FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


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

For the quarterly period ended June 27, 2002      Commission file number 1-3879

                                     DynCorp

             (Exact name of registrant as specified in its charter)

            Delaware                                        36-2408747
 (State of incorporation or organization)   (I.R.S. Employer Identification No.)

  11710 Plaza America Drive, Reston, Virginia                 20190
  (Address of principal executive offices)                 (Zip Code)

                                 (703) 261-5000
              (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. |X| Yes |_| No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

      Class                                 Outstanding as of August 12, 2002
      -----                                 ---------------------------------
 Common Stock, $0.10 par value                          10,575,692


<PAGE>


                            DYNCORP AND SUBSIDIARIES
                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 27, 2002

                                      INDEX


                                                                        Page


PART I.  FINANCIAL INFORMATION
-------------------------------

   Item 1.  Financial Statements (Unaudited)

     Consolidated Condensed Balance Sheets at
         June 27, 2002 and December 27, 2001 (Revised - See Note 2)     3-4

     Consolidated Condensed Statements of Operations for
         Three and Six Months Ended June 27, 2002 and
         June 28, 2001 (Revised - See Note 2)                           5

     Consolidated Condensed Statements of Cash Flows for
         Six Months Ended June 27, 2002  and
         June 28, 2001 (Revised - See Note 2)                           6

     Consolidated Statement of Stockholders' Equity for
          Six Months Ended June 27, 2002                                7

     Notes to Consolidated Condensed Financial Statements               8-17

   Item 2.  Management's Discussion and Analysis of Financial Condition
                     and Results of Operations                          18-28

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk  28

PART II.  OTHER INFORMATION

  Item 1.  Legal Proceedings                                            29-31

  Item 6.  Exhibits and Reports on Form 8-K                             31

Signatures                                                              32



<PAGE>


                          PART I. FINANCIAL INFORMATION

                            DYNCORP AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                       JUNE 27, 2002 AND DECEMBER 27, 2001
                                 (In thousands)
                                    UNAUDITED


<TABLE>
<CAPTION>

                                                                                                               December 27,
                                                                                         June 27,                 2001
                                                                                           2002           (Revised - See Note 2)
                                                                                           ----            ---------------------
<S>                                                                                     <C>               <C>
Assets
------
Current Assets:
 Cash and cash equivalents                                                              $   41,167                $   15,078
 Accounts receivable (net of allowance for doubtful accounts
        of $7,879 in 2002 and $6,637 in 2001)                                              351,878                   353,990
 Other current assets                                                                       50,047                    33,551
                                                                                         ---------                 ---------
     Total current assets                                                                  443,092                   402,619

Property and Equipment (net of accumulated depreciation
 and amortization of $27,127  in 2002 and $26,599 in 2001)                                  21,229                    20,959

Goodwill                                                                                   107,814                   103,185

Intangible Assets (net of accumulated amortization of
 $25,163 in 2002 and $24,454 in 2001)                                                       19,981                    27,240

Other Assets                                                                                29,487                    48,687
                                                                                         ---------                 ---------

Total Assets                                                                             $ 621,603                 $ 602,690
                                                                                         =========                 =========

</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  condensed
financial statements.

<PAGE>


                            DYNCORP AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                         JUNE 27, 2002 AND DECEMBER 27, 2001
                      (In thousands, except share amounts)
                                    UNAUDITED

<TABLE>
<CAPTION>

                                                                                                                December 27,
                                                                                          June 27,                 2001
                                                                                           2002            (Revised - See Note 2)
                                                                                           ----            ----------------------
<S>                                                                                    <C>                 <C>
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities:
 Notes payable and current portion of long-term debt                                     $  25,047                 $   20,123
 Accounts payable                                                                           29,827                     19,420
 Deferred revenue and customer advances                                                      5,531                      6,195
 Accrued liabilities                                                                       217,491                    206,718
                                                                                         ---------                -----------
     Total current liabilities                                                             277,896                    252,456

Long-Term Debt                                                                             249,099                    264,482

Other Liabilities and Deferred Credits                                                      49,210                     46,018

Contingencies and Litigation

Temporary Equity:
 Redeemable common stock at redemption value -
   ESOP shares, 7,077,838 and 7,142,510
     shares issued and outstanding in 2002 and 2001,
     respectively, subject to restrictions                                                 368,649                    326,368
   Other redeemable common stock, 286,217 shares issued
            and outstanding in 2002 and 2001                                                 7,944                      6,967

Stockholders' Equity:
 Common stock, par value ten cents per share, authorized 20,000,000 shares;
   issued 5,364,244 and 5,296,146 shares
   in 2002 and 2001, respectively                                                              536                        530
 Paid-in surplus                                                                           137,290                    138,052
 Accumulated other comprehensive loss                                                         (741)                    (1,081)
 Reclassification to temporary equity for redemption value
   greater than par value                                                                 (375,860)                  (332,596)
 Deficit                                                                                   (50,928)                   (55,438)
 Common stock held in treasury, at cost; 2,152,607 and
   2,196,853 shares in 2002 and 2001, respectively                                         (41,492)                   (43,068)
                                                                                         ---------                -----------

Total Liabilities and Stockholders' Equity                                               $ 621,603                 $  602,690
                                                                                         =========                ===========

</TABLE>
The  accompanying  notes are an integral  part of these  consolidated  condensed
financial statements.
<PAGE>


                            DYNCORP AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                    UNAUDITED
<TABLE>
<CAPTION>
                                                                  Three Months Ended               Six Months Ended
                                                                  ------------------               ----------------
                                                                              June 28,2001                    June 28, 2001
                                                               June 27,       (Revised -        June 27,     (Revised - See
                                                                 2002          See Note2)         2002           Note 2)
                                                                 ----          ----------         ----           -------
<S>                                                            <C>            <C>               <C>           <C>
Revenues                                                        $595,011        $476,900        $1,139,790         $916,973

Costs and expenses:
   Costs of services                                             562,518         449,657         1,077,700          865,252
   Corporate general and administrative                            7,216           7,199            14,834           14,026
   Interest income                                                  (172)           (159)             (240)            (453)
   Interest expense                                                6,963           8,032            14,156           16,409
   Amortization of intangibles of acquired companies                 519           1,738             1,037            3,649
   Other expense (other income)                                   18,081               6            19,873              (51)
                                                                 --------        --------        ----------        ---------

                 Total costs and expenses                        595,125         466,473         1,127,360          898,832

(Loss) earnings before income taxes and minority interest           (114)         10,427            12,430           18,141

       (Benefit) provision for income taxes                          (38)          4,082             4,251            7,136
                                                                 --------        --------        ----------        ---------

(Loss) earnings before minority interest                             (76)          6,345             8,179           11,005
       Minority interest                                           1,429             934             2,692            1,545
                                                                 --------        --------        ----------        ---------


Net (loss) earnings                                              $(1,505)        $ 5,411          $  5,487          $ 9,460
                                                                =========        ========        ==========        =========
       Accretion of other redeemable common stock to
           redemption value                                          496             568               977            1,119

Common stockholders' share of net (loss) earnings                $(2,001)        $ 4,843          $  4,510          $ 8,341
                                                                =========        ========        ==========        =========

Basic (loss) earnings per share                                  $ (0.19)        $  0.46          $   0.42          $  0.79
                                                                =========        ========        ==========        =========

Diluted (loss) earnings per share                                $ (0.19)        $  0.44          $   0.39          $  0.75
                                                                =========        ========        ==========        =========

Weighted average number of shares
   outstanding for basic earnings per share                       10,662          10,559            10,654           10,552
Weighted average number of shares
   outstanding for diluted earnings per share                     10,662          11,106            11,566           11,061

</TABLE>

The accompanying notes are an integral part of these consolidated condensed
financial statements.

<PAGE>


                            DYNCORP AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                    UNAUDITED
<TABLE>
<CAPTION>
                                                                                          Six Months Ended
                                                                                          ----------------
                                                                                                       June 28,
                                                                                                         2001
                                                                                      June 27,        (Revised -
                                                                                        2002          See Note 2)
                                                                                        ----          -----------
<S>                                                                                   <C>             <C>
Cash Flows from Operating Activities:
Common stockholders' share of net earnings                                             $ 4,510            $ 8,341
Adjustments to reconcile net earnings to net cash  provided by (used in)
operating activities:
    Depreciation and amortization                                                        7,757             10,325
    Accretion of other redeemable common stock to redemption value                         977              1,119
    Gain on sale of assets of DynServices.com                                            (130)                  -
    Deferred taxes                                                                      (4,819)                 -
    Non-cash net losses of unconsolidated affiliates                                     2,219                527
    Change in minority interest                                                          1,460                429
    Changes in pension asset and other postretirement benefit obligations                2,591              1,404
    Non-cash reserve of investment in unconsolidated
     affiliate                                                                          15,812                  -
    Other                                                                                (877)              (425)
Changes in current assets and liabilities, net of acquisitions
   and dispositions:
   (Increase) decrease in current assets and certain other assets except
     cash and cash equivalents                                                        (11,094)             10,388
   Increase (decrease) in current liabilities and certain other
     liabilities excluding  notes payable and current portion of                        21,713            (38,110)
     long-term debt                                                                  ---------           --------
         Cash provided by (used in) operating activities                                40,119             (6,002)
                                                                                     ---------           --------

Cash Flows from Investing Activities:
Proceeds from sale of property and equipment                                               211              2,942
Purchases of property and equipment                                                    (4,009)            (3,348)
Proceeds from investments in unconsolidated affiliates                                     307                 29
Proceeds from the sale of assets of DynServices.com                                        400                  -
Capitalized software costs                                                               (267)                  -
Other                                                                                        -              (489)
                                                                                    ----------           --------
         Cash used in investing activities                                             (3,358)              (866)
                                                                                    ----------           --------

Cash Flows from Financing Activities:
Payments on indebtedness                                                               (73,622)          (159,250)
Proceeds from debt issuance                                                             62,950            159,250
Other                                                                                                         142
                                                                                    ----------           --------
Cash (used in) provided by financing activities                                        (10,672)               142
                                                                                    ----------           --------

Net Increase (Decrease) in Cash and Cash Equivalents                                    26,089             (6,726)
Cash and Cash Equivalents at Beginning of the Period                                    15,078             12,954
                                                                                    ----------           --------
Cash and Cash Equivalents at End of the Period                                         $41,167            $ 6,228
                                                                                    ==========           ========

Supplemental Cash Flow Information:
Cash paid for income taxes                                                             $ 9,563            $ 7,270
                                                                                    ==========           ========
Cash paid for interest                                                                $ 13,011           $ 17,618
                                                                                    ==========           ========

</TABLE>

The accompanying notes are an integral part of these consolidated condensed
financial statements.

<PAGE>


                            DYNCORP AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 (In thousands)

                                    UNAUDITED
<TABLE>

<CAPTION>
                                                               Adjustment for
                                                              Redemption Value    Deficit                     Accumulated Other
                                        Common      Paid-in   Greater than Par  (Revised -   Treasury           Comprehensive
                                         Stock      Surplus         Value       See Note 2)   Stock                  Loss
                                        ------      -------         -----       -----------   -----                  ----
<S>                                      <C>       <C>            <C>           <C>          <C>                   <C>

Balance, December 27, 2001               $ 530     $138,052       $(332,596)    $(55,438)    $(43,068)             $(1,081)

Employee compensation plans
   (option exercises, restricted
    stock plan, incentive bonus)                    (1,739)                                     1,576
Reclassification to redeemable
   common stock                             6                       (42,287)
Accretion of other redeemable
   common stock to redemption value                    977             (977)       (977)
Adjustment to fair value of
   derivative financial instrument                                                                                    337
Translation adjustment and other                                                                                        3
Net earnings                                                                       5,487
                                         -----     --------        ----------   ----------   ---------              ------
Balance, June 27, 2002                   $ 536     $137,290        $(375,860)   $ (50,928)   $(41,492)              $(741)
                                         =====     ========        ==========   ==========   =========              ======

</TABLE>


The accompanying notes are an integral part of these consolidated condensed
financial statements.

