SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                           FORM 10-K/A-Amendment No. 2
         Annual Report Pursuant To Section 13 Or 15(d) Of The Securities
                              Exchange Act Of 1934

For the fiscal year ended December 27, 2001      Commission file number:  1-3879
                                     DynCorp
             (Exact name of registrant as specified in its charter)

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

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

Registrant's telephone number, including area code:  (703) 261-5000

Securities registered pursuant to Section 12(b) of the Act:
 Title of each class                   Name of each exchange on which registered
      None                                               None

Securities registered pursuant to Section 12(g) of the Act:
                                  Common Stock
                                (Title of class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.
                                     |X| Yes           |_| No
Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|

State the aggregate  market value of the voting stock held by  nonaffiliates  of
the registrant. The registrant's voting stock is not publicly traded; therefore,
the aggregate market value is based on the Company's February 21, 2002, internal
market price of $46.25 per share. Approximately 3.2% of outstanding voting stock
is held by nonaffiliates  and has an aggregate market value of $15,174,949 as of
December 27, 2001.

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest  practicable  date.  10,530,901  shares of common
stock having a par value of $0.10 per share were outstanding April 9, 2002.

DOCUMENTS INCORPORATED BY REFERENCE

Part  III  incorporates  information  from  the  registrant's  Definitive  Proxy
Statement  for the 2002  Annual  Meeting of  Stockholders,  to be filed with the
Securities  and  Exchange  Commission  on Schedule 14A within 120 days after the
close of the registrant's fiscal year.

This  Amendment  No. 2 for Form  10-K/A  is being  filed to give  effect  to the
revision of the Company's  financial  statements,  as discussed in Note 2 to the
Consolidated  Financial  Statements  included in Item 8. This  document does not
reflect  any  significant  updates  other  than as related  to the  revision  of
financial  statements and related  re-audit.  The Company  suggests  reading its
Securities and Exchange Commission filings for subsequent periods including Form
10-Q for updated information.

<PAGE>



                                TABLE OF CONTENTS
                                      2001
                          FORM 10-K/A - Amendment No. 2

          Item                                                          Page
--------------------------------------------------------------------------------

       Part I

1. Business                                                              1-4
2. Properties                                                            4-5
3. Legal Proceedings                                                     5
4. Submission of Matters to a Vote of Security Holders                   5


       Part II

5. Market for the Registrant's Common Stock and Related Stockholder
    Matters                                                              6-7
6. Selected Financial Data                                               8-9
7. Management's Discussion and Analysis of Financial
    Condition and Results of Operations                                  10-27
7A.Quantitative and Qualitative Disclosures about Market Risk            27
8. Financial Statements and Supplementary Data                           28
   Report of Independent Public Accountants                              29
   Financial Statements
     Consolidated Balance Sheets
       Assets                                                            30
       Liabilities and Stockholders' Equity                              31
     Consolidated Statements of Operations                               32
     Consolidated Statements of Cash Flows                               33
     Consolidated Statements of Stockholders' Equity                     34
     Notes to Consolidated Financial Statements                          35-66
9. Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosures                            67


       Part III

10.Directors and Executive Officers of the Registrant                    67
11.Executive Compensation                                                67
12.Security Ownership of Certain Beneficial Owners and Management        67
13.Certain Relationships and Related Transactions                        67


       Part IV

14.Exhibits, Financial Statement Schedules, and Reports on Form 8-K      67-69

Signatures                                                               70
Certification of the Chief Executive Officer                             71
Certification of the Chief Financial Officer                             72
Schedule II-Valuation and Qualifying Accounts                            73

<PAGE>



ITEM 1. BUSINESS

General Information

DynCorp  and  subsidiaries  (collectively  the  "Company")  provide  diversified
management,  technical,  engineering and professional services primarily to U.S.
Government  customers  throughout  the United  States and  internationally.  The
Company's customers include various branches of the U.S. Departments of Defense,
Energy, State, and Justice, the Drug Enforcement Agency, the National Institutes
of Health, the Defense Information Systems Agency, the National  Aeronautics and
Space  Administration  and  various  other  U.S.,  state  and  local  government
agencies, commercial clients and foreign governments.  Generally, these services
are  provided  under  both  prime  contracts  and  subcontracts,  which  may  be
fixed-price,  time-and-material or cost reimbursement contracts depending on the
work requirements and other individual  circumstances.  These services cover the
following areas:

     DynCorp Information and Enterprise Technology  ("DI&ET"),  based in Reston,
     Virginia,  designs, develops, supports and integrates software and hardware
     systems to provide customers with  comprehensive  solutions for information
     management  and  engineering   needs.   DI&ET  provides  a  wide  range  of
     information  technology  ("IT") solutions  including IT lifecycle  support,
     government operational outsourcing, network and communications engineering,
     seat  management,  metrology  engineering,  and security  and  intelligence
     programs.  DI&ET revenues for fiscal years ended 2001,  2000, and 1999 were
     $588.0 million,  $606.7 million,  and $581.9 million,  respectively.  These
     services are provided primarily to U.S. Government customers throughout the
     United States.  DI&ET includes DynCorp Management  Resources,  Inc. ("DMR")
     which provides IT and business process  outsourcing  solutions to state and
     local government agencies. On December 27, 2001, DynCorp disposed of DMR by
     merging it with TekInsight.com,  Inc., in exchange for a 40.0% ownership of
     the new company.  See "DynCorp  Management  Resources,  Inc. ("DMR") Merger
     with DynTek, Inc." below for further discussion.

     DynCorp Technical Services ("DTS"),  based in Fort Worth, Texas, delivers a
     wide  variety of  specialized  technical  services  including  engineering,
     aviation services, base operations,  range technical services,  contingency
     services,  space and re-entry system services,  logistics support services,
     and marine services.  These services are provided mainly to U.S. Government
     customers in the United States. Revenues for fiscal years ended 2001, 2000,
     and  1999  were  $514.5  million,   $446.2  million,  and  $361.9  million,
     respectively.

     DynCorp  International  ("DI"),  based  in  Fort  Worth,  Texas,  primarily
     services  the  Company's  international  business,  including  personal and
     physical security services,  and base maintenance and operations  worldwide
     to support U.S.  military  aircraft  engineering  and IT  solutions.  These
     services are provided to the U.S.  Government and foreign  organizations at
     various  locations   throughout  the  world  depending  on  the  customers'
     requirements.  Revenues  for fiscal years ended 2001,  2000,  and 1999 were
     $545.8 million, $459.1 million, and $333.6 million, respectively.

     DynCorp  Information  Systems LLC ("DIS"),  based in  Chantilly,  Virginia,
     provides a broad range of  integrated  telecommunications  services  and IT
     solutions  in  the  areas  of  professional   services,   business  systems
     integration,  information  infrastructure  solutions and IT operations  and
     support.  DIS is DynCorp's  full-service  voice/data  integrator and has an
     established  business base in the U.S.  federal  defense and civil markets.
     DIS was  acquired on December 10, 1999 from GTE  Corporation.  Revenues for
     the fiscal years ended 2001 and 2000 and the twenty days ended December 30,
     1999, were $246.3 million, $228.5 million and $13.9 million,  respectively.
     Full year revenues in 1999, which are not included in the Company's results
     of  operations  except for the portion  representing  the twenty days ended
     December 30, 1999, as noted above, were $221.6 million.

     AdvanceMed    ("ADVMED"),    based    in    Reston,    Virginia,    is    a
     business-to-business,  eHealth decision  support solution  organization and
     provides an integrated  set of decision  support tools to meet the needs of
     healthcare  payers and  providers.  Revenues  for fiscal  years ended 2001,
     2000,  and 1999 were  $61.3  million,  $64.7  million,  and $54.0  million,
     respectively.

<PAGE>

The revenues, operating profits, and total assets of the above industry segments
are incorporated  herein by reference to Note 21 to the  Consolidated  Financial
Statements  included  elsewhere in this Annual Report on Form 10-K/A - Amendment
No. 2.

Industry Segments

For business segment reporting,  DI&ET, DTS, DI, DIS, and ADVMED each constitute
reportable business segments.

Significant Customers

The Company  derived  96%,  98%,  and 97% of its  revenues  from  contracts  and
subcontracts  with the U.S.  Government in 2001,  2000, and 1999,  respectively.
Prime  contracts  comprised 88% of revenue in 2001,  79% of revenue in 2000, and
75% of revenue in 1999.  Prime  contracts with the Department of Defense ("DoD")
represented  49% of revenue in 2001,  44% of revenue in 2000, and 40% of revenue
in 1999. In 2001,  2000, and 1999, 99% of the Company's  prime contract  revenue
was from the U.S. Government.

Government Contracts

The U.S.  Government  is the Company's  primary  customer.  All U.S.  Government
contracts  and  subcontracts  may be modified,  curtailed or  terminated  at the
convenience of the government if program  requirements or budgetary  constraints
change. In the event that a contract is terminated for convenience,  the Company
generally is reimbursed for its allowable  costs through the date of termination
and is paid a proportionate  amount of the stipulated profit or fee attributable
to the work actually performed.

Although contract and program  modifications,  curtailments or terminations have
not had a material  adverse  effect on the Company in the past, no assurance can
be given that such  modifications,  curtailments or terminations will not have a
material  adverse effect on the financial  condition or results of operations of
the Company in the future.

The Company's business with the U.S. Government and other customers is generally
performed   under   cost-reimbursement,   time-and-materials,   and  fixed-price
contracts.  Under  cost-reimbursement  contracts,  the  customers  reimburse the
Company for its direct costs and allocable  indirect costs,  plus a fixed fee or
incentive fee. Under time-and-materials contracts, the Company is paid for labor
hours at  negotiated,  fixed hourly  rates and  reimbursed  for other  allowable
direct costs at actual costs plus allocable  indirect costs.  Under fixed-priced
contracts,  the Company is required to provide  services or stipulated  products
for a fixed  price.  Because the Company  assumes the risk of  performing a firm
fixed-price contract at a set price, the failure to accurately estimate ultimate
costs or to control costs during the contract  performance could result,  and in
some  instances  has  resulted,  in reduced  profits  or losses  for  particular
contracts.

During  fiscal  years 2001,  2000,  and 1999,  approximately  53%,  52% and 56%,
respectively,  of the Company's  revenues  were derived from  cost-reimbursement
contracts and  approximately  24%, 23% and 16%,  respectively,  of the Company's
revenues   were   from   fixed-priced   contracts,   with   the   balance   from
time-and-materials contracts.

Contract  costs  for  services  or  products  supplied  to the U.S.  Government,
including  allocated  indirect costs,  are subject to audit and adjustments as a
result of negotiations between the Company and U.S. Government  representatives.
Substantially all of the Company's indirect contract costs have been agreed upon
through  fiscal year 1999.  Contract  revenues  for  subsequent  years have been
recorded in amounts,  which are  expected to be realized  upon final  settlement
with the U.S.  Government.  However,  no assurance  can be given that audits and
adjustments  for  subsequent  years will not  result in  decreased  revenues  or
profits for those years.

Backlog

The  Company's  backlog of  business,  which  includes  awards  under both prime
contracts and subcontracts, as well as

<PAGE>


the estimated value of option years on government contracts, was $6.8 billion at
December 27, 2001,  compared to December 28, 2000 backlog of $6.1 billion, a net
increase of $0.7  billion.  The backlog at December  27, 2001  consisted of $2.0
billion for DI&ET,  $2.0 billion for DTS,  $2.2 billion for DI, $0.4 billion for
DIS, and $0.2  billion for ADVMED  compared to December 28, 2000 of $1.7 billion
for DI&ET,  $1.7 billion for DTS, $2.2 billion for DI, $0.4 billion for DIS, and
$0.1  billion for ADVMED.  Contributing  to the increase in backlog was a fourth
quarter 2001 win of $0.2 billion for a U.S. Air Force base  contract  which will
provide a broad  range of base  operations  and  support  services,  and another
fourth  quarter  2001 win of $0.2  billion for a U.S.  Naval Air Warfare  Center
contract which will provide maintenance,  engineering, software development, and
operations  testing  support.  DI&ET wins in 2001 were for a contract  that will
provide technical support encompassing information technology,  engineering, and
ancillary  services to the U.S.  Naval Surface  Warfare  Center  providing  $0.2
billion of the increase,  a contract that will provide  technical support to the
Department  of the  Treasury  providing  $0.1  billion  of the  increase,  and a
contract  that  involves  infrastructure  facilities,  hardware,  software,  and
support systems to the Securities and Exchange Commission providing $0.2 billion
of the  increase.  Of the total  backlog at December 27,  2001,  $4.7 billion is
expected to produce revenues after 2002:  DI&ET $1.5 billion,  DTS $1.4 billion,
DI $1.7 billion, DIS $0.1 billion, and ADVMED $0.1 billion.

Contracts with the U.S. Government are generally written for periods of three to
five years with a few federal contracts awarded with options up to eight and ten
years. Because of appropriation  limitations in the federal budget process, firm
funding is usually  made for only one year at a time,  and, in some  cases,  for
periods  of less  than one  year,  with the  remainder  of the  years  under the
contract expressed as a series of one-year options. The Company's experience has
been that the government generally exercises these options.  Amounts included in
backlog  are based on the  contract's  total  awarded  value  and the  Company's
estimates  regarding the amount of the award that will ultimately  result in the
recognition of revenue.  These  estimates are based on the Company's  experience
with similar awards and similar customers.  Estimates are reviewed  periodically
and appropriate  adjustments are made to the amounts  included in backlog and in
unexercised  contract  options.  Historically,  these  adjustments have not been
significant.

Competition

The markets  that the Company  services are highly  competitive.  In each of its
business areas, the Company's  competition is quite  fragmented,  with no single
competitor  holding a  significant  market  position.  The  Company  experiences
vigorous competition from industrial firms, university laboratories,  non-profit
institutions,  and U.S. Government agencies.  Many of the Company's  competitors
are large,  diversified firms with substantially greater financial resources and
larger technical staffs than the Company has available. Government agencies also
compete  with and are  potential  competitors  of the Company  because  they can
utilize their internal resources to perform certain types of services that might
otherwise be performed by the Company.  A majority of the Company's  revenues is
derived from contracts with the U.S.  Government and its prime contractors,  and
such  contracts are awarded on the basis of  negotiations  or  competitive  bids
where price is a significant factor.

Foreign Operations

The Company provides services in foreign countries under contracts with the U.S.
Government and foreign  customers.  The contracts with foreign customers are not
material to the Company's financial position or results of operations.

The risks associated with the Company's foreign  operations  relating to foreign
currency  fluctuation and political and economic conditions in foreign countries
have not had a significant negative impact to the Company.

