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

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

             For the quarterly period ended  September 25, 1997

                                  OR

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

             For the transition period from          to

             Commission file number                1-3879


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

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

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

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

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

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

         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.  9,050,408 shares of
common stock having a par value of $0.10 per share were outstanding at November
1, 1997.

<PAGE>

                                     DYNCORP

                                      INDEX

                                                                         Page
PART I.  FINANCIAL INFORMATION

     Consolidated Condensed Balance Sheets -
         September 25, 1997 and December 31, 1996                        3-4

     Consolidated Condensed Statements of Operations -
         Three and Nine Months Ended September 25, 1997                   5
         and September 26, 1996

     Consolidated Condensed Statements of Cash Flows -
         Nine Months Ended September 25, 1997 and September 26, 1996      6

     Consolidated Statement of Permanent Stockholders' Equity             7

     Notes to Consolidated Condensed Financial Statements               8-13

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

PART II.  OTHER INFORMATION

     Item 1.  Legal Proceedings                                          17

     Item 4.  Results of Votes of Security Holders                       17

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

     Signatures                                                          17

     Exhibit 11 - Computations of Earnings Per Common Share              18

<PAGE>

                           PART I. FINANCIAL INFORMATION

                              DYNCORP AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                    SEPTEMBER 25, 1997 AND DECEMBER 31, 1996
                              (Dollars in thousands)

                                                       September 25,
                                                           1997     December 31,
                                                         Unaudited       1996
Assets
Current Assets:
 Cash and cash equivalents                              $   26,329   $   25,877
 Accounts receivable and contracts in process (Note 2)     187,270      187,679
 Inventories of purchased products and supplies,
     at lower of cost (first-in, first-out) or market        6,670        1,030
 Other current assets                                       10,043       10,009
                                                          --------     --------
     Total current assets                                  230,312      224,595

Property and Equipment (net of accumulated depreciation
 and amortization of $22,674 in 1997 and $16,737 in 1996)   20,387       19,084

Intangible Assets (net of accumulated amortization
 of $44,662 in 1997 and $43,028 in 1996)                    47,293       48,927

Other Assets (Notes 2 and 8)                                80,489       76,146
                                                          --------     --------
Total Assets                                            $  378,481   $  368,752
                                                          ========     ========

See accompanying notes to consolidated condensed financial statements.

<PAGE>


                              DYNCORP AND SUBSIDIARIES
                        CONSOLIDATED CONDENSED BALANCE SHEETS
                       SEPTEMBER 25, 1997 AND DECEMBER 31, 1996
                   (Dollars in thousands, except per share amounts)

                                                    September 25,
                                                        1997        December 31,
                                                      Unaudited         1996
Liabilities and Stockholders' Equity
Current Liabilities:
 Notes payable and current portion of long-term debt    $    1,139   $      628
 Accounts payable                                           35,404       42,716
 Advances on contracts in process                            7,434        6,002
 Accrued liabilities                                       105,589       99,499
                                                          --------    ---------
     Total current liabilities                             149,566      148,845

Long-Term Debt  (Notes 2 and 5)                            152,585      103,555

Other Liabilities and Deferred Credits  (Note 8)            78,925       79,513

Contingencies and Litigation  (Note 8)                           -            -

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

Permanent Stockholders' Equity (Note 4):
 Preferred Stock, Class C 18% cumulative, convertible,
   $24.25 liquidation value (liquidation  value  including
   unrecorded  dividends of $14,147 in 1996), 123,711
   shares authorized,issued and outstanding in 1996              -        3,000
 Common Stock, par value ten cents per share, authorized
   20,000,000 shares; issued 3,852,522 shares in 1997
   and 3,315,673 shares in 1996                                385          332
 Common Stock Warrants                                       3,859       11,139
 Paid-in Surplus                                           122,613      148,234
 Reclassification to temporary equity for redemption
   value greater than par value                           (151,121)    (138,694)
 Deficit                                                   (92,826)    (101,259)
 Common Stock Held in Treasury, at cost; 1,642,848
   shares and 170,716 warrants in 1997 and 1,514,482
   shares and 170,716 warrants in 1996                     (28,028)     (25,235)
 Unearned ESOP Shares                                       (9,284)           -
                                                         ----------   ----------
Total Liabilities and Stockholders' Equity              $  378,481   $  368,752
                                                         ==========   ==========

See accompanying notes to consolidated condensed financial statements.