<PAGE>

                            DYNCORP AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                  JUNE 27, 2002
                (Dollars in thousands, except per share amounts)
                                    UNAUDITED

Note 1.  Basis of Presentation and Significant Accounting Policies

     The Company has prepared the  unaudited  consolidated  condensed  financial
     statements  included  herein  pursuant to the rules and  regulations of the
     Securities  and  Exchange  Commission  ("SEC").   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.  It is
     recommended   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/A.  See Note 2 "Revision of
     Financial  Statements"  for  further  comments on the Form  10-K/A.  In the
     opinion of the Company,  the  unaudited  consolidated  condensed  financial
     statements  included herein reflect all  adjustments  (consisting of 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.  Certain amounts presented for
     prior periods have been reclassified to conform to the 2002 presentation.

     Contract Accounting

     Revenues for  cost-reimbursement  contracts  are  recorded as  reimbursable
     costs are incurred, including a pro-rata share of the contractual fees. For
     time-and-material  contracts,  revenue  is  recognized  to  the  extent  of
     billable rates times hours  delivered plus material and other  reimbursable
     costs   incurred.   For  long-term   fixed  price   production   contracts,
     units-of-delivery  is generally used as the  measurement  basis for revenue
     recognition.   Revenue  from  other  long-term  fixed  price  contracts  is
     recognized ratably over the contract period or by other appropriate methods
     to measure  services  provided.  Because  the  Company  assumes the risk of
     performing a fixed price contract at a set price, the failure to accurately
     estimate ultimate costs or to control costs during  performance of the work
     could result,  and in some  instances has resulted,  in reduced  profits or
     losses for such contracts.  Anticipated  losses on contracts are recognized
     when  identified.  Disputes  arise in the  normal  course of the  Company's
     business on projects  where the Company is  contesting  with  customers for
     collection of funds  because of events such as delays,  changes in contract
     specifications and questions of cost allowability or  collectibility.  Such
     disputes,  whether  claims or  unapproved  change  orders in the process of
     negotiation,  are recorded at the lesser of their  estimated net realizable
     value or actual costs incurred,  and only when  realization is probable and
     can be reliably estimated.  Claims against the Company are recognized where
     loss is considered probable and reasonably  determinable in amount. Because
     there are  estimates and judgments  involved,  the actual  results could be
     different from those estimates.

     Investment Recoverability

     The  Company  periodically  evaluates  the  recoverability  of  its  equity
     investments,  in accordance with Accounting  Principles  Board No. 18, "The
     Equity  Method of  Accounting  for  Investments  in Common  Stock,"  and if
     circumstances  arise where a loss in value is  considered  to be other than
     temporary,  the Company will record a write-down of excess investment cost.
     The   Company's   recoverability   analysis  is  based  on  the   projected
     undiscounted  cash flows of the  investments,  which is the lowest level of
     cash flow  information  available.  During the second  quarter of 2002, the
     Company  recorded  a  write-off  of  approximately  $15.8  million,   which
     represented  the net balance of a certain  investment,  which was stated in
     excess of its net realizable  value. The total charge was included in Other
     Expense  (Other  Income)  on  the  Consolidated   Condensed   Statement  of
     Operations at June 27, 2002.
<PAGE>


Note 2.  Revision of Financial Statements

     The Company has revised certain  information in the Consolidated  Condensed
     Financial  Statements  for the three and six  months  ended  June 28,  2001
     following  discussions  with  the  staff  of the SEC  regarding  accounting
     principles  articulated in Statement of Financial  Accounting Standards No.
     38, "Accounting for Preacquisition  Contingencies of Purchased Enterprises"
     ("SFAS No. 38") and Accounting  Principles  Board Opinion No. 16, "Business
     Combinations" ("APB 16") as they relate to the Company's acquisition of DIS
     from GTE  Corporation  in December  1999 and also  regarding  its method of
     accounting for long-term service contracts and the related applicability of
     percentage  of  completion  method to service  contracts  with the  Federal
     Government.

     When the Company purchased DIS in December 1999, issues existed relating to
     the  financial  performance  of certain DIS contracts  and  realization  of
     certain DIS receivables.  The Company  disclosed in its 1999 Form 10-K that
     its purchase accounting was preliminary. During 2000, the Company continued
     its  evaluation  of the  status of  contracts  at the date of  acquisition.
     Primarily  in  the  third  quarter  of  2000,  the  Company  finalized  its
     evaluation  of the impact of the future cash flows related to the contracts
     based on information obtained through that quarter and recorded an increase
     to  reserves  through  a  purchase  accounting  adjustment.   The  purchase
     accounting adjustment also resulted in an increase to goodwill and deferred
     tax assets. At the end of the third quarter of 2001, the Company reversed a
     significant  amount of the contract  loss  reserves as a result of entering
     into a  modification  of  one of the  contracts  acquired.  This  was  also
     accounted  for as a purchase  accounting  adjustment,  which  resulted in a
     decrease to goodwill and deferred tax assets.

     According to SFAS No. 38, the  allocation  period for  purchase  accounting
     adjustments  ends when the acquiring  enterprise  is no longer  waiting for
     information  that  it has  arranged  to  obtain  and  that is  known  to be
     available or obtainable at the acquisition  date. Items  identified  during
     the initial  purchase  period as  "preacquisition  contingencies"  shall be
     included in the allocation of the purchase price based on the fair value of
     the contingency. The Company previously believed that the allocation period
     related to these  preacquisition  contingencies was still open during those
     periods.  Although  the  Company  stated  in its 1999  Form  10-K  that the
     purchase price allocation was preliminary, after discussions with the SEC's
     staff,  the Company has  determined  that the  allocation  period for these
     preacquisition  contingencies  was no  longer  open in 2000 and  2001,  and
     therefore  the  adjustments  made should have been  accounted  for directly
     through the  statement of  operations,  rather than as a resolution  of the
     identified preacquisition contingencies, with a corresponding adjustment to
     the original purchase accounting.  As a result, the financial statements of
     the Company for the years ended  December 28,  2000,  and December 27, 2001
     have been revised to reflect the adjustments  directly in the statements of
     operations.  In addition,  the 1999 financial  statements have been revised
     for the  allocation of the DIS purchase price with respect to the valuation
     of an acquired contract in progress. The Company has filed its December 28,
     2000 and  December  27, 2001 Forms  10-K/A to reflect  these  changes.  The
     second  quarter and six months  ended June 28,  2001  common  stockholders'
     share of net earnings and diluted  share  effects are included in the table
     below as "As Revised."

     In 2002,  the Company also changed its method of  accounting  for long-term
     service  contracts.   Previously,   the  Company  followed  the  historical
     industry-wide practice of recording income from long-term service contracts
     using the percentage of completion  method, in  accordance  with the  AICPA
     "Audit and Accounting  Guide,  Audits of Federal  Government  Contractors,"
     which incorporates as  an appendix  AICPA  Statement of Position  No.  81-1
     "Accounting   for   Performance   of   Construction    Type   and   Certain
     Production-Type Contracts." Under this method, income is recognized ratably
     over the period of performance  based on the estimated profit margin at the
     completion of the contract. Such a method has resulted in deferral of costs
     or  profits  on  certain  contracts.  Following  discussions  with  its new
     accountants  and the SEC's staff,  it has been  determined that percentage-
     of-completion accounting should not be utilized and costs or profits should
     not be deferred in order to recognize a consistent  profit  margin on these
     long-
<PAGE>


     term contracts.  Profit on a given long-term service  contract,  therefore,
     could fluctuate from one accounting period to  another due to  fluctuations
     in the revenue earned and costs incurred in a given accounting period. As a
     result,the financial statements of the Company for the three and six months
     ended June 28, 2001 and for the three  months ended  March  28,  2002  have
     been revised to eliminate the deferral of such costs or profits on  service
     contracts.  The Company has  decided to  apply this change   retroactive to
     January 2000 and to the  acquistion of  DIS.  The Company also  intends  to
     amend its previously filed 2001 Form 10-K/A to revise the financial  state-
     ments for each of the fiscal years 2001, 2000 and 1999, as well as its Form
     10-Q for the three months ended March 28, 2002. The change did not have any
     effect on the Company's cash flows or revenues in 2002, 2001, 2000 or 1999.

     As a result of the revisions described above, reported common stockholders'
     share of net earnings increased by $1.0 million,  from $3.8 million to $4.8
     million for the three months ended June 28, 2001 and by $1.9 million,  from
     $6.5  million  to $8.3  million  for the six months  ended  June 28,  2001.
     Reported  common  stockholders'  share of net  earnings  per diluted  share
     increased  from $0.34 to $0.44 for the  three-month  period  ended June 28,
     2001 and from $0.59 to $0.75 for the six-month period ended June 28, 2001.

     The  impacts on the June 28,  2001  Statement  of  Operations  data for the
     revisions discussed above are presented in the table below:

<TABLE>
<CAPTION>

                                                    Three Months Ended (Unaudited)    Six Months Ended (Unaudited)
                                                    ------------------------------    ----------------------------
                                                      June 28,         June 28,         June 28,         June 28,
                                                        2001             2001             2001             2001
Statement of Operations Data:                        As Reported      As Revised       As Reported      As Revised
-----------------------------                        -----------      ----------       -----------      ----------
<S>                                                 <C>               <C>             <C>               <C>
Revenues                                              $476,900         $476,900         $916,973          $916,973
Cost of services                                       451,064          449,657          867,731           865,252
Earnings before income taxes
and minority interest                                    8,630           10,427           14,882            18,141
Common stockholders' share of
net earnings                                             3,819            4,843            6,483             8,341
Common stockholders' share of net earnings
per common share:
Basic earnings per share                             $    0.36         $   0.46         $   0.61          $   0.79
Diluted earnings per share                           $    0.34         $   0.44         $   0.59          $   0.75

</TABLE>

<PAGE>

     The impact of the revisions discussed above on the 2001 quarterly financial
     data and first quarter 2002 is presented in the tables below:
<TABLE>
<CAPTION>
                                                                        2001 Quarters
                                                                         (Unaudited)
                                                                         -----------
                                       First Quarter        Second Quarter               Third Quarter          Fourth Quarter
                                       -------------        --------------               -------------          --------------
Statement of Operations Data:      As           As           As           As           As          As          As           As
-----------------------------   Reported     Revised      Reported     Revised      Reported    Revised     Reported      Revised
                                --------     -------      --------     -------      --------    -------     --------      -------
<S>                            <C>          <C>          <C>          <C>          <C>         <C>         <C>           <C>
Revenues                       $440,073     $440,073     $476,900     $476,900     $504,113    $504,113    $539,289      $539,289
Cost of Services                416,667      415,595      451,064      449,657      471,675     429,000     516,881       516,359
Earnings before
income taxes and
minority interest                 6,252        7,714        8,630       10,427       16,402      59,467      24,330        24,812

Common
stockholders' share               2,665        3,498        3,819        4,843        9,058      36,678      15,066        15,548
of  net earnings
Common stockholders'
share of  net
earnings per common share:
Basic earnings per share       $   0.25      $  0.33      $  0.36      $  0.46      $  0.86     $  3.47     $  1.42       $  1.47
Diluted earnings per share     $   0.24      $  0.31      $  0.34      $  0.44      $  0.82     $  3.30     $  1.35       $  1.40
Balance Sheet Data:
-------------------
Accounts receivable, net of
allowance for doubtful
accounts                       $313,558     $314,825     $321,643     $322,910     $315,386    $316,653    $353,990      $353,990
Other current assets             40,788       33,019       37,356       31,070       40,542      33,259      39,436        33,551
Intangible assets, net
of accumulated                  178,390      132,346      175,548      129,893      150,270     129,030     126,107       130,425
amortization
Other assets                     49,925       48,178       46,804       45,212       38,205      37,388      49,330        48,687
Total assets                    618,588      564,295      612,232      559,966      583,411     555,337     604,900       602,690
Accrued liabilities             156,342      154,834      159,807      159,033      163,428     162,058     209,269       206,718
Other liabilities
and deferred credits             88,038       85,590       88,897       86,719       46,300      38,782      45,251        46,018
Deficit                         (62,170)    (112,508)     (58,352)    (107,667)     (49,292)    (68,477)    (55,012)      (55,438)

