FORM 10-Q
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

(Mark One)
(X)              QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended June 26, 1997

                                   OR

( )            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the transition period from            to

Commission file number         1-3879


                                  DynCorp
           (Exact name of registrant as specified in its charter)


                Delaware                              36-2408747
     (State or other jurisdiction of                (IRS Employer
      incorporation or organization)              Identification No.)


      2000 Edmund Halley Drive, Reston, VA             20191-3436
    (Address of principal executive offices)           (Zip Code)

                            (703)   264-0330
            (Registrant's telephone number, including area code)




          (Former name, former address and former fiscal year, if changed
          since last report)


         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.  9,023,814 shares of
common stock having a par value of $0.10 per share were  outstanding at June 26,
1997.

<PAGE>
                                     DYNCORP

                                      INDEX

                                                                     Page
PART I.  FINANCIAL INFORMATION

     Consolidated Condensed Balance Sheets -
         June 26, 1997 and December 31, 1996                         3-4

     Consolidated Condensed Statements of Operations -
         Three and Six Months Ended June 26, 1997 and June 27, 1996    5

     Consolidated Condensed Statements of Cash Flows -
         Six Months Ended June 26, 1997 and June 27, 1996              6

     Consolidated Statement of Permanent Stockholders' Equity          7

     Notes to Consolidated Condensed Financial Statements           8-13

     Management's Discussion and Analysis of Financial Condition
         and Results of Operations                                 14-16

PART II.  OTHER INFORMATION

     Item 1.  Legal Proceedings                                       17

     Item 6.  Exhibits and Reports on Form 8-K                        17

     Signatures                                                       17

     Exhibit 11 - Computations of Earnings Per Common Share           18

<PAGE>

                          PART I. FINANCIAL INFORMATION

                            DYNCORP AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                       JUNE 26, 1997 AND DECEMBER 31, 1996
                             (Dollars in thousands)




                                                         June 26,
                                                          1997     December 31,
                                                        Unaudited     1996
Assets
Current Assets:
 Cash and cash equivalents                             $   32,923   $ 25,877
 Accounts receivable and contracts in process (Note 2)    182,226    187,679
 Inventories of purchased products and supplies,
     at lower of cost (first-in, first-out) or market       1,460      1,030
 Other current assets                                      14,860     10,009

     Total current assets                                 231,469    224,595

Property and Equipment (net of accumulated depreciation
 and amortization of $20,851 in 1997 and $16,737 in 1996)  20,084     19,084

Intangible Assets (net of accumulated amortization
 of $44,120 in 1997 and $43,028 in 1996)                   47,836     48,927

Other Assets (Notes 2 and 8)                               78,226     76,146

Total Assets                                             $377,615   $368,752


See accompanying notes to consolidated condensed financial statements.

<PAGE>

                            DYNCORP AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                       JUNE 26, 1997 AND DECEMBER 31, 1996
                (Dollars in thousands, except per share amounts)

                                                         June 26,
                                                           1997     December 31,
                                                        Unaudited      1996
Liabilities and Stockholders' Equity
Current Liabilities:
 Notes payable and current portion of long-term debt   $    891     $     628
 Accounts payable                                        39,928        42,716
 Advances on contracts in process                         2,623         6,002
 Accrued liabilities                                    106,891        99,499

     Total current liabilities                          150,333       148,845

Long-Term Debt  (Notes 2 and 5)                         152,948       103,555

Other Liabilities and Deferred Credits  (Note 8)         79,296        79,513

Contingencies and Litigation  (Note 8)                        -             -

Temporary Equity (Note 3):
 Redeemable Common Stock -
   ESOP Shares, 6,735,509 and 6,165,957
     shares issued and outstanding in 1997 and 1996,
     respectively, subject to restrictions              148,790       136,343
   Other, 125,714 shares issued and outstanding in
     1997 and 1996                                        3,017         2,979

Permanent Stockholders' Equity (Note 4):
 Preferred Stock, Class C 18% cumulative,
  convertible, $24.25 liquidation value
  (liquidation value including unrecorded dividends
  of $14,147 in 1996), 123,711 shares authorized,
  issued and outstanding in 1996                              -         3,000
 Common Stock, par value ten cents per share, authorized
  20,000,000 shares; issued 3,805,439 shares in 1997
  and 3,315,673 shares in 1996                              381           332
 Common Stock Warrants                                    3,891        11,139
 Paid-in Surplus                                        122,805       148,234
 Reclassification to temporary equity for redemption
  value greater than par value                         (151,121)     (138,694)
 Deficit                                                (96,913)     (101,259)
 Common Stock Held in Treasury, at cost;
  1,642,738 shares and 170,716 warrants
  in 1997 and 1,514,482 shares and
  170,716 warrants in 1996                              (28,028)      (25,235)
 Unearned ESOP Shares                                    (7,784)            -

Total Liabilities and Stockholders' Equity             $377,615      $368,752


See accompanying notes to consolidated condensed financial statements.