The  Company's  foreign  operations  are  significantly  influenced  by the U.S.
Government's foreign policy and funding for such operations. Revenues in foreign
countries under contracts with the U.S. Government  represent  approximately 98%
of all foreign operations revenue for 2001 and 99% for 2000 and 1999.

<PAGE>



Revenues from foreign operations by location are as follows:
($ thousands)
<TABLE>
<CAPTION>
      Locations
      ---------
                                           2001           2000
                                        Revised (a)    Revised (a)        1999
                                        -----------    -----------        ----
      <S>                               <C>            <C>             <C>

      Europe and North America           $121,512       $137,227       $107,143
      Latin America and the Caribbean      95,409        103,489         58,010
      Middle East                          82,207         54,510         41,979
      Asia/Pacific                         49,667         56,663         32,971
      Africa                                1,990          8,820         14,159
      Other                                 1,378         24,099          3,430
                                         --------       --------       --------
      Total Foreign Operations Revenue   $352,163       $384,808       $257,692
                                         ========       ========       ========
</TABLE>


Assets  outside the U.S. are $140  thousand  and $545  thousand for December 27,
2001, and December 28, 2000, respectively.

(a) The Company has revised certain  information in the  Consolidated  Financial
Statements for the fiscal years ended  December 30, 1999,  December 28, 2000 and
December  27,  2001 for a change in  accounting  method  for  certain  long-term
service contracts previously using percentage of completion accounting. See Note
2 to the Consolidated  Financial Statements and "Change in Accounting Method and
Revision of Financial Statements" discussion below.

Incorporation

The  Company  was  incorporated  in  Delaware  in 1946.  With more  than  23,300
employees worldwide,  the Company is one of the largest employee-owned companies
in the United States.

Employees

At December 27, 2001, the Company  employed over 22,200 full-time and over 1,100
part-time  employees  who work at more than 500 company and  customer  locations
around the world.  Approximately  3,100  employees  were located  outside of the
United States. Of the Company's U.S. employees, approximately 5,000 were covered
by various collective bargaining agreements with labor unions.

Forward Looking Statements

Certain  matters  discussed  or  incorporated  by  reference  in this report are
forward-looking  statements  within the meaning of the federal  securities laws.
Although  the  Company  believes  that  the   expectations   reflected  in  such
forward-looking  statements are based upon reasonable assumptions,  there can be
no assurance that its  expectations  will be achieved.  Factors that could cause
actual  results to differ  materially  from the Company's  current  expectations
include the early  termination  of, or failure of a customer to exercise  option
periods under, a significant contract;  the inability of the Company to generate
actual customer orders under indefinite delivery, indefinite quantity contracts;
technological  change;  the  inability of the Company to manage its growth or to
execute its internal performance plan; the inability of the Company to integrate
the  operations  of  acquisitions;  the  inability of the Company to attract and
retain  the  technical  and other  personnel  required  to perform  its  various
contracts;  general economic conditions;  and other risks discussed elsewhere in
this report and in other filings of the Company with the Securities and Exchange
Commission.

ITEM 2. PROPERTIES

The Company is primarily a service-oriented  company,  and as such the ownership
or  leasing  of  real  property  is an  activity  that  is  not  material  to an
understanding of the Company's normal operations. However, the leasing of real

<PAGE>

property is material to an understanding of the Company's  liquidity and capital
resources (see Liquidity and Capital Resources discussion below).

Leased Properties

The Company leases  numerous  commercial  facilities used in connection with the
various  services  rendered to its customers.  None of the properties are unique
and, in the opinion of management,  the  facilities  employed by the Company are
adequate for the present needs of the business.  The following  table sets forth
information on the Company's material leased properties:

Leased Properties as of       Approximate Square
   December 27, 2001               Footage                  General Usage
   -----------------               -------                  -------------
Memphis, Tennessee                 337,655         General Office and Warehouse
Cincinnati, Ohio                   321,200         General Office and Warehouse
Reston, Virginia                   292,942                  General Office
Chantilly, Virginia                244,522                  General Office
Atlanta, Georgia                   218,448         General Office and Warehouse
Carrollton, Texas                  208,000         General Office and Warehouse
Jacksonville, Florida              153,329         General Office and Warehouse
Urbandale, Iowa                    152,945         General Office and Warehouse
Fort Worth, Texas                  114,159                  General Office
Herndon, Virginia                   84,293         General Office and Warehouse
Alexandria, Virginia                76,589                  General Office
Columbia, Maryland                  55,930                  General Office
Norco, California                   48,912                  General Office
Gaithersburg, Maryland              30,600                  General Office
Springfield, Virginia               28,252                  General Office
York, Pennsylvania                  23,130                  General Office
Foreign locations                  321,498          General Office and Housing
Other Locations                    152,821         General Office and Warehouse

Upon expiration of its leases, the Company does not anticipate any difficulty in
obtaining  renewals or  alternative  space.  Lease  expiration  dates range from
fiscal 2002 through 2012.

Owned Property

On February 29, 2000, the Company sold an office building located in Alexandria,
Virginia  to a third party for $10.5  million,  and  simultaneously  closed on a
lease of that property from the new owner. The Company used a portion of the net
proceeds to pay off the mortgage on the property.

The Company does not own any other real property.

ITEM 3. LEGAL PROCEEDINGS

Note 20 to the  Consolidated  Financial  Statements  included  elsewhere in this
Annual  Report  on Form  10-K/A -  Amendment  No. 2 is  incorporated  herein  by
reference.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters  submitted to a vote of security holders during the fourth
quarter of 2001.

<PAGE>


                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

DynCorp's  common  stock  is not  publicly  traded.  However,  the  Company  has
established an Internal Market to provide liquidity for its stockholders. Shares
available for trading in the Internal Market are registered under the Securities
Act of 1933. The Internal Market generally  permits  stockholders to sell shares
of common stock which have been  registered for such sale on four  predetermined
days each year, subject to purchase demand.

Sales of common stock on the Internal Market are made at established  prices for
the common  stock  determined  pursuant  to the formula  and  valuation  process
described below (the "Formula  Price") to active  employees and directors of the
Company,  subject to state  securities  regulations,  and to the trustees of the
Savings and Retirement  Plan and the Capital  Accumulation  and Retirement  Plan
("Savings  Plans"),  as well as the administrator of the Employee Stock Purchase
Plan  ("ESPP"),  who may purchase  shares of common  stock for their  respective
trusts and plans.

If the aggregate purchase orders exceed the number of shares available for sale,
the Company  may,  but is not  obligated  to, sell shares of common stock on the
Internal  Market.  Further,  the  following  prospective  purchasers  will  have
priority, in the order listed:

    - the administrator of the ESPP;
    - the trustees of the Savings Plans; and
    - eligible employees and directors, on a pro rata basis.

If the  aggregate  number of shares  offered for sale on the Internal  Market is
greater than the aggregate  number of shares  sought to be purchased,  offers by
stockholders  to sell 500 shares or less,  or up to the first 500 shares if more
than 500 shares are offered,  will be accepted  first.  If,  however,  there are
insufficient  purchase  orders to support the primary  allocation of 500 shares,
then the  purchase  orders will be allocated  equally  among all of the proposed
sellers up to the first 500 shares offered for sale by each seller.  Thereafter,
a similar  procedure  will be applied first to the next 10,000 shares offered by
each  remaining  seller  and  then to the next  20,000  shares  offered  by each
remaining  seller,  and offers to sell in excess of 30,500  shares  will then be
accepted on a pro rata basis.

The foregoing procedure does not apply to "accelerated  distribution"  shares to
be  sold by the  Savings  Plan  trustees.  In  February  2001,  terminated  ESOP
participants who were scheduled to receive distributions in 2002 and later years
were offered the opportunity to accelerate the distribution of those shares they
would otherwise receive in those years.  Electing participants must request that
the  trust  sell as many of their  shares  on the  Internal  Market as there are
purchase  orders  remaining  after  the  procedure  described  in the  foregoing
paragraph is  completed.  The cash  proceeds from such sales will be used to pay
the  purchase  price for the  accelerated  distribution  shares.  The  number of
accelerated  distribution shares offered on each Internal Market trade date will
be equal to the number of shares which the trustee can sell,  and each  electing
participant will sell a pro rata portion of shares.

The Company may, but is not required to, purchase shares offered for sale in the
Internal  Market,  to the extent the number of shares offered exceeds the number
sought to be  purchased.  All  sellers on the  Internal  Market  (other than the
Company and its retirement  plans) will pay a commission equal to one percent of
the  proceeds  from  such  sales.  Purchasers  on  the  Internal  Market  pay no
commission.

The market price of the common stock is  established  pursuant to the  valuation
process described below, which uses the formula set forth below to determine the
Formula  Price at which the Common  Stock  trades in the  Internal  Market.  The
Formula Price is reviewed on a quarterly  basis,  generally in conjunction  with
Internal Market trade dates.
<PAGE>

The  Formula  Price per share of common  stock is the product of seven times the
operating cash flow ("CF"), where operating cash flow is represented by earnings
before interest,  taxes,  depreciation,  and amortization of the Company for the
four fiscal quarters immediately preceding the date on which a price revision is
made,  multiplied  by a market  factor  ("Market  Factor"  denoted MF), plus the
non-operating  assets at disposition  value (net of disposition  costs) ("NOA"),
minus the sum of interest bearing debt adjusted to market and other  outstanding
securities  senior to common stock  ("IBD"),  the whole divided by the number of
shares of common  stock  outstanding  at the date on which a price  revision  is
made, on a fully diluted basis assuming exercise of all outstanding  options and
shares deferred under a former restricted stock plan ("ESO").  The Market Factor
is a  numeric  factor  which  reflects  existing  securities  market  conditions
relevant to the valuation of such stock.  The Formula Price of the common stock,
expressed as an equation, is as follows:

                                   [(CFx7)MF+NOA-IBD]
                                   ------------------
                  Formula Price =         ESO

The Board of Directors believes that the valuation process and Formula result in
a fair price for the common stock  within a broad range of  financial  criteria.
Other than quarterly review and possible  modification of the Market Factor, the
Board of  Directors  will not  change the  Formula  unless (i) in the good faith
exercise of its fiduciary  duties and after  consultation  with its professional
advisors,  the Board of Directors  determines that the formula no longer results
in a stock price  which  reasonably  reflects  the value of the Company on a per
share basis, or (ii) a change in the Formula or the method of valuing the common
stock is required under applicable law.

The  following  table sets forth the Formula  Price for the common stock and the
Market Factor as of the end of each quarter for the past two years (prior to the
revisions as noted in the "Change in Accounting Method and Revision of Financial
Statements" and "Prior Revision of Financial Statements" discussions below).

Quarter Ended                             Formula Price ($)       Market Factor
-------------                             -----------------       -------------
December 30, 1999                               23.50                  1.11
March 30, 2000                                  22.75                  1.50
June 29, 2000                                   23.50                  1.39
September 28, 2000                              22.75                  1.24
December 28, 2000                               29.00                  0.94
March 29, 2001                                  31.00                  0.97
June 28, 2001                                   31.50                  0.99
September 27, 2001                              32.00                  1.00
December 27, 2001                               44.75                  1.07

There were  approximately  788 and 767 record holders of DynCorp common stock at
December 27, 2001 and December 28, 2000, respectively. The Savings Plans' Trusts
own 8,869,936 shares  (including ESOP accounts),  or 84.3% of total  outstanding
shares,  on behalf of  approximately  40,000 current and former employees of the
Company as of December 27, 2001. The Trusts'  independent  appraiser  valued the
Company's  stock price at $46.25 at February 21, 2002.  Cash  dividends have not
been declared or paid on the common stock since 1988.  The  Company's  financing
instruments severely restrict its ability to pay cash dividends.

<PAGE>


ITEM 6. SELECTED FINANCIAL DATA

The following table presents summary selected historical  financial data derived
from the audited  Consolidated  Financial  Statements of the Company for each of
the five  years  presented.  During  these  periods,  the  Company  paid no cash
dividends  on its Common  Stock.  The  following  information  should be read in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" and the audited Consolidated Financial Statements and
related notes thereto, included elsewhere in this Annual Report on Form 10-K/A -
Amendment No. 2. (Dollars in thousands, except per share data.)

<TABLE>
<CAPTION>

                                                        Dec 27        Dec 28         Dec 30
                                                       2001 (b)      2000 (c)       1999 (d)       Dec 31        Dec 31
                                                      Revised(a)    Revised(a)     Revised(a)     1998 (e)      1997 (f)
                                                      ----------    ----------     ----------     --------      --------
Statement of Operations Data:
-----------------------------
<S>                                                  <C>           <C>            <C>           <C>           <C>
Revenues                                             $1,955,973    $1,805,155     $1,345,281    $1,233,707    $1,145,937
Cost of services                                     $1,810,273    $1,778,329     $1,280,239    $1,173,151    $1,096,246
Corporate general and administrative                 $   29,456    $   29,350      $  21,741     $  18,630     $  17,785
Interest expense                                     $   31,521    $   41,408      $  18,943     $  14,144     $  12,432
Earnings (loss) from continuing operations before
    extraordinary item, cumulative effect of
    change in accounting principle and certain
    other expenses (a) (g) (h)                       $   60,834    $ (38,498)     $   9,507     $  15,585     $  15,579
Earnings (loss) from continuing operations before
    extraordinary item and cumulative effect of
    change in accounting principle (a) (h)           $   60,834    $ (38,646)     $   7,610     $  15,055     $   7,422
Net earnings (loss) (a) (h)                          $   60,834    $ (43,416)     $   6,009     $  15,055     $   7,422
Common stockholders' share of net earnings
   (loss)(a) (h)                                     $   58,444    $ (45,258)     $   5,915     $  15,055     $   7,422
Common stockholders' share of earnings (loss) per
    share from continuing operations before
    extraordinary item and cumulative effect of
    change in accounting principle (a)
         Basic                                       $     5.53    $   (3.86)     $    0.75     $    1.47     $    0.83
         Diluted                                     $     5.26    $   (3.86)     $    0.74     $    1.43     $    0.70
Common stockholders' shares of net earnings
   (loss)(a)
         Basic                                       $     5.53    $   (4.32)     $    0.59     $    1.47     $    0.83
         Diluted                                     $     5.26    $   (4.32)     $    0.58     $    1.43     $    0.70

Balance Sheet Data:
-------------------
Total assets                                         $  598,440    $ 586,756      $ 628,934     $ 379,238     $ 390,122
Long-term debt excluding current maturities          $  264,482    $ 283,889      $ 334,944     $ 152,121     $ 152,239
Redeemable common stock                              $  333,335    $ 246,330      $ 189,116     $ 183,861     $ 154,840