</TABLE>

<TABLE>
<CAPTION>
                                   (Unaudited)
                       First Quarter Ended March 28, 2002
                       ----------------------------------
                                                          As             As
Statement of Operations Data:                          Reported        Revised
-----------------------------                          --------        -------
<S>                                                    <C>             <C>
Revenues                                               $544,779        $544,779
Cost of Services                                        514,341         515,182
Earnings before income taxes and minority
interest                                                 13,385          12,544
Common stockholders' share of net earnings                7,035           6,511
Common  stockholders' share of  net earnings
per common share:
Basic earnings per share                                $ 0.66          $ 0.61
Diluted earnings per share                              $ 0.61          $ 0.57
Balance Sheet Data:
-------------------
Other current assets                                   $ 56,199         $49,357
Goodwill                                                103,496         107,814
Intangible assets, net of
accumulated amortization                                 20,835          20,835
Other assets                                             48,448          47,950
Total assets                                            617,007         613,985
Accrued liabilities                                     202,758         199,919
Deficit                                                 (47,977)        (48,927)
</TABLE>

<PAGE>

     The Form 10-K/A for 2001 as previously filed, reflects the revision for
     issues related to SAB 38 and APB 16, but does not reflect the percentage of
     completion  issue.  The table below reflects the impacts for the percentage
     of completion  issue on fiscal years 2001 and 2000. The Company  intends to
     amend its Form  10-K/A for fiscal  year 2001,  which will  include  amended
     financial  information for each affected quarter in 2001 and 2000.  Because
     the Company's prior  independent  accountants,  Arthur Andersen LLP, are no
     longer servicing the marketplace, the revisions will require the Company to
     engage  new  independent  accountants  to  audit  the  Company's  financial
     statements for fiscal years 2001, 2000 and 1999;  thus, the Company may not
     be in a position to make the amended filings for several months.
<TABLE>
<CAPTION>
                                                                              (Unaudited)
                                                                              -----------

                                                   2001 As              2001 As              2000 As              2000 As
                                                  Reported              Revised             Reported              Revised
Statement of Operations Data:                 in the Form 10-K/A                        in the Form 10-K/A
-----------------------------                 ------------------        -------         ------------------        -------
<S>                                             <C>                  <C>                  <C>                  <C>
Revenues                                        $1,960,375           $1,960,375           $1,809,109           $1,809,109
Cost of Services                                 1,813,991            1,810,611            1,781,825            1,784,285
Earnings (loss) before income taxes (benefit)
and minority interest                               99,200              102,421             (56,233)             (58,853)
Common stockholders' share of  net earnings
(loss)                                              58,522               60,567             (40,654)             (42,357)
Common stockholders' share of  net earnings
(loss) per common share:
Basic earnings (loss) per share                 $     5.54           $     5.74           $   (3.88)           $   (4.04)
Diluted earnings (loss) per share               $     5.27           $     5.45           $   (3.88)           $   (4.04)
Balance Sheet Data:
-------------------
Accounts receivable, net of allowance for
doubtful accounts                               $  353,990           $  353,990           $  335,621           $3  36,813
Prepaid income taxes                                 2,126                1,887                1,139                1,139
Other current assets                                37,310               31,664               34,707               25,234
Intangible assets, net of accumulated
amortization                                       126,107              130,425              130,766              135,244
Other assets                                        49,330               48,687               40,203               38,942
Total assets                                       604,900              602,690              593,495              588,431
Accrued income taxes                                   603                  603                6,474                6,474
Accrued liabilities                                208,666              206,115              200,006              197,413
Deferred income taxes                                8,648                9,415                    -                    -
Other liabilities and deferred credits              36,603               36,603               87,566               87,566
Deficit                                            (55,012)             (55,438)            (113,534)            (116,006)
</TABLE>


Note 3.  Other Current Assets

     Other  current  assets as of June 27, 2002 and December  27, 2001  included
     $20.8  million and $8.7  million of  inventories  on  long-term  contracts,
     respectively.

Note 4.  Accrued Liabilities

     Accrued  liabilities  as of June 27, 2002 and  December  27, 2001  included
     $119.3 million and $106.1 million of accrued salaries, respectively.

Note 5.  Redeemable Common Stock

     Effective  January 1, 2001,  the  Company  established  two new plans:  the
     Savings and  Retirement  Plan and the Capital  Accumulation  and Retirement
     Plan  (collectively,  the "Savings Plans").  At the same time, the Employee
     Stock  Ownership  Plan ("ESOP") was merged into the two plans.  The Company
     stock accounts of participants  in the ESOP were  transferred to one or the
     other of the Savings Plans, and the Savings Plans
<PAGE>

     participants  have the same  distribution  and put  rights  for these  ESOP
     shares as they had in the ESOP. All rights and  obligations of the ESOP re-
     main intact in the new plans.  In  accordance  with  the  Employee  Retire-
     ment Income Security  Act  regulations  and the Savings  Plans'  documents,
     the Company is obligated,   unless the Savings  Plans' Trust  purchases the
     shares, to purchase certain distributed  common  stock shares,  transferred
     from the former ESOP, from former participants in the ESOP on retirement or
     termination at fair value as  long as the  Company's  common  stock is  not
     publicly traded.  However, the Company  is  permitted to  defer put options
     if,  under  Delaware law, the capital of the Company would be impaired as a
     result of such repurchase.

     On December 10, 1999,  the Company  entered into an agreement  with various
     financial  institutions  for the sale of  426,217  shares of the  Company's
     stock and Subordinated  Notes. Under a contemporaneous  registration rights
     agreement,  the  holders of these  shares of stock will have a put right to
     the Company  commencing  on  December  10,  2003,  at a price of $40.53 per
     share,  unless one of the following  events has occurred prior to such date
     or the  exercise of the put right:  (1) an initial  public  offering of the
     Company's common stock has been  consummated;  (2) all the Company's common
     stock has been sold; (3) all the Company's  assets have been sold in such a
     manner that the holders have received cash  payments;  or (4) the Company's
     common  stock  has  been  listed  on  a  national  securities  exchange  or
     authorized  for  quotation on the Nasdaq  National  Market System for which
     there is a public market of at least $100 million for the Company's  common
     stock.  If,  at the time of the  holders'  exercise  of the put  right  the
     Company is unable to pay the put price  because of  financial  covenants in
     loan agreements or other  provisions of law, the Company will not honor the
     put at that  time,  and the put price will  escalate  for a period of up to
     four years,  at which time the put must be  honored.  The  escalation  rate
     increases during such period until the put is honored,  and the rate varies
     from an annualized factor of 22% for the first quarter after the put is not
     honored up to 52% during the sixteenth quarter. The annual accretion in the
     fair  value  of  these  shares  is  reflected  as  a  reduction  of  common
     stockholders'  share of net  earnings  on the  consolidated  statements  of
     operations.

     Common stock which is redeemable has been reflected as Temporary  Equity at
     the  redemption  value  at each  balance  sheet  date and  consists  of the
     following:
<TABLE>
<CAPTION>
                                                           Balance at                                    Balance at
                                        Redeemable          June 27,                      Redeemable    December 27,
                            Shares        Value               2002           Shares         Value           2001
                            ------        -----               ----           ------         -----          -----
<S>                      <C>          <C>                  <C>             <C>               <C>        <C>
      ESOP Shares        2,954,885       $53.25            $157,348        2,995,783         $47.00     $140,802
                         4,122,953       $51.25             211,301        4,146,727         $44.75      185,566
                         ---------                         --------        ---------                    --------

                         7,077,838                         $368,649        7,142,510                    $326,368
                         =========                         ========        =========                    ========

      Other Shares         286,217       $27.76            $  7,944          286,217         $24.34     $  6,967
                         =========                         ========        =========                    ========

</TABLE>

Note 6.  Income Taxes

     The  provisions  for income taxes in 2002 and 2001 are based upon estimated
     effective   tax  rates.   These  rates  include  the  impact  of  permanent
     differences between the book bases of assets and liabilities recognized for
     financial reporting purposes and the bases recognized for tax purposes.

Note 7.  Earnings Per Share ("EPS")

     The following table sets forth (in thousands) the  reconciliation of shares
     for basic EPS to shares for diluted EPS.  Basic EPS is computed by dividing
     common  stockholders'  share of net earnings by the weighted average number
     of common shares outstanding and contingently issuable shares. The weighted
     average  number of common shares  outstanding  includes  issued shares less
     shares held in treasury and any unallocated  Savings' Plans shares.  Shares
     earned  and  vested  but  unissued  under  the  Restricted  Stock  Plan are
     contingently  issuable  shares  whose  conditions  for  issuance  have been
     satisfied and as such have been included in the  calculation  of basic EPS.
     Diluted EPS is computed similarly except the denominator is
<PAGE>

     increased  to  include  the  weighted   average  number  of  stock  options
     outstanding, assuming the treasury stock method. The diluted loss per share
     for the three months ended June 27, 2002 was computed in the same manner as
     the basic loss per share, since adjustments related to the dilutive effects
     of stock options would have been antidilutive.

<TABLE>
<CAPTION>

                                                                 Three Months Ended      Six Months Ended
                                                                 ------------------      ----------------
                                                           June 27,      June 28,      June 27,        June 28,
                                                             2002          2001          2002           2001
                                                             ----          ----          ----           ----
<S>                                                           <C>           <C>          <C>             <C>
Weighted average shares outstanding for basic EPS             10,662        10,559       10,654          10,552
   Effect of dilutive securities:
      Stock options                                               -            547          912             509
                                                              ------        ------       ------          ------
Weighted average shares outstanding for diluted EPS           10,662        11,106       11,566          11,061
                                                              ======        ======       ======          ======
</TABLE>

Note 8.  Goodwill and Other Intangible Assets - Adoption of Statement 142

     The Company  has  adopted  SFAS No.  142,  "Goodwill  and Other  Intangible
     Assets,"  beginning  December 28, 2001,  the first day of fiscal 2002.  The
     provisions of SFAS No. 142 eliminate  amortization  of goodwill and require
     an impairment  assessment at least annually by applying a fair-value  based
     test.  Accordingly,  the Company has  eliminated  amortization  in 2002 for
     goodwill, which includes assembled workforce of $4.6 million as of June 27,
     2002 and December 27, 2001  previously  classified as an intangible  asset.
     The total carrying amount for goodwill is $107.8 million and $103.2 million
     as of June 27, 2002 and December 27,  2001,  respectively.  The Company has
     identified  the  reporting  units to be tested for the goodwill  impairment
     test,  which will be measured as of the  beginning of the fiscal year.  The
     Company has completed the first step of the transitional impairment test in
     accordance  with the  provisions of SFAS No. 142. The Company has concluded
     that there has been no  impairment  of such assets as of the  beginning  of
     fiscal year 2002.

