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| R      | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2011                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | OR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| £ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIESEXCHANGE ACT OF 1934                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|   | FOR THE TRANSITION PERIOD FROM                                                                                           TO                  |

| MASSACHUSETTS                                                  | 04-2211809                           |
|----------------------------------------------------------------|--------------------------------------|
| (State or other jurisdiction of Incorporation or organization) | (I.R.S. Employer Identification No.) |

| Large accelerated filer | £                                               | Accelerated filer  R              |
|-------------------------|------------------------------------------------------|---------------------------------------------|
| Non-accelerated filer   | £ (Do not check if a smaller reporting company) | Smaller reporting company  £ |

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|                          |     |                                                                                                                                                              | Page   |
|-------------------------------|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Part I. Financial Information |     |
|                          | Item 1.  | Financial Statements                                                                                                                                              |   |
|                          |     | Condensed Consolidated Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010                                                                       | 3      |
|                          |     | Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011 and 2010 (unaudited)                                             | 4      |
|                          |     | Condensed Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the three months ended June 30, 2011 and 2010 (unaudited) | 5      |
|                          |     | Condensed Consolidated Statements of Changes in Stockholders’ Equity and Comprehensive Income for the six months ended June 30, 2011 and 2010 (unaudited)   | 6      |
|                          |     | Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2011 and 2010 (unaudited)                                                       | 7      |
|                          |     | Notes to Condensed Consolidated Financial Statements (unaudited)                                                                                                  | 8      |
|                          | Item 2.  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                                                       | 19     |
|                          | Item 3.  | Quantitative and Qualitative Disclosures About Market Risk                                                                                                        | 26     |
|                          | Item 4.  | Controls and Procedures                                                                                                                                           | 26     |
|                          |     |
| Part II. Other Information    |     |
|                          | Item 1.  | Legal Proceedings                                                                                                                                                 | 27     |
|                          | Item 1A. | Risk Factors                                                                                                                                                      | 27     |
|                          | Item 2.  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                                                       | 27     |
|                          | Item 6.  | Exhibits                                                                                                                                                          | 28     |

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DYNAMICS RESEARCH CORPORATION

|                                                                                                                                                                      |   | June 30,2011 |    |   | December 31,2010 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------|------------------|--------|
|                                                                                                                                                                      |   | (unaudited)  |    |   |             |   |
| Assets                                                                                                                                                                    |   |         |    |   |             |   |
| Current assets                                                                                                                                                            |   |         |    |   |             |   |
| Cash and cash equivalents                                                                                                                                                 |   | $            | 8,590   |   |             | $      | 30,163 |   |
| Contract receivables, net                                                                                                                                                 |   |         | 77,857  |   |             |   | 48,394 |   |
| Prepaid expenses and other current assets                                                                                                                                 |   |         | 3,619   |   |             |   | 2,924 |   |
| Total current assets                                                                                                                                                      |   |         | 90,066  |   |             |   | 81,481 |   |
| Noncurrent assets                                                                                                                                                         |   |         |    |   |             |   |   |   |
| Property and equipment, net                                                                                                                                               |   |         | 16,489  |   |             |   | 12,219 |   |
| Goodwill                                                                                                                                                                  |   |         | 209,855 |   |             |   | 97,641 |   |
| Intangible assets, net                                                                                                                                                    |   |         | 21,785  |   |             |   | 2,533 |   |
| Deferred tax asset                                                                                                                                                        |   |         | -       |   |             |   | 585 |   |
| Other noncurrent assets                                                                                                                                                   |   |         | 5,462   |   |             |   | 3,757 |   |
| Total noncurrent assets                                                                                                                                                   |   |         | 253,591 |   |             |   | 116,735 |   |
| Total assets                                                                                                                                                              |   | $            | 343,657 |   |             | $      | 198,216 |   |
|                                                                                                                                                                      |   |         |    |   |             |   |   |   |
| Liabilities and stockholders' equity                                                                                                                                      |   |         |    |   |             |   |   |   |
| Current liabilities                                                                                                                                                       |   |         |    |   |             |   |   |   |
| Current portion of long-term debt                                                                                                                                         |   | $            | 11,000  |   |             | $      | 8,000 |   |
| Accounts payable                                                                                                                                                          |   |         | 28,349  |   |             |   | 16,883 |   |
| Accrued compensation and employee benefits                                                                                                                                |   |         | 22,436  |   |             |   | 18,046 |   |
| Deferred tax liability                                                                                                                                                    |   |         | 2,205   |   |             |   | 2,418 |   |
| Other accrued expenses                                                                                                                                                    |   |         | 4,111   |   |             |   | 4,617 |   |
| Total current liabilities                                                                                                                                                 |   |         | 68,101  |   |             |   | 49,964 |   |
| Long-term liabilities                                                                                                                                                     |   |         |    |   |             |   |   |   |
| Long-term debt                                                                                                                                                            |   |         | 133,021 |   |             |   | 14,000 |   |
| Deferred tax liability                                                                                                                                                    |   |         | 648     |   |             |   | - |   |
| Other long-term liabilities                                                                                                                                               |   |         | 28,108  |   |             |   | 27,067 |   |
| Total long-term liabilities                                                                                                                                               |   |         | 161,777 |   |             |   | 41,067 |   |
| Total liabilities                                                                                                                                                         |   |         | 229,878 |   |             |   | 91,031 |   |
| Commitments and contingencies                                                                                                                                             |   |         |    |   |             |   |   |   |
| Stockholders' equity                                                                                                                                                      |   |         |    |   |             |   |   |   |
| Preferred stock, $0.10 par value; 5,000,000 shares authorized; no shares issued and outstanding                                                                           |   |         | -       |   |             |   | - |   |
| Common stock, $0.10 par value; 30,000,000 shares authorized; 10,315,224 and 10,040,029 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively |   |         | 1,031   |   |             |   | 1,004 |   |
| Capital in excess of par value                                                                                                                                            |   |         | 56,278  |   |             |   | 54,138 |   |
| Accumulated other comprehensive loss, net of taxes                                                                                                                        |   |         | (21,409 | )      |             |   | (21,691 | ) |
| Retained earnings                                                                                                                                                         |   |         | 77,879  |   |             |   | 73,734 |   |
| Total stockholders' equity                                                                                                                                                |   |         | 113,779 |   |             |   | 107,185 |   |
| Total liabilities and stockholders' equity                                                                                                                                |   | $            | 343,657 |   |             | $      | 198,216 |   |