Statement of Cash Flows Data:
-----------------------------
Cash flows provided by (used in) operating
    activities                                       $    8,109    $  59,051      $  13,835     $  (7,752)    $   9,937
Cash flows (used in) provided by investing
    activities                                       $   (3,796)   $   8,082      $(184,975)    $ (20,131)    $  (8,257)
Cash flows (used in) provided by financing
    activities                                       $   (2,189)   $ (59,836)     $ 172,709     $   7,369     $  (2,955)
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Additional Data:
----------------
<S>                                                  <C>           <C>            <C>           <C>           <C>
EBITDA (i)                                           $   144,101   $   5,175      $  42,112     $  45,226     $  29,274
</TABLE>

(a)  The Company has revised certain  information in the Consolidated  Financial
     Statements for the fiscal years ended December 30, 1999,  December 28, 2000
     and  December  27,  2001 for a change  in  accounting  method  for  certain
     long-term  service  contracts  previously  using  percentage  of completion
     accounting. See Note 2 to the Consolidated Financial Statements and "Change
     in  Accounting  Method and  Revision of  Financial  Statements"  discussion
     below.  2001 includes  $44.7 million of income  primarily from revised loss
     estimates due to contract  modification in 2001 on a contract acquired with
     the purchase of DIS. 2000 includes  charges  totaling $76.2 million related
     primarily to revised loss estimates on the same contract  acquired with the
     acquisition  of DIS.  See the  "Prior  Revision  of  Financial  Statements"
     discussion  below  regarding  revision  of the 2000  and 1999  Consolidated
     Financial Statements.
(b)  2001  includes  a $17,442  gain  recognized  on the  disposition  of DMR on
     December 27, 2001.
(c)  2000 includes  $5,998 for the  replacement  of core systems,  including DIS
     systems.  Interest  expense was higher in 2000 compared to 1999 as a result
     of the  acquisition  of DIS in December  1999,  which the Company  financed
     through  additional  borrowings  of $167.5  million  under higher cost debt
     instruments.
(d)  1999  includes  reversal of $2,000  reserve  for  favorable  resolution  of
     contract compliance issues, $4,387 for the replacement of core systems, DIS
     in-process research and development write-off $6,400,  settlement of a suit
     with a former  electrical  subcontractor  $2,200,  and write-off of cost in
     excess of net assets acquired of consolidated subsidiary $1,234.
(e)  1998  includes  reversal of $670  reserve for asbestos  litigation,  $1,177
     accrual for  subcontractor  suit,  reversal of $2,500  reserve for contract
     compliance issues, and $2,159 expense for the replacement of core systems.
(f)  1997  includes  $7,800  accrual of costs  related to  asbestos  litigation,
     $2,488 reversal of income tax valuation  allowance,  and $2,055 reversal of
     accrued interest related to IRS examinations and potential  disallowance of
     deductions.
(g)  Certain other expenses include costs and expenses  associated with divested
     businesses  of $148 in 2000,  $1,897 in 1999,  $530 in 1998,  and $8,157 in
     1997.
(h)  The  cumulative  effect of change in  accounting  principle,  net of income
     taxes, in 2000 of $4,770  resulted from the Company's  change in accounting
     method for certain long-term service contracts  previously using percentage
     of  completion  accounting.  See  Note  2  to  the  Consolidated  Financial
     Statements  for further  details.  The  extraordinary  loss,  net of income
     taxes,  in 1999 of $1,601  resulted  from the early  extinguishment  of the
     $50.0 million of 7.486% Fixed Rate Contract Receivable Collateralized Notes
     due to  refinancing  of  the  Company's  debt  in  order  to  complete  the
     acquisition of  DIS.  The difference between Net Earnings (Loss) and Common
     Stockholders' Share of Net Earnings (Loss)  is the  accretion in  the  fair
     value of shares of the  Company's stock which  were  issued as  part of the
     December  1999 acquisition of DIS.
(i)  Earnings before Interest, Taxes, Depreciation,  and Amortization ("EBITDA")
     represents  a measure of the  Company's  ability to generate  cash flow and
     does not  represent net income or cash flow from  operating,  investing and
     financing  activities  as defined  by U.S.  generally  accepted  accounting
     principles  ("GAAP").  EBITDA is not a measure of  performance or financial
     condition  under GAAP, but is presented to provide  additional  information
     about the Company to the reader.  EBITDA  should be  considered in addition
     to, but not as a  substitute  for, or superior  to,  measures of  financial
     performance  reported in accordance with GAAP. EBITDA has been adjusted for
     the amortization of deferred debt expense and debt issuance  discount which
     are  included  in  interest  expense  in  the  Consolidated  Statements  of
     Operations  and  included  in   depreciation   and   amortization   in  the
     Consolidated  Statements  of Cash  Flows.  Readers are  cautioned  that the
     Company's  definition  of  EBITDA  may not  necessarily  be  comparable  to
     similarly  titled  captions  used by other  companies  due to the potential
     inconsistencies in the method of calculation.
<PAGE>



ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

General

The following  discussion  and analysis  provides  information  that  management
believes  is  relevant  to  an  assessment  and  understanding  of  DynCorp  and
subsidiaries'  (collectively,  the "Company") consolidated results of operations
and financial  condition for the fiscal years ended 2001,  2000,  and 1999.  The
discussion should be read in conjunction with the Company's audited consolidated
financial statements and accompanying notes.

Overview

The Company provides diversified management, technical and professional services
primarily  to  U.S.  Government  customers  throughout  the  United  States  and
internationally.  The Company's  customers  include various branches of the U.S.
Departments of Defense, Energy, State, and Justice, the Drug Enforcement Agency,
the National  Institute of Health, the Defense  Information  Systems Agency, the
National  Aeronautics and Space Administration and various other U.S., state and
local  government   agencies,   commercial  clients  and  foreign   governments.
Generally,   these  services  are  provided  under  both  prime   contracts  and
subcontracts, which may be fixed-price,  time-and-material or cost reimbursement
contracts depending on the work requirements and other individual circumstances.

The  Company has five  Strategic  Business  Segments:  DynCorp  Information  and
Enterprise  Technology  ("DI&ET"),  DynCorp Technical Services ("DTS"),  DynCorp
International  ("DI"),  DynCorp Information Systems LLC ("DIS"),  and AdvanceMed
("ADVMED").

On December  10,  1999,  the Company  acquired  GTE  Information  Systems LLC, a
subsidiary  of GTE  Corporation  and  changed  its name to  DynCorp  Information
Systems LLC. It operates as a separate  subsidiary of the Company and a separate
Strategic  Business Segment as noted above. The acquisition was accounted for as
a purchase;  accordingly,  operating results for DynCorp Information Systems LLC
have been included from the date of acquisition.

On December  27,  2001,  the Company  completed  the merger of its  wholly-owned
subsidiary,  DynCorp Management Resources, Inc. ("DMR"), the Company's state and
local  government   services   subsidiary,   with   TekInsight.com,   Inc.  Upon
consummation of this merger,  TekInsight.com,  Inc. was renamed DynTek,  Inc., a
publicly  traded company.  The Company has obtained a 40% ownership  interest in
DynTek,  Inc.  The  shares of  DynTek,  Inc.  received  by the  Company  are not
registered  but the  Company has the right to require  DynTek,  Inc. to register
these shares. DMR's operating results, gain on disposal,  and financial position
are included in the DI&ET Strategic Business Segment.  For further  information,
see "DynCorp Management Resources, Inc. ("DMR") Merger with DynTek, Inc." below.

Change in Accounting Method and Revision of Financial Statements

Subsequent to the issuance of the Company's  financial  statements  for the year
ended  December  27,  2001 on  April  11,  2002,  the  Company  revised  certain
information in the Consolidated  Financial Statements for the fiscal years ended
December 30, 1999, December 28, 2000 and December 27, 2001 following discussions
with the staff of the Securities and Exchange  Commission  ("SEC") regarding its
method of accounting  for certain  long-term  service  contracts and the related
applicability of the percentage of completion  method to service  contracts with
the  Federal  Government.   Previously,  the  Company  followed  the  historical
industry-wide  practice of recording  income from  long-term  service  contracts
using the  percentage of  completion  method,  in  accordance  with the American
Institute of  Certified  Public  Accountants'  ("AICPA")  "Audit and  Accounting
Guide,  Audits of Federal  Government  Contractors,"  which  incorporates  as an
appendix  AICPA  Statement  of  Position  ("SOP")  No.  81-1,   "Accounting  for
Performance of Construction Type and Certain  Production-Type  Contracts." Under
this method, income is recognized at a
<PAGE>

consistent  profit margin over the period of performance  based on the estimated
profit margin at the  completion of the contract.  Such a method has resulted in
deferral of costs,  including start-up costs, and deferral of profits on certain
contracts. Under SOP No. 81-1, revenue can be recognized based on costs incurred
as a measurement  of progress  towards  completion,  which can differ from other
revenue  recognition  methods  such as those  outlined  in SEC Staff  Accounting
Bulletin  ("SAB")  No.  101,  "Revenue  Recognition  in  Financial  Statements."
Following  discussions  with  the  SEC's  staff  it  has  been  determined  that
percentage of  completion  accounting  should be applied to long-term  contracts
which are specifically  described in the scope section of AICPA SOP No. 81-1 and
other appropriate accounting literature.  All other long-term service contracts,
even those with the  Federal  Government,  should  not apply the  percentage  of
completion method. Accordingly, the Company changed its method for accounting on
these long-term  service  contracts to be in accordance with SEC SAB No. 101 and
other applicable generally accepted accounting principles.  As a result of these
changes,  profit  margins  on a  given  long-term  service  contract  could  now
fluctuate  from one  accounting  period to another  due to  fluctuations  in the
revenue earned and costs incurred in a given accounting period.

In accordance with the SEC Staff's guidance, the Company has applied this change
in accounting  method  retroactively  to January 2000 (the effective date of SAB
No.  101) and to the  acquisition  of DIS in  December  1999.  As a result,  the
financial  statements  of the Company for the fiscal  years ended  December  30,
1999,  December 28,  2000,  and December 27, 2001 have been revised to eliminate
the  deferral  of such  costs or  profits  on  service  contracts  and to adjust
revenue.  Revenue was adjusted for certain  fixed price  service  contracts  and
other  service  contracts,  which had used cost  incurred  in  relation to total
estimated  cost at completion as a measurement  of progress  towards  completion
under  percentage of completion,  in order to comply with SEC SAB No. 101, which
prescribes recognizing revenue on a straight-line basis over the contract period
or by other appropriate  methods to measure services provided.  The Company also
intends to amend its previously filed Form 10-Q for the three months ended March
28, 2002. The cumulative  effect of the change in accounting  principle on prior
years  resulted  in a  one-time,  non-cash  reduction  to net  earnings  of $4.8
million,  net of taxes of $2.6 million, or $0.46 per diluted share, in 2000. The
change in accounting  method did not have any effect on the Company's cash flows
in 2002, 2001, 2000, and 1999.

As a result of the revisions  described  above,  reported  common  stockholders'
share of net earnings  decreased by $0.1  million,  from $58.5  million to $58.4
million for the year ended  December 27,  2001.  Reported  common  stockholders'
share of net loss  increased by $4.6  million,  from $(40.7)  million to $(45.3)
million for the year ended  December 28,  2000.  Reported  common  stockholders'
share of net earnings  slightly  increased by $13.0 thousand,  remaining at $5.9
million for the year ended  December 30,  1999.  Reported  common  stockholders'
share of net earnings (loss) per diluted share decreased from $5.27 to $5.26 for
the year ended December 27, 2001, increased from $(3.88) to $(4.32) for the year
ended  December 28, 2000,  and increased  from $0.57 to $0.58 for the year ended
December 30, 1999.

The  effects of the  revisions  for the change in  accounting  method on certain
long-term  service  contracts on the 2001, 2000, and 1999 financial data, and on
the 2001 and 2000 unaudited  quarterly financial data are presented in Note 2 to
the Consolidated Financial Statements.  The "As Reported" numbers are taken from
the previously filed 2001 Form 10-K/A and include the revisions to 2000 and 1999
results  related to the "Prior  Revision  of  Financial  Statements"  discussion
below.

Prior Revision of Financial Statements

In the original 2001 Form 10-K/A filed on May 15, 2002,  the Company had revised
certain  information  in the  Consolidated  Financial  Statements for the fiscal
years ended December 30, 1999 and December 28, 2000 following  discussions  with
the staff of the SEC regarding accounting principles articulated in Statement of
Financial  Accounting  Standards ("SFAS") No. 38, "Accounting for Preacquisition
Contingencies of Purchased  Enterprises" and Accounting Principles Board ("APB")
No. 16, "Business  Combinations" as they relate to the Company's  acquisition of
DIS from GTE Corporation in December 1999.

When the Company  purchased DIS in December 1999, issues existed relating to the
financial  performance  of certain DIS contracts and  realization of certain DIS
receivables.  The  Company  disclosed  in its 1999 Form  10-K that its  purchase
accounting was preliminary. During 2000, the Company continued its evaluation of
the  status of  contracts  at the date of  acquisition.  Primarily  in the third
quarter of 2000,  the  Company  finalized  its  evaluation  of the impact of the
future cash flows related to the contracts based on information obtained through
that quarter and recorded an
<PAGE>


increase to reserves  through a purchase  accounting  adjustment.  The  purchase
accounting  adjustment also resulted in an increase to goodwill and deferred tax
assets.  At the end of the  third  quarter  of  2001,  the  Company  reversed  a
significant  amount of the contract loss reserves as a result of entering into a
modification of one of the contracts acquired.  This was also accounted for as a
purchase  accounting  adjustment,  which  resulted in a decrease to goodwill and
deferred tax assets.

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

Revenue and Operating Profit

In 2001,  revenue (as revised - see "Change in Accounting Method and Revision of
Financial  Statements"  discussion above) increased by $150.8 million,  or 8.4%,
from 2000 compared to a $459.9 million, or 34.2%,  increase in 2000 revenue over
1999. Revenues were $2.0 billion,  $1.8 billion,  and $1.3 billion in 2001, 2000
and 1999, respectively.  Operating profit was $163.5 million, $24.4 million, and
$63.1 million in 2001, 2000, and 1999,  respectively.  Operating profit for 2001
and 2000  includes  $44.7  million and $(76.2)  million,  respectively,  related
primarily to revised loss estimates on a contract  acquired with the purchase of
DIS as described  in the "Prior  Revision of  Financial  Statements"  discussion
above).  Operating  profit is  defined as the  excess of  revenues  over cost of
services and certain  non-operating  income and  expense,  which are included in
Other Income, net of Other Miscellaneous Expenses on the Consolidated Statements
of Operations. The growth in 2001 revenue and operating profit was due primarily
to several new contract wins,  increased tasking on existing contracts,  and the
gain on sale of DMR.  The larger  growth in 2000 as compared to 1999 in revenues
and  operating  profits was due in part to reporting the full year of operations
of DIS,  which was acquired in December  1999.  DIS  accounted  for 46.7% of the
growth in revenues in 2000 and for 145.7% of the decrease in  operating  profits
in 2000, as compared to 1999.

