8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported) May 2, 2007

DYNAMICS RESEARCH CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Massachusetts

(State or Other Jurisdiction of Incorporation)

000-02479	04-2211809
(Commission File Number)	(IRS Employer Identification No.)

60 Frontage Road Andover, Massachusetts	01810
(Address of Principal Executive Offices)	(Zip Code)

(978) 475-9090

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

     o      Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o      Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Section 2 — Financial Information
	Item 2.02.   Results of Operations and Financial Condition
Section 9 — Financial Statements and Exhibits
	Item 9.01.   Financial Statements and Exhibits.
SIGNATURES
Exhibit Index
Ex-99.1 Press Release dated May 2, 2007.

Section 2 — Financial Information

Item 2.02.   Results of Operations and Financial Condition

The information in this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be incorporated by reference into any filing of the company under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

On May 2, 2007, Dynamics Research Corporation issued a press release announcing financial results as of and for the three months ended March 31, 2007. A copy of the press release is attached hereto as Exhibit 99.1.

Section 9 — Financial Statements and Exhibits

Item 9.01.   Financial Statements and Exhibits.

(c)	Exhibits
	Number
		99.1	Press release dated May 2, 2007.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

DYNAMICS RESEARCH CORPORATION (Registrant)
By:	/s/ David Keleher
	David Keleher
	Senior Vice President and Chief Financial Officer

May 2, 2007

Exhibit Index

Exhibit Number	Exhibit Name	Location
99.1	Press release dated May 2, 2007.	Furnished herewith*

* Exhibit 99.1 attached hereto is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

EX-99.1

Exhibit 99.1

DYNAMICS RESEARCH CORPORATION
REPORTS FIRST QUARTER 2007 RESULTS

Andover, Mass.—May 2, 2007—Dynamics Research Corporation (Nasdaq: DRCO), a leading provider of innovative engineering, technical and information technology services and solutions to federal and state governments today announced operating results for the first quarter ended March 31, 2007.

Financial Results

The Company reported revenue of $56.8 million for the first quarter of 2007, compared with $68.2 million for the same period in 2006. Completion of the Company’s Air National Guard contract in May 2006 and lower subcontractor revenue resulting from the recent, successful transition to the USAF Consolidated Acquisition and Professional Services (CAPS) contract accounted for $9.5 million of the change in revenues for the first quarter of this year, compared with a year ago. Net income was $1.1 million, or $0.12 per diluted share, for the first quarter of 2007 compared with $1.4 million, or $0.15 per diluted share, before the effect of an accounting change for the same period a year ago.

Business Highlights

“Our financial results for the first quarter of 2007 were solid with several key indicators trending favorably,” said Jim Regan, DRC’s chairman and chief executive officer. “Revenues exceeded our expectations, with a substantial increase in revenues derived from billable hours compared with the fourth quarter of last year, while subcontractor revenues related to the successful transition to the CAPS contract decreased by $4.5 million on a sequential basis. Operating margin of 4.3% for the quarter just ended also was seasonally strong, comparing favorably with 4.1% for the same period in 2006.

“While Federal budgetary pressures have continued to delay contract awards we are having success growing our business base utilizing a number of important contracts we have won over the past year. Looking ahead, we anticipate a pick-up in contract award announcements as the year progresses,” Regan added. The Company also received in the first quarter of 2007 new business contract awards having an estimated total value of $62 million.

Company Guidance

The Company estimates revenues for the calendar year 2007 to be in the range of $225 to $240 million and earnings per diluted share to be in the range of $0.65 to $0.75, unchanged from the Company’ previous guidance. For the second quarter of 2007 the Company anticipates revenues in the range of $56 to $58 million and earnings per diluted share of $0.14 to $0.16.

Conference Call

The Company will conduct a first quarter 2007 conference call on Thursday, May 3, 2007 at 10:30 a.m. ET. The call will be available via telephone at (800) 231-9012, and accessible via Web cast at www.drc.com. Recorded replays of the conference call will be available on Dynamics Research Corporation’s investor relations home page at www.drc.com and by telephone at (888)

203-1112, passcode #1628724, beginning at 12:30 p.m. ET May 4, 2007 through 11:59 p.m. ET May 11, 2007.

About Dynamics Research Corporation

DRC is headquartered in Andover, Massachusetts and has major offices in Vienna, Virginia and Fairborn, Ohio. The company has 27 additional field offices throughout the United States providing direct support to all branches of the Department of Defense and several state government agencies.

Dynamics Research Corporation is an innovative solutions provider that partners with its customers to apply proven processes and technologies. For more than 50 years, DRC has delivered technical and information technology services that enhance the performance and cost effectiveness of its customers’ mission critical systems. For additional information about DRC please visit our website at www.drc.com.