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DYNAMICS RESEARCH CORPORATION

|                                                                |   | Three Months EndedJune 30,2011 |       |   | Three Months EndedJune 30,2010 |   |       | SixMonths EndedJune 30,2011 |   |   | SixMonths EndedJune 30,2010 |   |
|---------------------------------------------------------------------|--------|--------------------------------|------------|--------|--------------------------------|--------|------------|-----------------------------|--------|--------|-----------------------------|--------|
| Revenue                                                             |   | $                              | 68,472     |   |                           | $      | 65,308     |                        |   | $      | 137,996                     |   |   | $ | 133,892 |   |
| Cost of revenue                                                     |   |                           | 58,045     |   |                           |   | 55,111     |                        |   |   | 116,805                     |   |   |   | 112,938 |   |
| Gross profit                                                        |   |                           | 10,427     |   |                           |   | 10,197     |                        |   |   | 21,191                      |   |   |   | 20,954 |   |
|                                                                |   |                           |       |   |                           |   |       |                        |   |   |                        |   |   |   |   |   |
| Selling, general and administrative expenses                        |   |                           | 6,809      |   |                           |   | 5,080      |                        |   |   | 12,478                      |   |   |   | 11,036 |   |
| Amortization of intangible assets                                   |   |                           | 374        |   |                           |   | 386        |                        |   |   | 748                         |   |   |   | 771 |   |
| Operating income                                                    |   |                           | 3,244      |   |                           |   | 4,731      |                        |   |   | 7,965                       |   |   |   | 9,147 |   |
| Interest expense, net                                               |   |                           | (768       | )      |                           |   | (367       | )                           |   |   | (1,020                      | )      |   |   | (743 | ) |
| Other income (expense), net                                         |   |                           | 67         |   |                           |   | (30        | )                           |   |   | 163                         |   |   |   | 83 |   |
| Income from continuing operations before provision for income taxes |   |                           | 2,543      |   |                           |   | 4,334      |                        |   |   | 7,108                       |   |   |   | 8,487 |   |
| Provision for income taxes                                          |   |                           | 1,106      |   |                           |   | 1,755      |                        |   |   | 2,963                       |   |   |   | 3,171 |   |
| Income from continuing operations                                   |   |                           | 1,437      |   |                           |   | 2,579      |                        |   |   | 4,145                       |   |   |   | 5,316 |   |
| Income from discontinued operations, net of tax                     |   |                           | -          |   |                           |   | 173        |                        |   |   | -                           |   |   |   | 305 |   |
| Net income                                                          |   | $                              | 1,437      |   |                           | $      | 2,752      |                        |   | $      | 4,145                       |   |   | $ | 5,621 |   |
|                                                                |   |                           |       |   |                           |   |       |                        |   |   |                        |   |   |   |   |   |
| Earnings per share (1)                                              |   |                           |       |   |                           |   |       |                        |   |   |                        |   |   |   |   |   |
| Basic                                                               |   |                           |       |   |                           |   |       |                        |   |   |                        |   |   |   |   |   |
| Income from continuing operations                                   |   | $                              | 0.14       |   |                           | $      | 0.26       |                        |   | $      | 0.42                        |   |   | $ | 0.54 |   |
| Income from discontinued operations, net of tax                     |   |                           | -          |   |                           |   | 0.02       |                        |   |   | -                           |   |   |   | 0.03 |   |
| Net income                                                          |   | $                              | 0.14       |   |                           | $      | 0.28       |                        |   | $      | 0.42                        |   |   | $ | 0.57 |   |
| Diluted                                                             |   |                           |       |   |                           |   |       |                        |   |   |                        |   |   |   |   |   |
| Income from continuing operations                                   |   | $                              | 0.14       |   |                           | $      | 0.26       |                        |   | $      | 0.41                        |   |   | $ | 0.53 |   |
| Income from discontinued operations, net of tax                     |   |                           | -          |   |                           |   | 0.02       |                        |   |   | -                           |   |   |   | 0.03 |   |
| Net income                                                          |   | $                              | 0.14       |   |                           | $      | 0.27       |                        |   | $      | 0.41                        |   |   | $ | 0.56 |   |
|                                                                |   |                           |       |   |                           |   |       |                        |   |   |                        |   |   |   |   |   |
| Weighted average shares outstanding                                 |   |                           |       |   |                           |   |       |                        |   |   |                        |   |   |   |   |   |
| Basic                                                               |   |                           | 10,050,545 |   |                           |   | 9,896,738  |                        |   |   | 9,971,411                   |   |   |   | 9,858,538 |   |
| Diluted                                                             |   |                           | 10,194,171 |   |                           |   | 10,070,809 |                        |   |   | 10,145,738                  |   |   |   | 10,042,916 |   |

| (1) | Total may not add due to rounding. |
|-----|------------------------------------|

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DYNAMICS RESEARCH CORPORATION

|                                                          |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|---------------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at March 31, 2011                                     |   |                | 10,104 |   |                   | $      | 1,010  |                           |   | $      | 54,504                               |   |   | $                 | (21,637 | )      |   | $      | 76,442 |   |   | $ | 110,319 |   |
| Comprehensive income:                                         |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                                    |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 1,437 |   |   |   | 1,437 |   |
| Other comprehensive income, net of tax:                       |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Settlement of derivative instruments                          |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | 228     |   |   |   | - |   |   |   | 228 |   |
| Comprehensive income                                          |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 1,665 |   |
| Issuance of common stock through stock plan transactions, net |   |                | 206    |   |                   |   | 20     |                           |   |   | 1,307                                |   |   |              | -       |   |   |   | - |   |   |   | 1,327 |   |
| Issuance of restricted stock                                  |   |                | 16     |   |                   |   | 2      |                           |   |   | (2                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture of restricted stock                                |   |                | (9     | )      |                   |   | (1     | )                              |   |   | 1                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                                   |   |                | (2     | )      |                   |   | -      |                           |   |   | (25                                  | )      |   |              | -       |   |   |   | - |   |   |   | (25 | ) |
| Share-based compensation                                      |   |                | -      |   |                   |   | -      |                           |   |   | 142                                  |   |   |              | -       |   |   |   | - |   |   |   | 142 |   |
| Tax benefit from stock plan transactions                      |   |                | -      |   |                   |   | -      |                           |   |   | 351                                  |   |   |              | -       |   |   |   | - |   |   |   | 351 |   |
| Balance at June 30, 2011                                      |   |                | 10,315 |   |                   | $      | 1,031  |                           |   | $      | 56,278                               |   |   | $                 | (21,409 | )      |   | $      | 77,879 |   |   | $ | 113,779 |   |

|                                                     |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at March 31, 2010                                |   |                | 9,924  |   |                   | $      | 992    |                           |   | $      | 52,758                               |   |   | $                 | (20,508 | )      |   | $      | 63,898 |   |   | $ | 97,140 |   |
| Comprehensive income:                                    |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                               |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 2,752 |   |   |   | 2,752 |   |
| Other comprehensive income, net of tax:                  |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Changes in unrealized loss on derivative instruments     |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Comprehensive income                                     |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 2,752 |   |
| Issuance of common stock through stock plan transactions |   |                | 81     |   |                   |   | 9      |                           |   |   | 732                                  |   |   |              | -       |   |   |   | - |   |   |   | 741 |   |
| Issuance of restricted stock                             |   |                | 19     |   |                   |   | 2      |                           |   |   | (2                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture of restricted stock                           |   |                | (4     | )      |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                              |   |                | (2     | )      |                   |   | (1     | )                              |   |   | (35                                  | )      |   |              | -       |   |   |   | - |   |   |   | (36 | ) |
| Share-based compensation                                 |   |                | -      |   |                   |   | -      |                           |   |   | 201                                  |   |   |              | -       |   |   |   | - |   |   |   | 201 |   |
| Tax benefit from stock plan transactions                 |   |                | -      |   |                   |   | -      |                           |   |   | 135                                  |   |   |              | -       |   |   |   | - |   |   |   | 135 |   |
| Balance at June 30, 2010                                 |   |                | 10,018 |   |                   | $      | 1,002  |                           |   | $      | 53,789                               |   |   | $                 | (20,508 | )      |   | $      | 66,650 |   |   | $ | 100,933 |   |