For the year ended  December 27, 2001,  DI&ET reported a decrease in revenues of
$18.7  million,  or 3.1%, to $588.0 million as compared to 2000. The decrease in
revenues was primarily due to the completion of a subcontract for the Department
of Commerce for the 2000 Census in November 2000.  This contract had revenues of
$1.5  million  and $44.6  million  for the years  ended  December  27,  2001 and
December 28, 2000,  respectively.  Also contributing to the decrease in revenues
in 2001 was the loss of the subcontract  providing operations  management to the
Department  of Energy  ("DoE")  Hanford  location and, to a lesser  extent,  the
completion  of another DoE contract in the second  quarter of 2000 that provided
management,  technical,  and  scientific  services.  The  subcontract  providing
operations  management to the DoE Hanford location ended effective September 30,
2001.  Revenues for the DoE Hanford location  contract totaled $75.1 million and
$109.0 million in 2001 and 2000, respectively.

Offsetting the decreases in DI&ET  revenues were  increased  revenues on several
other contracts. DI&ET had increased revenues from growth in a joint venture for
vaccine  technology  services  for the  Department  of  Defense  ("DoD"),  a new
contract  that  provides  battlefield  simulation  system  support  services and
maintenance  for the U.S.  Army, and a new contract with the DoD, which provides
security background investigations.  The battlefield simulation contract and the
security  background  investigations  contract  were both  awarded in the second
quarter  of 2000 and were fully  operational  in 2001.  These two new  contracts
provided combined  revenues of $30.0 million in 2001. Also  contributing  higher
revenues was a new DMR contract in the third quarter of 2001, which provides
<PAGE>


non-emergency medical  transportation  services in the Commonwealth of Virginia.
This  contract  provided  revenues of $15.1  million in 2001 and is part of DMR,
which was divested on December 27, 2001.  Management  expects growth in revenues
on the vaccine  technology  services  contract  and the  battlefield  simulation
contract and slower growth in revenues on the background security investigations
contract  in  2002.  In  addition,  management  expects  its  two  recently  won
contracts,  one with the  Department of Treasury and another with the Securities
and Exchange  Commission,  to help offset the lost revenues from the DoE Hanford
contract for 2002;  however,  these  increases  are not assured and they are not
expected to fully replace the lost  revenues.  Management  does not expect to be
able to replace the revenues from DMR in 2002,  which were  approximately  $41.9
million,   $27.0  million,   and  $24.5  million  for  2001,   2000,  and  1999,
respectively.

DI&ET's  operating profit  increased by $2.6 million,  or 6.9%, to $39.7 million
for the year ended  December 27, 2001. The increase is due partially to the gain
on the disposal of DMR in the amount of approximately  $17.4 million,  which was
offset by a $13.4 million loss from DMR  operations.  The DMR operating loss was
primarily  due to losses  of $9.4  million  on the new  contract  that  provides
non-emergency medical  transportation  services in the Commonwealth of Virginia.
Also  contributing to the DMR operating loss were higher costs associated with a
contract that provides non-emergency  transportation to Medicaid patients in the
State of Connecticut. Both of these contracts were divested on December 27, 2001
as part of DMR. The Company is obligated for the satisfactory performance on the
contract  with the  Commonwealth  of  Virginia,  but is entitled to  contractual
indemnification  by  TekInsight.com,  Inc.  for  any  post  closing  claims.  In
addition,  operating  profits were negatively  impacted due to the completion of
the  subcontract for the Department of Commerce for the 2000 Census and the loss
of the DoE Hanford  location  subcontract  as noted above.  These two  contracts
reported  a  combined  decrease  in  operating  profit in 2001 of $7.2  million.
Operating profits for the DoE Hanford location  subcontract totaled $2.1 million
and $4.5  million  in 2001 and 2000,  respectively.  Operating  profits  for the
Census  subcontract  totaled  $0.2  million  and $5.0  million in 2001 and 2000,
respectively.

Offsetting   these  decreases  were  increases  in  operating  profit  resulting
primarily  from  profit on the new  battlefield  simulation  and the  background
security investigations  contracts that are noted above and increased tasking on
the vaccine technology  services contract that is also noted above. The combined
increase in operating  profit for these three contracts  totaled $3.2 million in
2001.

The gain on disposal of DMR was due to the Company  receiving  18,336,664 shares
of class B common stock of DynTek,  Inc.  These shares are not  registered,  but
DynCorp  has  rights  to  require  DynTek,  Inc.  to  register  the  shares.  An
independent  appraiser  estimated a value of $31.0  million for these  shares at
December  27,  2001.  The result of this  transaction  was a gain on the sale of
approximately  $29.1  million;  however,  under  generally  accepted  accounting
principles ("GAAP") the Company recognized only 60% of the gain or $17.4 million
for this  non-monetary  transaction  because  the  Company  has a 40%  ownership
interest in the new entity DynTek, Inc. See "DynCorp Management Resources,  Inc.
("DMR") Merger with DynTek, Inc." below for further discussion.

DI&ET  revenues were $606.7  million in 2000, an increase of $24.8  million,  or
4.3% over 1999 revenues of $581.9 million.  The revenue increases were primarily
due to increases on a  subcontract  for the  Department of Commerce for the 2000
Census, which began generating revenue in the second half of 1999, and growth of
revenues on a contract with the U.S. Postal Service,  which began  operations in
1999 and was fully  operational in 2000. Also  contributing to DI&ET's increased
revenues was growth in a joint venture for vaccine  technology  services for the
Department of Defense,  which was just starting up in 1999, increased tasking on
several General Services Administration indefinite delivery, indefinite quantity
(IDIQ)  contracts,  and an  outsourcing  contract  awarded in late 1999 with the
Department of Housing and Urban  Development  which became  operational in 2000.
Partially  offsetting  these increases in revenue were the loss of a subcontract
for  the  U.S.   Postal  Service  and  a  contract  with  the   Immigration  and
Naturalization Service. Revenues on these two contracts in 2000 and 1999 totaled
$2.4 million and $55.5 million, respectively.

In 2000,  DI&ET's  operating  profit  increased by $7.2 million to $37.2 million
from $30.0 million in 1999, a 24.1% increase.  The largest increase in operating
profit resulted from the Department of Commerce 2000 Census  subcontract,  which
provided $4.7 million of the  increase.  DI&ET  experienced  growth in operating
profits on
<PAGE>


several General Services Administration IDIQ contracts and its joint venture for
vaccine technology services for the Department of Defense.  Also contributing to
the  increase  in  operating  profit  were  operating  losses in 1999 on certain
contracts  that did not continue in 2000.  Offsetting  the increase in operating
profit was the loss of the Immigration and  Naturalization  Service  contract in
1999, which had $3.8 million in operating profit in 1999.

DMR's  revenues  and  operating  profits are  included in DI&ET's  revenues  and
operating profits noted above. In 2001, 2000, and 1999, DMR reported revenues of
$41.9 million, $27.0 million, and $24.5 million, respectively. Operating profits
(losses) for DMR were $4.0 million,  $0.1 million,  and $(1.4)  million in 2001,
2000, and 1999,  respectively.  DMR's 2001 operating profit includes the gain on
disposition  of $17.4  million,  which  was  offset by $13.4  million  loss from
operations.  See "DynCorp Management Resources, Inc. ("DMR") Merger with DynTek"
below for further discussion.

DTS' 2001 revenues grew by $68.3 million,  or 15.3%,  in 2001 to $514.5 million.
The  increase  in  revenues  over 2000  resulted  from  continued  growth in its
logistics support and aviation services businesses,  primarily from new military
aircraft  maintenance and base operations support contracts at two domestic U.S.
Air Force bases  (Andrews AFB and Vance AFB).  These two new U.S. Air Force base
contracts  (which  both began  operations  in the first  half of 2001)  provided
combined  revenues of $62.5  million in the year ended  December  27,  2001.  An
additional  U.S. Air Force base contract  that began in 2000 recorded  increased
revenues in 2001.  This  contract  provided  revenues of $30.8 million and $16.3
million  for  the  years  ended   December  27,  2001  and  December  28,  2000,
respectively.  Slightly  offsetting the increases in revenue was the divestiture
of certain aerospace research and development  contracts in the third quarter of
2000. Revenues in 2000 for the aerospace contracts were $5.5 million. Management
expects  future  revenue  increases  due to the phase-in of another new contract
with the U.S.  Air Force in March 2002 and the start up of a new  contract  with
the National  Aeronautics and Space  Administration  Johnson Space Center, which
was awarded in early February of 2002.

DTS'  operating  profits for the year ended  December 27, 2001 increased by $1.2
million,  or 8.9%, in 2001 to $15.1 million.  The increases in operating profits
were due  primarily  to the  increased  revenues on the new U.S.  Air Force base
contracts that are noted above.  Operating profits on the two new U.S. Air Force
base  contracts  totaled  $2.9  million for the year ended  December  27,  2001.
Slightly  offsetting  these  increases  in  operating  profit  was  the  loss of
operating  profit  from  the  divestiture  of  certain  aerospace  research  and
development contracts as noted above.

DTS revenues increased by $84.3 million,  or 23.3%, to $446.2 million in 2000 as
compared to $361.9 million in 1999.  Operating profit increased by $1.7 million,
or 13.9%,  from $12.1 million in 1999 to $13.8 million in 2000.  The increase in
revenues in 2000 was  primarily  attributable  to  increases  in the purchase of
reimbursable  materials  for a U.S. Army  contract.  The increase in revenues on
this contract in 2000 totaled $23.9 million.  An additional  U.S. Air Force base
contract  that began in 2000 recorded  revenues of $16.3  million in 2000.  Also
contributing   to  the  increase  in  revenues   was  the   contract   providing
organizational  and  intermediate  level  maintenance  for  various  aircraft at
Holloman Air Force Base, which began in the latter part of 1999 and ramped up in
2000. This contract reported  increases in 2000 over 1999 of $11.4 million.  The
increases in operating profits in 2000 over 1999 were primarily  attributable to
the  increased  revenues  on the  contracts  noted  above.  These  increases  in
operating  profits  were  offset  slightly  by a  decrease  in  profits on a DTS
start-up venture.

DI's revenues showed  continued growth in the year ended December 27, 2001. DI's
2001  revenues  grew by 18.9% to $545.8  million,  as compared to 2000 growth of
37.6% to  $459.1  million.  The  increases  in 2001  over  2000  were  primarily
attributable  to the  phase-in  of two new  contracts:  one which was awarded in
August 2000 and provides maintenance and logistical support to the U.S. Army and
the other which was awarded in April 2000 and provides maintenance, storage, and
security  support  to the  United  States  Central  Command  Air  Forces.  These
contracts reported combined revenues of $116.7 million and $30.2 million in 2001
and 2000,  respectively.  The growth in the U.S.  Air Force  contract was higher
than  expected for 2001 due to increased  activities  resulting  from the war in
Afghanistan.  The war may have added as much as $20.0 million in revenue for the
contract in 2001.  Management is expecting smaller growth on these two contracts
in 2002. Other increases in revenues resulted largely from increased services on
a contract with the  Department of State ("DoS") in support of the  government's
drug eradication  program,  primarily in South America, and to a smaller extent,
from a new contract in 2001 that provides
<PAGE>


personnel  services for U.S.  embassies.  This DoS contract provided revenues of
$83.4 million and $57.9 million in 2001 and 2000, respectively. Offsetting these
increases was decreased volume on an IDIQ contract that provides combat support,
combat service support  augmentation and force provided  training modules to the
U.S. Army and other military  services.  Other smaller decreases from prior year
revenues were due to the completion of a contract providing logistics support to
the  United  Nations  in Sierra  Leone,  the loss of a  contract  that  provided
services  in support of the United  Nations  mission in Kosovo,  and the phasing
down of an International  Police Task Force contract with the DoS in Bosnia. The
combined  revenue  reductions in 2001  compared to 2000 on these four  contracts
totaled $24.6 million.  Management  expects  revenues to grow in 2002 due to the
two new contracts noted above as well as new business  awarded in early 2002. In
February  2002, DI was awarded a five-year  contract with the U.S. Air Force for
work in Latin America.

DI's operating profit increased by $13.0 million,  or 52.0%, to $38.1 million in
2001. DI's operating profit increases  resulted from the higher revenue as noted
above.  Operating  profits  grew  faster  than  revenues in 2001 due to improved
profit margins in some of its service areas and lower indirect  expenses.  These
improved  profit  margins  resulted in part from  contracts  that started in the
first part of 2000. In addition, operating profits increased from a modification
to the DoS contract supporting the government's drug eradication  programs noted
above that added fees in 2001.

DI revenues  increased $125.5 million,  or 37.6%, to $459.1 million in 2000 over
1999 revenues of $333.6 million.  DI's revenues  increased  primarily due to the
start up of the two new contracts  noted above:  one which was awarded in August
2000 and provides  maintenance  and logistical  support to the U.S. Army and the
other which was awarded in April 2000 and  provides  maintenance,  storage,  and
security  support to the United  States  Central  Command Air Forces.  These two
contracts  provided  revenues of $30.2 million in 2000.  In addition,  there was
increased tasking on the  International  Police Task Force contract with the DoS
in Bosnia;  increased  volume on an IDIQ contract that provides  combat support,
combat service support  augmentation and force provided  training modules to the
U.S. Army and other military services; increased tasking on a contract providing
aviation and related support of equipment  maintenance to the armed forces;  and
increased  services  on  the  DoS  contract  supporting  the  government's  drug
eradication  program.  These four contracts  provided revenues of $329.2 million
and $258.0 million in 2000 and 1999,  respectively.  Slightly  offsetting  these
increases in revenues were  decreases in revenues  resulting from the completion
of a base  operations  contract  for the  United  Nations  in Angola  and a base
operations contract for the U.S. Army with a joint venture in Haiti in the first
half of 2000.  These two contracts  reported  combined  decreases in revenues of
$15.9 million in 2000 as compared to 1999.

DI operating  profits  increased by $5.7 million,  or 29.3%, to $25.1 million in
2000 over 1999.  These increases in operating  profits  resulted from the higher
revenues as noted above.  Combined  operating  profits for the two new contracts
totaled $2.0 million in 2000. Offsetting these increases,  were the decreases in
operating  results  from the  completion  of the United  Nations  and U.S.  Army
contracts noted above.  These two contracts  reported combined decreases of $0.9
million in 2000 as compared to 1999.