Safe harbor statements under the Private Securities Litigation Reform Act of 1995: Some statements contained or implied in this news release, may be considered forward-looking statements, which by their nature are uncertain. Consequently, actual results could materially differ. For more detailed information concerning how risks and uncertainties could affect the company’s financial results, please refer to DRC’s most recent filings with the SEC. The company assumes no obligation to update any forward-looking information.

CONTACTS:	Investors:	David Keleher	Media:	Duyen “Jen” Truong, Sage Communications (for DRC)
		SVP and Chief Financial Officer		703.584.5645
		978.289.1615
		dkeleher@drc.com		duyent@aboutsage.com

ATTACHMENT I

DYNAMICS RESEARCH CORPORATION

CONSOLIDATED RESULTS OF OPERATIONS (unaudited)
(in thousands, except share and per share data)

	Three months ended
	March 31,
	2007			2006
Contract revenue	$	55,912		$	66,759
Product sales		868			1,454
Total revenue		56,780			68,213
Cost of contract revenue		46,933			56,945
Cost of product sales		1,148			1,298
Selling, general and administrative expenses		5,598			6,633
Amortization of intangible assets		650			702
Total operating costs and expenses		54,329			65,578
Operating income		2,451			2,635
Interest expense, net		(456	)		(569	)
Other income		(48	)		339
Income before provision for income taxes		1,947			2,405
Provision for income taxes		824			1,015
Income before cumulative effect of accounting change		1,123			1,390
Cumulative effect of accounting change (1)		—			84
Net income	$	1,123		$	1,474
Earnings per common share
Basic
Income before cumulative effect of accounting change	$	0.12		$	0.15
Cumulative effect of accounting change		—			0.01
Net income per common share	$	0.12		$	0.16
Diluted
Income before cumulative effect of accounting change	$	0.12		$	0.15
Cumulative effect of accounting change		—			0.01
Net income per common share	$	0.12		$	0.16
Weighted average shares outstanding
Basic		9,256,566			9,012,706
Diluted		9,507,446			9,396,644

(1) Due to the adoption of SFAS 123R on January 1, 2006.

ATTACHMENT II

DYNAMICS RESEARCH CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)

	March 31,		December 31,
	2007		2006
			(Restated) (1)
Assets
Cash and cash equivalents	$	389	$	7,887
Accounts receivable, net		38,720		27,136
Unbilled expenditures and fees on contracts in process		38,282		36,764
Prepaid expenses and other current assets		3,525		2,713
Total current assets		80,916		74,500
Property, plant and equipment, net		11,193		11,509
Goodwill		63,055		63,055
Intangible assets, net		5,021		5,671
Deferred tax asset		1,507		1,507
Other noncurrent assets		3,076		3,499
Total assets	$	164,768	$	159,741
Liabilities and stockholders’ equity
Accounts payable	$	14,807	$	18,195
Accrued payroll and employee benefits		15,016		14,473
Deferred income taxes		9,003		9,864
Other accrued expenses		4,729		5,090
Total current liabilities		43,555		47,622
Long-term debt		24,900		15,000
Other long-term liabilities		10,203		12,805
Stockholders’ equity		86,110		84,314
Total liabilities and stockholders’ equity	$	164,768	$	159,741

(1) The December 31, 2006 balance sheet has been adjusted to correct certain tax liabilities, which resulted in an increase in stockholders’ equity of $549, which will be more fully described in the Company’s first quarter 2007 Form 10-Q filing with the Securities and Exchange Commission.

ATTACHMENT III

DYNAMICS RESEARCH CORPORATION

SUPPLEMENTAL INFORMATION (unaudited)
(dollars in thousands)

Contract revenues were earned from the following sectors:

	Three Months Ended
	March 31,
	2007		2006
National defense and intelligence agencies	$	44,631	$	54,942
Federal civilian agencies		7,563		7,311
State and local government agencies		3,548		4,276
Other		170		230
	$	55,912	$	66,759

Revenues by contract type as a percentage of contract revenue were as follows:

	Three Months Ended
	March 31,
	2007			2006
Time and materials		57	%		61	%
Cost reimbursable		22	%		21	%
Fixed price, including service-type contracts		21	%		18	%
		100	%		100	%
Prime contract		65	%		67	%
Sub-contract		35	%		33	%
		100	%		100	%

	Three Months Ended
	March 31,
	2007			2006
Net cash used in operating activities	$	(17,315	)	$	(1,558	)
Capital expenditures	$	509		$	1,061
Depreciation	$	825		$	790
Bookings	$	78,562		$	70,843

	March 31,
	2007		2006
Funded backlog	$	114,684	$	144,200
Employees		1,501		1,744