     The Company's  contract backlog,  patent,  and core development  intangible
     assets are still subject to amortization  under SFAS No. 142.  Amortization
     for the  first  half of 2002  for  these  intangible  assets  totaled  $1.0
     million.  Estimated  aggregate  amortization  expense for these  intangible
     assets for the next five  years  totals:  $2.1  million in each of 2002 and
     2003,   $2.0  million  in  2004,   and  $0.5  million  in  2005  and  2006,
     respectively.  The following table presents these intangible assets, net of
     accumulated amortization, as of June 27, 2002 that are required to continue
     to be amortized under SFAS No. 142:

<TABLE>
<CAPTION>
Intangible Assets, Net of                                 Gross                     Accumulated
  Accumulated Amortization                           Carrying Amount                Amortization
  ------------------------                           ---------------                ------------
<S>                                                      <C>                          <C>
Contracts acquired                                       $ 1,703                      $ 1,543
Patent                                                     7,100                        1,845
Core and developed technology                              7,700                        3,955
                                                           -----                        -----
                                                         $16,503                      $ 7,343
                                                         =======                      =======
</TABLE>

<PAGE>


     The table above excludes  capitalized  software that is not covered by SFAS
     No. 142. Capitalized software, net of accumulated amortization totals $10.8
     million  and  $12.4  million  as  of  June  27,  2002  and  December  2001,
     respectively. The following table presents adjusted net income and earnings
     per share for the three and six months ended June 28, 2001,  in  comparison
     to the results for the three and six months  ended June 27,  2002,  to show
     what the impact  would  have been if SFAS No.  142 had been  adopted at the
     beginning of fiscal 2001. The adjusted  results  presented below are net of
     taxes.
<TABLE>
<CAPTION>

                                                               Three Months Ended                   Six Months Ended
                                                               ------------------                   ----------------
                                                                              June 28, 2001                      June 28, 2001
                                                               June 27,         (Revised -           June 27,     (Revised -
                                                                 2002          See Note 2)              2002      See Note 2)
                                                                 ----          -----------              -----     -----------
<S>                                                            <C>                  <C>               <C>              <C>
Common stockholders' share of net (loss) earnings              $  (2,001)           $ 4,843           $ 4,510          $ 8,341
Add back: Goodwill amortization                                        -                564                 -            1,089
Add back: Assembled workforce amortization                             -                133                 -              267
                                                               ---------            --------          -------          -------
Adjusted  common  stockholders'  share of net  (loss)
earnings                                                       $  (2,001)           $ 5,540           $ 4,510          $ 9,697
                                                               ==========           =======           =======          =======

Basic earnings per share:
Common stockholders' share of net (loss) earnings              $   (0.19)          $   0.46        $     0.42        $    0.79
Goodwill amortization                                                  -               0.05                 -             0.10
Assembled workforce amortization                                       -               0.01                 -             0.03
                                                               ---------          ---------        ----------        ---------
Adjusted  common  stockholders'  share of net  (loss)
earnings                                                       $   (0.19)          $   0.52        $     0.42        $    0.92
                                                               ==========          ========        ==========        =========

Diluted earnings per share:
Common stockholders' share of net (loss) earnings              $   (0.19)          $   0.44        $     0.39        $    0.75
Goodwill amortization                                                  -               0.05                 -             0.10
Assembled workforce amortization                                       -               0.01                 -             0.03
                                                               ---------           --------        ----------        ---------
Adjusted  common  stockholders'  share of net  (loss)
earnings                                                       $   (0.19)          $   0.50        $     0.39        $    0.88
                                                               ==========          ========        ==========        =========

</TABLE>

Note 9.  Recently Issued Accounting Pronouncements

     In April 2002,the Financial Accounting Standards Board ("FASB")issued  SFAS
     No. 145,  "Rescission of FASB  Statements  No. 4, 44, and 64,  Amendment of
     FASB  Statement  No. 13 and Technical  Corrections."  SFAS No. 145 rescinds
     SFAS No. 4, "Reporting Gains and Losses from Extinguishment of Debt," which
     required  that all  gains  and  losses  from  extinguishment  of debt to be
     aggregated and classified as an  extraordinary  item if material.  SFAS No.
     145  requires  that  gains  and  losses  from  extinguishment  of  debt  be
     classified  as  extraordinary  only if they  meet  criteria  in  Accounting
     Principles Board Opinion No. 30, thus distinguishing  transactions that are
     part of recurring operations from those that are unusual or infrequent,  or
     that meet the criteria for  classification  as an extraordinary  item. SFAS
     No. 145 amends SFAS No. 13, "Accounting for Leases",  to require that lease
     modifications   that  have  economic  effects  similar  to   sale-leaseback
     transactions  be  accounted  for  in  the  same  manner  as  sale-leaseback
     transactions.  In addition,  SFAS No. 145 rescinds SFAS No. 44, "Accounting
     for Intangible Assets of Motor Carriers," and SFAS No. 64, "Extinguishments
     of Debt Made to Satisfy Sinking-Fund Requirements," which are not currently
     applicable to the Company. The provisions of SFAS No. 145 as they relate to
     the rescission of SFAS No. 4 shall be applied in fiscal year 2003.  Certain
     provisions related to SFAS No. 13 are effective for transactions
<PAGE>

     occurring  after May 15, 2002.  Management  does not expect SFAS No. 145 to
     have a material impact on the Company's  results of operations or financial
     condition.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
     Associated with Exit or Disposal  Activities." SFAS No. 146 requires that a
     liability  for a cost  associated  with  an exit or  disposal  activity  be
     recognized  when the  liability  is  incurred  and states  that an entity's
     commitment  to a plan, by itself,  does not create a present  obligation to
     others  that  meets  the  definition  of a  liability.  SFAS  No.  146 also
     establishes that fair value is the objective for initial measurement of the
     liability.  Provisions  of SFAS No. 146 are  effective for exit or disposal
     activities   that  are  initiated  after  December  31,  2002,  with  early
     application  encouraged.  Management does not expect SFAS No. 146 to have a
     material  impact  on the  Company's  results  of  operations  or  financial
     condition.

Note 10.  Business Segments

     Effective January 2002, the Company  realigned its five strategic  business
     segments into four segments.  DynCorp Information and Enterprise Technology
     ("DI&ET")  and DynCorp  Information  Systems LLC ("DIS") were combined into
     one strategic business segment,  DynCorp Systems and Solutions ("DSS"),  in
     order to structure one business segment  providing  integrated  information
     technology and business  functional  outsourcing to the federal government.
     The business segment  information for 2001 has been restated to give effect
     to this  change.  DSS  provides  a wide  range  of  information  technology
     services   and  other   professional   services   including   network   and
     communications  engineering,  government operational outsourcing,  security
     and intelligence  programs.  DynCorp  International LLC ("DI") operates the
     Company's overseas business,  including  information  technology solutions,
     technical  services,  and worldwide  maintenance  support to U.S.  military
     aircraft.  DynCorp  Technical  Services  ("DTS") provides a wide variety of
     specialized technical services including aviation services, range technical
     services, base operations, and logistics support.  AdvanceMed ("ADVMED") is
     structured as a  business-to-business,  eHealth  decision  support solution
     organization  and provides an integrated  set of decision  support tools to
     meet the needs of healthcare payers and providers.

<PAGE>

     Revenues,  operating profit and identifiable  assets for the Company's four
     business  segments  for  2002  and the  comparable  periods  for  2001  are
     presented below:
<TABLE>
<CAPTION>

                                                                   Three Months Ended                   Six Months Ended
                                                                   ------------------                   ----------------
                                                                             June 28, 2001                      June 28, 2001
                                                           June 27,         (Revised - See          June 27,   (Revised - See
                                                             2002             Note 2) (c)             2002        Note 2) (c)
                                                             ----             -----------             ----        -----------
<S>                                                        <C>              <C>                     <C>          <C>
Revenues
--------
   DSS                                                     $242,076             $201,426             $ 467,672        $390,948
   DI                                                       178,620              131,316               343,008         249,884
   DTS                                                      161,309              128,097               301,964         245,191
   ADVMED                                                    13,006               16,061                27,146          30,950
                                                            -------               ------            ----------        --------
                                                           $595,011             $476,900            $1,139,790        $916,973
                                                           ========             ========            ==========        ========
Operating Profit (Loss) (a)
-----------------------
   DSS                                                     $ 17,142             $ 12,171             $  33,128        $ 22,914
   DI                                                        10,741                8,424                17,889          16,862
   DTS                                                        6,157                4,281                12,267           8,667
   ADVMED                                                       114                1,399                 (619)           1,696
                                                            -------               ------                ------        --------
                                                             34,154               26,275                62,665          50,139

 Corporate general and administrative                         7,216                7,199                14,834          14,026
 Interest income                                               (172)                (159)                 (240)          (453)
 Interest expense                                             6,963                8,032                14,156          16,409
 Goodwill amortization                                            -                  959                     -           1,850
 Amortization of other intangibles of acquired companies        519                  779                 1,037           1,799
 Minority interest included in operating profit              (1,429)                (934)               (2,692)        (1,545)
 Other miscellaneous (b)                                     21,171                  (28)               23,140            (88)
                                                            -------                ------             --------         -------
 (Loss) earnings before income taxes and minority interest   $ (114)            $ 10,427              $ 12,430         $18,141
                                                            =======             ========              ========         =======

</TABLE>

<TABLE>
<CAPTION>

                                                                                    December 27,
                                                                  June 27,
                                                                    2002              2001 (c)
                                                                    ----              --------
<S>                                                              <C>                 <C>
  Identifiable Assets
  -------------------
     DSS                                                          $277,172            $290,398
     DI                                                             96,802              94,241
     DTS                                                           139,149             109,763
     ADVMED                                                         23,370              26,880
     Corporate                                                      85,110              81,408
                                                                 ---------           ---------
                                                                  $621,603           $ 602,690
                                                                 =========           =========
</TABLE>


     (a)  Defined as the excess of revenues over operating  expenses and certain
          non-operating expenses.
     (b)  Other  miscellaneous  includes  $15.8  million  for the  reserve of an
          investment  in an  unconsolidated  affiliate in the second  quarter of
          2002 (see Note 1).
     (c)  Data has been revised to give  recognition  to the current  reportable
          segment structure.


Note 11.  Contingencies and Litigation

          The Company is a  guarantor  on a fixed price  services  contract  for
          non-emergency transportation brokerage services.  Management perceives
          the exposure of financial  losses on this guarantee  could possibly be
          in the range of $4.0  million to $12.5  million  over the next  twelve
          months.  At this  time,  management  does not  believe  a  reserve  is
          required  because no claim has been asserted and one is not considered
          probable.
<PAGE>


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

General
-------
The following  discussion  and analysis  provides  information  that  management
believes is relevant to an  assessment  and  understanding  of the  consolidated
results of operations  and financial  condition of DynCorp and its  subsidiaries
(collectively, the "Company"). The discussion should be read in conjunction with
the interim condensed  consolidated  financial  statements and notes thereto and
the Company's annual report on Form 10-K/A for the year ended December 27, 2001.

Results of Operations
---------------------
The  Company  provides  diversified  management,   technical,   engineering  and
professional  services  primarily to U.S.  Government  customers  throughout the
United States and  internationally.  The  Company's  customers  include  various
branches  of the U.S.  Departments  of  Defense,  Energy,  State,  Justice,  and
Treasury,  the National Aeronautics and Space Administration,  and various other
U.S.  state and local  government  agencies,  commercial  clients,  and  foreign
governments.  Generally,  these services are provided under both prime contracts
and  subcontracts,   which  may  be  fixed  price,   time-and-material  or  cost
reimbursement  contracts depending on the work requirements and other individual
circumstances.  The following  discusses the Company's results of operations and
financial  condition  for the three and six months  ended June 27,  2002 and the
comparable periods for 2001.

Revision of Financial Statements
--------------------------------
The  Company has  revised  certain  information  in the  Consolidated  Condensed
Financial  Statements for the three and six months ended June 28, 2001 following
discussions  with  the  staff  of  the  SEC  regarding   accounting   principles
articulated in Statement of Financial  Accounting  Standards No. 38, "Accounting
for Preacquisition  Contingencies of Purchased  Enterprises" ("SFAS No. 38") and
Accounting  Principles Board Opinion No. 16, "Business  Combinations" ("APB 16")
as they  relate to the  Company's  acquisition  of DIS from GTE  Corporation  in
December 1999 and also regarding its method of accounting for long-term  service
contracts and the related  applicability  of percentage of completion  method to
service contracts with the Federal Government.