<PAGE>


                            DYNCORP AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                (Dollars in thousands, except per share amounts)

                                    UNAUDITED

                                        Three Months Ended     Six Months Ended
                                       June 26,    June 27,  June 26,  June 27,
                                          1997        1996      1997       1996
Revenues:
 Information and Engineering Technology  $ 70,909  $66,488  $135,117   $137,502
 Aerospace Technology                     113,441   93,850   218,035    179,378
 Enterprise Management                    104,875   89,292   207,462    174,476
 Intercompany eliminations                   (530)       -      (782)         -
               Total revenues             288,695  249,630   559,832    491,356


Costs and Expenses:
 Costs of services                        276,374  235,948   536,168    466,945
 Corporate selling and administrative       4,353    4,352     8,792      8,812
 Interest income                             (637)    (362)     (998)      (976)
 Interest expense                           3,907    2,516     6,891      5,096
 Other                                      1,018      284     1,294        850
               Total costs and expenses   285,015  242,738   552,147    480,727


Earnings from continuing operations
 before income taxes and minority interest  3,680    6,892     7,685     10,629
   Provision for income taxes (Note 6)      1,442    3,013     2,728      4,213

Earnings from continuing operations
 before minority interest                   2,238    3,879     4,957      6,416
       Minority interest                      203      326       611        622

Earnings from continuing operations         2,035    3,553     4,346      5,794
 Earnings from discontinued operations,
   net of income taxes                          -      865         -        865

Net earnings                             $  2,035  $ 4,418  $  4,346   $  6,659

Preferred Class C dividends not
 declared or recorded (Note 4)                  -     (558)        -     (1,092)

Common stockholders' share of earnings   $  2,035  $ 3,860  $  4,346   $  5,567

Weighted average number of common
 shares outstanding and dilutive
 common stock equivalents (Note 7)  10,415,954 11,676,927 10,796,531 11,740,392


Common stockholders' share of earnings
    per common share - primary and fully diluted
Continuing operations                    $   0.20  $  0.26  $   0.40   $   0.40
Discontinued operations                         -     0.07         -       0.07
                                         $   0.20  $  0.33  $   0.40   $   0.47


See accompanying notes to consolidated condensed financial statements.

<PAGE>


                            DYNCORP AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                  UNAUDITED
                                                       Six Months Ended
                                                 June 26,             June 27,
                                                    1997                 1996
Cash Flows from Operating Activities:
Net earnings                                    $  4,346           $    6,659
Adjustments to reconcile net earnings from
 operations to net cash provided (used):
Depreciation and amortization                      5,043                4,079
Payment of income taxes on gain on sale of
 Commercial Aviation business                          -              (13,990)
Gain from discontinued operation                       -                 (865)
Increase in reserves for divested businesses         125                    -
Proceeds from insurance settlement for asbestos
 claims                                            1,000                    -
Other                                               (344)                (469)
Changes in current assets and liabilities, net
of acquisitions:
 Increase in current assets except cash, cash
 equivalents and notes receivable                    (60)              (6,389)
 Increase (decrease) in current liabilities
 except notes payable and current portion of
 long term debt                                    1,104              (11,561)

Cash provided (used) by operating activities      11,214              (22,536)


Cash Flows from Investing Activities:
Sale of property and equipment                        51                  360
Purchase of property and equipment                (2,926)              (2,908)
Assets and liabilities of acquired businesses
   (excluding cash acquired)                           -               (1,805)
Increases in investment in unconsolidated
   subsidiaries                                     (677)                (300)
Increase in cash on deposit for letters of credit      -                2,584
Other                                               (122)                (189)
 Cash used by investing activities                (3,674)              (2,258)


Cash Flows from Financing Activities:
Treasury stock purchased                            (284)              (4,271)
Payment on indebtedness                             (463)                (625)
Retirement of Contract Receivable
 Collateralized Notes 1992-1                     (98,500)                   -
Proceeds from Contract Receivable
 Collateralized Notes 1997-1                      50,000                    -
Proceeds from issuance of Senior Notes (Note 5)   99,484                    -
Stock released to Employee Stock Ownership Plan    2,595                  503
Loan to Employee Stock Ownership Plan (Note 4)   (10,379)                   -
Deferred financing expenses                       (4,767)              (1,281)
Borrowing under line of credit                         -                5,000
Common stock and warrants purchased from
 investors (Note 4)                              (37,819)                   -
Other                                               (361)                   6
Cash used by financing activities                   (494)                (668)

Net Increase (Decrease) in Cash and Cash
 Equivalents                                       7,046              (25,462)
Cash and Cash Equivalents at Beginning of
 the Period                                       25,877               31,151
Cash and Cash Equivalents at End of the Period  $ 32,923           $    5,689

Supplemental Cash Flow Information:
Cash paid for income taxes (Note 6)             $  2,229           $   16,981

Cash paid for interest                          $  5,938           $    4,810


See accompanying notes to consolidated condensed financial statements.