----

DYNAMICS RESEARCH CORPORATION

|                                                          |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|---------------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at December 31, 2010                                  |   |                | 10,040 |   |                   | $      | 1,004  |                           |   | $      | 54,138                               |   |   | $                 | (21,691 | )      |   | $      | 73,734 |   |   | $ | 107,185 |   |
| Comprehensive income:                                         |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                                    |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 4,145 |   |   |   | 4,145 |   |
| Other comprehensive income, net of tax:                       |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Settlement of derivative instruments                          |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | 282     |   |   |   | - |   |   |   | 282 |   |
| Comprehensive income                                          |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 4,427 |   |
| Issuance of common stock through stock plan transactions, net |   |                | 268    |   |                   |   | 26     |                           |   |   | 1,687                                |   |   |              | -       |   |   |   | - |   |   |   | 1,713 |   |
| Issuance of restricted stock                                  |   |                | 46     |   |                   |   | 5      |                           |   |   | (5                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Repurchased shares                                            |   |                | (21    | )      |                   |   | (2     | )                              |   |   | (308                                 | )      |   |              | -       |   |   |   | - |   |   |   | (310 | ) |
| Forfeiture of restricted stock                                |   |                | (9     | )      |                   |   | (1     | )                              |   |   | 1                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                                   |   |                | (9     | )      |                   |   | (1     | )                              |   |   | (139                                 | )      |   |              | -       |   |   |   | - |   |   |   | (140 | ) |
| Share-based compensation                                      |   |                | -      |   |                   |   | -      |                           |   |   | 329                                  |   |   |              | -       |   |   |   | - |   |   |   | 329 |   |
| Tax benefit from stock plan transactions                      |   |                | -      |   |                   |   | -      |                           |   |   | 575                                  |   |   |              | -       |   |   |   | - |   |   |   | 575 |   |
| Balance at June 30, 2011                                      |   |                | 10,315 |   |                   | $      | 1,031  |                           |   | $      | 56,278                               |   |   | $                 | (21,409 | )      |   | $      | 77,879 |   |   | $ | 113,779 |   |

|                                                     |   | Common Stock Shares |   |   | Common Stock Par Value |   |   | Capital in Excess of Par Value |   |   | Accumulated Other Comprehensive Loss |   |   | Retained Earnings |    |   | Total  |   |
|----------------------------------------------------------|--------|---------------------|--------|--------|------------------------|--------|--------|--------------------------------|--------|--------|--------------------------------------|--------|--------|-------------------|---------|--------|--------|--------|
| Balance at December 31, 2009                             |   |                | 9,923  |   |                   | $      | 992    |                           |   | $      | 52,580                               |   |   | $                 | (20,505 | )      |   | $      | 61,029 |   |   | $ | 94,096 |   |
| Comprehensive income:                                    |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Net income                                               |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | -       |   |   |   | 5,621 |   |   |   | 5,621 |   |
| Other comprehensive income, net of tax:                  |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   |   |   |
| Changes in unrealized loss on derivative instruments     |   |                | -      |   |                   |   | -      |                           |   |   | -                                    |   |   |              | (3      | )      |   |   | - |   |   |   | (3 | ) |
| Comprehensive income                                     |   |                |   |   |                   |   |   |                           |   |   |                                 |   |   |              |    |   |   |   |   |   |   |   | 5,618 |   |
| Issuance of common stock through stock plan transactions |   |                | 98     |   |                   |   | 10     |                           |   |   | 851                                  |   |   |              | -       |   |   |   | - |   |   |   | 861 |   |
| Issuance of restricted stock                             |   |                | 25     |   |                   |   | 3      |                           |   |   | (3                                   | )      |   |              | -       |   |   |   | - |   |   |   | - |   |
| Forfeiture of restricted stock                           |   |                | (13    | )      |                   |   | (1     | )                              |   |   | 1                                    |   |   |              | -       |   |   |   | - |   |   |   | - |   |
| Release of restricted stock                              |   |                | (15    | )      |                   |   | (2     | )                              |   |   | (168                                 | )      |   |              | -       |   |   |   | - |   |   |   | (170 | ) |
| Share-based compensation                                 |   |                | -      |   |                   |   | -      |                           |   |   | 364                                  |   |   |              | -       |   |   |   | - |   |   |   | 364 |   |
| Tax benefit from stock plan transactions                 |   |                | -      |   |                   |   | -      |                           |   |   | 164                                  |   |   |              | -       |   |   |   | - |   |   |   | 164 |   |
| Balance at June 30, 2010                                 |   |                | 10,018 |   |                   | $      | 1,002  |                           |   | $      | 53,789                               |   |   | $                 | (20,508 | )      |   | $      | 66,650 |   |   | $ | 100,933 |   |