DIS revenues were $246.3  million in 2001 as compared to $228.5 million in 2000,
an increase of $17.8 million,  or 7.8%. DIS' operating  profit increased in 2001
over 2000 by $123.3 million,  or 222.8%, to $67.9 million.  Adjustments  related
primarily to revised loss estimates on an acquired contract increased  operating
profit by $44.7  million  due to  contract  modification  in 2001 and  decreased
operating  profit by $76.2 million in 2000 (see the "Prior Revision of Financial
Statements" discussed above). Excluding these adjustments, the increases in both
revenues  and  operating  profits  were due  primarily  to the start up of a new
contract in the third quarter of 2001 with the Federal  Bureau of  Investigation
("FBI") for updated  office  automation,  which  consists  primarily of desk top
computers,  servers, and networks.  Management is expecting further increases in
revenues and operating  profits for this contract in 2002, due to an accelerated
schedule  for  completion  of  the  contract.   This  contract's   schedule  was
accelerated  as part of the  government's  response to the terrorist  attacks on
September 11, 2001. Offsetting these increases were decreases that resulted from
several  programs that were winding down in 2001. DIS expects  revenue growth in
2002 to be at a higher  rate than in 2001,  due  primarily  to the FBI  contract
noted above.

DIS, which was acquired on December 10, 1999 from GTE Corporation,  had revenues
of $228.5 million in 2000
<PAGE>



and $13.9  million for the  twenty-day  period  ended  December  30,  1999.  DIS
operating  results were $(55.3) million operating loss in 2000 (inclusive of the
above-noted  adjustment of $(76.2)  million) and $1.0 million for the twenty-day
period in 1999.  2000  operating  profit  excluding the one-time  adjustment was
$20.9 million. Full year revenue, which is not included in the Company's results
of operations except for the portion representing the twenty days ended December
30, 1999,  as noted above,  was $221.6  million for 1999. A lack of new contract
awards to DIS resulted in modest revenue growth in 2000.

ADVMED  reported  revenues of $61.3  million and $64.7 million in 2001 and 2000,
respectively.  ADVMED's  operating profits were $2.7 million and $3.7 million in
2001 and 2000, respectively.  The decreases in 2001 revenues of $3.3 million, or
5.2%,  from 2000 were  primarily due to the loss of a subcontract  with the U.S.
Army that  provided  review and  analysis  of military  health care  facilities'
performance.  This  contract  reported  revenues  of $8.8  million  in 2000.  In
addition,  operating profit was negatively  impacted in 2001 by costs associated
with the completion of a commercial software product.  Partially  offsetting the
lost revenue and operating  profit for the year ended December 27, 2001 were the
start-up of several task orders for a contract that provides review and analysis
support for the Centers for  Medicaid and Medicare  Services  ("CMS"),  formerly
known as the Health Care Financing Administration, and also the collection of an
account  receivable  in the first half of 2001 that was  written  off in a prior
year of $0.8  million.  The CMS contract  reported  revenues of $11.1 million in
2001.  Management  expects  that the new CMS task  orders  will  offset the lost
revenue and operating profit from the loss of the contract in 2001 that provided
review and analysis of military health care facilities' performance.

The increases in ADVMED's 2000 revenues over 1999 of $10.7 million, or 19.8%, to
$64.7  million were due to increased  tasking on the clinical  data  abstraction
services  contract  that  provides  information  to be  analyzed  by CMS and the
related  revenues  from the  September  2000 purchase of certain net assets of a
company that  develops  and markets  proprietary  decision-support  software and
provides  related  consulting  services to evaluate and profile  performance  of
providers engaged by healthcare payers. The increases in ADVMED's 2000 operating
profit over 1999 of $3.1 million to $3.7  million  were due to the  increases in
revenues on the contracts noted above. Also contributing to the increase in 2000
in operating  profit was the write off of an account  receivable of $1.2 million
in 1999.

Cost of Services

Cost of services (as revised - see "Change in Accounting  Method and Revision of
Financial  Statements"  discussion above) was 92.6%, 98.5%, and 95.2% of revenue
in 2001,  2000, and 1999,  respectively.  Cost of services (as revised) was $1.8
billion,  $1.8 billion, and $1.3 billion in 2001, 2000, and 1999,  respectively.
Cost of services includes a decrease in 2001 of $44.7 million and an increase of
$76.2 million in 2000 related primarily to revised loss estimates on an acquired
contract (as described in "Prior  Revision of Financial  Statements"  discussion
above). Cost of services as a percentage of revenue fluctuated  primarily due to
the  one-time  adjustments  noted  above.  Cost of services  increased  by $31.9
million from 2000, or 1.8%, to $1.8 billion.  The primary reasons for the change
in cost of services  in 2001 are the $13.4  million  operating  loss for DMR and
lower profit margins for ADVMED due to higher indirect  expenses,  offset by the
one-time adjustment noted above.

Cost of  services  increased  by $498.1  million  from 1999,  or 38.9%,  to $1.8
billion in 2000. Cost of services for DIS, which was purchased in December 1999,
comprised $221.0, or 44.4%, of the increase from 1999.

The  decrease in the cost of services  (exclusive  of the  one-time  adjustments
noted  above)  as a  percentage  of  revenue  in 2000 as  compared  to 1999  was
attributable  to the higher  margin DIS  business  acquired  in 1999,  partially
offset by  significant  growth in the lower  margin  DTS  business.  DIS cost of
services (exclusive of the one-time adjustments noted above) was 93.4% and 92.9%
of revenue in 2000 and 1999,  respectively.  DTS cost of services  was 96.1% and
95.5% of revenue in 2000 and 1999, respectively.

Corporate General and Administrative

Corporate general and administrative  expense increased slightly in 2001 by $0.1
million, or 0.4%, to $29.5 million,
<PAGE>

as  compared to $29.4  million in 2000.  Corporate  general  and  administrative
expense  increased  by $7.6  million,  or 35.0%,  in 2000 as  compared  to $21.7
million in 1999. Corporate general and administrative expense as a percentage of
revenue was 1.5% in 2001, and 1.6% in 2000 and 1999. The higher expense in 2000,
as compared to both 2001 and 1999,  was  primarily  due to  increased  costs for
converting DIS to the Company's  financial  systems,  which was completed in the
fourth  quarter  of  2000.  In  2001,  2000  and  1999,  corporate  general  and
administrative  expenses  were  reduced by $0.4  million,  $0.9 million and $2.0
million,  respectively,  due to  reversal of  reserves  for federal  acquisition
regulation  compliance issues related to the early and middle 1990's, which were
settled in the Company's favor during those years.

Interest Expense and Interest Income

Interest expense for 2001 was $31.5 million, or 1.6% of revenues, as compared to
$41.4 million,  or 2.3% of revenues for 2000.  The decrease in interest  expense
was  attributable to lower average debt levels and lower average  interest rates
in  2001  as  compared  to  2000.  The  average  levels  of  indebtedness   were
approximately $285.1 million in 2001 and $337.2 million in 2000.

Interest expense for 2000 was $41.4 million, or 2.3% of revenues, as compared to
$18.9 million,  or 1.4% of revenues  reported for 1999. The increase in interest
expense  was  attributable  to higher  average  debt  levels and higher  average
interest  rates in 2000,  as compared  to 1999.  The  average  annual  levels of
borrowing were  approximately  $337.2 million in 2000 compared to $203.8 million
in 1999. The average  annual levels of borrowing and the average  interest rates
increased  in 2000 over 1999 as a result of the  acquisition  of DIS in December
1999, which the Company financed through additional borrowings of $167.5 million
under  higher  cost  debt   instruments  (see  Working  Capital  and  Cash  Flow
discussions).

Interest income was $0.7 million,  $1.5 million, and $1.4 million in 2001, 2000,
and 1999,  respectively.  The  fluctuations  are primarily  attributable  to the
balance of cash and  short-term  investments  throughout  any given year and the
average  rates of  interest.  In 2000,  the  Company  received  $0.5  million in
interest  income on tax refunds due to  amendments  of prior years' tax returns.
The  twelve-month  average balance of cash and short-term  investments was $14.2
million in 2001, $15.9 million in 2000, and $19.8 million in 1999.

Amortization of Intangibles of Acquired Companies

Amortization  of intangibles of acquired  companies (as revised - see "Change in
Accounting  Method and  Revision  of  Financial  Statements"  discussion  above)
decreased by $8.5 million to $6.4 million in 2001  compared to $14.9  million in
2000. The decreases from 2000 resulted from intangibles related to DIS contracts
acquired,  which  became  fully  amortized  early in the first  quarter of 2001.
Amortization for the intangibles  related to DIS contracts acquired which became
fully  amortized  in 2001  totaled $7.9 million in 2000 and only $0.2 million in
2001.  Amortization costs related to all of the DIS intangibles in 2001 and 2000
totaled $4.3 million and $13.1 million, respectively.

Amortization of intangibles of acquired companies (as revised) increased by $3.5
million to $14.9 million in 2000 compared to $11.4 million in 1999. The increase
in amortization  of intangibles of acquired  companies in 2000 resulted from the
full year impact of the amortization of intangible  assets that were recorded in
connection with the December 1999 acquisition of DIS. Also in 1999, there was an
in-process  research and development  write-off of $6.4 million  associated with
the  acquisition of DIS and a write-off of $1.2 million of cost in excess of net
assets acquired for a business that was divested in February 2000.  Amortization
costs related to the DIS  intangibles in 1999 were $7.1 million (which  includes
the $6.4 million write-off).

In June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141,  "Business  Combinations" and SFAS No. 142,  "Goodwill and Other Intangible
Assets." The provisions of SFAS No. 142 eliminate  amortization  of goodwill and
identifiable  intangible  assets with indefinite lives and require an impairment
assessment at least  annually by applying a fair value based test.  Such testing
requires a fair value based assessment by reporting unit (which is defined as an
operating segment or component of an operating segment) to determine if
<PAGE>


goodwill is impaired at the reporting unit level. SFAS No. 141 includes guidance
relating to  identification of intangible assets that should be recognized apart
from goodwill. The Company is in the process of defining the reporting units and
performing the initial impairment testing. The Company is required to adopt SFAS
No. 142 starting in fiscal year 2002. The Company anticipates an annual increase
to common stockholders' share of net earnings of approximately $2.9 million (net
of tax),  or $0.26 per diluted  share,  from the  elimination  of  goodwill  and
assembled workforce amortization. Management continues to estimate the impact on
reported  financial  position and results of operations for the other provisions
of the statements.

Income Taxes

The provision (benefit) for income taxes is based on reported earnings, adjusted
to reflect the impact of permanent  differences between the book value of assets
and liabilities  recognized for financial reporting  purposes,  and such amounts
recognized  for tax  purposes.  The  provision  (benefit)  for income  taxes (as
revised - see "Change in Accounting Method and Revision of Financial Statements"
discussion  above) increased by $55.9 million from 2000. The increase was due to
higher  pretax  income  in 2001  resulting  in  large  part  from  the  one-time
adjustments  recorded  in 2001  and  2000  related  primarily  to  revised  loss
estimates on an acquired contract (see "Prior Revision of Financial  Statements"
discussion  above), and to a lesser extent a slightly higher effective tax rate,
as compared to 2000. The Company's  effective tax rate (as revised - see "Change
in Accounting  Method and Revision of Financial  Statements"  discussion  above)
approximated  36.6% in 2001, 32.4% in 2000, and 43.6% in 1999, after taking into
account the effect of minority  interest,  extraordinary  items,  and cumulative
effect of change in accounting principle. In 1999 and 2001, the Company reversed
state income taxes  provided in prior years related to the favorable  resolution
of state tax audit issues.  Based on current  projections,  management estimates
income tax payments, net of tax refunds, of $25.1 million in 2002.

No valuation  allowance for deferred  federal tax assets was deemed necessary at
December  27, 2001 or December  28,  2000.  The Company has provided a valuation
allowance  for  deferred  state tax assets of $5.1  million and $5.5  million at
December 27, 2001 and December 28, 2000, respectively, 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.

Other Income

Other income increased by $18.8 million to $19.4 million in 2001, as compared to
$0.5 million in 2000.  The increase  resulted  from the Company  completing  the
merger  of its  wholly-owned  subsidiary,  DMR,  with  TekInsight.com,  Inc.  on
December  27,  2001,  and  recognizing  60% or $17.4  million of the gain on the
disposition. See "DynCorp Management Resources, Inc. ("DMR") Merger with DynTek,
Inc." below for further discussion.

Other income was  relatively  unchanged in 2000 as compared to 1999,  decreasing
slightly by $0.3 million to $0.5 million in 2000.

DynCorp Management Resources, Inc. ("DMR") Merger with DynTek, Inc.

DMR was divested on December 27, 2001, by merger with  TekInsight.com,  Inc. The
merger between  TekInsight.com,  Inc. and DMR formed the new entity DynTek, Inc.
DynTek, Inc. is a public company listed on NASDAQ under the symbol DYTK. DynTek,
Inc. is a provider of information  technology and outsourced management services
to state and local  governments  serving  customers  across 17 states.  On a pro
forma basis,  DynTek,  Inc. had revenues of approximately  $77.2 million for the
fiscal year ended June 30, 2001.

The Company received  18,336,664 shares of class B common stock of DynTek,  Inc.
These shares are not registered  stock, but the Company has the right to require
DynTek,  Inc. to register the shares.  An independent  appraisal of these shares
resulted in a value of $31.0 million for these shares at December 27, 2001. This
transaction  resulted  in a gain on the  sale of  approximately  $29.1  million;
however,  under  GAAP the  Company  recognized  only 60% of the  gain,  or $17.4
million,  for  this  non-monetary  transaction  because  the  Company  has a 40%
ownership interest in the new entity, DynTek, Inc.
<PAGE>


The $17.4  million  gain on the  disposal of DMR was  partially  offset by DMR's
$13.4  million  operating  loss as noted  above.  Since  the  Company  has a 40%
interest in DynTek,  Inc.  and does not have  control,  it will  account for its
investment on the equity basis of accounting going forward.  The Company has the
right to appoint  persons to three of the seven director  positions on the board
of DynTek, Inc.

As part of the merger  agreement,  the  Company  has  contract  obligations  for
several  outstanding  performance  bonds on certain DMR  contracts,  which total
approximately $3.4 million as of December 27, 2001.  DynTek,  Inc. has agreed to
make its best effort to replace the bonds with its own obligations.  The Company
is also obligated to the Commonwealth of Virginia for  satisfactory  performance
on DMR's contract to provide  non-emergency medical  transportation  services in
Virginia.  Should DynTek,  Inc. default on the Virginia  contracts and/or any of
the performance  bonds, it could result in financial losses for the Company.  In
addition,  the majority of the estimated loss on the Virginia  contract has been
funded by the Company in the  start-up  phase of the  contract,  which  occurred
prior to the merger on December 27, 2001.