<PAGE>


                            DYNCORP AND SUBSIDIARIES
            CONSOLIDATED STATEMENT OF PERMANENT STOCKHOLDERS' EQUITY
                             (Dollars in thousands)

                                    UNAUDITED
<TABLE>

<CAPTION>
                                                                           Adjustment for
                                                         Common             Redemption Value                       Unearned
                               Preferred      Common      Stock     Paid-in Greater than                Treasury       ESOP
                                   Stock       Stock   Warrants     Surplus   Par Value      Deficit      Stock     Shares

  <S>                            <C>          <C>       <C>        <C>         <C>          <C>        <C>        <C>

  Balance, December 31, 1996     $ 3,000      $  332    $11,139    $148,234    $(138,694)   $(101,259) $ (25,235)  $      -

  Stock issued under
   Restricted Stock Plan                           8                   (573)
   Treasury stock issued                                                                                     233
   Treasury stock purchased                                                                                 (232)
   Stock warrants and options
    exercised                                      3        (51)        145
   Loans to the Employee Stock
    Stock Ownership Plan (Note 4)                                                                                   (10,379)
   Payment received on ESOP note                                                                                      2,595
   Class C Preferred Stock
    converted and warrants
    exercised (Note 4)            (3,000)         95     (2,007)      5,119
   Common stock purchased and
    warrants exercised (Note 4)                          (5,190)    (30,120)                              (2,794)
   Net earnings                                                                                 4,346
   Reclassification to Redeemable
     Common Stock                                (57)                            (12,427)
  Balance, June 26, 1997         $     -      $  381    $ 3,891    $122,805    $(151,121)   $ (96,913) $ (28,028)  $ (7,784)

</TABLE>

<PAGE>



                            DYNCORP AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                    UNAUDITED

1.   The unaudited  consolidated condensed financial statements included herein
     have been prepared by the Company  pursuant to the rules and regulations of
     the Securities and Exchange  Commission.  Certain  information and footnote
     disclosures   normally  included  in  financial   statements   prepared  in
     accordance  with  generally  accepted   accounting   principles  have  been
     condensed or omitted pursuant to such rules and  regulations,  although the
     Company  believes that the disclosures are adequate to make the information
     presented not misleading.  It is suggested that these  condensed  financial
     statements be read in  conjunction  with the financial  statements  and the
     notes thereto  included in the Company's latest annual report on Form 10-K.
     In the  opinion  of  the  Company,  the  unaudited  consolidated  condensed
     financial  statements included herein reflect normal recurring  adjustments
     necessary  to  present  fairly  the  financial  position,  the  results  of
     operations  and the cash flows for such  interim  periods.  The  results of
     operations for such interim periods are not  necessarily  indicative of the
     results for the full year.

2.   On April 18,  1997,  the  Company's  wholly-owned  subsidiary  Dyn Funding
     Corporation (" DFC ") entered into  agreements  with  Prudential  Insurance
     Company of America and Columbine Life Insurance  Company,  Inc. to purchase
     from DFC up to $140,000,000 of Contract  Receivable  Collateralized  Notes,
     Series 1997-1.  The five year,  $50,000,000  Class A Fixed Rate Note, which
     bears interest at 7.486%, was issued at closing,  and the $90,000,000 Class
     B Variable Rate Note, which was also issued, has yet to be utilized.  These
     notes contain terms and conditions  substantially identical to those of the
     Contract  Receivable  Collateralized  Notes,  Series 1992-1.  Utilizing the
     proceeds  from the  issuance of the 9.5% Senior  Notes (see Note 5) and the
     proceeds from the new Contract Receivable Collateralized Class A Fixed Rate
     Note,  the Contract  Receivable  Collateralized  Notes,  Series 1992-1 were
     retired.

     On May 15, 1997,  the Company  amended and restated its term note  facility
     with Citicorp  North America to provide for a $15,000,000  letter of credit
     and revolving loan facility.

     At June 26, 1997,  $64,074,000  of accounts  receivable  are  restricted as
     collateral for the Contract Receivable Collateralized Notes, Series 1997-1.
     Additionally, $1,500,000 and $3,000,000 of cash is restricted as collateral
     for the Series  1997-1  Notes and Series  1992-1 Notes at June 26, 1997 and
     December 31, 1996,  respectively,  and has been included in Other Assets on
     the balance sheet.

     Trade accounts  receivable are net of an allowance for doubtful accounts of
     $503,000 and $229,000 at June 26, 1997 and December 31, 1996, respectively.

3.   Common stock which is redeemable has been reflected as Temporary Equity at
     each balance sheet date and consists of the following:

<TABLE>

<CAPTION>
                                               Balance at                               Balance  at
                                Redeemable      June  26,                Redeemable     December 31,
                     Shares        Value          1997         Shares       Value          1996
<S>                <C>           <C>       <C>              <C>           <C>        <C>
ESOP Shares        3,520,037      $24.00   $   84,480,888    3,520,037     $23.70    $  83,424,877
                   3,215,472      $20.00       64,309,440    2,645,920     $20.00       52,918,400

                   6,735,509               $  148,790,328    6,165,957               $ 136,343,277

Other Shares         125,714      $24.00   $    3,017,136      125,714     $23.70    $   2,979,422

</TABLE>


4.   On February 5, 1997, the Employee  Stock  Ownership  Trust  purchased from
     certain investors in Capricorn Investors,  L.P. all of the Company's Class
     C Preferred  Stock. The purchase price for the securities was $18,567,000,
     of which  $10,290,000 was paid by a note from the ESOP that was guaranteed
     by the  Company.  The ESOP  subsequently  converted  the Class C Preferred
     Stock and exercised the related  warrants,  upon which the Company  issued
     949,642 shares of common stock to the ESOP. The unpaid balance on the note
     receivable from the ESOP,  representing  390,406 shares, is reflected as a
     reduction in stockholders' equity at June 26, 1997.