----

DYNAMICS RESEARCH CORPORATION

|                                                                |   | SixMonthsEndedJune 30, 2011 |     |   | SixMonths EndedJune 30,2010 |   |
|---------------------------------------------------------------------|--------|----------------------------------|----------|--------|-----------------------------|--------|
| Cash flows from operating activities:                               |   |                             |     |   |                        |   |
| Net income                                                          |   | $                                | 4,145    |   |                        | $      | 5,621 |   |
| Income from discontinued operations                                 |   |                             | -        |   |                        |   | 305 |   |
| Income from continuing operations                                   |   |                             | 4,145    |   |                        |   | 5,316 |   |
| Adjustments to reconcile net cash provided by operating activities: |   |                             |     |   |                        |   |   |   |
| Depreciation                                                        |   |                             | 1,707    |   |                        |   | 1,764 |   |
| Amortization of intangible assets                                   |   |                             | 748      |   |                        |   | 771 |   |
| Share-based compensation                                            |   |                             | 329      |   |                        |   | 364 |   |
| Investment income from equity interest                              |   |                             | (75      | )      |                        |   | (139 | ) |
| Tax benefit from stock plan transactions                            |   |                             | (575     | )      |                        |   | (164 | ) |
| Loss on extinguishment of debt                                      |   |                             | 193      |   |                        |   | - |   |
| Settlement of derivative instrument                                 |   |                             | 340      |   |                        |   | - |   |
| Deferred income taxes                                               |   |                             | 835      |   |                        |   | (2,283 | ) |
| Other                                                               |   |                             | (235     | )      |                        |   | (254 | ) |
| Change in operating assets and liabilities, net of merger:          |   |                             |     |   |                        |   |   |   |
| Contract receivables, net                                           |   |                             | (7,423   | )      |                        |   | 10,641 |   |
| Prepaid expenses and other current assets                           |   |                             | 321      |   |                        |   | 598 |   |
| Accounts payable                                                    |   |                             | 4,235    |   |                        |   | (646 | ) |
| Accrued compensation and employee benefits                          |   |                             | (2,873   | )      |                        |   | (931 | ) |
| Other accrued expenses                                              |   |                             | (810     | )      |                        |   | 667 |   |
| Other long-term liabilities                                         |   |                             | (861     | )      |                        |   | (654 | ) |
| Net cash provided by continuing operations                          |   |                             | 1        |   |                        |   | 15,050 |   |
| Net cash provided by discontinued operations                        |   |                             | -        |   |                        |   | 518 |   |
| Net cash provided by operating activities                           |   |                             | 1        |   |                        |   | 15,568 |   |
| Cash flows from investing activities:                               |   |                             |     |   |                        |   |   |   |
| Purchase of business, net of cash acquired                          |   |                             | (142,822 | )      |                        |   | - |   |
| Additions to property and equipment                                 |   |                             | (862     | )      |                        |   | (3,581 | ) |
| Proceeds from sale of investments and long-lived assets             |   |                             | -        |   |                        |   | 19 |   |
| Dividends from equity investment                                    |   |                             | 35       |   |                        |   | 74 |   |
| Increase in other assets                                            |   |                             | (24      | )      |                        |   | 291 |   |
| Net cash used in continuing operations                              |   |                             | (143,673 | )      |                        |   | (3,197 | ) |
| Net cash used in discontinued operations                            |   |                             | -        |   |                        |   | (67 | ) |
| Net cash used in investing activities                               |   |                             | (143,673 | )      |                        |   | (3,264 | ) |
| Cash flow from financing activities:                                |   |                             |     |   |                        |   |   |   |
| Proceeds from loan agreements, net                                  |   |                             | 144,021  |   |                        |   | - |   |
| Repayments under term loan                                          |   |                             | (22,000  | )      |                        |   | (4,000 | ) |
| Borrowings under revolving credit agreement                         |   |                             | -        |   |                        |   | 34,156 |   |
| Repayments under revolving credit agreement                         |   |                             | -        |   |                        |   | (36,129 | ) |
| Payments of deferred financing costs                                |   |                             | (1,900   | )      |                        |   | - |   |
| Proceeds from the exercise of stock plan transactions               |   |                             | 1,713    |   |                        |   | 861 |   |
| Repurchase of shares                                                |   |                             | (310     | )      |                        |   | - |   |
| Tax benefit from stock plan transactions                            |   |                             | 575      |   |                        |   | 164 |   |
| Net cash provided by (used in) financing activities                 |   |                             | 122,099  |   |                        |   | (4,948 | ) |
| Net increase (decrease) in cash and cash equivalents                |   |                             | (21,573  | )      |                        |   | 7,356 |   |
| Cash and cash equivalents, beginning of period                      |   |                             | 30,163   |   |                        |   | 55 |   |
| Cash and cash equivalents, end of period                            |   | $                                | 8,590    |   |                        | $      | 7,411 |   |

----

NOTE 1. BASIS OF PRESENTATIO

----

| Cash consideration                   |   | $      | 143,000 |   |
|--------------------------------------|--------|--------|---------|--------|
| Working capital adjustment           |   |   | 973     |   |
| Cash acquired                        |   |   | (1,151  | )      |
| Purchase price, net of cash acquired |   | $      | 142,822 |   |
|                                 |   |   |    |   |
| Current assets, net of cash acquired |   | $      | 23,056  |   |
| Property and equipment               |   |   | 2,273   |   |
| Other noncurrent assets              |   |   | 4       |   |
| Current liabilities                  |   |   | (14,725 | )      |
| Goodwill and other intangible assets |   |   | 132,214 |   |
| Total purchase price allocation      |   | $      | 142,822 |   |

|                                       |   |   |    |   | Weighted     |   |
|--------------------------------------------|--------|--------|---------|--------|--------------|--------|
|                                       |   |   |    |   | average      |   |
|                                       |   |   |    |   | amortization |   |
|                                       |   |   |    |   | life (years) |   |
| Customer relationships                     |   | $      | 12,700  |   |         |   | 8.5 |   |
| Contractual backlog                        |   |   | 6,700   |   |         |   | 6.5 |   |
| Trade name                                 |   |   | 600     |   |         |   | 1.5 |   |
| Goodwill                                   |   |   | 112,214 |   |         |   | - |   |
| Total goodwill and other intangible assets |   | $      | 132,214 |   |         |   |   |   |

|                              |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                              |   | June 30,           |   |   | June 30,         |   |
|                              |   | 2011               |   |   | 2010             |   |   | 2011 |   |   | 2010 |   |
| Revenue                           |   | $                  | 96,022 |   |             | $      | 86,302 |   |   | $ | 191,466 |   |   | $ | 174,546 |   |
| Operating income                  |   | $                  | 4,673  |   |             | $      | 4,968 |   |   | $ | 11,608 |   |   | $ | 9,065 |   |
| Income from continuing operations |   | $                  | 984    |   |             | $      | 1,057 |   |   | $ | 3,364 |   |   | $ | 1,441 |   |
| Net income                        |   | $                  | 984    |   |             | $      | 1,230 |   |   | $ | 3,364 |   |   | $ | 1,746 |   |

----

|                               |   | Three Months Ended |   |   | Six Months Ended |   |
|------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                               |   | June 30,           |   |   | June 30,         |   |
|                               |   | 2011               |   |   | 2010             |   |   | 2011 |   |   | 2010 |   |
| Income from continuing operations: |   |               |   |   |             |   |   |   |   |   |   |   |
| Basic                              |   | $                  | 0.10   |   |             | $      | 0.11 |   |   | $ | 0.34 |   |   | $ | 0.15 |   |
| Diluted                            |   | $                  | 0.10   |   |             | $      | 0.10 |   |   | $ | 0.33 |   |   | $ | 0.14 |   |
|                               |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Net income                         |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
| Basic                              |   | $                  | 0.10   |   |             | $      | 0.12 |   |   | $ | 0.34 |   |   | $ | 0.18 |   |
| Diluted                            |   | $                  | 0.10   |   |             | $      | 0.12 |   |   | $ | 0.33 |   |   | $ | 0.17 |   |

|                                                                 |   | Three Months EndedJune 30,2010 |   |   | Six Months EndedJune 30,2010 |   |
|----------------------------------------------------------------------|--------|------------------------------------------|--------|--------|----------------------------------------|--------|
| Product revenue                                                      |   | $                                        | 2,235  |   |                                   | $      | 4,404 |   |
|                                                                 |   |                                     |   |   |                                   |   |   |   |
| Income (loss) before benefit for income taxes                        |   |                                     | 350    |   |                                   |   | 570 |   |
| (Provision) benefit for income taxes                                 |   |                                     | (141   | )      |                                   |   | (229 | ) |
| Income (loss) from operations of discontinued operations, net of tax |   |                                     | 209    |   |                                   |   | 341 |   |
| Loss on sale of discontinued operations, net of tax benefit of $25   |   |                                     | (36    | )      |                                   |   | (36 | ) |
| Income from discontinued operations, net of tax                      |   | $                                        | 173    |   |                                   | $      | 305 |   |

|                                                                                                               |   | June 30,2011 |   |   | December 31, 2010 |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------------|--------|--------|-------------------|--------|
| Contract receivables, net                                                                                          |   |         |   |   |              |   |
| Billed receivables                                                                                                 |   | $            | 31,145 |   |              | $      | 17,123 |   |
| Unbilled receivables(1):                                                                                           |   |         |   |   |              |   |   |   |
| Revenues recorded in excess of milestone billings on fixed price contract with state and local government agencies |   |         | 6,878  |   |              |   | 5,353 |   |
| Retainages and fee withholdings                                                                                    |   |         | 485    |   |              |   | 394 |   |
| Other unbilled receivables                                                                                         |   |         | 39,680 |   |              |   | 26,045 |   |
| Total unbilled receivables                                                                                         |   |         | 47,043 |   |              |   | 31,792 |   |
| Allowance for doubtful accounts                                                                                    |   |         | (331   | )      |              |   | (521 | ) |
| Contract receivables, net                                                                                          |   | $            | 77,857 |   |              | $      | 48,394 |   |