When the Company  purchased DIS in December 1999, issues existed relating to the
financial  performance  of certain DIS contracts and  realization of certain DIS
receivables.  The  Company  disclosed  in its 1999 Form  10-K that its  purchase
accounting was preliminary. During 2000, the Company continued its evaluation of
the  status of  contracts  at the date of  acquisition.  Primarily  in the third
quarter of 2000,  the  Company  finalized  its  evaluation  of the impact of the
future cash flows related to the contracts based on information obtained through
that quarter and recorded an increase to reserves through a purchase  accounting
adjustment.  The purchase accounting  adjustment also resulted in an increase to
goodwill and deferred tax assets.  At the end of the third quarter of 2001,  the
Company reversed a significant  amount of the contract loss reserves as a result
of entering into a modification of one of the contracts acquired.  This was also
accounted for as a purchase accounting adjustment,  which resulted in a decrease
to goodwill and deferred tax assets.

According  to SFAS  No.  38,  the  allocation  period  for  purchase  accounting
adjustments  ends  when  the  acquiring  enterprise  is no  longer  waiting  for
information  that it has arranged to obtain and that is known to be available or
obtainable at the acquisition date. Items identified during the initial purchase
period as "preacquisition  contingencies" shall be included in the allocation of
the  purchase  price  based on the fair value of the  contingency.  The  Company
previously  believed that the allocation period related to these  preacquisition
contingencies  was still open during those periods.  Although the Company stated
in its 1999 Form 10-K that the purchase price allocation was preliminary,  after
discussions with the SEC's staff, the Company has determined that the allocation
period for these  preacquisition  contingencies  was no longer  open in 2000 and
2001,
<PAGE>

and  therefore  the  adjustments  made should have been  accounted  for directly
through  the  statement  of  operations,  rather  than  as a  resolution  of the
identified preacquisition contingencies,  with a corresponding adjustment to the
original  purchase  accounting.  As a result,  the  financial  statements of the
Company for the years ended  December 28, 2000,  and December 27, 2001 have been
revised to reflect the adjustments directly in the statements of operations.  In
addition,  the 1999 financial statements have been revised for the allocation of
the DIS purchase price with respect to the valuation of an acquired  contract in
progress.  The Company has filed its  December  28, 2000 and  December  27, 2001
Forms 10-K/A to reflect these changes.

In 2002, the Company also changed its method of accounting for long-term service
contracts.   Previously,  the  Company  followed  the  historical  industry-wide
practice  of  recording  income  from  long-term  service  contracts  using  the
percentage  of  completion  method,  in  accordance  with the AICPA  "Audit  and
Accounting Guide, Audits of Federal Government  Contractors," which incorporates
as an appendix AICPA Statement of Position No. 81-1  "Accounting for Performance
of Construction Type and Certain Production-Type  Contracts." Under this method,
income  is  recognized  ratably  over the  period  of  performance  based on the
estimated  profit margin at the  completion  of the contract.  Such a method has
resulted  in  deferral  of costs or  profits  on  certain  contracts.  Following
discussions with its new accountants and the SEC's staff, it has been determined
that  percentage  of completion  accounting  should not be utilized and costs or
profits should not be deferred in order to recognize a consistent  profit margin
on these  long-term  contracts.  Profit on a given long-term  service  contract,
therefore,  could  fluctuate  from  one  accounting  period  to  another  due to
fluctuations  in the revenue  earned and costs  incurred  in a given  accounting
period. As a result,  the financial  statements of the Company for the three and
six months  ended June 28,  2001 and for the three  months  ended March 28, 2002
have been revised to eliminate  the deferral of such costs or profits on service
contracts.  The Company has decided to apply this change  retroactive to January
2000 and to the  acquisition  of DIS.  The  Company  also  intends  to amend its
previously filed 2001 Form 10-K/A to revise the financial statements for each of
the fiscal  years  2001,  2000 and 1999,  as well as its Form 10-Q for the three
months ended March 28, 2002. The change did not have any effect on the Company's
cash flows or revenues in 2002, 2001, 2000 or 1999.

As a result of the revisions  described  above,  reported  common  stockholders'
share of net  earnings  increased  by $1.0  million,  from $3.8  million to $4.8
million for the three months ended June 28, 2001 and by $1.9 million,  from $6.5
million to $8.3 million for the six months ended June 28, 2001.  Reported common
stockholders'  share of net earnings per diluted share  increased  from $0.34 to
$0.44 for the three-month period ended June 28, 2001 and from $0.59 to $0.75 for
the six-month period ended June 28, 2001.

The impacts on the June 28, 2001  statement of operations  data,  2001 quarterly
financial data and the March 28, 2002 financial data for the revisions discussed
above  are  presented  in  Note  2 to  these  Consolidated  Condensed  Financial
Statements.

The Form 10-K/A for 2001, as previously filed,  reflects the revision for issues
related to SAB 38 and APB 16, but does not reflect the  percentage of completion
issue.  See table that  reflects the impacts for the  percentage  of  completion
issue on fiscal  years 2001 and 2000 in Note 2 to these  Consolidated  Condensed
Financial  Statements.  The Company  intends to amend its Form 10-K/A for fiscal
year 2001,  which will include amended  financial  information for each affected
quarter in 2001 and 2000.  Because the Company's prior independent  accountants,
Arthur Andersen LLP, are no longer servicing the marketplace, the revisions will
require the Company to engage new independent accountants to audit the Company's
financial statements for fiscal years 2001, 2000 and 1999; thus, the Company may
not be in a position to make the amended filings for several months.

Effective  January  2002,  the Company  realigned  its five  strategic  business
segments into four  segments.  DynCorp  Information  and  Enterprise  Technology
("DI&ET")  and DynCorp  Information  Systems LLC ("DIS") were  combined into one
strategic business segment,  DynCorp Systems and Solutions ("DSS"),  in order to
structure one business segment providing integrated  information  technology and
business functional outsourcing
<PAGE>

to the federal government (see Note 10 to the Consolidated  Condensed  Financial
Statements)  and therefore the DIS results of operations and financial  position
have been included in the DSS financial information.

Revenues and Operating Profit
-----------------------------
Revenues for the three months ended June 27, 2002  increased by $118.1  million,
or 24.8%, to $595.0 million as compared to $476.9 million for the same period in
2001.  Revenues  for the six months  ended  June 27,  2002  increased  by $222.8
million,  or 24.3%,  to $1.1 billion as compared to $917.0  million for the same
period in 2001.  Operating  profit was $34.2  million and $62.7  million for the
three and six months ended June 27, 2002,  increases of $7.9 million,  or 30.0%,
and  $12.5  million,  or  25.0%,  respectively  from the same  periods  in 2001.
Operating  profit is defined as the excess of revenues over cost of services and
certain  non-operating income and expenses,  which are included in Other Expense
(Other Income) on the Consolidated  Condensed Statements of Operations.  See the
"Revision  of  Financial  Statements"  discussion  above  and  in  Note 2 to the
Consolidated  Condensed Financial Statements for the impacts on operating profit
from revised loss  estimates on a contract  acquired with the purchase of DIS in
December  1999 and from the  percentage  of  completion  accounting  issue.  The
increase in both revenues and  operating  profit was  attributable  primarily to
several new contract wins and increased tasking on existing contracts. Operating
profits  grew faster than  revenues  due to losses on several  contracts  in the
first half of 2001 that did not continue in the first half of 2002 and increased
profit due to  additional  revenue in the first half of 2002 for contract  costs
that were recognized in a prior period.

DynCorp Systems and Solutions  ("DSS") had revenues of $242.1 million and $467.7
million in the three and six months ended June 27, 2002, compared to revenues of
$201.4  million and $390.9 million in the same periods in 2001. The increases in
revenue in the second quarter and first half of 2002 of $40.7 million, or 20.2%,
and $76.7 million, or 19.6%,  respectively  resulted primarily from the start-up
of two new contracts and increased  tasking on existing  contracts.  The two new
contracts  consisted  of one  which  started  in the third  quarter  of 2001 for
updated office automation,  including desktop computers,  servers, and networks,
for the Federal Bureau of Investigation  ("FBI") and which provided the majority
of  the  increase  in  revenues,  and  the  other  to  manage  and  operate  the
infrastructure facilities,  hardware, software and systems relating to non-EDGAR
systems to the SEC.  These two  contracts  provided  combined  revenues of $42.0
million and $90.4 million in the three and six months ended June 27, 2002. Also,
contributing  to the revenue  growth was  expansion of a  Department  of Defense
("DoD")  program  for vaccine  production,  growth in a contract  that  provides
battlefield   simulation  and  virtual  training  system  support  services  and
maintenance  for the U.S.  Army,  and  growth in a DoD  contract  that  provides
security  background  investigations  that was awarded in the second  quarter of
2000.  Partially  offsetting  these increases in revenue was the completion of a
subcontract  providing operations management to the Department of Energy ("DoE")
in September 2001. Revenues for the three and six months ended June 28, 2001 for
this  subcontract  were $23.5  million  and $48.3  million,  respectively.  Also
offsetting  these  increases  in revenues  for DSS was the  divesture of DynCorp
Management Resources, Inc. ("DMR") in December 2001, which provided $7.3 million
and $14.4 million for the three and six months ended June 28, 2001.

For the second quarter and six months ended June 27, 2002,  operating profit for
DSS  increased  by  $5.0  million,  or  40.8%,  and  $10.2  million,  or  44.6%,
respectively,  to $17.1 million and $33.1 million,  respectively.  The operating
profit increases for DSS resulted  primarily from the new FBI contract and, to a
lesser  extent,  the new SEC  contract  discussed  above.  These  two  contracts
provided  combined  operating  profits of $3.1  million and $4.9 million for the
three  and six  months  ended  June 27,  2002.  In  addition,  operating  profit
increased  due to  increased  tasking and a larger award fee pool on the vaccine
production,  battlefield simulation,  and the security background investigations
contracts  that are all  noted  above.  Also  contributing  to the  increase  in
operating  profits  were the  losses on the DMR  contracts  in the three and six
months ended June 28, 2001 that did not continue in 2002.  Partially  offsetting
these increases to operating profit was the completion of the DoE subcontract in
the third quarter of 2001,  which is noted above.  Operating  profit on this DoE
subcontract  for the three and six months  ended June 28, 2001 was $0.4  million
and $1.4 million, respectively.

DynCorp  International's  ("DI") second quarter and six-month 2002 revenues grew
by 36.0%  and 37.3% to $178.6  million  and  $343.0  million,  respectively,  as
compared to the same prior year periods of $131.3 million and $249.9 million,
<PAGE>

respectively.  The  increase in  revenues  resulted  primarily  from growth in a
contract that provides maintenance, storage, and security support of war reserve
materials to the United States Central Command Air Forces,  growth on a contract
with the U.S.  Armed  Forces  that  started up in the  second  half of 2001 that
provides  maintenance  and parts to military  aircraft,  increased  tasking on a
contract with the  Department  of State  ("DoS") in support of the  government's
drug eradication program, primarily in South America, and increased tasking on a
contract which provides combat service support  augmentation  and Force Provided
Training Modules primarily to the U.S. Army. DI also commenced  performance on a
new commercial  subcontract in Saudi Arabia  involving repair and maintenance of
Saudi  military  aircraft,  which was awarded in the fourth  quarter of 2001 and
became  fully  operational  in 2002.  This  contract  provided  revenues of $5.7
million and $12.1  million in the three and six months ended June 27,  2002.  In
addition,  DI was also awarded a new  contract  with the U.S. Air Force in March
2002  supporting  aerial  counter-drug  surveillance  missions in central  South
America and the Caribbean and including  providing base  operations  support for
personnel and aircraft. This contract provided $4.8 million in the first half of
2002.  Partially  offsetting the increases in revenues was the decreased manning
requirements on the DoS  international  police task force contract in the second
quarter of 2002.