     Concurrent  with the ESOP's purchase of the Class C Preferred  Stock,  the
     Company  purchased  128,345  shares of common stock and  1,806,141  common
     stock warrants from other investors in Capricorn Investors, L.P. at a cost
     of $19.55 for each common share or warrant.  The total  purchase price for
     these  securities was $37,819,000,  of which  $18,910,000 was paid in cash
     and short-term notes were issued for the balance.

5.   0n March 17, 1997, the Company closed on the issuance of  $100,000,000  of
     9.5%  Senior   Subordinated  Notes  due  2007.  The  notes  are  unsecured
     obligations of the Company and will be subordinated in right of payment to
     all  existing and future  senior debt of the Company.  Interest is payable
     semi-annually  on March 1 and  September  1 of each  year,  commencing  on
     September 1, 1997.

     The proceeds received,  $99,484,000,  net of a discount, were used to fund
     the  Company's   purchase  of  common  stock  and  warrants  from  outside
     investors,  to make a loan to the ESOP to repay the note to certain of the
     Capricorn  investors (plus accrued interest) for the purchase of the Class
     C Preferred  Stock (see Note 4), to fund  partially the  retirement of the
     Contract  Receivable   Collateralized  Notes  (see  Note  2)  and  to  pay
     transaction fees.

6.   The provision for income taxes in 1997 and 1996 is based upon an estimated
     annual effective tax rate, including the impact of differences between the
     book value of assets and  liabilities  recognized for financial  reporting
     purposes and the basis recognized for tax purposes.

     The $16,981,000 of cash paid for income taxes in 1996 includes $13,990,000
     related to the gain on the sale of the Commercial Aviation business.

7.   The weighted average number of common shares  outstanding  includes issued
     shares or shares  issuable  under the Restricted  Stock Plan,  plus common
     stock  equivalents,  less  shares held in  treasury  and any pledged  ESOP
     shares.  Common  stock  equivalents  consist  of shares  subject  to stock
     options and unexercised warrants,  less the number of shares assumed to be
     purchased from the proceeds.

8.   The Company and its  subsidiaries  and  affiliates  are involved in various
     claims and  lawsuits,  including  contract  disputes  and  claims  based on
     allegations of negligence and other tortuous  conduct.  The Company is also
     potentially  liable for certain personal  injury,  tax,  environmental  and
     contract  dispute  issues  related  to the  prior  operations  of  divested
     businesses.  In addition,  certain  subsidiary  companies  are  potentially
     liable for environmental,  personal injury and contract and dispute claims.
     In most cases,  the Company and its  subsidiaries  have denied,  or believe
     they have a basis to deny,  liability  and in some  cases  have  offsetting
     claims against the plaintiffs,  third parties or insurance carriers.  As of
     June 26,  1997,  the  total  amount of  damages  currently  claimed  by the
     plaintiffs  in these cases is  estimated to be  approximately  $135,000,000
     (including  compensatory and punitive  damages and penalties).  This amount
     includes  estimates  for claims  which have been  filed  without  specified
     dollar amounts or for amounts that are in excess of recoveries  customarily
     associated with the stated causes of actions;  such amount does not include
     estimates  for  claims  that may have been  incurred  but have not yet been
     asserted.  The  Company  believes  that the amount  that will  actually  be
     recovered  in these  cases  will be  substantially  less  than  the  amount
     claimed.  After taking into  account  available  insurance  and opinions of
     legal and other  experts,  the Company  believes it is adequately  reserved
     with respect to the potential  liability  for such claims.  The Company has
     recorded  such damages and  penalties  that are  considered  to be probable
     recoveries   against  the  Company  or  its  subsidiaries.   The  Company's
     accounting  policy is to accrue an estimate of the future  legal costs that
     will be incurred to defend  against  claims and  disputed  issues  asserted
     against the  Company.  This policy has been  applied  consistently  for all
     significant legal issues for each period presented.

     The Company  estimates  that the aggregate  potential  liability for claims
     asserted  as of June 26,  1997  ranges  from  $8,500,000  to  $135,000,000,
     excluding  amounts for claims that may have been  incurred but have not yet
     been asserted,  and has accrued aggregate  reserves of $29,400,000 for such
     claims,  excluding  approximately  $2,000,000 in additional reserves.  Such
     estimates  reflect  management's  best estimate of the aggregate  liability
     that will result from these  matters.  While it is not  possible to predict
     with  certainty  the  outcome of  litigation  and other  matters  discussed
     herein, the Company's management  believes,  based in part upon opinions of
     counsel, insurance in force and the facts currently known, that liabilities
     in excess of those  recorded,  if any,  arising from such matters would not
     have a material  adverse effect on the results of operations,  consolidated
     financial  position or liquidity of the Company over the  long-term.  As of
     June 26,  1997,  the  Company  estimates  that it has  primary  and  excess
     insurance coverage,  excluding approximately $92,000,000 in excess coverage
     underwritten  by  insolvent  carriers,  of more  than  $507,600,000.  It is
     possible,  however,  that the timing of the resolution of individual issues
     could  result in a  significant  impact  on the  operating  results  and/or
     liquidity of one or more future reporting periods.