<PAGE>
<TABLE>

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

                                    UNAUDITED
<CAPTION>

                                              Three Months Ended          Nine Months Ended
                                          September 25, September 26, September 25, September 26,
                                               1997         1996         1997          1996
<S>                                        <C>          <C>          <C>          <C>
Revenues:
   Information and Engineering Technology   $  66,521    $  63,882    $ 201,638    $ 201,383
   Aerospace Technology                       111,506       97,686      329,541      277,065
   Enterprise Management                      106,501       85,400      313,964      259,876
   Intercompany eliminations                     (696)           -       (1,478)           -
                                            ----------   ----------   ----------   ----------
                 Total revenues               283,832      246,968      843,665      738,324
                                            ----------   ----------   ----------   ----------
Costs and Expenses:
   Costs of services                          269,851      233,817      806,018      700,761
   Corporate selling and administrative         4,062        4,504       12,855       13,315
   Interest income                               (463)        (336)      (1,460)      (1,312)
   Interest expense                             3,730        2,548       10,621        7,644
   Other                                          555          470        1,850        1,321
                                            ----------   ----------   ----------   ----------
                 Total costs and expenses     277,735      241,003      829,884      721,729
                                            ----------   ----------   ----------   ----------
Earnings from continuing operations
   before income taxes and minority interest    6,097        5,965       13,781       16,595
       Provision for income taxes (Note 6)      1,623        2,357        4,351        6,570
                                            ----------   ----------   ----------   ----------

Earnings from continuing operations
    before minority interest                    4,474        3,608        9,430       10,025
       Minority interest                          387          367          997          990
                                            ----------   ----------   ----------   ----------

Earnings from continuing operations             4,087        3,241        8,433        9,035
    Earnings from discontinued operations,
       net of income taxes                          -            -            -          865
                                            ----------   ----------   ----------   ----------
Net earnings                                $   4,087    $   3,241    $   8,433    $   9,900
                                            ==========   ==========   ==========   ==========
   Preferred Class C dividends not
      declared or recorded (Note 4)                 -         (583)           -       (1,675)
                                            ----------   ----------   ----------   ----------
Common stockholders' share of earnings      $   4,087    $   2,658    $   8,433    $   8,225
                                            ==========   ==========   ==========   ==========

Weighted average number of common shares
   outstanding and dilutive common stock
   equivalents (Note 7)                    10,457,765   11,686,090   10,694,237   11,724,925
                                           ==========   ==========   ==========   ==========

Common stockholders' share of earnings per
   common share - primary and fully diluted
Continuing operations                       $    0.39    $    0.23    $    0.79    $    0.63
Discontinued operations                             -            -            -         0.07
                                                -----        -----        -----        -----
                                            $    0.39    $    0.23    $    0.79    $    0.70
                                                =====        =====        =====        =====

See accompanying notes to consolidated condensed financial statements.

</TABLE>

<PAGE>
<TABLE>

                           DYNCORP AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                             (Dollars in thousands)
                                    UNAUDITED
<CAPTION>
                                                                     Nine Months Ended
                                                                September 25, September 26,
                                                                    1997         1996
<S>                                                              <C>          <C>
Cash Flows from Operating Activities:
 Net earnings                                                    $  8,433     $  9,900
 Adjustments to reconcile net earnings from operations
   to net cash provided (used):
 Depreciation and amortization                                      7,254        6,167
 Payment of income taxes on gain on sale of Commercial
   Aviation  business                                                   -      (13,990)
 Gain from discontinued operations                                      -         (865)
 Increase in reserves for divested or acquired businesses             325            -
 Proceeds from insurance settlement for asbestos claims             1,488            -
 Other                                                               (744)      (1,417)
 Changes in current assets and liabilities, net of acquisitions:
   Increase in current assets except cash, cash equivalents and
     notes receivable                                              (5,327)        (340)
   Decrease in current liabilities except notes payable
     and current portion of long term debt                           (195)      (1,578)
                                                                  --------     --------
Cash provided (used) by operating activities                       11,234       (2,123)
                                                                  --------     --------

Cash Flows from Investing Activities:
 Sale of property and equipment                                        57          636
 Purchase of property and equipment                                (4,462)      (3,972)
 Assets and liabilities of acquired businesses
   (excluding cash acquired)                                            -       (1,805)
 Increases in investment in unconsolidated
   subsidiaries                                                    (3,351)        (511)
 Increase in notes receivable                                        (168)           -
 Decrease in cash on deposit for letters of credit                      -        6,244
 Other                                                               (210)        (248)
                                                                  --------     --------
Cash (used) provided by investing activities                       (8,134)         344
                                                                  --------     --------

Cash Flows from Financing Activities:
 Treasury stock purchased                                            (284)      (9,791)
 Payment on indebtedness                                             (664)      (1,003)
 Retirement of Contract Receivable Collateralized Notes 1992-1    (98,500)           -
 Proceeds from Contract Receivable Collateralized Notes 1997-1     50,000            -
 Proceeds from issuance of Senior Notes (Note 5)                   99,484            -
 Stock released to Employee Stock Ownership Plan                    2,595          503
 Loan to Employee Stock Ownership Plan (Note 4)                   (11,879)           -
 Deferred financing expenses                                       (5,080)      (1,304)
 Common stock and warrants purchased from investors (Note 4)      (37,819)           -
 Other                                                               (501)          17
                                                                  --------     --------
Cash used by financing activities                                  (2,648)     (11,578)
                                                                  --------     --------
Net Increase (Decrease) in Cash and Cash Equivalents             $    452     $(13,357)
Cash and Cash Equivalents at Beginning of the Period               25,877       31,151
                                                                  --------     --------
Cash and Cash Equivalents at End of the Period                   $ 26,329     $ 17,794
                                                                  ========     ========