DI's second quarter and six-month 2002 operating  profits grew by 27.5% and 6.1%
to $10.7 million and $17.9 million,  respectively, as compared to the same prior
year periods of $8.4 million and $16.9 million,  respectively.  The increases in
operating  profits resulted from the increased  tasking on several contracts and
the new contracts as mentioned above.  DI's operating profit was also positively
impacted due to additional  revenue on contract costs that were  recognized in a
prior period.  Partially  offsetting the increases in operating  profits was the
decreased  manning  requirements  on the DoS  international  police  task  force
contract in the second  quarter of 2002.  The contract,  which  provides  combat
service support  augmentation and Force Provided  Training Modules  primarily to
the U.S. Army, is expected to be substantially complete by the end of 2002. This
contract  provided  revenues of $16.1  million and $22.1  million and  operating
profits of $0.8  million and $1.1  million,  respectively,  in the three and six
months ended June 27, 2001.  Management expects that the new contracts discussed
above will offset the lost revenue and operating profit.

DynCorp Technology Services' ("DTS") revenues for the three and six months ended
June 27, 2002, grew 25.9% and 23.2%, respectively,  to $161.3 million and $302.0
million,  respectively,  compared to $128.1  million and $245.2  million for the
comparable  periods in 2001. The increases in the DTS revenues resulted from new
contracts and  increased  tasking on existing  contracts.  DTS was awarded a new
contract in the second quarter of 2002 with the National  Aeronautics  and Space
Administration  ("NASA"), which provides base operations and maintenance support
for the Johnson Space Center. This contract provided $8.3 million in revenues in
the second  quarter of 2002.  DTS was also awarded a contract to provide  repair
and  maintenance  to the  California  Department of Forestry  helicopters in the
first quarter of 2002, which provided $4.9 million in revenues in the first half
of 2002. In addition,  revenues  increased due to increased  tasking on two U.S.
Air Force contracts providing aircraft  maintenance and base operations support.
One of these contracts is at Andrews AFB and was awarded in the first quarter of
2001 and the other is at Vance AFB and was  awarded  in October  2000.  Revenues
also  increased  due to increased  tasking on a U.S.  Military  Sealift  Command
contract, which manages, operates, and maintains non-combat oceangoing U.S. Navy
ships and on a contract that provides range  operations and maintenance  support
to the U.S. Navy. DTS reported revenue increases at Fort Rucker due to increased
contract  requirements  that  have  resulted  in  additional  personnel  and the
negotiation of a new collective  bargaining  agreement that resulted in a higher
wage and fringe package for the employees.  This contract provided $12.4 million
and $16.7  million for the second  quarter and  six-month  revenue  increases in
2002.  Management  expects  revenue  growth on a U.S.  Air Force  contract  that
provides base operations and support  services at Maxwell AFB, which will become
fully operational in the second half of 2002.

DTS  operating  profits for the three and six months ended June 27,  2002,  grew
43.8% and 41.5%, respectively, to $6.2 million and $12.3 million,  respectively,
compared to $4.3  million and $8.7 million for the  comparable  periods in 2001.
DTS operating  profits  increased due to the new contracts and increased tasking
on the contracts  discussed above.  Operating  profits grew faster than revenues
due to improved  profit  margins on some of DTS' base  operations  and  aviation
support services contracts.
<PAGE>

AdvanceMed  ("ADVMED")  reported  revenues of $13.0 million and $27.1 million in
the three and six months ended June 27, 2002, respectively, as compared to $16.1
million and $31.0  million in the same prior year  periods.  ADVMED's  operating
profits  (loss) were $0.1 million and $(0.6) million in the three and six months
ended June 27, 2002, respectively,  as compared to $1.4 million and $1.7 million
in the comparable periods of 2001. The decrease in revenues resulted mostly from
the reduction in work scope on a contract that provides  external quality review
to health care organizations in the State of Texas and the successful completion
of two tasks that review Medicaid and Medicare claims data.  These lost revenues
will be replaced in part by two task awards, which will provide support services
to Medicaid and  Medicare,  and will begin  operations  in the third  quarter of
2002.  The decrease in  operating  profit  resulted  from  increased  costs on a
commercial  product  introduction  and the  addition  of a sales  team  for this
commercial product,  which was not reflected in prior year costs. The commercial
product  provides  performance  measurement  portfolios  designed to improve the
delivery of high-risk,  high-cost healthcare services.  ADVMED has strategies in
place to grow new  customers  for this  commercial  contract and expects  future
revenue and operating profit increases from these strategies.

Cost of Services
----------------
Cost of services as a percentage of revenue  remained  consistent  for the three
and six months  ended June 27,  2002,  as compared to the same  periods in 2001.
Cost of  services  was 94.5% and 94.6% of  revenue  for the three and six months
ended June 27, 2002, respectively, as compared to 94.3% and 94.4%, respectively,
for the comparable periods in 2001. Cost of services was $562.5 million and $1.1
billion,  respectively,  compared to $449.7  million and $865.3  million for the
comparable  periods in 2001,  increases  of $112.9  million and $212.4  million,
respectively. Cost of services as a percentage of revenue was higher in 2002 due
to higher balances of deferred costs that were expensed in 2002 compared to 2001
due to the revisions for the change in accounting  method as described above and
in Note 2 to the Consolidated  Condensed Financial Statements.  Offsetting these
increases  in cost of  services as a  percentage  of revenue as compared to 2001
were lower percentages due to DTS operating profits growing faster than revenues
from improved profit margins on some of its base operations and aviation support
services  contracts.  Cost of services for the Company  includes  mainly  direct
labor, direct overhead, and direct facility costs.

Corporate General and Administrative Expense
--------------------------------------------
Corporate general and  administrative  expense was relatively  unchanged at $7.2
million  for the second  quarter of 2002 as  compared to the same period in 2001
and  increased  slightly  in the first six  months of 2002 to $14.8  million  as
compared  to $14.0  million in the same  period in 2001.  Corporate  general and
administrative  expense as a  percentage  of  revenue  was 1.2% and 1.3% for the
three and six months  ended June 27, 2002 and 1.5% for the same periods in 2001.
The slight increase in corporate general and  administrative  expense was due to
costs  associated  with the management  efforts to explore the potential sale of
the Company to or its merger with a third party.  In the first  quarter of 2002,
the Board of  Directors  authorized  management  to consider  interests of third
parties  in a  merger  or sale of the  Company.  No  formal  agreement  has been
negotiated or executed at this time.  The Company has notified its  stockholders
and  participants in its Savings and Retirement Plan,  Capital  Accumulation and
Retirement   Plan,   and  former   Employee   Stock   Ownership  Plan  of  these
circumstances.

Interest Expense
----------------
Interest expense was $7.0 million and $14.2 million, respectively, for the three
and six months ended June 27, 2002,  compared to $8.0 million and $16.4  million
for the comparable periods in 2001.  Interest expense as a percentage of revenue
was 1.2% for the three and six months ended June 27,  2002,  as compared to 1.7%
and 1.8% for the comparable  periods in 2001.  The decrease in interest  expense
was  attributable to lower average debt levels and lower average  interest rates
in the three and six months of 2002 as compared to the same periods in 2001. The
<PAGE>

average  levels of  indebtedness  were  approximately  $280.5 million and $285.7
million in the six months ended June 27, 2002 and June 28, 2001, respectively.

Amortization of Intangibles of Acquired Companies
-------------------------------------------------
Amortization of intangibles of acquired companies was $0.5 million and $1.0
million for the second quarter and first six months of 2002, respectively, as
compared to $1.7 million and $3.6 million for the comparable periods of 2001.
The decrease resulted from the Company's adoption on December 28, 2001, the
first day of fiscal year 2002, of the Statement of Financial Accounting
Standards ("SFAS") No. 142, "Goodwill and Other Intangible Assets". The
provisions of SFAS No. 142 eliminated amortization of goodwill, including
assembled workforce which is now considered goodwill, and accordingly, the
Company eliminated amortization of goodwill beginning December 28, 2001. The
provisions also require an impairment assessment at least annually by applying a
fair-value based test. See Note 8 to the Consolidated Condensed Financial
Statements included in this Quarterly Report on Form 10-Q to show what the
impact would have been on the second quarter and first half of 2001 financial
results if SFAS No. 142 had been adopted at the beginning of fiscal 2001.

Other Expense (Other Income)
----------------------------

Other expense (other income) was $18.1 million and $19.9 million for the three
and six months ended June 27, 2002 and consists mostly of the Company's share of
the estimated net losses of unconsolidated affiliates, and the write-off of an
investment in an unconsolidated affiliate.

The Company periodically evaluates the recoverability of its equity investments,
in accordance with Accounting Principles Board No. 18, "The Equity Method of
Accounting for Investments in Common Stock," and if circumstances arise where a
loss in value is considered to be other than temporary, the Company will record
a write-down of excess investment cost. The Company's recoverability analysis is
based on the projected undiscounted cash flows of the investments, which is the
lowest level of cash flow information available. During the second quarter of
2002, the Company recorded a non-recurring, write-off of approximately $15.8
million, which represented the net balance of a certain investment, which was
stated in excess of its net realizable value. The total charge was included in
Other Expense (Other Income) on the Consolidated Condensed Statement of
Operations at June 27, 2002.

Income Taxes
------------

The provisions for income taxes in 2002 and 2001 are based upon estimated
effective tax rates, including the impact of permanent differences between the
book bases of assets and liabilities recognized for financial reporting purposes
and the bases recognized for tax purposes. The provision for income taxes
decreased by $4.1 million and $2.9 million for the three and six months ended
June 27, 2002, respectively, from the comparable periods in 2001. The decreases
were due to lower pretax income in both the three and six months ended June 27,
2002 and a lower effective tax rate in the second quarter of 2002, and partially
offset by a slightly higher effective tax rate in the first six months of 2002,
compared to the same periods in 2001. The Company's effective tax rate
approximated 43.7% for the six months ended June 27, 2002, compared to 43.0% in
the comparable period in 2001, after taking into account the effect of minority
interests.

Backlog
-------

The Company's backlog of business, which includes awards under both prime
contracts and subcontracts as well as the estimated value of option years on
government contracts, was $7.2 billion at June 27, 2002 compared to $6.8 billion
at December 27, 2001, a net increase of $0.4 billion. The backlog at June 27,
2002 consisted of $2.3 billion for DSS, $2.2 billion for DI, $2.6 billion for
DTS, and $0.1 billion for ADVMED compared to December 27, 2001 backlog of $2.4
billion for DSS, $2.2 billion for DI, $2.0 billion for DTS, and $0.2 billion for
ADVMED. A large part of the increase was attributable to the $0.5 billion win on
a fifteen - year DTS contract with the U.S. Air Force in the second quarter of
2002. This cost plus contract begins in October 2002 and will provide support to
<PAGE>

the Air Force Command and Air Combat Command operations at the Nevada Test and
Training Range.

Working Capital
---------------

Working capital, defined as current assets less current liabilities, was $165.2
million at June 27, 2002 compared to $150.2 million at December 27, 2001, an
increase of $15.0 million, or 10.0%. The ratio of current assets to current
liabilities at June 27, 2002 and December 27, 2001 was 1.6. The increase in
working capital was primarily a result of strong customer collections, which
resulted in a higher cash and cash equivalents balance at June 27, 2002 compared
to December 27, 2001, and increases in the other current asset balance, which
was due to increased inventory on a FBI contract. Partially offsetting these
increases in cash and cash equivalents and other current assets was a larger
current portion of the Senior Secured Credit Agreement Term A debt as of June
27, 2001 and increases in certain accrued expenses.

Cash Flows from Operating Activities
------------------------------------

Cash provided by  operations  was $40.1 million in the first six months of 2002,
an increase  of $46.1  million  from the  comparable  period in 2001.  The major
components  of the  increase  were higher  collections  of  receivables,  higher
accounts payable, and higher operating profits, excluding non-cash net losses of
unconsolidated  affiliates  of  $2.2  million  and  a  non-cash  reserve  of  an
investment in an unconsolidated affiliate of $15.8 million in the second quarter
of 2002. In the first six months of 2001,  $6.0 million was used in  operations.
The major components of the $6.0 million were a decrease in current  liabilities
and certain other  liabilities of $38.0 million,  offset by net earnings of $8.3
million,  and a decrease  in current  assets and certain  other  assets of $10.4
million.