----

|                                        |   | June 30,2011 |    |   | December 31, 2010 |   |
|---------------------------------------------|--------|--------------|---------|--------|-------------------|--------|
| Prepaid expenses and other current assets:  |   |         |    |   |              |   |
| Restricted cash                             |   | $            | 359     |   |              | $      | 350 |   |
| Other                                       |   |         | 3,260   |   |              |   | 2,574 |   |
| Prepaid expenses and other current assets   |   | $            | 3,619   |   |              | $      | 2,924 |   |
|                                        |   |         |    |   |              |   |   |   |
| Property and equipment, net:                |   |         |    |   |              |   |   |   |
| Software                                    |   | $            | 11,014  |   |              | $      | 10,834 |   |
| Furniture and other equipment               |   |         | 10,448  |   |              |   | 8,998 |   |
| Leasehold improvements                      |   |         | 10,621  |   |              |   | 7,104 |   |
| Property and equipment                      |   |         | 32,083  |   |              |   | 26,936 |   |
| Less accumulated depreciation               |   |         | (15,594 | )      |              |   | (14,717 | ) |
| Property and equipment, net                 |   | $            | 16,489  |   |              | $      | 12,219 |   |
|                                        |   |         |    |   |              |   |   |   |
| Other noncurrent assets:                    |   |         |    |   |              |   |   |   |
| Deferred compensation plan investments      |   | $            | 1,595   |   |              | $      | 1,589 |   |
| Equity investments                          |   |         | 1,039   |   |              |   | 999 |   |
| Other                                       |   |         | 2,828   |   |              |   | 1,169 |   |
| Other noncurrent assets                     |   | $            | 5,462   |   |              | $      | 3,757 |   |
|                                        |   |         |    |   |              |   |   |   |
| Accrued compensation and employee benefits: |   |         |    |   |              |   |   |   |
| Accrued compensation and related taxes      |   | $            | 10,578  |   |              | $      | 8,487 |   |
| Accrued vacation                            |   |         | 7,526   |   |              |   | 4,008 |   |
| Accrued pension liability                   |   |         | 1,099   |   |              |   | 4,000 |   |
| Other                                       |   |         | 3,233   |   |              |   | 1,551 |   |
| Accrued compensation and employee benefits  |   | $            | 22,436  |   |              | $      | 18,046 |   |
|                                        |   |         |    |   |              |   |   |   |
| Other accrued expenses:                     |   |         |    |   |              |   |   |   |
| Accrued income taxes                        |   | $            | -       |   |              | $      | 390 |   |
| Deferred gain on sale of building           |   |         | 676     |   |              |   | 676 |   |
| Deferred rent liability                     |   |         | 648     |   |              |   | 591 |   |
| Other                                       |   |         | 2,787   |   |              |   | 2,960 |   |
| Other accrued expenses                      |   | $            | 4,111   |   |              | $      | 4,617 |   |
|                                        |   |         |    |   |              |   |   |   |
| Other long-term liabilities:                |   |         |    |   |              |   |   |   |
| Accrued pension liability                   |   | $            | 15,860  |   |              | $      | 16,694 |   |
| Deferred rent liability                     |   |         | 6,744   |   |              |   | 4,185 |   |
| Deferred gain on sale of building           |   |         | 2,367   |   |              |   | 2,705 |   |
| Deferred compensation plan liability        |   |         | 1,595   |   |              |   | 1,589 |   |
| Other                                       |   |         | 1,542   |   |              |   | 1,894 |   |
| Other long-term liabilities                 |   | $            | 28,108  |   |              | $      | 27,067 |   |

| (1) | At June 30, 2011 and December 31, 2010, unbilled retainages and fee withholdings of $0.4 million and $0.3 million were not anticipated to be billed within one year. Additionally, at June 30, 2011 and December 31, 2010, $0.8 million and $1.0 million, respectively, of the other unbilled receivable balances are not scheduled to be invoiced within one year. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                       |   | Cost   |   |   | AccumulatedAmortization |   |   | Net    |   |
|----------------------------|--------|--------|--------|--------|-------------------------|--------|--------|--------|--------|
| Customer relationships     |   | $      | 14,600 |   |                    | $      | (594   | )      |   | $ | 14,006 |   |
| Contractual backlog        |   |   | 6,700  |   |                    |   | -      |   |   |   | 6,700 |   |
| Customer contracts         |   |   | 3,500  |   |                    |   | (3,082 | )      |   |   | 418 |   |
| Non-competition agreements |   |   | 1,400  |   |                    |   | (1,339 | )      |   |   | 61 |   |
| Trade name                 |   |   | 600    |   |                    |   | -      |   |   |   | 600 |   |
| Total                      |   | $      | 26,800 |   |                    | $      | (5,015 | )      |   | $ | 21,785 |   |

|                       |   | Cost   |   |   | AccumulatedAmortization |   |   | Net |   |
|----------------------------|--------|--------|--------|--------|-------------------------|--------|--------|-----|--------|
| Customer relationships     |   | $      | 1,900  |   |                    | $      | (440   | )   |   | $ | 1,460 |   |
| Customer contracts         |   |   | 3,500  |   |                    |   | (2,857 | )   |   |   | 643 |   |
| Non-competition agreements |   |   | 1,400  |   |                    |   | (970   | )   |   |   | 430 |   |
| 8(a) contract transition   |   |   | 130    |   |                    |   | (130   | )   |   |   | - |   |
| Total                      |   | $      | 6,930  |   |                    | $      | (4,397 | )   |   | $ | 2,533 |   |

| Remainder of 2011   |   | $ | 3,044 |   |
|---------------------|--------|---|-------|--------|
| 2012                |   | $ | 4,124 |   |
| 2013                |   | $ | 3,722 |   |
| 2014                |   | $ | 3,663 |   |
| 2015 and thereafter |   | $ | 7,232 |   |

----

----

|                                                             |   | Three Months EndedJune 30, |   |   | Six Months EndedJune 30, |   |
|------------------------------------------------------------------|--------|----------------------------|--------|--------|--------------------------|--------|
|                                                             |   | 2011                       |   |   | 2010                     |   |   | 2011 |   |   | 2010 |   |
| Gain (loss) recognized in other comprehensive income, net of tax |   | $                          | 228    |   |                     | $      | - |   |   | $ | 282 |   |   | $ | (3 | ) |