In the first quarter of 2002,  the Company paid $2.6 million to DynTek,  Inc. in
resolution of a dispute  concerning the adequacy of DMR's working capital at the
time of closing. The Company recorded the $2.6 million payment as a liability at
December 27, 2001, and included the $2.6 million  payment in its  calculation of
the gain on the sale. DynTek, Inc. is currently seeking additional financing. It
is possible  that the Company may make  additional  payments to DynTek,  Inc. in
order to assist in funding its business in the future.

Extraordinary Item

In the fourth  quarter of 1999,  the  Company  recorded  an  extraordinary  item
totaling $1.6 million  (gross  extraordinary  item of $2.5 million net of income
tax benefit of $0.9  million).  The charge was recorded in  connection  with the
early extinguishment of secured indebtedness due to refinancing of the Company's
debt in order to complete the acquisition of DIS.

Working Capital

Working  capital (as revised - see "Change in Accounting  Method and Revision of
Financial Statements"  discussion above), defined as current assets less current
liabilities,  was $144.7 million at December 27, 2001 compared to $134.2 million
at December 28, 2000, an increase of $10.4 million.  The ratio of current assets
to current  liabilities  at December 27, 2001 and December 28, 2000 was 1.6. The
increase  in  working  capital  is  primarily  the  result  of  higher  accounts
receivable balances that resulted from higher revenues in 2001 versus 2000 and a
higher other current asset balance,  which was due to prepaid  expenses on a FBI
contract.  Partially offsetting these increases in accounts receivable and other
current  assets was a larger  current  portion of the Term A debt as of December
27, 2001.

Cash Flows from Operating Activities

For the year ended  December  27,  2001,  the  Company's  net cash  provided  by
operations  was $8.1 million,  decreasing  $50.9 million from $59.1 million cash
provided by operations in 2000.  The decrease in operating  cash flows  resulted
primarily from increases in accounts  receivable due to higher revenues in 2001,
increases in other current assets due to prepaid expenses on a FBI contract, and
decreases in accounts  payable and certain accrued  expenses.  Offsetting  these
decreases in operating  cash flow was an increase in operating  cash flow due to
an increase in deferred  taxes that resulted from  differences  between book and
tax income.  In 2000, the increases in cash flows from  operations  over 1999 of
$45.2 million  resulted  primarily from higher customer  collections,  partially
offset by payments on accounts payable.



Cash Flows from Investing Activities

Cash used in investing  activities for the year ended December 27, 2001 was $3.8
million.  The  Company  used  cash of $7.1  million  to  purchase  property  and
equipment  in 2001,  and it sold certain  other  property  and  equipment  which
provided  cash of $5.2  million.  The Company  also  purchased  software of $3.2
million for a contract  that  provides  review and analysis  support for medical
services and for a contract  which  provides  weather data  services.  Investing
activities  provided funds of $8.1 million for the year ended December 28, 2000.
In February  2000,  the Company sold an office  building  located in Alexandria,
Virginia  to a third party for $10.5  million,  and  simultaneously  closed on a
lease of that property from the new owner. The Company used a portion of the net
proceeds to pay off the mortgage on the property.  In October 2000,  the Company
sold  various  high-end  communications  equipment  on a DIS contract to a third
party for $20.4  million and  simultaneously  closed on a lease of the equipment
from the new owner.  Offsetting the cash provided from these sales was cash used
for the purchase of property and equipment of approximately $21.0 million, which
included approximately $11.1 million of equipment purchased in the first half of
2000 and sold in the October 2000 sale-leaseback  transaction as noted above. In
September  2000,  the Company  purchased $1.6 million of certain net assets of a
company that  develops  and markets  proprietary  decision-support  software and
provides  related  consulting  services to evaluate and profile  performance  of
providers engaged by healthcare  providers.  Also in September 2000, the Company
sold $2.3  million  of  certain  net  assets  of a DTS  aerospace  research  and
development unit.

Cash used in investing  activities in 1999 totaled  $185.0  million and included
acquisition  costs of $167.5 million and capital  expenditures of $19.8 million.
Acquisition  costs were  related to the  acquisition  of DIS in  December  1999.
Capital  expenditures  included  $13.9  million for the purchase of property and
equipment  and $5.9 million for new  software for internal  use. The Company had
capitalized  a total of $11.6  million of costs related to internal use software
as of December 30, 1999.

Cash Flows from Financing Activities

Financing   activities  used  funds  of  $2.2  million  during  2001.  Financing
activities  included several short-term  borrowings and subsequent payments of a
cumulated  sum of $274.1  million  under the  Senior  Secured  Credit  Agreement
Revolving  Credit  Facility   maturing   December  9,  2004.  The  Company  also
contributed  $2.2  million to the  Savings and  Retirement  Plan and the Capital
Accumulation and Retirement Plan ("Savings Plans") in 2001. These  contributions
were used to retire the put obligation on certain Savings Plans' shares.

In  2000,  financing  activities  used  funds  of $59.8  million  primarily  for
voluntary prepayments on the Senior Secured Credit Agreement Term A and B Loans,
the  Revolving  Credit  Facility  and the mortgage on the  Alexandria,  Virginia
office  building that the Company sold in the first quarter of 2000. The Company
reduced its outstanding  borrowings under the Term A Loans by $30.0 million, the
Term B Loans  by  $23.1  million,  and the  Revolving  Credit  Facility  by $7.0
million.  Offsetting  these reductions in cash flows was the net receipt of $2.7
million of payments on loans from the  Employee  Stock  Ownership  Trust and the
issuance of $3.4 million of additional 15%  Subordinated  Notes for  pay-in-kind
interest.

In 1999,  financing  activities  provided funds of $172.7  million.  The Company
borrowed $223.8 million under a Senior Secured Credit Agreement.  The borrowings
were used for an optional  redemption of the Company's  outstanding 7.486% Fixed
Rate Contract  Receivable  Collateralized  Notes,  Series 1997-1 (the  "Notes"),
Class A, to reduce irrevocably the Company's  Floating Rate Contract  Receivable
Collateralized  Notes, Series 1997-1, Class B and to pay transactional  expenses
and for general corporate operating  purposes.  The Company issued $40.0 million
face value of its  subordinated  pay-in-kind  notes for $33.9 million and issued
426,217 shares of the Company's stock for $6.1 million.

Earnings before Interest, Taxes, Depreciation, and Amortization ("EBITDA")

EBITDA  represents a measure of the Company's  ability to generate cash flow and
does not  represent  net  income  or cash  flow from  operating,  investing  and
financing  activities  as  defined  by U.S.  GAAP.  EBITDA is not a  measure  of
<PAGE>

performance  or  financial  condition  under GAAP,  but is  presented to provide
additional  information  about  the  Company  to the  reader.  EBITDA  should be
considered in addition to, but not as a substitute for, or superior to, measures
of  financial  performance  reported in  accordance  with GAAP.  EBITDA has been
adjusted  for the  amortization  of  deferred  debt  expense  and debt  issuance
discount which are included in interest expense in the  Consolidated  Statements
of Operations and included in depreciation  and amortization in the Consolidated
Statements of Cash Flows. Readers are cautioned that the Company's definition of
EBITDA may not  necessarily be comparable to similarly  titled  captions used by
other  companies  due  to  the  potential   inconsistencies  in  the  method  of
calculation.

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

                                                                        For Fiscal Years Ended
                                                                        ----------------------
<S>                                                            <C>              <C>              <C>
                                                                   2001           2000              1999
                                                                (Revised -      (Revised -       (Revised-
                                                                See Note 2)     See Note 2)      See Note 2)
                                                               ------------     --------------   -----------
Net earnings (loss)                                            $  60,834        $ (43,416)       $  6,009
   Depreciation and amortization                                  19,910           27,054          13,561
   Interest expense, net                                          30,864           39,937          17,550
   Income tax provision (benefit)                                 35,060          (20,827)          4,640
   Extraordinary item, net of tax                                      -                -           1,601
   Cumulative effect of change in accounting principle,
    net of tax                                                         -            4,770               -
   Amortization of deferred debt expense                          (1,966)          (2,300)         (1,210)
   Debt issue discount                                              (601)             (43)            (39)
                                                               ----------       ----------       ---------
EBITDA                                                         $ 144,101        $   5,175        $ 42,112
                                                               ==========       ==========       =========
</TABLE>


In 2001,  EBITDA (as revised - see "Change in Accounting  Method and Revision of
Financial Statements" above) increased by $138.9 million, or 2,684.6%, to $144.1
million as compared to 2000.  In 2000,  EBITDA  decreased by $36.9  million,  or
87.7%,  as compared to 1999. The increases in EBITDA  (exclusive of the one-time
adjustments  related  primarily to revised loss estimates on a contract acquired
with the purchase of DIS described in "Prior  Revision of Financial  Statements"
above) are primarily  attributable  to the higher  operating  profits for DI&ET,
DTS, DI, and DIS. The DI&ET increase includes the gain on the disposition of DMR
of $17.4 million  partially  offset by DMR's operating  losses of $13.4 million.
The above net earnings  (loss) amounts  include DIS transition  expenses of $5.5
million and $0.1 million in 2000 and 1999, respectively, and none in 2001. These
expenses relate to administrative  and accounting support provided by the former
parent corporation and affiliates of DIS and ended in the first quarter of 2001.
Also  included  in these  expenses  are costs  related  to  transitioning  these
services to the Company. See Working Capital and Cash Flows discussion above for
information on the Company's cash flow data.

Liquidity and Capital Resources

The Company's primary source of cash and cash equivalents is from operations and
financing  activities.  The Company's principal customer is the U.S. Government.
This  customer  provides for a dependable  flow of cash from the  collection  of
accounts  receivable.   Additionally,  many  of  the  contracts  with  the  U.S.
Government provide for progress billings based on costs incurred. These progress
billings  reduce the amount of cash that would  otherwise be required during the
performance of these contracts.

The carrying amounts  reflected in the  consolidated  balance sheets of cash and
cash  equivalents,  accounts  receivable and contracts in process,  and accounts
payable  approximate fair value at December 27, 2001 due to the short maturities
of these instruments.

<PAGE>


The Company has minimal  exposure to  financial  market risks such as changes in
interest rates and adverse movements in foreign currency exchange rates.

The  Company  has $99.7  million of 9 1/2% Senior  Subordinated  Notes  ("Senior
Subordinated  Notes") outstanding with a scheduled maturity in 2007. Interest is
payable semi-annually,  in arrears, on March 1 and September 1 of each year. The
Senior Subordinated Notes are redeemable,  in whole or in part, at the option of
the Company,  on or after March 1, 2002 at a redemption  price which ranges from
104.8% in 2002 to 100.0% in 2005 and  thereafter.  In addition,  the Company may
redeem up to 35.0% of the aggregate  principal amount of the Senior Subordinated
Notes (at a redemption  price of 109.5%) with proceeds  generated  from a public
offering of equity,  provided at least 65.0% of the original aggregate amount of
the Senior Subordinated Notes remains outstanding. The Senior Subordinated Notes
are general  unsecured  obligations of the Company and will be  subordinated  in
right of payment to all existing and future senior debt of the Company.

The Company has a Senior Secured Credit Agreement (the "Credit  Agreement") with
a group of financial institutions.  Under the Credit Agreement,  the Company has
outstanding  borrowings of $70.0 million under Term A Loans maturing December 9,
2004,  $76.9 million  under Term B Loans  maturing  December 9, 2006,  and has a
$90.0 million  revolving  line of credit,  which,  at December 27, 2001,  had no
borrowings.

The Term A Loans are to be repaid in an  installment of $1.3 million in February
2002 and then eleven  quarterly  installments  of $6.3 million  beginning in May
2002. The Term B Loans are to be repaid in an installment of $5.7 million in May
2005 and then six quarterly  installments  of $11.9 million  beginning in August
2005. At the option of the Company,  borrowings  under the Credit Agreement bear
interest at either LIBOR or a base rate  established by the bank,  plus a margin
that varies based upon the Company's ratio of debt to earnings.

The Company is charged a commitment fee of 0.5% per annum on unused  commitments
under the revolving  line of credit.  Letters of credit  outstanding  were $11.1
million  and  $9.5   million  at  December  27,  2001  and  December  28,  2000,
respectively,  under the line of credit.  The amount available was $78.9 million
and $80.5 million,  respectively, as of December 27, 2001 and December 28, 2000.
The  Company  also  has $7.2  million  in  outstanding  surety  obligations  for
performance  and payment bonds  supporting  various  contracts.  These bonds are
partially collateralized with letters of credits, the value of which is included
in the $11.1 million noted above.

The Credit  Agreement  contains  customary  restrictions  on the  ability of the
Company to undertake  certain  activities,  such as the incurrence of additional
debt,  the payment of dividends on or the  repurchase  of the  Company's  common
stock, the merger of the Company into another company, the sale of substantially
all the Company's assets,  and the acquisition of the stock or substantially all
the assets of another  company.  The Credit  Agreement also  stipulates that the
Company must maintain certain  financial ratios,  including  specified ratios of
earnings  to  fixed  charges,  debt to  earnings,  and  accounts  receivable  to
borrowings,  under the Credit  Agreement.  At December 27, 2001 and December 28,
2000, the Company was in compliance with these covenants.

The  Company  has  outstanding   $40.0  million  face  value  of  the  Company's
subordinated  pay-in-kind  notes due 2007, with an estimated fair value of $37.9
million  ("Subordinated  Notes").  The Subordinated Notes bear interest at 15.0%
per annum,  payable  semi-annually.  The Company  may,  at its option,  prior to
December 15, 2004, pay the interest in cash or in additional Subordinated Notes.
The Subordinated Notes are redeemable, in whole or in part, at the option of the
Company,  on or after December 15, 2000, at a redemption  price that ranges from
114.0% in 2000 to  100.0% in 2006 and  thereafter.  The  Subordinated  Notes are
general  unsecured  obligations of the Company and will be subordinated in right
of payment to all  existing  and future  senior  debt of the  Company and to the
Senior Notes.

As of December 27, 2001 the Company's total debt was $284.6 million, an increase
of $0.6 million from $284.0  million as of December 28, 2000,  primarily  due to
the  amortization  of the  discounts  on the  Subordinated  Notes and the 9 1/2%
Senior Subordinated Notes discussed above.