     Asbestos Claims

     An acquired  and  inactive  subsidiary,  Fuller-Austin  Insulation  Company
     ("Fuller-Austin"),  which discontinued its business activities in 1986, has
     been  named as one of many  defendants  in civil  lawsuits  which have been
     filed in certain state courts beginning in 1986 (principally Texas) against
     manufacturers, distributors and installers of products allegedly containing
     asbestos.   Fuller-Austin  was  a   non-manufacturer   that  installed  and
     occasionally distributed industrial insulation products.  Fuller-Austin had
     discontinued  the  use  of  asbestos-containing  products  prior  to  being
     acquired  by the  Company  in 1974.  These  claims  are not part of a class
     action.

     The  claimants   generally  allege  injuries  to  their  health  caused  by
     inhalation of asbestos fibers.  Many of the claimants seek punitive damages
     as well as compensatory  damages.  The amount of damages sought is impacted
     by a multitude  of  factors.  These  include  the type and  severity of the
     disease sustained by the claimant (i.e.,  mesothelioma,  lung cancer, other
     types of cancer,  asbestosis  or pleural  changes);  the  occupation of the
     claimant;  the duration of the claimant's  exposure to  asbestos-containing
     products;  the  number  and  financial  resources  of the  defendants;  the
     jurisdiction in which the claim is filed;  the presence or absence of other
     possible  causes  of the  claimant's  illness;  the  availability  of legal
     defenses,  such as the  statute of  limitations;  and whether the claim was
     made on an individual basis or as part of a group claim.

     Claim Exposure

     As  of  July  18,  1997,   15,025  plaintiffs  have  filed  claims  against
     Fuller-Austin  and various other  defendants.  Of these claims,  3,219 have
     been dismissed,  3,740 have been resolved without an admission of liability
     at an average cost of $3,566 per claim  (excluding legal defense costs) and
     an additional 383 claims have been settled in principle  (subject to future
     processing and funding) at a average cost of $1,882 per claim.

     The  following is a summary of claims filed against  Fuller-Austin  through
     July 18, 1997:

                                                      Years
                                 1993
                               & Prior   1994    1995    1996    1997     Total

      Claims Filed              2,921   1,136   4,522   4,122   2,324    15,025
      Claims Dismissed            (79)    (21) (1,035) (1,459)   (625)   (3,219)
      Claims Resolved          (1,224)   (394) (  182) (1,828)   (112)   (3,740)
      Settlements in process                                             (  383)
      Claims Outstanding at July 18, 1997                                 7,683

     In connection with these claims, Fuller-Austin's primary insurance carriers
     have incurred  approximately  $23,400,000  (including  $10,100,000 of legal
     defense costs, but excluding $720,000 for settlements in process) to defend
     and settle the claims and, in addition,  jury verdict  judgments  have been
     entered against  Fuller-Austin in the aggregate amount of $6,500,000 which
     have not been paid and which are  under  appeal by  Fuller-Austin.  Through
     June  26,1997,  the  Company  and  Fuller-Austin  have  charged  to expense
     approximately   $12,500,000  consisting  of  $6,200,000  of  charges  under
     retrospectively  rated  insurance  policies and  $6,300,000 of reserves for
     potential  uninsured  legal and  settlement  costs related to these claims.
     These   charges   substantially   eliminate   any  further   exposure   for
     retrospectively determined premium payments under the retrospectively rated
     insurance policies.

     Fuller-Austin  has  continued  its strategy of requiring  direct proof that
     claimants  were  exposed to  asbestos-containing  products as the result of
     Fuller-Austin's  operations.  This has  resulted  in an  increase  in claim
     settlements  and a decrease  in  litigation  defense  activities.  However,
     perceived   changes  in  the  nature  of  new  claims   filed  have  caused
     Fuller-Austin  and its insurers to reevaluate  Fuller-Austin's  approach to
     claims  settlement.  Consequently,  there is a potential  for an  increased
     level of trial  activity  which  Fuller-Austin  believes  will  reduce  the
     overall  cost  of  asbestos  personal  injury  claims  in the  long  run by
     requiring  claimants  to present  and prove clear  evidence of  substantial
     asbestos-related impairment and exposure to Fuller-Austin's operations, and
     by denying  recovery to claimants  who are  unimpaired  or who did not have
     significant exposure to Fuller-Austin's operations.

     Further,  the level of filed claims has become significant only since 1992,
     and therefore,  Fuller-Austin  has a relatively brief history  (compared to
     manufacturers  and suppliers) of claims volume and a limited data file upon
     which to estimate the number or costs of claims that may be received in the
     future.  Also,  effective September 1, 1995, the State of Texas (where most
     of these  claims have been filed)  enacted  tort reform  legislation  which
     Fuller-Austin    believes   will   ultimately   curtail   the   number   of
     unsubstantiated asbestos claims filed against the subsidiary in Texas.