----

|                             | Balance Sheet Location  |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
|----------------------------------|-------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| Assets:                          |                    |   |    |   |   |    |   |   |    |   |   |   |   |
| Investments held in Rabbi Trusts | Other noncurrent assets |   | $       | 1,595  |   |    | $      | -      |    |   | $      | -      |   |   | $ | 1,595 |   |

|                             | Balance Sheet Location      |   | Level 1 |   |   | Level 2 |   |   | Level 3 |   |   | Total  |   |
|----------------------------------|-----------------------------|--------|---------|--------|--------|---------|--------|--------|---------|--------|--------|--------|--------|
| Assets:                          |                        |   |    |   |   |    |   |   |    |   |   |   |   |
| Investments held in Rabbi Trusts | Other noncurrent assets     |   | $       | 1,589  |   |    | $      | -      |    |   | $      | -      |   |   | $ | 1,589 |   |
|                             |                        |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Liabilities:                     |                        |   |    |   |   |    |   |   |    |   |   |   |   |   |   |   |   |
| Interest rate swap               | Other long-term liabilities |   | $       | -      |   |    | $      | 467    |    |   | $      | -      |   |   | $ | 467 |   |

|                                          |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                          |   | June 30,           |   |   | June 30,         |   |
|                                          |   | 2011               |   |   | 2010             |   |   | 2011 |   |   | 2010 |   |
| Interest cost on projected benefit obligation |   | $                  | 1,030  |   |             | $      | 1,053 |   |   | $ | 2,060 |   |   | $ | 2,107 |   |
| Expected return on plan assets                |   |               | (1,275 | )      |             |   | (1,108 | ) |   |   | (2,550 | ) |   |   | (2,216 | ) |
| Recognized actuarial loss                     |   |               | 302    |   |             |   | 275 |   |   |   | 605 |   |   |   | 550 |   |
| Net periodic pension expense                  |   | $                  | 57     |   |             | $      | 220 |   |   | $ | 115 |   |   | $ | 441 |   |

----

|                                   |   | Three Months Ended |   |   | Six Months Ended |   |
|----------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                   |   | June 30,           |   |   | June 30,         |   |
|                                   |   | 2011               |   |   | 2010             |   |   | 2011 |   |   | 2010 |   |
| Cost of products and services          |   | $                  | 99     |   |             | $      | 102 |   |   | $ | 186 |   |   | $ | 175 |   |
| Selling, general and administrative    |   |               | 43     |   |             |   | 99 |   |   |   | 143 |   |   |   | 189 |   |
| Total share-based compensation expense |   | $                  | 142    |   |             | $      | 201 |   |   | $ | 329 |   |   | $ | 364 |   |

|                        |   | Number of Shares |     |   | WeightedAverage Exercise Price |   |   | WeightedAverageRemainingContractualTerm(in years) |   |   | Aggregate Intrinsic Value |   |
|----------------------------------|--------|-----------------------|----------|--------|------------------------------------------|--------|--------|---------------------------------------------------|--------|--------|-------------------------------------|--------|
| Outstanding at December 31, 2010 |   |                  | 472,490  |   |                                     | $      | 10.23  |                                              |   |   | 1.5                                 |   |   | $ | 1,688 |   |
| Granted                          |   |                  | -        |   |                                     | $      | -      |                                              |   |   |                                |   |   |   |   |   |
| Exercised                        |   |                  | (377,000 | )      |                                     | $      | 8.96   |                                              |   |   |                                |   |   |   |   |   |
| Cancelled                        |   |                  | (2,000   | )      |                                     | $      | 18.14  |                                              |   |   |                                |   |   |   |   |   |
| Outstanding at June 30, 2011     |   |                  | 93,490   |   |                                     | $      | 15.15  |                                              |   |   | 5.1                                 |   |   | $ | 23 |   |
|                             |   |                  |     |   |                                     |   |   |                                              |   |   |                                |   |   |   |   |   |
| Exercisable at December 31, 2010 |   |                  | 432,490  |   |                                     | $      | 9.94   |                                              |   |   | 0.7                                 |   |   | $ | 1,684 |   |
| Exercisable at June 30, 2011     |   |                  | 63,490   |   |                                     | $      | 15.98  |                                              |   |   | 3.3                                 |   |   | $ | 15 |   |

|                        |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------|--------|--------------------|--------|--------|------------------|--------|
|                        |   | June 30,           |   |   | June 30,         |   |
|                        |   | 2011               |   |   | 2010             |   |   | 2011 |   |   | 2010 |   |
| Cash proceeds received      |   | $                  | 1,241  |   |             | $      | 648 |   |   | $ | 1,541 |   |   | $ | 669 |   |
| Intrinsic value realized    |   | $                  | 1,885  |   |             | $      | 337 |   |   | $ | 2,415 |   |   | $ | 398 |   |
| Income tax benefit realized |   | $                  | 687    |   |             | $      | 131 |   |   | $ | 846 |   |   | $ | 133 |   |

----

|                 | Number of Shares                                               |   | WeightedAverageGrant-Date Fair Value                               |
|--------------------------------|---------------------------------------------------------------------|--------|-------------------------------------------------------------------------|
| Nonvested at December 31, 2010 |           98,755  |   |  $          9.57 |
| Granted                        |           46,500  |   |  $        14.68            |
| Vested                         |         (41,351)            |   |  $          9.36 |
| Cancelled                      |           (9,467) |   |  $        12.27            |
| Nonvested at June 30, 2011     |           94,437  |   |  $        11.90            |

|                                                              |   | Three Months Ended |       |   | Six Months Ended |   |
|-------------------------------------------------------------------|--------|--------------------|------------|--------|------------------|--------|
|                                                              |   | June 30,           |       |   | June 30,         |   |
|                                                              |   | 2011               |       |   | 2010             |   |   | 2011 |   |   | 2010 |   |
|  Weighted average shares outstanding - Basic                 |   |               | 10,050,545 |   |             |   | 9,896,738 |   |   |   | 9,971,411 |   |   |   | 9,858,538 |   |
|  Diluted effect of stock options and restricted stock grants |   |               | 143,626    |   |             |   | 174,071 |   |   |   | 174,327 |   |   |   | 184,378 |   |
|  Weighted average shares outstanding - Diluted               |   |               | 10,194,171 |   |             |   | 10,070,809 |   |   |   | 10,145,738 |   |   |   | 10,042,916 |   |

----

----

|   | ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
|--------|-----------------------------------------------------------------------------------------------------|

|   | · | Our dependency on the Federal government and changes in federal spending priorities; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | A shift in pricing structure for government contracts; |
|--------|--------|--------------------------------------------------------|

|   | · | An increased focus on the elimination of overhead within the Department of Defense; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | Failure to obtain new government contracts or retain existing contracts; |
|--------|--------|--------------------------------------------------------------------------|

|   | · | The effect of Federal government in-sourcing on our business; |
|--------|--------|---------------------------------------------------------------|

|   | · | The loss of skilled personnel; |
|--------|--------|--------------------------------|

|   | · | The risk of security breaches in systems we develop, install or maintain; |
|--------|--------|---------------------------------------------------------------------------|

|   | · | Failure by Congress to timely approve budgets governing spending by Federal agencies; |
|--------|--------|---------------------------------------------------------------------------------------|

|   | · | Risks due to government contract provisions providing for rights unfavorable to us, including the ability to terminate contracts at any time for convenience; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Potential systems or service failures that could result in liability to our company; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | Failure to obtain or maintain necessary security clearances; |
|--------|--------|--------------------------------------------------------------|

|   | · | Risks associated with various, complex Federal government procurement laws and regulations; |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | Adverse effects in the event of an unfavorable Federal audit of our contracts; |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | Failure to adequately safeguard confidential information; |
|--------|--------|-----------------------------------------------------------|