Supplemental Cash Flow Information:
Cash paid for income taxes (Note 6)                              $  2,534     $ 17,307
                                                                  ========     ========
Cash paid for interest                                           $ 11,449     $  7,594
                                                                  ========     ========

See accompanying notes to consolidated condensed financial statements.


</TABLE>

<PAGE>
<TABLE>

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

<CAPTION>
                                                                                      Adjustment for
                                                                 Common              Redemption Value                       Unearned
                                       Preferred     Common       Stock     Paid-in   Greater than                Treasury    ESOP
                                         Stock        Stock    Warrants     Surplus     Par Value      Deficit      Stock    Shares
<S>                                     <C>          <C>       <C>         <C>         <C>          <C>         <C>         <C>
Balance, December 31, 1996              $ 3,000      $  332    $ 11,139    $148,234    $(138,694)   $(101,259)  $ (25,235)  $     -

   Stock issued under
      Restricted Stock Plan                              11                    (799)
   Treasury stock issued                                                                                              233
   Treasury stock purchased                                                                                          (232)
   Stock warrants and options exercised                   4         (83)        179
   Loans to the Employee
       Stock Ownership Plan (Note 4)                                                                                        (11,879)
   Payment received on ESOP note                                                                                              2,595
   Class C Preferred Stock converted
        and warrants exercised (Note 4)  (3,000)         95      (2,007)      5,119
   Common stock purchased and
        warrants exercised (Note 4)                              (5,190)    (30,120)                               (2,794)
   Net earnings                                                                                         8,433
   Reclassification to Redeemable
     Common Stock                                      ( 57)                             (12,427)
                                        --------     --------  ---------   ---------   ----------   ----------  ----------  --------
Balance, September 25, 1997             $     -      $  385    $  3,859    $122,613    $(151,121)   $ (92,826)  $ (28,028)  $(9,284)
                                        ========     ========  =========   =========   ==========   ==========  ==========  ========

</TABLE>

<PAGE>

                            DYNCORP AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                                    UNAUDITED

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

2.   On April 18,  1997,  the  Company's  wholly-owned  subsidiary  Dyn Funding
     Corporation (" DFC ") entered into  agreements  with  Prudential  Insurance
     Company of America and Columbine Life Insurance  Company,  Inc. to purchase
     from DFC up to $140.0 million of Contract Receivable Collateralized Notes,
     Series 1997-1.  The five year, $50.0 million Class A Fixed Rate Note, which
     bears interest at 7.486%, was issued at closing,and the $90.0 million Class
     B Variable Rate Note, which was also issued, has yet to be utilized.  These
     notes contain terms and conditions  substantially identical to those of the
     Contract  Receivable  Collateralized  Notes,  Series 1992-1.  Utilizing the
     proceeds  from the  issuance of the 9.5% Senior  Notes (see Note 5) and the
     proceeds from the new Contract Receivable Collateralized Class A Fixed Rate
     Note,  the Contract  Receivable  Collateralized  Notes,  Series 1992-1 were
     retired.

     On May 15, 1997,  the Company  amended and restated its term note  facility
     with Citicorp North America to provide for a five year,$15.0 million letter
     of credit and revolving loan facility.

     At  September  25,  1997,  $60.8 million  of  accounts  receivable  are
     restricted as collateral for the Contract Receivable  Collateralized Notes,
     Series  1997-1.  Additionally,  $1.5 million and $3.0 million of cash is
     restricted  as  collateral  for the Series  1997-1 Notes and Series  1992-1
     Notes at September  25, 1997 and December 31, 1996,  respectively,  and has
     been  included  in  Other  Assets  on the  balance  sheet.


     Trade accounts receivable are net of an allowance for doubtful accounts of
     $0.5 million and  $0.2 million at September 25,1997 and December 31,1996,
     respectively.

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

                                   Balance at                        Balance at
                      Redeemable  September 25,          Redeemable December 31,
               Shares    Value        1997       Shares     Value       1996
ESOP Shares  3,520,037  $24.00  $  84,480,888   3,520,037  $23.70  $  83,424,877
             3,215,472  $20.00     64,309,440   2,645,920  $20.00     52,918,400
             ---------          -------------   ---------          -------------
             6,735,509          $ 148,790,328   6,165,957          $ 136,343,277
             =========          =============   =========          =============

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

      In accordance with ERISA regulations and the Employee Stock Ownership Plan
      documents, the ESOP Trust or the Company is obligated to purchase vested
      common stock shares from ESOP participants at the fair value as long as
      the Company's common stock is not publicly traded.  However, under the
      Subscription Agreement with the ESOP dated September 9, 1988, the Company
      is permitted to defer put options if, under Delaware law, the capital
      of the Company would be impaired as a result of such repurchase.