Cash Flows from Investing Activities
------------------------------------

Investing activities used funds of $3.4 million in the six months ended June 27,
2002, as compared to cash used by investing activities of $0.9 million in the
six months ended June 28, 2001. The use of funds in the first half of 2002
resulted mostly from the purchase of property and equipment of $4.0 million,
compared to the purchase of property and equipment in the same period of 2001 of
$3.3 million.

Cash Flows from Financing Activities
------------------------------------

Financing activities used funds of $10.7 million during the six months ended
June 27, 2002 and included several short-term borrowings and subsequent payments
of a cumulated sum of $63.0 million under the Senior Secured Credit Agreement
Revolving Credit Facility, maturing December 9, 2004. In the second quarter
2002, the Company made installment payments of $1.3 million and $6.3 million on
the Senior Secured Credit Agreement Term A Loan, maturing December 9, 2004, in
February and May respectively, and prepaid $3.2 million on the Senior Secured
Credit Agreement Term B Loan, maturing December 9, 2006. During the first half
of 2001, financing activities provided funds of $0.1 million and included
several short-term borrowing and subsequent payments of a cumulated sum of
$159.3 million under the Senior Secured Credit Agreement Revolving Credit
Facility.

Earnings before Interest, Taxes, Depreciation, and Amortization
---------------------------------------------------------------

Earnings before Interest, Taxes, Depreciation, and Amortization ("EBITDA") as
defined by management, consists of net earnings before income tax provision
(benefit), net interest expense, and depreciation and amortization. EBITDA
represents a measure of the Company's ability to generate cash flow and does not
represent net income or cash flow from operating, investing and financing
activities as defined by generally accepted accounting principles ("GAAP").
EBITDA is not a measure of performance or financial condition under GAAP, but is
presented to provide additional information about the Company to the reader.
EBITDA should be considered in addition to, but not as a substitute for, or
superior to, measures of financial performance reported in accordance with GAAP.
EBITDA has been adjusted for the amortization of deferred debt expense and debt
issue discount which are included in "interest expense" in the Consolidated
Statements of Operations and included in "amortization and depreciation" in the
Consolidated Statements of Cash Flows. EBITDA has not been adjusted to give
<PAGE>

affect to the depreciation and amortization attributable to minority interest
shareholders. Readers are cautioned that the Company's definition of EBITDA may
not necessarily be comparable to similarly titled captions used by other
companies due to the potential inconsistencies in the method of calculation.

The following represents the Company's computation of EBITDA (in thousands):
<TABLE>
<CAPTION>

                                                                   Three Months Ended             Six Months Emded
                                                                   ------------------             ----------------
                                                                               June 28,                        June 28,
                                                               June 27,     2001 (Revised      June 27,      2001 (Revised
                                                                 2002        - See Note 2)       2002        - See Note 2)
                                                                 ----        -------------       ----        -------------
<S>                                                            <C>           <C>               <C>           <C>

Net (loss) earnings                                               $(1,505)          $ 5,411       $ 5,487            $ 9,460
   Depreciation and amortization                                     2,874            5,536         7,757             10,325
   Interest expense, net                                             6,791            7,873        13,916             15,956
   (Benefit) provision for income taxes                               (38)            4,082         4,251              7,136
   Amortization of deferred debt expense                             (525)            (887)       (1,047)            (1,359)
   Debt issue discount                                               (135)             (12)         (291)               (23)
                                                                   -------         --------      --------            --------
EBITDA                                                             $ 7,462         $ 22,003      $ 30,073            $41,495
                                                                   =======         ========      ========            =======
</TABLE>


EBITDA (as defined above) decreased by $14.5 million,  or 66.1%, to $7.5 million
for the second quarter of 2002 as compared to the comparable period in 2001. For
the first six months of 2002,  EBITDA  decreased by $11.4 million,  or 27.4%, to
$30.1  million as compared  to the first six months of 2001.  The  decreases  in
EBITDA in the three and six month  periods in 2002,  as  compared to the similar
periods in 2001, are primarily  attributable to the  non-recurring  write-off of
the  investment  in an  unconsolidated  affiliate of $15.8 million in the second
quarter  of 2002 and  offset  partially  by the  higher  operating  profits,  as
discussed above.

Recent Developments
-------------------

The Board of Directors authorized management in the fourth quarter of 2001 to
consider interests of third parties in a merger or sale of the Company. There is
the potential for a merger or sale of the Company in the short-term future, but
no formal agreement has been negotiated or executed at this time. The Company
has notified its stockholders and participants in its Savings and Retirement
Plan, Capital Accumulation and Retirement Plan, and former Employee Stock
Ownership Plan of this potential change in owners of the Company and merger or
sale of the Company.

Liquidity and Capital Resources
-------------------------------

The carrying amounts reflected in the Consolidated Condensed Balance Sheets of
cash and cash equivalents, accounts receivable and contracts in process, and
accounts payable approximate fair value at June 27, 2002 due to the short
maturities of these instruments.

As of June 27, 2002 the Company's total debt was $274.1 million, a decrease of
$10.5 million from $284.6 million as of December 27, 2001, primarily due to the
February and May 2002 payments of $1.3 million and $6.3 million, respectively,
made on the Term A Loan and the April 2002 prepayment of $3.2 million on the
Term B Loan. These payments were partially offset by the amortization of the
discounts on the Subordinated Notes and the 9 1/2% Senior Subordinated Notes
discussed below.

The Company has a Senior Secured Credit Agreement (the "Credit Agreement") with
a group of financial institutions. Under the Credit Agreement, the Company has
outstanding borrowings of $62.5 million under Term A Loans maturing December 9,
2004, $73.7 million under Term B Loans maturing December 9, 2006, and has a
$90.0 million revolving line of credit, which, at June 27, 2002, had no
borrowings. Installment payments of $1.3 million and $6.3 million were paid on
the Term A Loans in February and May 2002, respectively. The Term A Loans are to
be repaid in eleven quarterly installments of $6.3 million, which began in May
2002. A prepayment of $3.2 million was paid on the Term B Loan in April 2002.
<PAGE>

The Term B Loans are scheduled to be repaid in an installment of $5.7 million in
May 2005 and then six quarterly installments of $11.9 million beginning in
August 2005. The Company is charged a commitment fee of 0.5% per annum on unused
commitments under the revolving line of credit. Letters of credit outstanding
were $11.0 million and $11.1 million at June 27, 2002 and December 27, 2001,
respectively, under the line of credit. The amount available was $79.0 million
and $78.9 million, respectively, as of June 27, 2002 and December 27, 2001.

The Company has $99.7 million of 9 1/2% Senior Subordinated Notes ("Senior
Subordinated Notes") outstanding with a scheduled maturity in 2007. Interest is
payable semi-annually, in arrears, on March 1 and September 1 of each year. The
Company has outstanding $40.0 million face value of the Company's subordinated
pay-in-kind notes due 2007, with an estimated fair value of $38.2 million
("Subordinated Notes"). The Subordinated Notes bear interest at 15.0% per annum,
payable semi-annually. The Company may, at its option, prior to December 15,
2004, pay the interest in cash or in additional Subordinated Notes.

The Company is a guarantor on a fixed price services contract for non-emergency
transportation brokerage services. Management perceives the exposure of
financial losses on this guarantee could possibly be in the range of $4.0
million to $12.5 million over the next twelve months. At this time, management
does not believe a reserve is required because no claim has been asserted and
one is not considered probable.


Chart Outlining Future Financial Commitments
--------------------------------------------

The following table sets forth the Company's total contractual cash obligations
for the remaining six months of 2002 and over the next four years and thereafter
(in thousands):
<TABLE>
<CAPTION>


                                                                       Cash Obligations Due by Year
                                                                       ----------------------------

                                               July -
Contractual                                   December
Cash Obligation                  Total          2002           2003         2004          2005         2006       Thereafter
---------------                  -----          ----           ----         ----          ----         ----       ----------
<S>                           <C>           <C>            <C>           <C>          <C>           <C>          <C>
Long-term Debt                $274,146      $12,547        $ 25,002      $28,083      $26,228       $47,500      $134,786
Operating Leases               227,468       24,649          42,968       36,790       27,600        25,643        69,818
Maximum Liability to
 Repurchase ESOP
 Shares                        368,649       18,697          27,802       30,032       27,674        23,842       240,602
Liability to Repurchase
 Other Redeemable
 Common Stock                    7,944            -           7,944            -            -             -             -
                              --------      -------        --------      -------     --------       -------      --------

Total Contractual Cash
 Obligations                  $878,207      $55,893        $103,716      $94,905      $81,502       $96,985      $445,206
                              ========      =======        ========      =======      =======       =======      ========
</TABLE>

The Company has contractual cash obligations under several of its long-term debt
provisions, as discussed above.

The Company has several significant  operating leases for facilities,  furniture
and equipment. Minimum lease payments over the next 11 years are estimated to be
$227.5 million, including $24.6 million for the remaining six months of 2002. Of
the $24.6  million  2002 minimum  lease  payments,  $7.3 million  related to DIS
leases, $5.2 million related to a U.S. Postal Service contract, and $3.5 million
related to the new corporate headquarters building.

The Company is obligated to repurchase certain of its former Employee Stock
Ownership Plan ("ESOP") vested common stock shares (under a "put option") from
former ESOP participants upon death, disability, retirement and termination at
the fair value (as determined by an independent appraiser) until such time as
the Company's common stock is publicly traded. Under the Subscription Agreement
dated September 9, 1988, the Company is permitted to defer put options if, under
<PAGE>

Delaware law, the capital of the Company would be impaired as a result of such
repurchase. The Company's total contractual cash obligation to repurchase former
ESOP shares will fluctuate in the future as the independently determined fair
value fluctuates. The total obligation to repurchase former ESOP shares is
$368.6 million as of June 27, 2002, based on the independently determined fair
value as of May 24, 2002.

Under a registration rights agreement, the holders of the other redeemable
common stock will have a put right to the Company commencing on December 10,
2003, at a price of $40.53 per share, unless one of the following events has
occurred prior to such date or the exercise of the put right: (1) an initial
public offering of the Company's common stock has been consummated; (2) all the
Company's common stock has been sold; (3) all the Company's assets have been
sold in such a manner that the holders have received cash payments; or (4) the
Company's common stock has been listed on a national securities exchange or
authorized for quotation on the NASDAQ National Market System for which there is
a public market of at least $100 million for the Company's common stock. The
total obligation to repurchase other redeemable shares of the Company's stock is
$7.9 million as of June 27, 2002.

Critical Accounting Policies
----------------------------

The preparation of financial statements in conformity with U.S. Generally
Accepted Accounting Principles ("GAAP") requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Estimates include accrued liabilities such as contract losses,
litigation reserves, and incentive compensation awards, which are not paid out
until the following year. Actual results could differ from those estimates.
During the performance of long-term contracts, these estimates are periodically
reviewed and revisions are made as required. The impact on revenue and contract
profit as a result of these revisions is included in the periods in which the
revisions are made.

Revenues for cost-reimbursement contracts are recorded as reimbursable costs are
incurred, including a pro-rata share of the contractual fees. For
time-and-material contracts, revenue is recognized to the extent of billable
rates times hours delivered plus material and other reimbursable costs incurred.
For long-term fixed price production contracts, units-of-delivery is generally
used as the measurement basis for revenue recognition. Revenue from other
long-term fixed price contracts is recognized ratably over the contract period
or other appropriate methods to measure services provided. Because the Company
assumes the risk of performing a fixed price contract at a set price, the
failure to accurately estimate ultimate costs or to control costs during
performance of the work could result, and in some instances has resulted, in
reduced profits or losses for such contracts. Anticipated losses on contracts
are recognized when identified. Disputes arise in the normal course of the
Company's business on projects where the Company is contesting with customers
for collection of funds because of events such as delays, changes in contract
specifications and questions of cost allowability or collectibility. Such
disputes, whether claims or unapproved change orders in the process of
negotiation, are recorded at the lesser of their estimated net realizable value
or actual costs incurred, and only when realization is probable and can be
reliably estimated. Claims against the Company are recognized where loss is
considered probable and reasonably determinable in amount. Because there are
estimates and judgments involved, the actual results could be different from
those estimates.