|   | · | An adverse outcome related to ongoing legal proceedings; |
|--------|--------|----------------------------------------------------------|

|   | · | Competitive conditions in current markets and difficulties in entering new markets; |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | Our ability to maintain sufficient sources of financing and the risk that our financing requirements should increase; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | Acquired operations, including High Performance Technologies, Inc (“HPTi”) may perform at levels below our financial expectations, or we may be unable to successfully integrate acquired operations; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Our substantial investment in goodwill may become impaired requiring write downs, which could significantly reduce operating income. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Issuances of our securities are subject to federal and state securities laws, and certain holders of common stock issued by us may be entitled to rescind their purchases. Approximately 148,000 shares issued through the Company's employee stock purchase plan between July 2007 and May 2011, at purchase prices ranging from $ 6.63 to $14.12 per share, were not registered under the federal securities law.  The Company intends to offer to repurchase the approximately 119,000 shares that continue to be held by the original purchasers. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| · | Solutions.  We deliver high-value differentiated solutions to our clients.  Our five areas of differentiated expertise are business transformation, information technology, training and performance support, management services and science and engineering services.  We believe our solutions align well with the needs of our government customers today through improved efficiencies and effectiveness, procurement reform, transformational and technology based changes, and ongoing, changing security threats. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Markets and Customers.  We target markets, which based on long-term market force drivers, have sustained government projected demand for services.  We select customers from the spectrum of federal government departments and agencies in our target growth markets with needs that well match the solutions we provide.  Currently our target growth markets include homeland security, healthcare, cyber security, intelligence and financial/regulatory reform.  In 2010, approximately 60% of our revenue was derived from clients in these markets and selected high growth areas of defense such as unmanned aerial systems and force readiness and training. Our 2010 revenue derived from these markets grew 12% over 2009. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Prime Government and Agency-Wide Contracts.  We hold an enviable portfolio of government and agency-wide multiple award schedule ID/IQ task order contracts.  Today, these types of contracts are the federal government’s preferred means of procurement for services. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| · | Acquisitions.  We use acquisitions, funded through both operationally generated cash and leverage, to strengthen our position in our target growth markets. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                  |   | Three Months Ended June 30, |   |   |   |
|-------------------------------------------------------|--------|-----------------------------|--------|--------|--------|
|                                                  |   | 2011                        |   |   |   |   | 2010 |   |   |   |
| (in millions)                                         |   | $(1)                        |   |   | %      |   |   |   |   | $(1) |   |   | % |   |   |   |
|  Revenue                                         |   | $                           | 68.5   |   |   |   |   |   |   |   | $ | 65.3 |   |   |   |   |   |   |
|  Gross profit                                    |   | $                           | 10.4   |   |   |   | 15.2 | % |   |   |   | $ | 10.2 |   |   |   | 15.6 | % |   |   |
|  Selling, general and administrative             |   |                        | 6.8    |   |   |   | 9.9 | % |   |   |   |   | 5.1 |   |   |   | 7.8 | % |   |   |
|  Amortization of intangible assets               |   |                        | 0.4    |   |   |   | 0.5 | % |   |   |   |   | 0.4 |   |   |   | 0.6 | % |   |   |
|  Operating income                                |   |                        | 3.2    |   |   |   | 4.7 | % |   |   |   |   | 4.7 |   |   |   | 7.2 | % |   |   |
|  Interest expense, net                           |   |                        | (0.8   | )      |   |   | (1.1 | )% |   |   |   |   | (0.4 | ) |   |   | (0.6 | )% |   |   |
|  Other income, net                               |   |                        | 0.1    |   |   |   | 0.1 | % |   |   |   |   | (0.0 | ) |   |   | 0.0 | % |   |   |
|  Provision for income taxes                      |   |                        | 1.1    |   |   |   | 43.5 | % |   | (2) |   |   | 1.8 |   |   |   | 40.5 | % |   | (2) |
|  Effect of discontinued operations, net of taxes |   |                        | -      |   |   |   | 0.0 | % |   |   |   |   | 0.2 |   |   |   | 0.3 | % |   |   |
|  Net income                                      |   | $                           | 1.4    |   |   |   | 2.1 | % |   |   |   | $ | 2.8 |   |   |   | 4.2 | % |   |   |

|                                                  |   | Six Months Ended June 30, |   |   |   |
|-------------------------------------------------------|--------|---------------------------|--------|--------|--------|
|                                                  |   | 2011                      |   |   |   |   | 2010 |   |   |   |
| (in millions)                                         |   | $(1)                      |   |   | %      |   |   |   |   | $(1) |   |   | % |   |   |   |
|  Revenue                                         |   | $                         | 138.0  |   |   |   |   |   |   |   | $ | 133.9 |   |   |   |   |   |   |
|  Gross profit                                    |   | $                         | 21.2   |   |   |   | 15.4 | % |   |   |   | $ | 21.0 |   |   |   | 15.6 | % |   |   |
|  Selling, general and administrative             |   |                      | 12.5   |   |   |   | 9.0 | % |   |   |   |   | 11.0 |   |   |   | 8.2 | % |   |   |
|  Amortization of intangible assets               |   |                      | 0.7    |   |   |   | 0.5 | % |   |   |   |   | 0.8 |   |   |   | 0.6 | % |   |   |
|  Operating income                                |   |                      | 8.0    |   |   |   | 5.8 | % |   |   |   |   | 9.1 |   |   |   | 6.8 | % |   |   |
|  Interest expense, net                           |   |                      | (1.0   | )      |   |   | (0.7 | )% |   |   |   |   | (0.7 | ) |   |   | (0.6 | )% |   |   |
|  Other income, net                               |   |                      | 0.2    |   |   |   | 0.1 | % |   |   |   |   | 0.1 |   |   |   | 0.1 | % |   |   |
|  Provision for income taxes                      |   |                      | 3.0    |   |   |   | 41.7 | % |   | (2) |   |   | 3.2 |   |   |   | 37.4 | % |   | (2) |
|  Effect of discontinued operations, net of taxes |   |                      | -      |   |   |   | 0.0 | % |   |   |   |   | 0.3 |   |   |   | 0.2 | % |   |   |
|  Net income                                      |   | $                         | 4.1    |   |   |   | 3.0 | % |   |   |   | $ | 5.6 |   |   |   | 4.2 | % |   |   |

| (1)    | Totals may not add due to rounding.                                                                                       |
|--------|--------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                           |
| (2)    | The percentage of provision for income taxes relates to a percentage of income from continuing operations before income taxes. |

|                                       |   | Three Months Ended June 30, |   |
|--------------------------------------------|--------|-----------------------------|--------|
|                                       |   | 2011                        |   |   | 2010 |   |
| (in millions)                              |   | $                           |   |   | %(1) |   |   | $ |   |   | % |   |
| National defense and intelligence agencies |   | $                           | 47.5   |   |   |   | 69.3 | % |   | $ | 40.6 |   |   |   | 62.2 | % |
| Homeland security                          |   |                        | 11.3   |   |   |   | 16.5 |   |   | $ | 13.2 |   |   |   | 20.3 | % |
| Federal civilian agencies                  |   |                        | 5.8    |   |   |   | 8.4 |   |   | $ | 6.2 |   |   |   | 9.4 | % |
| Total revenue from federal agencies        |   |                        | 64.6   |   |   |   | 94.3 |   |   | $ | 60.0 |   |   |   | 91.9 | % |
| State and local government agencies        |   |                        | 3.9    |   |   |   | 5.7 |   |   | $ | 5.3 |   |   |   | 8.1 | % |
| Other                                      |   |                        | 0.0    |   |   |   | 0.0 |   |   | $ | 0.0 |   |   |   | 0.0 | % |
| Total revenue                              |   | $                           | 68.5   |   |   |   | 100.0 | % |   | $ | 65.3 |   |   |   | 100.0 | % |