     The Company and its defense  counsel have analyzed the 15,025 claim filings
     incurred  through July 18, 1997.  Based on this  analysis and  consultation
     with its  professional  advisors,  Fuller-Austin  has  estimated  its cost,
     including legal defense costs, to be $17,700,000 for claims filed and still
     unsettled  and  $37,300,000  as its  minimum  estimate  of future  costs of
     unasserted  claims,  including  legal  defense  costs.  No  upper  limit of
     exposure can presently be reasonably  estimated.  The Company cautions that

<PAGE>

     these  estimates are subject to  significant  uncertainties,  including the
     future effect of tort reform legislation enacted in Texas and other states,
     the  success  of  Fuller-Austin's  litigation  strategy,  the  size of jury
     verdicts, success of appeals in process, the number and financial resources
     of future  plaintiffs,  and the actions of other  defendants.  During 1996,
     approximately  40 claims,  with  approximately  700 more being prepared for
     filing,  were filed in another state where  Fuller-Austin  had  significant
     business  operations.  Although the claims filed against  Fuller-Austin  in
     states other than Texas have been included in the claims  summary table set
     forth  above,  exposure  for  these  claims  has not been  included  in the
     Company's  estimates  and neither  the Company nor its defense  counsel are
     able to  reasonably  predict the outcome of these cases or the incidence of
     the 700 or other future claims that may be filed.  Therefore,  actual claim
     experience  may vary  significantly  from  such  estimates,  especially  if
     certain Texas appeals are decided  unfavorably to Fuller-Austin  and/or the
     level of  claims  filed in other  states  increases.  At June 26,  1997 and
     December 31, 1996, Fuller-Austin recorded an estimated liability for future
     indemnity payments and defense costs related to currently  unsettled claims
     and minimum  estimated future claims of $55,000,000  (recorded as long-term
     liability).

     Insurance Coverage

     Defense  has been  tendered  to and  accepted  by  Fuller-Austin's  primary
     insurance  carriers,  and by certain  of the  Company's  primary  insurance
     carriers  that issued  policies  under which  Fuller-Austin  is named as an
     additional  insured;  however,  only one such primary carrier has partially
     accepted defense without a reservation of rights. The Company believes that
     Fuller-Austin has at least $7,600,000 in unexhausted  primary coverage (net
     of  deductibles  and  self-insured   retentions,   but  including  disputed
     coverage)  under its  liability  insurance  policies to cover the unsettled
     claims,  verdicts  and future  unasserted  claims and  defense  costs.  The
     primary carriers also have unlimited liability for defense costs (presently
     running at the annual rate of approximately  $1,500,000) until such time as
     the primary  limits under these  policies are  exhausted.  When the primary
     limits are  exhausted,  liability for both indemnity and legal defense will
     be  tendered  to the  excess  coverage  carriers,  all of which  have  been
     notified  of  the  pendency  of  the  asbestos  claims.   The  Company  and
     Fuller-Austin  have  approximately  $490,000,000  of additional  excess and
     umbrella  insurance that is generally  responsive to asbestos claims.  This
     amount excludes  approximately  $92,000,000 of coverage issued by insolvent
     carriers. After the $7,600,000 of unexhausted primary coverage, the Company
     has  $35,700,000 of excess  coverage in place before entering a $35,000,000
     layer of  insolvent  coverage  for  policy  years  1979  through  1984 (the
     "Insolvent  Layer").  All of the  Company's and  Fuller-Austin's  liability
     insurance  policies cover indemnity  payments and defense fees and expenses
     subject to applicable policy terms and conditions.

     Coverage Litigation

     The Company and  Fuller-Austin  have  instituted  litigation in Los Angeles
     Superior  Court,  California,  against their  primary and excess  insurance
     carriers,  to obtain  declaratory  judgments  from the court  regarding the
     obligations of the various carriers to defend and pay asbestos claims.  The
     issues in this litigation include the aggregate  liability of the carriers,
     the  triggering  and  drop-down of excess  coverage to cover the  Insolvent
     Layer and allocation of losses among multiple carriers including  insolvent
     carriers and various  other  issues  related to the  interpretation  of the
     policy contracts.  All of the carrier  defendants have filed general denial
     answers.

     Although  there can be no assurances as to the outcome of this  litigation,
     management  believes that it is probable that the Company and Fuller-Austin
     will prevail in obtaining judicial rulings confirming the availability of a
     substantial  portion of the coverage.  Based on a review of the independent
     ratings of these carriers,  the Company believes that a substantial portion
     of  this  coverage  will  continue  to be  available  to meet  the  claims.
     Fuller-Austin  recorded in Other Assets  $54,000,000 and  $55,000,000  (not
     including reserves of $5,900,000 and $6,400,000,  respectively) at June 26,
     1997 and  December  31,  1996,  representing  the amount that it expects to
     recover from its insurance carriers for the payment of currently  unsettled
     and estimated future claims.

     The Company cautions, however, that even though the existence and aggregate
     dollar  amounts  of  insurance  are  not  generally  being  disputed,  such
     insurance coverage is subject to interpretation by the court and the timing
     of the availability of insurance payments could, depending upon the outcome
     of the  litigation  and/or  negotiation,  delay the  receipt  of  insurance
     company  payments and require  Fuller-Austin to assume  responsibility  for
     making interim payment of asbestos defense and indemnity costs.