<PAGE>


The Board of Directors has issued an enabling  resolution  that provides for the
repurchase of up to 500,000 shares of the Company's  common stock at a price not
to  exceed  the  current  market  price,  subject  to all  applicable  financial
covenants.  Management  continuously reviews alternative uses of excess cash and
debt capacity for purposes of acquisitions,  dividends, repurchase of shares and
other financial matters.

In November 2001 the Company entered into three-year  employment agreements with
certain executives  specifying annual salaries and incentive plan target bonuses
and providing for payment of salary and pro-rated bonuses following termination.
The employment agreements also provide, in the event of involuntary  termination
without cause, for consulting payments and non-compete  payments for a period of
thirty months,  and, if the executive is terminated in connection  with a change
in control of the Company, payment of an additional lump-sum amount.

Chart Outlining Future Financial Commitments

The following table sets forth the Company's total  contractual cash obligations
over the next five years and thereafter (in thousands):
<TABLE>
<CAPTION>

                                                            Cash Obligations Due by Year

Contractual
Cash Obligation                   Total        2002        2003         2004        2005        2006      Thereafter
---------------                   -----        ----        ----         ----        ----        ----      ----------
<S>                             <C>          <C>         <C>          <C>         <C>         <C>         <C>
Long-term Debt                  $284,605     $20,123     $ 25,005     $28,083     $29,400     $47,500     $134,494
Operating Leases                 249,782      46,963       42,968      36,790      27,600      25,643       69,818
Maximum Liability to
 Repurchase ESOP
 Shares                          326,368      19,996       24,340      26,292      24,228      20,873      210,639
Liability to Repurchase
 Other Redeemable
 Common Stock                     11,600           -       11,600           -           -           -            -
DynTek, Inc. Payments              2,600       2,600            -           -           -           -            -
                                --------     -------     --------     -------     -------     -------     --------
Total Contractual Cash
 Obligations                    $874,955     $89,682     $103,913     $91,165     $81,228     $94,016     $414,951
                                ========     =======     ========     =======     =======     =======     ========
</TABLE>


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

The Company has several significant  operating leases for facilities,  furniture
and equipment. Minimum lease payments over the next 11 years are estimated to be
$249.8  million,  including  $47.0  million in 2002.  Of the $47.0  million 2002
minimum lease payments,  $14.6 million related to DIS leases (including the sale
and  leaseback of various  high-end  communications  equipment as noted  above),
$10.4  million  related to a U.S.  Postal  Service  contract,  and $6.9  million
related to the new corporate headquarters building.

The Company is obligated to repurchase  certain of its Employee Stock  Ownership
Plan  ("ESOP")  vested  common stock  shares  (under a "put  option")  from ESOP
participants (see Note 8 to the Consolidated  Financial  Statements) upon death,
disability,  retirement  and  termination at the fair value (as determined by an
independent appraiser) until such time as the Company's common stock is publicly
traded. Under the Subscription Agreement dated September 9, 1988, the Company is
permitted  to defer put  options  if,  under  Delaware  law,  the capital of the
Company would be impaired as a result of such repurchase.  Participants  receive
their vested shares upon retirement,  becoming disabled,  or death over a period
of one to five years and for other reasons of  termination  over a period of one
to ten years, all as set forth in the ESOP documents.  The participant can elect
to retain  distributed  ESOP shares instead of a participant  put. The Company's
total  contractual  cash  obligation to repurchase ESOP shares will fluctuate in
the future as the  independently  determined  fair value  fluctuates.  The total
obligation to repurchase  ESOP shares is $326.4 million as of December 27, 2001,
based on the  independently  determined  fair  value as of  December  27,  2001.
Effective  January 1, 2001, the Company  established two new plans:  the Savings
and  Retirement   Plan  and  the  Capital   Accumulation   and  Retirement  Plan
(collectively, the "Savings Plans"). At the same time, the ESOP was
<PAGE>


merged into the two plans.  The Company stock  accounts of  participants  in the
ESOP were  transferred  to one or the other of the Savings  Plans'  trusts,  and
Savings Plans  participants  have the same distribution and put rights for these
ESOP shares as they had in the ESOP.

On December  10,  1999,  the Company  entered  into an  agreement  with  various
financial institutions for the sale of 426,217 shares of the Company's stock and
Subordinated Notes (see Note 5 to the Consolidated Financial Statements).  Under
a contemporaneous  registration rights agreement, the holders of these shares of
stock will have a put right to the Company commencing on December 10, 2003, at a
price of $40.53 per share, unless one of the following events has occurred prior
to such date or the exercise of the put right: (1) an initial public offering of
the Company's  common stock has been  consummated;  (2) all the Company's common
stock  has been  sold;  (3) all the  Company's  assets  have been sold in such a
manner that the holders have received cash payments; or (4) the Company's common
stock has been  listed on a  national  securities  exchange  or  authorized  for
quotation  on the NASDAQ  National  Market  System  for which  there is a public
market of at least $100 million for the Company's  common stock. If, at the time
of the  holders'  exercise of the put right the Company is unable to pay the put
price because of financial  covenants in loan agreements or other  provisions of
law,  the  Company  will not honor the put at that time,  and the put price will
escalate  for a  period  of up to four  years,  at  which  time  the put must be
honored.  The  escalation  rate  increases  during such period  until the put is
honored,  and the rate varies from an  annualized  factor of 22.0% for the first
quarter after the put is not honored up to 52.0% during the  sixteenth  quarter.
The total  obligation to repurchase these shares of the Company's stock is $11.6
million as of December 27, 2001.  On December 26, 2001,  two of the holders sold
140,000 of these shares on the Company's internal market and those shares are no
longer subject to the put right.

The  payment to DynTek,  Inc. of $2.6  million was made in the first  quarter of
2002 as noted above in the "DynCorp  Management  Resources,  Inc. ("DMR") Merger
with DynTek, Inc." discussion.

Transactions, Arrangements and Other Relationships with Unconsolidated Entities

The Company owns a 49.5% ownership  interest in DynCorp  TechServ LLC, a Georgia
limited  liability  company.  The primary purpose of DynCorp  TechServ LLC is to
provide complete networked desktop computing environments to clients pursuant to
contractual  arrangements  under which payments are calculated on the basis of a
price per user for the entire  service.  The  services are provided in a bundled
aggregation  that includes the support of hardware and software already owned by
the  customer,  the  provision  of  additional  hardware  and  software  for the
customer's  use during  the  contractual  term,  network  management,  help desk
services,  and related  customer  support  services.  Title to the  hardware and
software  provided  to the  customer  equipment  typically  does not pass to the
customer, if at all, until the end of the contractual term.

DynCorp  TechServ LLC has a Management and Operational  Services  Agreement with
the Company  under which the Company  provides all  operational  and  management
services to DynCorp  TechServ LLC under its current  contracts and all marketing
assistance and proposal  development services in the pursuit of additional prime
contracts and task orders under  existing  contracts  and any future  contracts.
DynCorp  TechServ LLC secures all financing  arrangements for the acquisition of
hardware,  software,   peripheral  equipment,  and  other  capital  expenditures
necessary for the performance of the current or future contracts,  including all
loans, capital leases, and similar  arrangements,  without guarantee or recourse
to the Company.

The  Company  is a  minority  partner in New  Mexico  Technology  Group,  LLC, a
partnership  formed to respond to the  request  for  proposal  to perform on the
Department  of Defense  White Sands  Missile  Range  Support  Services  contract
administered by the Directorate of Contracting,  STEWS-DOC,  White Sands Missile
Range,  New Mexico.  The Company is not  obligated  for any debt,  obligation or
other liability of the  partnership or to members of the partnership  beyond the
partnership capital account.

The Company holds a minority  interest in the Aerospace Center Support ("ACS") a
joint  venture  formed to support the U.S. Air Force  contract for  "Contractual
Support Services" for the Arnold  Engineering  Development Center and Arnold Air
Force Base,  Tennessee.  ACS operates a complex of aerospace  ground  simulation
test facilities for the
<PAGE>


engineering development support for U.S. aircraft,  missiles,  spacecraft, fully
functional jet and rocket engines,  and other aerospace systems. The Company has
not guaranteed,  and does not intend to guarantee,  ACS's  obligations under its
contract agreements.

The Company has a minority interest in Composite  Technology,  Inc. ("CTI"). CTI
services and repairs aircraft components. The Company's minority interest in CTI
allows it the  exclusive  right to utilize  and market  boron and other  advance
repair  patch  technologies  in North and South  America.  The  Company  has not
guaranteed, and does not intend to guarantee, any of CTI's obligations.

The Company has a 40% interest in ES-KO (UK)/DynCorp Joint Venture (JV). This JV
provides for base operations support to NATO in Kosovo,  Macedonia, and Albania.
In addition to the basic base level  support the JV provides  civil  engineering
services of all roads and  bridges  throughout  the region.  The Company has not
guaranteed ES-KO  (UK)/DynCorp  Joint Venture's  obligations  under its contract
arrangements.

The Company  also  participates  as a minority  owner in several  other  limited
liability companies,  joint ventures and corporations but does not guarantee any
of their operations, except for DynTek, Inc. (see "DynCorp Management Resources,
Inc. ("DMR") Merger with DynTek, Inc." discussion noted above).

The following  table* sets forth the  Company's  investments  (in  thousands) in
limited  liability  companies,  joint ventures,  and  corporations  that are not
consolidated  into the Company's  financial  statements as of December 27, 2001.
The other investors are not considered  related parties,  as defined by SFAS No.
57, "Related Party Disclosures." Related parties include affiliates, management,
directors, and entities owned or controlled by management or directors.
<TABLE>
<CAPTION>

Name of Entity                          Ownership                               Ownership %     Investment
  (nature of business)                                                                        Balance as of
                                                                                            December 27, 2001
-------------------------------------------------------------------------------------------------------------
<S>                                     <C>                                        <C>
Composite Technology Inc.               DynCorp Advanced Repair Technology Inc.    25.0%        $  786
boron patch technology                  Others                                     75.0%

-------------------------------------------------------------------------------------------------------------
Aerospace Center Support                DynCorp                                    35.0%           333
services at Arnold Engineering Support  Others                                     65.0%
center

-------------------------------------------------------------------------------------------------------------
DynCorp TechServ LLC                    DynCorp                                    49.5%            11
services                                Others                                     50.5%

-------------------------------------------------------------------------------------------------------------
DynTek, Inc.                            DynCorp                                    40.0%        19,289
state and local outsourcing             Public                                     60.0%

-------------------------------------------------------------------------------------------------------------
ES-KO (UK)/DynCorp Joint                DynCorp                                    40.0%           935
Venture                                 Others                                     60.0%
government outsourcing services
-------------------------------------------------------------------------------------------------------------
ITS Medical Systems LLC                 DynCorp                                    40.0%           567
hazardous biomedical substance          Others                                     60.0%
training
-------------------------------------------------------------------------------------------------------------
New Mexico Technology Group, LLC        DynCorp                                    47.0%           343
government outsourcing services         Other                                      53.0%

-------------------------------------------------------------------------------------------------------------
*Excludes investments of less than 20% ownership and inactive investments
</TABLE>

September 11, 2001

The September 11, 2001 terrorist  attacks  against the U.S. and the national and
global response to those terrorist  attacks did not have a significant  negative
impact on the  Company.  As a  consequence  of  increased  homeland  defense and
military retaliation overseas, management expects increased business activity on
several  contracts with the Federal  Government,  and thereby expects  increased
revenues in 2002. At this time, management is not able to
<PAGE>

project the total  financial  impact on its  statements  of  operations  or cash
flows.

Due to the normal cyclical nature of the insurance industry and also in part due
to the  September 11, 2001  terrorist  attacks  against the U.S.,  the Company's
insurance  position has changed.  Specifically,  some premiums  have  increased,
while the coverages  have been  restricted or eliminated,  the contract  periods
shortened,  and the  deductibles  increased.  As a result,  the Company  expects
increases  in its  insurance  expense  in 2002.  The  Company  does not  foresee
changing any of its current business operations due to these insurance changes.

Recent Developments

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

Environmental Matters

Neither the Company nor any of its  subsidiaries has been named as a Potentially
Responsible  Party (as  defined  in the  Comprehensive  Environmental  Response,
Compensation, and Liability Act) at any site. The Company has incurred costs for
the  installation and operation of a soil and water  remediation  system and for
the clean up of  environmental  conditions  at certain  other sites and has been
involved  with  several  environmental  claims (see Note 20 to the  Consolidated
Financial Statements).  The Company's liability, in the aggregate,  with respect
to these  matters is not  expected to be material  to the  Company's  results of
operations or financial condition.

Critical Accounting Policies (Revised)

Revenues for cost-reimbursement contracts are recorded as reimbursable costs are
incurred,   including   a  pro-rata   share  of  the   contractual   fees.   For
time-and-material  contracts,  revenue is  recognized  to the extent of billable
rates times hours delivered plus material and other reimbursable costs incurred.
For long-term fixed price production contracts,  revenue is recognized at a rate
per unit as the units are delivered.  Revenue from other  long-term  fixed price
contracts is recognized ratably over the contract period or by other appropriate
methods to measure  services  provided.  Contract costs are expensed as incurred
except for certain  limited  long-term  contracts  noted  below.  For  long-term
contracts,  which are  specifically  described in the scope section of AICPA SOP
No.  81-1,   "Accounting  for  Performance  of  Construction  Type  and  Certain
Production-Type  Contracts,"  or other  appropriate  accounting  literature  the
Company  applies the  percentage of completion  method.  Under the percentage of
completion  method,  income is recognized at a consistent profit margin over the
period of  performance  based on estimated  profit  margins at completion of the
contract.  This method of accounting  requires estimating the total revenues and
total  contract cost at completion of the contract.  During the  performance  of
long-term contracts, these estimates are periodically reviewed and revisions are
made as required. The impact on revenue and contract profit as a result of these
revisions  is  included  in the periods in which the  revisions  are made.  This
method can result in the  deferral of costs  including  start-up  costs,  or the
deferral of profit on these  contracts.  Because the Company assumes the risk of
performing  a fixed  price  contract at a set price,  the failure to  accurately
estimate ultimate costs or to control costs during performance of the work could
result,  and in some  instances has resulted,  in reduced  profits or losses for
such contracts.  Estimated losses on contracts at completion are recognized when
identified.

Disputes arise in the normal course of the Company's  business on projects where
the Company is  contesting  with  customers  for  collection of funds because of
events such as delays, changes in contract  specifications and questions of cost
allowability  or  collectibility.  Such  disputes  are recorded at the lesser of
their  estimated net realizable  value or actual costs  incurred,  and only when
realization  is  probable  and can be  reliably  estimated.  Claims  against the
Company  are  recognized  where  loss  is  considered  probable  and  reasonably
determinable in amount.  Because there are estimates and judgments involved, the
actual  results could be different  from those  estimates.  Accounts  receivable
balances  related to such disputed  items were  immaterial at December 27, 2001,
December 28, 2000, and December 30, 1999.