----

|                                       |   | Six Months Ended June 30, |   |
|--------------------------------------------|--------|---------------------------|--------|
|                                       |   | 2011                      |   |   | 2010 |   |
| (in millions)                              |   | $                         |   |   | %(1) |   |   | $ |   |   | % |   |
| National defense and intelligence agencies |   | $                         | 95.3   |   |   |   | 69.0 | % |   | $ | 84.9 |   |   |   | 63.4 | % |
| Homeland security                          |   |                      | 23.6   |   |   |   | 17.1 |   |   | $ | 26.2 |   |   |   | 19.5 | % |
| Federal civilian agencies                  |   |                      | 11.6   |   |   |   | 8.4 |   |   | $ | 12.1 |   |   |   | 9.1 | % |
| Total revenue from federal agencies        |   |                      | 130.5  |   |   |   | 94.6 |   |   | $ | 123.2 |   |   |   | 92.0 | % |
| State and local government agencies        |   |                      | 7.5    |   |   |   | 5.4 |   |   | $ | 10.7 |   |   |   | 8.0 | % |
| Other                                      |   |                      | 0.0    |   |   |   | 0.0 |   |   | $ | 0.0 |   |   |   | 0.0 | % |
| Total revenue                              |   | $                         | 138.0  |   |   |   | 100.0 | % |   | $ | 133.9 |   |   |   | 100.0 | % |

| (1) | Total revenue from federal agencies does not add due to rounding. |
|-----|-------------------------------------------------------------------|

|                                                |   | Three Months Ended |   |   | Six Months Ended |   |
|-----------------------------------------------------|--------|--------------------|--------|--------|------------------|--------|
|                                                |   | June 30,           |   |   | June 30,         |   |
|                                                |   | 2011               |   |   | 2010             |   |   | 2011 |   |   | 2010 |   |
|  Fixed price, including service type contracts |   |               | 51     | %      |             |   | 44 | % |   |   | 50 | % |   |   | 45 | % |
|  Time and materials                            |   |               | 30     |   |             |   | 35 |   |   |   | 30 |   |   |   | 34 |   |
|  Cost reimbursable                             |   |               | 19     |   |             |   | 21 |   |   |   | 20 |   |   |   | 21 |   |
|                                                |   |               | 100    | %      |             |   | 100 | % |   |   | 100 | % |   |   | 100 | % |
|                                                |   |               |   |   |             |   |   |   |   |   |   |   |   |   |   |   |
|  Prime contract                                |   |               | 76     | %      |             |   | 72 | % |   |   | 75 | % |   |   | 72 | % |
|  Sub-contract                                  |   |               | 24     |   |             |   | 28 |   |   |   | 25 |   |   |   | 28 |   |
|                                                |   |               | 100    | %      |             |   | 100 | % |   |   | 100 | % |   |   | 100 | % |

| (in millions) |   | June 30, 2011 |   |   |   | December 31, 2010 |   |
|---------------|--------|---------------|--------|--------|--------|-------------------|--------|
| Backlog:      |   |          |   |   |   |              |   |
| Funded        |   | $             | 161.6  |   | (1)    |              | $      | 133.5 |   |
| Unfunded      |   |          | 670.4  |   |   |              |   | 267.4 |   |
| Total backlog |   | $             | 832.0  |   | (2)    |              | $      | 400.9 |   |

|  (1) | Funded backlog includes $60.2 million from HPTi |
|-----------|-------------------------------------------------|
|  (2) | Total backlog includes $478.8 million from HPTi |

----

----

----

----

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4. CONTROLS AND PROCEDURES

----

ITEM 1. LEGAL PROCEEDINGS

ITEM 1A. RISK FACTORS

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

| Period                                   |   | Total Number of Shares Purchased(1) |   |   | Average Price Paid Per Share |   | Total Number of Shares Purchased as Part of Publicly Announced Programs | Approximate Dollar Value Of Shares that May Yet Be Purchased Under the Programs |
|------------------------------------------|--------|-------------------------------------|--------|--------|------------------------------|--------|-------------------------------------------------------------------------|---------------------------------------------------------------------------------|
| April 1, 2011 to April 30, 2011          |   |                                | 653    |   |                         | $      | 16.06                                                                   |                                                                            |   |   |
| May 1, 2011 to May 31, 2011              |   |                                | 87,072 |   |                         | $      | 15.28                                                                   |                                                                            |   |   |
| June 1, 2011 to  June 30, 2011 |   |                                | 227    |   |                         | $      | 15.31                                                                   |                                                                            |   |   |
| Total                                    |   |                                | 87,952 |   |                         | $      | 15.28                                                                   |                                                                            |   |   |

| (1)  | In December 2010, DRC’s board of directors authorized a share repurchase program which allowed us to buy All shares repurchased were not part of a publically announced program and represented shares repurchased to cover option costs in connection with the exercise of stock options and payroll withholding taxes in connection with the vesting of restricted stock awards. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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ITEM 6. EXHIBITS

|   | 10.1   |   | Commitment Letter, dated as of June 2, 2011, by and among Dynamics Research Corporation, Bank of America, N.A., Merrill, Lynch, Pierce, Fenner and Smith Incorporated, SunTrust Bank, SunTrust Robinson Humphrey, Inc., PNC Bank, National Association and PNC Capital Markets, LLC. |
|--------|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                                                                                                                                                                 |
|   | 10.2   |   | Commitment Letter, dated as of June 2, 2011, by and between Dynamics Research Corporation and Ares Management, LLC.                                                                                                                                                                  |
|   |   |   |                                                                                                                                                                                                                                                                                 |
|   | 31.1   |   | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                             |
|   |   |   |                                                                                                                                                                                                                                                                                 |
|   | 31.2   |   | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                             |
|   |   |   |                                                                                                                                                                                                                                                                                 |
|   | 32.1   |   | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                               |
|   |   |   |                                                                                                                                                                                                                                                                                 |
|   | 32.2   |   | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                               |

----

|                            | DYNAMICS RESEARCH CORPORATION                                     |
|---------------------------------|-------------------------------------------------------------------|
|                            | (Registrant)                                                      |
|                            |                                                              |
|                            |                                                              |
| Date:  August 9, 2011 | /s/ David Keleher                                                 |
|                            | Senior Vice President, Chief Financial Officer and Treasurer      |
|                            | (Principal Financial Officer)                                     |
|                            |                                                              |
| Date:  August 9, 2011 | /s/ Shaun N. McCarthy                                             |
|                            | Vice President, Corporate Controller and Chief Accounting Officer |
|                            | (Principal Accounting Officer)                                    |
|                            |                                                              |
|                            |                                                              |

----