     While the  Company  and  Fuller-Austin  believe  that  they  have  recorded
     sufficient  liability  to satisfy  Fuller-Austin's  reasonably  anticipated
     costs of present  and  future  plaintiffs'  suits,  it is not  possible  to
     predict the amount or timing of future suits or the future  solvency of its
     insurers.  In the event that  currently  unsettled and future claims exceed
     the  recorded  liability  of  $55,000,000,  the Company  believes  that the

<PAGE>

     judicially  determined  and /or  negotiated  amounts of excess and umbrella
     insurance  coverage that will be available to cover additional  claims will
     be  significant;  however,  it is unable  to  predict  whether  or not such
     amounts will be adequate to cover all  additional  claims  without  further
     contribution by Fuller-Austin.

     Government Contracting

      The major  portion of the Company's  business  involves  contracting  with
     departments and agencies of, and prime contractors to, the U.S. Government,
     and such contracts are subject to possible  termination for the convenience
     of the  government  and to audit and possible  adjustment to give effect to
     unallowable  costs  under  cost-type   contracts  or  to  other  regulatory
     requirements affecting both cost-type and fixed-price  contracts.  Payments
     received by the Company for allowable direct and indirect costs are subject
     to adjustment  and repayment  after audit by  government  auditors,  if the
     payments  exceed  allowable  costs.  Audits  have  been  completed  on  the
     Company's  incurred  contract  costs  through 1986 and are  continuing  for
     subsequent  periods.  The Company  has  included  an  allowance  for excess
     billings and contract  losses in its financial  statements that it believes
     is adequate based upon its  interpretation  of contracting  regulations and
     past experience.  There can be no assurance,  however,  that this allowance
     will be adequate.  The Company is aware of various costs  questioned by the
     government,  including issues related to the  recoverability  of certain of
     its ESOP  contributions,  but  cannot  determine  the  outcome of the audit
     findings at this time. In addition, the Company is occasionally the subject
     of  investigations  by the  Department  of Justice and other  investigative
     organizations,  resulting  from  employee and other  allegations  regarding
     business  practices.  In  management's  opinion,  there are no  outstanding
     issues of this nature at June 26, 1997,  that will have a material  adverse
     effect  on  the  Company's  consolidated  financial  position,  results  of
     operations or liquidity.

<PAGE>

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

The following discussion of financial condition and results of operations should
be read in conjunction with the 1996 Form 10-K.

Working  capital at June 26, 1997 was $81.1  million  compared to $75.8  million
at December 31, 1996,  an increase of $5.3 million.

At June 26,  1997,  $64.1  million of  accounts  receivable  are  restricted  as
collateral for the Contract Receivable Collateralized Notes Series 1997-1.

Cash provided by  operations  was $11.2 million in the first six months of 1997,
as  compared  to $22.5  million  of cash used in the  first six  months of 1996.
Excluding the effect of changes in current assets and liabilities  and, in 1996,
the  payment  of  taxes  on the  gain  on the  sale of the  Commercial  Aviation
business, operating activities produced a positive cash flow of $10.2 million in
1997 as compared to $9.4 million in 1996. The decrease in cash flow attributable
to reduced  earnings  from  continuing  operations  was offset by an increase in
non-cash charges,  primarily  depreciation and amortization,  and also insurance
proceeds received related to the Company's asbestos liability coverage.

Investing activities used funds of $3.7 million in the first six months of 1997,
principally  for the  purchase of property and  equipment.  During the first six
months of 1996,  cash used for investing  activities  was $2.3 million with cash
used for the purchase of property and  equipment  exceeding  cash  released from
deposit for letters of credit.

Financing activities used funds of $0.5 million in the first six months of 1997.
The  proceeds  from the  issuance  of the 9.5%  Senior  Notes  and the  Contract
Receivable  Collateralized  Notes Series 1997-1 were used to retire the Contract
Receivable  Collateralized  Notes Series 1992-1,  to make a loan to the Employee
Stock  Ownership  plan to fund the purchase of the Class C Preferred  Stock,  to
fund the Company's  purchase of common stock and warrants from  investors and to
pay transaction fees associated with the placement of the Senior Notes.

The  company  engaged  in the  aforementioned  equity  repurchases  in  order to
eliminate the potential effect of certain  preferential  voting rights given the
Class C Preferred Stock in the Company's certificate of incorporation; to reduce
the equity  holdings  and voting  capacity of a large  outside  stockholder;  to
reduce the  outstanding  and fully  diluted  equity of the  company;  to provide
treasury  shares for future  issuance to employees  under the Company's  various
compensation and benefit plans without the need for issuance of new shares;  and
to provide  additional  shares for the ESOP,  which can only  acquire  shares by
purchase from the Company or other stockholders. The ESOP's purpose for engaging
in the  aforementioned  transaction  was to acquire shares for the allocation to
participants'  accounts in 1997 and 1998. In addition to converting a portion of
the  Company's  total   capitalization   from  equity   capitalization  to  debt
capitalization,  the  transactions  reduced the Company's  fully diluted equity,
thus impacting the Company's earnings per share.

At June 26, 1997, backlog  (including option years on government  contracts) was
$3.0 billion, unchanged from December 31, 1996.