      In conjunction with the acquisition of Technology Applications, Inc. in
      1993, the Company issued put options on 125,714 shares of common stock.
      The holder may, at any time commencing on December 31, 1988 and ending on
      December 31, 2000, sell these shares to the Company at a price per share
      equal to the greater of $17.50; or, if the stock is publicly traded, the
      market value at a specified date; or, if the Company's stock is not
      publicly traded, the fair value at the time of exercise.

4.    On January 23, 1997, the Company entered into an agreement with Capricorn
      Investors, L.P. ("Capricorn") in which Capricorn agreed to waive its
      rights to nominate directors of the Company and also waived certain voting
      rights of the Company's then-outstanding Class C Preferred Stock.In return
      for these waivers, the Company paid a fee and authorized Capricorn to
      distribute a substantial portion of the shares of common stock and
      warrants and all of the outstanding shares of Class  C Preferred Stock
      to its investors. On February 5, 1997, the Employee Stock Ownership Trust
      purchased from certain of these investors all of the Company's Class
      C Preferred  Stock.  The  purchase  price for the  securities  was $18.6
      million,  of which $10.3 million was paid by a note from the ESOP that
      was guaranteed by the Company. The ESOP subsequently converted the Class C
      Preferred Stock and exercised the related warrants, upon which the Company
      issued 949,642 shares of common stock to the ESOP. Concurrent with the
      ESOP's purchase of the Class C Preferred  Stock,  the Company  purchased
      128,345  shares of common stock and  1,806,141  common stock warrants from
      other Capricorn investors at a cost of $19.55 for each common share or
      warrant.  The total purchase price for these securities was $37.8 million,
      of which $18.9 million was paid in cash and short-term notes were
      issued for the balance.

      On August 15, 1997, the Company loaned the ESOP an additional $1.5 million
      to pay administrative expenses and fund stock repurchase obligations.
      The unpaid balance on the notes receivable from the ESOP, is reflected as
      a reduction in stockholders' equity at September 25, 1997.

5.    On March 17, 1997, the Company closed on the issuance of $100.0 million of
      9.5%  Senior   Subordinated  Notes  due  2007.  The  notes  are  unsecured
      obligations of the Company and will be subordinated in right of payment to
      all  existing and future  senior debt of the Company.  Interest is payable
      semi-annually  on March 1 and  September  1 of each  year,  commencing  on
      September 1, 1997.

      The proceeds received,  $99.5 million, net of a discount,  were used to
      fund the  Company's  purchase of common  stock and  warrants  from outside
      investors,  to make a loan to the ESOP to repay the note to certain of the
      Capricorn  investors (plus accrued interest) for the purchase of the Class
      C Preferred  Stock (see Note 4), to fund  partially the  retirement of the
      Contract  Receivable   Collateralized  Notes  (see  Note  2)  and  to  pay
      transaction fees.

6.    The provision for income taxes in 1997 and 1996 is based upon an estimated
      annual effective tax rate, including the impact of differences between the
      book value of assets and  liabilities  recognized for financial  reporting
      purposes and the basis recognized for tax purposes.  Additionally,  in the
      third  quarter of 1997,  a federal tax benefit was recorded to reverse tax
      valuation reserves for deferred taxes as realization has been assured.

      The  $17.3 million of  cash paid  for income taxes  in  1996  includes
      $14.0 million  related  to  the  gain on  the  sale of  the Commercial
      Aviation business.

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

8.   The Company and its  subsidiaries  and  affiliates  are involved in various
     claims and  lawsuits,  including  contract  disputes  and  claims  based on
     allegations of negligence and other tortuous  conduct.  The Company is also
     potentially  liable for certain personal  injury,  tax,  environmental  and
     contract  dispute  issues  related  to the  prior  operations  of  divested
     businesses.  In addition,  certain  subsidiary  companies  are  potentially
     liable for environmental,  personal injury and contract and dispute claims.
     In most cases,  the Company and its  subsidiaries  have denied,  or believe
     they have a basis to deny,  liability  and in some  cases  have  offsetting
     claims against the plaintiffs,  third parties or insurance carriers.  As of
     September 25, 1997,  the total amount of damages  currently  claimed by the
     plaintiffs in these cases is estimated to be approximately  $132.0 million
     (including  compensatory and punitive  damages and penalties).  This amount
     includes  estimates  for claims  which have been  filed  without  specified
     dollar amounts or for amounts that are in excess of recoveries  customarily
     associated with the stated causes of actions;  such amount does not include
     estimates  for  claims  that may have been  incurred  but have not yet been
     asserted.  The  Company  believes  that the amount  that will  actually  be
     recovered  in these  cases  will be  substantially  less  than  the  amount
     claimed.  After taking into  account  available  insurance  and opinions of
     legal and other  experts,  the Company  believes it is adequately  reserved
     with respect to the potential  liability  for such claims.  The Company has
     recorded  such damages and  penalties  that are  considered  to be probable
     recoveries   against  the  Company  or  its  subsidiaries.   The  Company's
     accounting  policy is to accrue an estimate of the future  legal costs that
     will be incurred to defend  against  claims and  disputed  issues  asserted
     against the  Company.  This policy has been  applied  consistently  for all
     significant legal issues for each period presented.