Forward Looking Statements
--------------------------

Certain matters discussed or incorporated by reference in this report are
forward-looking statements within the meaning of the federal securities laws.
Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions, there can be
no assurance that its expectations will be achieved. Factors that could cause
actual results to differ materially from the Company's current expectations
include the early termination of, or failure of a customer to exercise option
periods under, a significant contract; the inability of the Company to generate
<PAGE>

actual customer orders under indefinite delivery, indefinite quantity contracts;
technological change; the inability of the Company to manage its growth or to
execute its internal performance plan; the inability of the Company to integrate
the operations of acquisitions; the inability of the Company to attract and
retain the technical and other personnel required to perform its various
contracts; general economic conditions; and other risks discussed elsewhere in
this report and in other filings of the Company with the Securities and Exchange
Commission.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to market risk from changes in interest rates and, to a
limited extent, foreign currency exchange rates that could affect its results of
operations and financial condition or cash flows. The Company manages its
exposure to these market risks through normal operating and financing activities
and, when deemed appropriate, hedges these risks through the use of derivative
financial instruments. The Company uses the term hedge to mean a strategy
designed to manage risks of volatility in rate movements on certain assets,
liabilities or anticipated transactions by creating a relationship in which
gains or losses on derivative instruments are expected to counterbalance the
losses or gains on the assets, liabilities or anticipated transactions exposed
to such market risks. The Company uses derivative financial instruments as a
risk management tool and not for trading or speculative purposes.

Interest Rate Risk

The Company has minimal exposure due to fluctuations in market interest rates.
Had market interest rates been 10% higher in the first half of 2002, the
Company's net earnings would have been approximately $119.1 thousand lower, or a
change of 2.2%. This is derived from a historical model that recalculates the
interest expense incurred by the Company assuming that the market interest rates
to which the Company's interest payments are indexed were, in all cases, 10.0%
higher, taking into consideration the effect of such higher interest rates on
the interest rate swap as noted below.

From time to time, the Company may enter into various derivative financial
instruments, including interest rate forwards, options and interest rate swaps,
to manage the exposure of portions of the Company's total debt portfolio and
related cash flows to fluctuations in market interest rates. In December 2000,
the Company entered into a two year and 28-day swap agreement, wherein the
Company pays approximately 6.2% annualized interest on a notional amount of
$35.0 million on a quarterly basis beginning on January 4, 2001 and ending on
January 6, 2003. The objective of this transaction is to neutralize the cash
flow variability on designated portions of the Company's Senior Secured Credit
Agreement Term A and Term B loans, which have a floating-rate, that may be
caused by fluctuations in market interest rates. The adjustments to fair value
of this derivative instrument during the six months ended June 27, 2002 resulted
in additional increases in accumulated other comprehensive income of $0.3
million. This swap is perfectly effective at its objective, and accordingly,
there are no existing gains or losses as of June 27, 2002 that are expected to
be reclassified into earnings within the next twelve months. The Company also
managed its exposure to changes in interest rates by effectively capping at 7.5%
the base interest rate on a notional amount of $100.0 million of its Senior
Secured Credit Agreement Term A and Term B loans until February 2002.

Foreign Currency Risk

The Company's cash flows are primarily denominated in U.S. dollars. With respect
to the limited cash flows that are denominated in foreign currency, the
Company's policy is to manage exposure to fluctuations in foreign exchange rates
by netting inflows of foreign exchange with outflows of foreign exchange. From
time to time the Company uses foreign exchange contracts to minimize exposure to
the risk that the eventual net cash inflows and outflows will be adversely
affected by changes in exchange rates. The Company's exposure to fluctuations in
foreign exchange risk is immaterial.
<PAGE>



PART II - OTHER INFORMATION

Item 1.  Legal Proceedings

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. The total amount of damages currently claimed by the plaintiffs in
these cases is estimated to be approximately $8.7 million (including
compensatory punitive damages and penalties). 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, the
Company believes it is adequately reserved with respect to the potential
liability for such claims. The estimates set forth above do not reflect claims
that may have been incurred but have not yet been filed. The Company has
recorded such damages and penalties that are considered to be probable
recoveries against the Company or its subsidiaries.

In September, 2000, the Company became aware of significant errors in
preacquisition estimates of the cost to complete a major ten-year federal
government telephone installation and operation contract that was undertaken in
1998 by a predecessor of GTE Information Systems, LLC, now known as DynCorp
Information Systems LLC, a wholly-owned subsidiary of the Company ("DIS"). The
Company acquired GTE Information Systems LLC from Contel Federal Systems, Inc.,
a subsidiary of GTE Corporation, in December 1999. See Note 2 for a discussion
of revisions concerning the accounting for such preacquisition estimates and the
impact of those revisions on the financial statements. Effective August 1, 2001,
DIS and the federal government customer entered into a bilateral modification of
the contract as a consequence of which the Company reduced the previously
recorded loss reserve by $42.7 million effective in the third quarter 2001. This
reduction resulted from the government's elimination of certain future
liabilities from the contract, an increase in future billing rates for calls,
and a decrease in future call revenue shared with the government agency. On
August 10, 2001, the Company instituted suit against GTE Corporation claiming
breaches of the acquisition agreement representations and warranties and for
other relief.

On September 11, 2001, DynCorp and three of its wholly-owned subsidiaries were
served with a civil action filed in the United States District Court for the
District of Columbia on behalf of certain Ecuadorian citizens and an alleged
class that could consist of at least 10,000 such unnamed citizens, alleging
personal injury, property damage and wrongful death as a consequence of the
spraying of narcotic crops along the Colombian border adjacent to Ecuador. The
action seeks a declaratory judgment as well as unspecified compensatory and
punitive damages. Spraying operations are conducted under a Company subsidiary
contract with the United States Department of State in cooperation with the
Colombian government. No spraying operations are conducted in Ecuador, although
the complaint alleges that sprayed material has drifted across the border into
Ecuador. All operations of the Company's subsidiary in Colombia are conducted in
accordance with specific instructions from the Department of State using
equipment and spray material provided by the United States government. The State
Department has publicly stated that the spray material has been demonstrated not
to be toxic to human beings. The Company and its subsidiaries intend to
vigorously defend against all allegations. The Company does not expect any
losses due to this litigation.

Regarding environmental issues, neither the Company, nor any of its
subsidiaries, is named a Potentially Responsible Party (as defined in the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"))
at any site. The Company, however, did undertake, as part of the 1988
divestiture of a petrochemical engineering subsidiary, an obligation to install
and operate a soil and water remediation system at a subsidiary research
facility site in New Jersey and also is required to pay the costs of continued
<PAGE>

operation of the remediation system. In addition, the Company, pursuant to the
1995 sale of its commercial aviation business, is responsible for the costs of
clean-up of environmental conditions at certain designated sites. Such costs may
include the removal and subsequent replacement of contaminated soil, concrete,
and underground storage tanks that existed prior to the sale of the commercial
aviation business. The resolution of these matters is not expected to have a
material impact on the Company's results of operations or financial condition.
The Company believes it has adequate accruals for any liability it may incur
arising from the designated sites.

The Company has been advised by the purchasers of two former subsidiaries
(DynAir Tech of Florida, Inc. and DynAir Services, Inc.) of environmental claims
by Dade County, Florida, arising out of the former subsidiaries' conduct of
business at Miami International Airport ("MIA"). Claims for indemnification are
being asserted against the Company pursuant to divestiture agreements entered
into in 1995. The Company has assumed defense of these allegations with a full
reservation of rights. A lawsuit was filed in April 2001 by Dade County in
Florida State Court against DynAir Tech's successor-in-interest, Sabretech,
Inc., and 16 other defendants, but neither Sabretech nor any other named
defendant has been served. DynAir Services is not currently a named defendant,
although it is one of an additional 200 companies that the County has identified
as having possible responsibility for contamination at MIA. Under the terms of
the DynAir Tech divestiture agreement, the purchaser is responsible for the
first $125,000 of cost incurred as a result of such claims; however, the Company
is required to assume full responsibility for all costs to the extent claims
exceed $125,000 up to an aggregate maximum amount of $2.5 million. If the
Company is required to indemnify under the DynAir Services divestiture
agreement, it would be responsible for all related costs. The County's complaint
specifies $200.0 million of incurred and $250.0 million of future damages
against the named defendants. Defense has been tendered to certain of the
Company's insurance carriers, although no coverage determination has been made.
Both DynAir Services and Sabretech are represented by environmental defense
counsel and intend to vigorously defend against the allegations. At this time,
the Company cannot reasonably determine the exposure, if any, to possible losses
from these claims.

The Company is a party to other civil and contractual lawsuits that have arisen
in the normal course of business for which potential liability, including costs
of defense, constitutes the remainder of the $8.7 million discussed above. The
estimated probable liability (included in Other Liabilities and Deferred Credits
on the Consolidated Condensed Balance Sheet) for these issues is approximately
$5.8 million and is substantially covered by insurance at June 27, 2002. All of
the insured claims are within policy limits and have been tendered to and
accepted by the applicable carriers. The Company has recorded an offsetting
asset (included in Other Assets on the Consolidated Condensed Balance Sheet) of
$5.2 million at June 27, 2002 for these items.

The Company has recorded its 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 above, it is the opinion
of the Company's management, 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 condition or
liquidity of the Company over the long-term. However, it is possible that the
timing of the resolution of individual issues could result in a significant
impact on the operating results and/or liquidity for one or more future
reporting periods.

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. A
majority of the audits have been completed on the Company's incurred contract
costs through 1999. The Company has included an allowance for excess billings
and contract losses in its financial statements that it believes is adequate
based on 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, but cannot
determine the outcome of the audit findings at this time. In addition, the
Company is occasionally the subject of investigations by various investigative
<PAGE>

organizations, resulting from employee and other allegations regarding business
practices. In management's opinion, there are no outstanding issues of this
nature at June 27, 2002 that will have a material adverse effect on the
Company's consolidated financial condition, results of operations, or liquidity.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

10.1  Amendment on May 1, 2002 of Patrick C. FitzPatrick's November 1, 2001
      Employment Agreement.
99.1  Certification by Chief Executive Officer Pursuant to 18 USC  Section 1350,
      as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99.2  Certification by Chief Financial Officer Pursuant to 18 USC Section  1350,
      as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(b)  Reports on Form 8-K

Form 8-K/A was filed on April 22, 2002 to amend the Company's Form 8-K filed on
December 27, 1999, to add as an Exhibit the unaudited financial statements of
Information Systems Division as of September 30, 1999.

Form 8-K was filed on May 31, 2002 to note the decision made on May 30, 2002, by
the  Company's  Board  of  Directors,  upon  the  recommendation  of  its  Audit
Committee, not to engage Arthur Andersen LLP as the Company's independent public
accountants for 2002 and authorized the engagement of Ernst & Young LLP to serve
as the  Company's  independent  public  accountants  for the fiscal  year ending
December  26,  2002.  Form  8-K/A was filed on June 3, 2002 to amend the May 31,
2002 Form 8-K  changing  the date  through  which  there  were no  disagreements
between the Company and Arthur Andersen LLP to May 30, 2002.

<PAGE>


                                   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 19, 2002                               /S/ Patrick C. FitzPatrick
                                                     __________________________
                                                     Patrick C. FitzPatrick
                                                     Senior Vice President
                                                     and Chief Financial Officer



Date:  August 19, 2002                               /S/ John J. Fitzgerald
                                                     ______________________
                                                     John J. Fitzgerald
                                                     Vice President and
                                                     Corporate Controller

<PAGE>