Results of Operations

Revenues for the second  quarter and first half of 1997 were $288.7  million and
$559.8 million,  respectively,  as compared to $249.6 million and $491.4 million
for the  comparable  periods in 1996,  an  increase  of $39.1  million and $68.5
million,  respectively.  Revenues for the second  quarter of 1997 increased over
the second quarter of 1996 for each of the three business areas. Information and
Engineering   Technology  (I&ET),   Aerospace  Technology  (AT)  and  Enterprise
Management  (EM) reported  revenues of $70.9 million,  $113.4 million and $104.9
million,  respectively,  for the  second  quarter of 1997 as  compared  to $66.5
million,  $93.8 million and $89.3 million for the same quarter in 1996. Revenues
for the first half of 1997 for AT and EM were $218.0 million and $207.5 million,
an increase  of $38.6  million and $33.0  million,  respectively,  over the same
period in 1996.  I&ET's revenues for the first half of 1997 were $135.1 million,
down $2.4 million from $137.5  million for the first half of 1996.  Increases in
AT's  second  quarter  and first  half  revenues  were  attributable  to a State
Department  contract  in  support  of  the  Bosnian  and  Haitian   peacekeeping
initiatives which were awarded in February and October 1996,  respectively,  and
phased in later in the year,  but which were fully  operational in 1997, as well
as increases in the level of effort on several existing contracts. In EM, second
quarter and first half  reductions in revenues due to contract  losses were more
than offset by revenues from a large Department of Energy  subcontract which was
awarded in August 1996, but which was fully  operational in 1997. For the second
quarter,  increases in I&ET's  revenues  attributable to the acquisition of Data
Management  Design,  Inc.  ("DMDI") in June of 1996 and new IDIQ type  contracts
offset  decreases in revenues  due to the  completion  and  phase-out of a large
contract with the Postal Service. However, for the first half of 1997, decreases
in revenues  attributable to the aforementioned  contract loss, coupled with the
reduction in the level of effort on existing  contracts,  exceeded  increases in
revenues attributable to acquisitions or new contract awards.

Cost of sales for the second  quarter and first half of 1997 was 95.7% and 95.8%
of revenue as  compared to 94.5% and 95.0% for the  comparable  periods in 1996.
This resulted in gross margins of $12.3 million (4.3%) for the second quarter of
1997 as  compared  to $13.7  million  (5.5%) for the second  quarter of 1996 and
$23.7  million  (4.2%) and $24.4  million  (5.0%) for the first half of 1997 and
1996,  respectively.  Contract  losses,  reduced  level of  effort  on  existing
contracts, decreased absorption of G&A on certain contracts and poor performance
attributable to the DMDI acquisition,  certain  contracts  acquired late in 1996
and other new business  ventures all contributed to the  deterioration  in gross
margin and offset any increases  attributable  to new contract  awards.  Further
eroding  gross  margin  was a  $0.5  million  charge  representing  the  partial
write-off of certain purchased software as a result of net realization  concerns
and $0.4 million of residual losses recorded in conjunction  with the closure of
the Company's operations in Mexico

Interest  income for the second  quarter of 1997 was  increased  over the second
quarter  of 1996  due to  greater  interest  yields  on  higher  cash  and  cash
equivalent  balances resulting from the refinancing  activity early in the year.
However,  for the first half,  interest  income is only slightly higher than the
first  half of 1996,  due to  elevated  cash  balances  early in the prior  year
generated from the proceeds from the sale of the Commercial Aviation business.

Interest  expense was $3.9 million and $6.9  million for the second  quarter and
first half of 1997, respectively,  up from $2.5 million and $5.1 million for the
comparable  periods in 1996,  primarily due to increased  levels of indebtedness
and at a slightly higher effective rate of interest.

Other consists of the following major items (in thousands):

                               Three Months Ended            Six Months Ended
                              June 26,      June 27,       June 26,    June 27,
                              1997          1996           1997        1996
Amortization of costs
 in excess of net assets
 acquired                     $397          $377           $799        $755
Provision for non-
 recovery of receivables       292             -            293         106
Environmental costs
 associated with a
 business divested in 1985     125             -            125           -
Miscellaneous                  204           (93)            77         (11)

                            $1,018          $284         $1,294        $850


The  provision  for  income  taxes in 1997 and 1996 is based  upon an  estimated
annual  effective  rate,  including the impact of  differences  between the book
value of assets and liabilities  recognized for financial reporting purposes and
the basis recognized for tax purposes.

The Company had federal and state  deferred  tax assets of $8.0  million at June
26, 1997 that have not been  recognized  because of the uncertainty of achieving
future earnings in either the time frame or in the particular state jurisdiction
needed to realize the tax benefit.

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

  This item is  incorporated  herein by reference to Note 8 to the  Consolidated
Condensed  Financial  Statements  included elsewhere in this quarterly Report on
Form 10-Q.

ITEM 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

  Exhibit 11 - Computations of Earnings Per Common Share

(b)  Reports on Form 8-K

  None filed

                                   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 thereunto duly authorized.

                                     DYNCORP

Date:  August 11, 1997                    /s/ P. C. FitzPatrick

                                          P.C. FitzPatrick
                                          Senior Vice President
                                          and Chief Financial Officer

Date:  August 11, 1997                    /s/ J. J. Fitzgerald

                                          J.J. Fitzgerald
                                          Vice President and Controller

<PAGE>