     The Company  estimates  that the aggregate  potential  liability for claims
     asserted as of  September  25,  1997  ranges  from $8.5 million to $132.0
     million,  excluding amounts for claims that may have been incurred but have
     not yet been  asserted,  and has  accrued  aggregate  reserves  of  $29.4
     million for such claims, excluding approximately $2.0 million in additional
     reserves.   Such  estimates  reflect  management's  best  estimate  of  the
     aggregate  liability that will result from these  matters.  While it is not
     possible to predict  with  certainty  the outcome of  litigation  and other
     matters discussed herein, the Company's management believes,  based in part
     upon opinions of counsel, insurance in force and the facts currently known,
     that  liabilities in excess of those  recorded,  if any,  arising from such
     matters  would  not  have a  material  adverse  effect  on the  results  of
     operations,  consolidated  financial  position or  liquidity of the Company
     over the long-term. As of September 25, 1997, the Company estimates that it
     has primary and excess insurance coverage, excluding  approximately  $92.0
     million in excess coverage underwritten by insolvent carriers, of more than
     $507.4 million.  It is  possible,  however,  that  the  timing  of  the
     resolution of individual issues could result in a significant impact on the
     operating results and/or liquidity of one or more future reporting periods.

     Asbestos Claims

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

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

     Claim Exposure

     As of  October  21,  1997,  15,560  plaintiffs  have filed  claims  against
     Fuller-Austin  and various other  defendants.  Of these claims,  3,256 have
     been  dismissed  and 3,804  have been  resolved  without  an  admission  of
     liability at an average cost of $3,531 per claim,  excluding  legal defense
     costs.

<PAGE>

     The following is a summary of the number of claims filed against
     Fuller-Austin:

                                           Y  e  a  r  s
                         1993
                       & Prior    1994     1995      1996     1997      Total
                   ----------------------------------------------------------
    Claims Filed        2,921    1,136    4,522     4,122    2,859     15,560
    Claims Dismissed      (79)     (21)  (1,035)   (1,459)    (662)    (3,256)
    Claims Resolved    (1,224)    (394)  (  182)   (1,828)    (176)    (3,804)

    Claims Outstanding, as of October 21, 1997                          8,500
                                                                       =======

     In connection with these claims, Fuller-Austin's primary insurance carriers
     have incurred approximately $24.3 million (including $10.8 million of
     legal defense costs) to defend and settle the claims and, in addition, jury
     verdict judgments have been entered against  Fuller-Austin in the aggregate
     amount  of  $6.5 million  which  have not been paid and which are under
     appeal by  Fuller-Austin.  Through  September  25,  1997,  the  Company and
     Fuller-Austin  have  charged  to  expense  approximately  $12.5 million
     consisting  of $6.2 million  of  charges  under  retrospectively  rated
     insurance policies and $6.3 million of reserves for potential  uninsured
     legal  and  settlement  costs  related  to  these  claims.   These  charges
     substantially eliminate any further exposure for retrospectively determined
     premium payments under the retrospectively rated insurance policies.

     Fuller-Austin  has  continued  its strategy of requiring  direct proof that
     claimants  were  exposed to  asbestos-containing  products as the result of
     Fuller-Austin's  operations. Consequently, while settlements of meritorious
     claims are considered,  there is a potential  for an  increased level of
     trial  activity  which  Fuller-Austin  believes  will  reduce  the overall
     cost of asbestos personal injury claims in the  long run by requiring
     claimants to present and prove, in court, clear evidence of substantial
     asbestos-related impairment and exposure to Fuller-Austin's operations, and
     by denying  recovery to claimants  who are  unimpaired  or who did not have
     significant exposure to Fuller-Austin's operations.

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

     The Company and its defense  counsel have analyzed the 15,560 claim filings
     incurred  through October 21, 1997. Based on this analysis and consultation
     with its  professional  advisors,  Fuller-Austin  has  estimated  its cost,
     including legal defense costs, to be $17.8 million for claims filed and
     still  unsettled  and $37.2 million  as its minimum  estimate of future
     costs of unasserted  claims,  including legal defense costs. No upper limit
     of exposure can presently be  reasonably  estimated.  The Company  cautions
     that these  estimates are subject to significant  uncertainties,  including
     the future  effect of tort  reform  legislation  enacted in Texas and other
     states, the success of  Fuller-Austin's  litigation  strategy,  the size of
     jury  verdicts,  success of appeals in  process,  the number and  financial
     resources of future plaintiffs, and the actions of other defendants. During
     1996,  approximately 40 claims,  with approximately 700 more being prepared
     for filing, were filed in another state where Fuller-Austin had significant
     business  operations.  Although the claims filed against  Fuller-Austin  in
     states other than Texas have been included in the claims  summary table set
     forth  above,  exposure  for  these  claims  has not been  included  in the
     Company's  estimates  and neither  the Company nor its defense  counsel are
     able to  reasonably  predict the outcome of these cases or the incidence of
     the 700 or other future claims that may be filed.  Therefore,  actual claim
     experience  may vary  significantly  from  such  estimates,  especially  if
     certain Texas appeals are decided  unfavorably to Fuller-Austin  and/or the
     level of claims filed in other states increases.  At September 25, 1997 and
     December 31, 1996, Fuller-Austin recorded an estimated liability for future
     indemnity payments and defense costs related to currently  unsettled claims
     and minimum estimated future claims of $55.0 million (recorded as long-term
     liability).

     Insurance Coverage

     Defense  has been  tendered  to and  accepted  by  Fuller-Austin's  primary
     insurance  carriers,  and by certain  of the  Company's  primary  insurance
     carriers  that issued  policies  under which  Fuller-Austin  is named as an
     additional  insured;  however,  only one such primary carrier has partially
     accepted defense without a reservation of rights. The Company believes that
     Fuller-Austin has at least $7.4 million in unexhausted  primary coverage
     (net of deductibles and  self-insured  retentions,  but including  disputed
     coverage)  under its  liability  insurance  policies to cover the unsettled
     claims,  verdicts  and future  unasserted  claims and  defense  costs.  The
     primary carriers also have unlimited liability for defense costs (presently
     running at the annual rate of  approximately  $1.5 million)  until such
     time as the primary  limits under these  policies are  exhausted.  When the
     primary  limits  are  exhausted,  liability  for both  indemnity  and legal
     defense will be tendered to the excess coverage carriers, all of which have
     been  notified of the  pendency  of the  asbestos  claims.  The Company and
     Fuller-Austin have approximately $490.0 million of additional excess and
     umbrella  insurance that is generally  responsive to asbestos claims.  This
     amount excludes approximately $92.0 million of coverage issued by insolvent
     carriers.  After the $7.4 million of unexhausted  primary coverage,  the
     Company has $35.7 million of excess coverage in place before entering a
     $35.0 million segment of insolvent coverage  for policy years 1979 through
     1984 (the "Insolvent  Segment").  All of the Company's and  Fuller-Austin's
     liability  insurance policies cover indemnity payments and defense fees and
     expenses subject to applicable policy terms and conditions.

     Coverage Litigation

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

     Although  there can be no assurances as to the outcome of this  litigation,
     management  believes that it is probable that the Company and Fuller-Austin
     will prevail in obtaining judicial rulings confirming the availability of a
     substantial  portion of the coverage.  Based on a review of the independent
     ratings of these carriers,  the Company believes that a substantial portion
     of  this  coverage  will  continue  to be  available  to meet  the  claims.
     Fuller-Austin recorded in Other Assets $54.0 million and $55.0 million (not
     including reserves of $5.2 million and $6.4 million, respectively) at
     September 25, 1997 and December 31, 1996,  representing  the amount that it
     expects to recover from its insurance carriers for the payment of currently
     unsettled and estimated future claims.

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

     While the  Company  and  Fuller-Austin  believe  that  they  have  recorded
     sufficient  liability  to satisfy  Fuller-Austin's  reasonably  anticipated
     costs of present  and  future  plaintiffs'  suits,  it is not  possible  to
     predict the amount or timing of future suits or the future  solvency of its
     insurers.  In the event that  currently  unsettled and future claims exceed
     the  recorded liability  of $55.0 million, the Company  believes  that the
     judicially  determined  and /or  negotiated  amounts of excess and umbrella
     insurance  coverage that will be available to cover additional  claims will
     be  significant;  however,  it is unable  to  predict  whether  or not such
     amounts will be adequate to cover all  additional  claims  without  further
     contribution by Fuller-Austin.

     Government Contracting

     The major  portion of the Company's  business  involves  contracting  with
     departments and agencies of, and prime contractors to, the U.S. Government,
     and such contracts are subject to possible  termination for the convenience
     of the  government  and to audit and possible  adjustment to give effect to
     unallowable  costs  under  cost-type   contracts  or  to  other  regulatory
     requirements affecting both cost-type and fixed-price  contracts.  Payments
     received by the Company for allowable direct and indirect costs are subject
     to adjustment  and repayment  after audit by  government  auditors,  if the
     payments  exceed  allowable  costs.  Audits  have  been  completed  on  the
     Company's  incurred  contract  costs  through 1986 and are  continuing  for
     subsequent  periods.  The Company  has  included  an  allowance  for excess
     billings and contract  losses in its financial  statements that it believes
     is adequate based upon its  interpretation  of contracting  regulations and
     past experience.  There can be no assurance,  however,  that this allowance
     will be adequate.  The Company is aware of various costs  questioned by the
     government,  including issues related to the  recoverability  of certain of
     its ESOP  contributions,  but  cannot  determine  the  outcome of the audit
     findings at this time. In addition, the Company is occasionally the subject
     of  investigations  by the  Department  of Justice and other  investigative
     organizations,  resulting  from  employee and other  allegations  regarding
     business  practices.  In  management's  opinion,  there are no  outstanding
     issues of this  nature at  September  25,  1997,  that will have a material
     adverse effect on the Company's consolidated financial position, results of
     operations or liquidity.

<PAGE>

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

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

Working  capital at  September  25,  1997 was $80.7  million  compared  to $75.8
million at December 31, 1996, an increase of $5.3 million.

At September 25, 1997,  $60.8 million of accounts  receivable  are restricted as
collateral for the Contract Receivable Collateralized Notes Series 1997-1.

Cash  provided by  operations  was $11.2  million in the nine months of 1997, as
compared to $2.1 million of cash used in the nine months of 1996.  Excluding the
effect of changes in current assets and liabilities and, in 1996, the payment of
taxes on the gain on the sale of the  Commercial  Aviation  business,  operating
activities produced a positive cash flow of $16.8 million in 1997 as compared to
$13.8  million  in 1996.  The  decrease  in cash flow  attributable  to  reduced
earnings  from  continuing  operations  was more than  offset by an  increase in
non-cash charges,  primarily  depreciation and amortization,  and also insurance
proceeds received related to the Company's asbestos liability coverage.

Investing  activities  used funds of $8.1  million  in the nine  months of 1997,
principally for the purchase of property and equipment and to fund the Company's
47%  interest  in an equity  investee.  During  the nine  months  of 1996,  cash
provided  by  investing   activities   was  $0.3  million  with  cash  used  for
acquisitions  and the purchase of property and equipment offset by cash released
from deposit for letters of credit.

Financing  activities used funds of $2.6 million in the nine months of 1997. The
proceeds from the issuance of the 9.5% Senior Notes and the Contract  Receivable
Collateralized  Notes Series 1997-1 were used to retire the Contract  Receivable
Collateralized  Notes  Series  1992-1,  to  make a loan  to the  Employee  Stock
Ownership plan to fund the purchase of the Class C Preferred  Stock, to fund the
Company's  purchase  of common  stock and  warrants  from  investors  and to pay
transaction fees associated with the placement of the Senior Notes.

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

At September 25, 1997, backlog (including option years on government  contracts)
was $3.8 billion,  as compared to $3.0  billion at December 31,  1996.  The
increase is primarily  attributable  to a large U.S.  Air Force  contract won in
recompetition to provide  maintenance and repair work on DoD weapons systems and
equipment at various locations worldwide.

Results of Operations

Revenues for the third  quarter and nine months of 1997 were $283.8  million and
$843.7 million,  respectively,  as compared to $247.0 million and $738.3 million
for the  comparable  periods in 1996,  an increase  of $36.8  million and $105.4
million,  respectively.  Revenues for the third  quarter and nine months of 1997
increased  over the  comparable  periods in 1996 for each of the three  business
areas.  Information and Engineering Technology (I&ET), Aerospace Technology (AT)
and  Enterprise  Management  (EM)  reported  revenues of $66.5  million,  $111.5
million  and  $106.5  million,  respectively,  for the third  quarter of 1997 as
compared to $63.9 million,  $97.7 million and $85.4 million for the same quarter
in 1996.  Revenues  for nine  months  of 1997 for  I&ET,  AT and EM were  $201.6
million,  $329.5 million and $314.0 million, an increase of $0.3 million,  $52.5
million and $54.1 million, respectively, over the same period in 1996. Increases
in  I&ET's  revenues  for  the  third  quarter  attributable  to new  Indefinite
Delivery/Indefinite  Quantity ("IDIQ") contract awards and new business ventures
offset  decreases  attributable  to the  phase-out of a large  contract with the
Postal  Service  and  decreases  in sales  volume.  For the nine months of 1997,
revenues  attributable  to the  acquisition  of  Data  Management  Design,  Inc.
("DMDI") in June of 1996 and new contracts  were offset by decreases in revenues
due to the  aforementioned  contract  phase-out  and  reductions in the level of
effort on existing  contracts.  Increases  in AT's third  quarter and nine month
revenues were  attributable to new contract awards and increases in the level of
effort on several existing  contracts as well as a State Department  contract in
support of the Haitian peacekeeping initiative which was awarded in October 1996
and phased in later in the year, but which was fully operational in 1997. In EM,
third quarter and nine month  increases in revenues were  primarily from a large
Department of Energy  subcontract which was awarded in August 1996 and was fully
operational  in 1997. The increases were partly offset by reductions in revenues
due to contract losses.

Cost of sales for the third  quarter and nine months of 1997 was 95.1% and 95.5%
of revenue as  compared to 94.7% and 94.9% for the  comparable  periods in 1996.
This resulted in gross margins of $14.0 million  (4.9%) for the third quarter of
1997 as compared to $13.2 million  (5.3%) for the third quarter of 1996. For the
nine month period in 1997 and 1996,  gross margin was $37.6  million,  but, as a
percentage,  gross  margin  decreased  from  5.1% in 1996 to 4.5% in  1997.  The
deterioration  in gross  margin  in 1997 as  compared  to 1996  attributable  to
contract losses,  reduced level of effort on existing contracts,  lower indirect
expense   ceilings  on  certain  cost  plus   contracts  and  poor   performance
attributable to the DMDI acquisition,  certain  contracts  acquired late in 1996
and other new business ventures (totaling approximately $7.9 million) offset any
increases  attributable  to new contract  awards  (approximately  $4.9 million).
Additionally, many of the new IDIQ contracts awarded require increased admin-
istrative oversight and sales effort and subsequently yield lower profit margins
than sole source direct contract awards which have historically comprised the
majority of the Company's business. Further eroding gross margin for the nine
months ended September 25, 1997, were a $0.5 million charge representing the
partial write-off of certain purchased software as a result of net realization
concerns and $0.4 million of residual losses recorded in conjunction  with the
closure of the Company's operations in Mexico.

Interest income for the third quarter and nine months of 1997 increased over
the comparable periods in 1996 due to greater interest yields on higher cash and
cash equivalent  balances  resulting from the refinancing  activity early in the
year.

Interest  expense was $3.7 million and $10.6  million for the third  quarter and
nine months of 1997, respectively, up from $2.5 million and $7.6 million for the
comparable  periods  in 1996,  due to  increased  levels  of  indebtedness  at a
slightly higher effective rate of interest.

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

                                       Three Months Ended    Nine Months Ended
                                       Sept.25,  Sept. 26,   Sept.25,  Sept. 26,
                                         1997      1996        1997      1996
Amortization of costs in excess
   of net assets acquired                $397      $402      $1,196     $1,157
Provision for non-recovery of
   receivables                              -         -         293        106
Environmental costs associated
   with a business divested in 1985         -         -         125          -
Legal accrual associated with a
   business acquired in 1994              200         -         200          -
Miscellaneous                             (42)       68          36         58
                                        ------    ------     -------    -------
                                         $555      $470      $1,850     $1,321
                                        ======    ======     =======    =======

The  provision  for  income  taxes in 1997 and 1996 is based  upon an  estimated
annual  effective  rate,  including the impact of  differences  between the book
value of assets and liabilities  recognized for financial reporting purposes and
the basis  recognized  for tax purposes.  Additionally,  in the third quarter of
1997, a federal tax benefit was recorded to reverse tax  valuation  reserves for
deferred taxes as realization has been assured.

The Company has provided a valuation  allowance  state  deferred
tax assets of $5.5  million at  September  25,  1997 due to the  uncertainty  of
achieving  future  earnings in either the time frame or in the particular  state
jurisdiction needed to realize the tax benefit.

<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

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

ITEM 4.  Results of Votes of Security Holders

An annual meeting of the Company's  stockholders  was held on July 23, 1997. The
sole item presented was the election of directors,  and three current  directors
were re-elected to three-year  terms as Class III directors.  The voting results
are set forth below.

Nominee                             Votes For              Withheld
T. Eugene Blanchard                 8,463,041               366,965
Paul V. Lombardi                    8,398,328               431,678
Dudley C. Mecum II                  8,437,786               392,220

The following directors continued in office:  Dan R. Bannister, Russell E.
Dougherty, Paul G. Kaminski, David L. Reichardt, and Herbert S. Winokur, Jr.

ITEM 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

  Exhibit 11 - Computations of Earnings Per Common Share

(b)  Reports on Form 8-K

  None filed

                                   SIGNATURES

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

DYNCORP


Date:  November 10, 1997                     P.C. FitzPatrick
                                             P.C. FitzPatrick
                                             Senior Vice President
                                             and Chief Financial Officer

Date:  November 10, 1997                     J.J. Fitzgerald
                                             J.J. Fitzgerald
                                             Vice President and Controller

<PAGE>