<PAGE>


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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


Interest Rate Risk
------------------

The Company has minimal  exposure due to  fluctuations in market interest rates.
Had market  interest rates been 10% higher than they were  throughout  2001, the
Company's net earnings would have been  approximately  $0.3 million lower,  or a
change of 0.5%. This is derived from a historical  model that  recalculates  the
interest expense incurred by the Company assuming that the market interest rates
to which the Company's  interest payments are indexed were, in all cases,  10.0%
higher,  taking into  consideration  the effect of such higher interest rates on
the interest rate swap as noted below.

From time to time,  the  Company  may enter into  various  derivative  financial
instruments,  including interest rate forwards, options and interest rate swaps,
to manage the exposure of portions of the  Company's  total debt  portfolio  and
related cash flows to  fluctuations  in market interest rates. In December 2000,
the Company entered in a two year and 28-day swap agreement, wherein the Company
pays  approximately  6.2%  annualized  interest  on a  notional  amount of $35.0
million on a quarterly  basis beginning on January 4, 2001 and ending on January
6, 2003.  The  objective  of this  transaction  is to  neutralize  the cash flow
variability  on  designated  portions of the  Company's  Senior  Secured  Credit
Agreement  Term A and  Term B loans,  which  have a  floating-rate,  that may be
caused by fluctuations  in market interest rates.  The adjustments to fair value
of this derivative  instrument  during 2001 resulted in additional  decreases in
accumulated other comprehensive  income of $0.9 million.  This swap is perfectly
effective at its  objective,  and  accordingly,  there are no existing  gains or
losses  as of  December  27,  2001 that are  expected  to be  reclassified  into
earnings  within the next  twelve  months.  The  Company  has also  managed  its
exposure to changes in interest  rates by  effectively  capping at 7.5% the base
interest  rate on a notional  amount of $100.0  million  of its  Senior  Secured
Credit Agreement Term A and Term B loans until February 2002. This option had no
value at the transition date of Statement of Financial  Accounting Standards No.
133, "Accounting for Derivative  Instruments and Hedging Activities" (see Note 7
to the Consolidated  Financial  Statements for further  discussion on derivative
financial instruments).


Foreign  Currency  Risk
-----------------------

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

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<PAGE>



INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
   DynCorp:

We have  audited  the  accompanying  consolidated  balance  sheets of DynCorp (a
Delaware corporation) and subsidiaries (the "Company"),  as of December 27, 2001
and December 28, 2000,  and the related  consolidated  statements of operations,
cash flows,  and  stockholders'  equity for the years ended  December  27, 2001,
December 28, 2000, and December 30, 1999. Our audits also included the financial
statement  schedule  referred to in the Index at Item  14(a)2.  These  financial
statements and the financial  statement  schedule are the  responsibility of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements and the financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of the Company as of December 27, 2001
and December 28, 2000,  and the results of its operations and its cash flows for
the years ended  December 27, 2001,  December 28, 2000, and December 30, 1999 in
conformity with accounting principles generally accepted in the United States of
America. Also, in our opinion, the financial statement schedule, when considered
in relation to the basic  consolidated  financial  statements  taken as a whole,
presents fairly in all material respects the information set forth therein.

As discussed in Note 2, the accompanying financial statements have been revised.


Deloitte & Touche LLP

McLean, Virginia
October 11, 2002

<PAGE>

<TABLE>
<CAPTION>

                            DynCorp and Subsidiaries
                           Consolidated Balance Sheets
                          As of the Fiscal Years Ended
                                 (In thousands)

                                                                          December 27,       December 28,
                                                                        2001 (Revised -     2000 (Revised -
                                                                          See Note 2)        See Note 2)
                                                                          -----------        -----------
<S>                                                                     <C>                 <C>
Assets
------
Current Assets:
   Cash and cash equivalents                                                 $ 15,078        $ 12,954
   Accounts receivable and contracts in process, net                          345,358         332,583
   Prepaid income taxes                                                         2,158           1,153
   Other current assets                                                        35,775          28,101
                                                                             --------        --------
      Total Current Assets                                                    398,369         374,791

Property and Equipment, at cost:
   Land                                                                             0              22
   Buildings and leasehold improvements                                        11,436          13,805
   Machinery and equipment                                                     36,122          37,772
                                                                             --------        --------
                                                                               47,558          51,599
   Accumulated depreciation and amortization                                  (26,599)        (23,833)
                                                                             --------        --------
      Net Property and Equipment                                               20,959          27,766

Intangible Assets, net                                                        130,425         135,244

Deferred Income Taxes                                                               -          10,013

Other Assets                                                                   48,687          38,942
                                                                             --------        --------

Total Assets                                                                 $598,440        $586,756
                                                                             ========        ========
</TABLE>

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

<PAGE>

<TABLE>
<CAPTION>

                            DynCorp and Subsidiaries
                           Consolidated Balance Sheets
                          As of the Fiscal Years Ended
                      (In thousands, except share amounts)

                                                                            December 27,         December 28,
                                                                          2001 (Revised -      2000 (Revised -
                                                                            See Note 2)          See Note 2)
                                                                            -----------          -----------
<S>                                                                         <C>                  <C>
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities:
   Notes payable and current portion of long-term debt                       $ 20,123             $    124
   Accounts payable                                                            19,420               27,574
   Deferred revenue and customer advances                                       6,195                7,631
   Accrued income taxes                                                           932                6,895
   Accrued expenses                                                           207,029              198,330
                                                                             --------             --------
      Total Current Liabilities                                               253,699              240,554

Long-term Debt                                                                264,482              283,889

Deferred Income Taxes                                                          10,134                    -

Other Liabilities and Deferred Credits                                         34,634               86,673

Contingencies and Litigation (Note 20)                                              -                    -

Temporary Equity:
 Redeemable common stock at redemption value
  ESOP shares, 7,142,510 and 7,504,653 shares issued
    and outstanding in 2001 and 2000, respectively,
    subject to restrictions                                                   326,368              238,346
  Other redeemable common stock, 286,217 and 426,217
    shares issued and outstanding in 2001 and 2000                              6,967                7,984

Stockholders' Equity:
  Common stock, par value ten cents per share, authorized
    20,000,000 shares; issued 5,296,146
     and 4,758,897 shares in 2001 and 2000, respectively                          530                  476
 Paid-in surplus                                                              138,052              134,638
 Accumulated other comprehensive (loss) income                                 (1,081)                   3
 Reclassification to temporary equity for redemption value
     greater than par value                                                  (332,596)            (245,540)
 Deficit                                                                      (59,681)            (118,125)
 Common stock held in treasury, at cost; 2,196,853
    and 2,264,625 shares in 2001 and 2000, respectively                       (43,068)             (42,142)
                                                                             ---------            ---------
Total Liabilities and Stockholders' Equity                                   $598,440             $586,756
                                                                             ========             =========

</TABLE>

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


<PAGE>

<TABLE>
<CAPTION>

                            DynCorp and Subsidiaries
                      Consolidated Statements of Operations
                           For the Fiscal Years Ended
                    (In thousands, except per share amounts)
                                                                                 December 27,      December 28,       December 30,
                                                                               2001 (Revised -   2000 (Revised -    1999 (Revised -
                                                                                 See Note 2)       See Note 2)        See Note 2)
                                                                                 -----------       -----------        -----------
<S>                                                                              <C>               <C>                <C>
Revenues                                                                         $1,955,973        $1,805,155         $1,345,281
                                                                                 ----------        ----------         ----------
Costs and expenses:
      Cost of services                                                            1,810,273         1,778,329          1,280,239
      Corporate general and administrative                                           29,456            29,350             21,741
      Interest expense                                                               31,521            41,408             18,943
      Interest income                                                                  (657)           (1,471)            (1,393)
      Amortization of intangibles of acquired companies                               6,394            14,922             11,408
      Other income, net of miscellaneous other expenses                             (19,370)             (532)              (875)
                                                                                  ----------        ----------         ----------
       Total costs and expenses                                                   1,857,617         1,862,006          1,330,063
                                                                                  ----------        ----------         ----------

Earnings (loss) from continuing operations before income taxes,
  minority interest, extraordinary item, and cumulative effect
  of change in accounting principle                                                  98,356           (56,851)            15,218
   Provision (benefit) for income taxes                                              35,060           (20,827)             4,640
                                                                                  ----------        ----------         ----------

Earnings (loss) from continuing operations before minority interest,
  extraordinary item, and cumulative effect of change in accounting principle        63,296           (36,024)            10,578
   Minority interest                                                                  2,462             2,622              2,968
                                                                                  ----------        ----------         ----------

Earnings (loss) from continuing operations before extraordinary item and
 cumulative effect of change in accounting principle                                 60,834           (38,646)             7,610
 Extraordinary loss from early extinguishment of debt, net of income taxes of $862        -                 -              1,601
                                                                                  ----------        ----------         ----------

Earnings (loss) from continuing operations before cumulative effect of change in
 accounting principle                                                                60,834           (38,646)             6,009
 Cumulative effect of change in accounting principle, net of income taxes of $2,568        -            4,770                   -
                                                                                  ----------        ----------         ----------

Net earnings (loss)                                                              $   60,834        $  (43,416)        $    6,009
                                                                                  ==========        ==========         ==========

 Accretion of other redeemable common stock to redemption value                       2,390             1,842                 94
                                                                                  ----------        ----------         ----------

Common stockholders' share of net earnings (loss)                                $   58,444        $  (45,258)        $    5,915
                                                                                  ==========        ==========         ==========
Common stockholders' share of net earnings (loss) per common share:
Basic earnings (loss) per share:
  Common stockholders' share of earnings from continuing operations              $     5.53        $    (3.86)        $     0.75
  Extraordinary loss                                                                      -                 -              (0.16)
  Cumulative effect of change in accounting principle                                     -              0.46                  -
                                                                                  ----------        ----------         ----------
  Common stockholders' share of net earnings - basic                             $     5.53        $    (4.32)        $     0.59
                                                                                  ==========        ==========         ==========

Diluted earnings (loss) per share:
    Common stockholders' share of earnings from continuing operations            $     5.26        $    (3.86)        $     0.74
    Extraordinary loss                                                                    -                 -              (0.16)
    Cumulative effect of change in accounting principle                                   -              0.46                  -
                                                                                  ----------        ----------         ----------
    Common stockholders' share of net earnings - diluted                         $     5.26        $    (4.32)        $     0.58
                                                                                  ==========        ==========         ==========
 Weighted-average number of shares
       outstanding for basic earnings per share                                      10,559            10,477             10,044
 Weighted-average number of shares
     outstanding for diluted earnings per share                                      11,113            10,477             10,273
</TABLE>

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


<PAGE>


<TABLE>
<CAPTION>

                            DynCorp and Subsidiaries
                      Consolidated Statements of Cash Flows
                           For the Fiscal Years Ended
                                 (In thousands)
                                                                                 December 27,      December 28,     December 30,
                                                                               2001 (Revised -   2000 (Revised -   1999 (Revised -
                                                                                 See Note 2)       See Note 2)      See Note 2)
                                                                                 -----------       -----------      -----------
<S>                                                                             <C>                <C>              <C>
Cash Flows from Operating Activities:
Common stockholders' share of net earnings (loss)                                $  58,444          $  (45,258)      $  5,915
Adjustments to reconcile common stockholders' share of net
 earnings (loss) to net cash provided by operating activities:
Depreciation and amortization                                                       19,910              27,054         13,561
Accretion of other redeemable common stock to redemption value                       2,390               1,842             94
Cumulative effect of change in accounting principle                                      -               4,770              -
Subordinated Notes issued in fulfillment of pay-in-kind interest                         -               3,397              -
Gain on divested business                                                          (17,442)                  -              -
Purchased in-process research and development                                            -                   -          6,400
Deferred income taxes                                                               29,434             (35,279)         2,298
Changes in reserves for divested business  - other                                    (164)                  -         (2,000)
Capitalized costs incurred on existing contracts                                         -                   -         (2,473)
(Reversal) establishment of preacquisition contingency reserves                    (42,744)             76,166              -
Changes in pension asset and other postretirement benefit obligations                1,775               2,688              -
Other                                                                                2,591              (1,774)         1,687
 Change in current assets and liabilities, net of acquisitions and dispositions:
  (Increase) decrease in accounts receivable and contracts in process              (22,656)             25,523        (37,919)
  (Increase) decrease in other current assets                                      (19,302)             (1,670)          (340)
  Increase in current liabilities except notes payable and current portion of
     long-term debt and reclassification from long-term liabilities                 (4,127)              1,592         26,612
                                                                                 ----------         -----------      ---------
        Cash provided by operating activities                                        8,109              59,051         13,835
                                                                                 ----------         -----------      ---------
Cash Flows from Investing Activities:
    Sale of property and equipment                                                   5,203              30,685            610
    Purchase of property and equipment                                              (7,070)            (20,960)       (13,878)
    Capitalized cost of new financial and human resource systems                         -                   -         (5,969)
    Capitalized cost of software                                                    (3,243)                  -              -
    Deferred income taxes from "safe harbor" leases                                      -                (597)          (481)
    Increase (decrease) in investment in unconsolidated subsidiaries                   500              (1,230)         1,363
    Assets and liabilities of acquired business                                          -              (1,620)      (167,504)
    Proceeds from business divestiture                                                   -               2,300              -
    Other                                                                              814                (496)           884
                                                                                 ----------         -----------      ---------
         Cash (used in) provided by investing activities                            (3,796)              8,082       (184,975)
                                                                                 ----------         -----------      ---------
Cash Flows from Financing Activities:
    Treasury stock purchased                                                        (2,182)                  -         (7,208)
    Payments on indebtedness                                                      (274,057)           (406,618)      (253,491)
    Proceeds from debt issuance                                                    274,050             344,005        428,552
    Proceeds from issuance of redeemable common stock                                    -                   -          6,048
    Payments received on ESOT loans                                                      -               2,958         10,577
    Loans to ESOT                                                                        -                (300)       (11,082)
    Other                                                                                -                 119           (687)
                                                                                 ----------         -----------      ---------
         Cash (used in) provided by financing activities                            (2,189)            (59,836)       172,709
                                                                                 ----------         -----------      ---------
Net Increase in Cash and Cash Equivalents                                            2,124               7,297          1,569
Cash and Cash Equivalents at Beginning of the Fiscal Year                           12,954               5,657          4,088
                                                                                 ----------         -----------      ---------
Cash and Cash Equivalents at End of the Fiscal Year                              $  15,078          $   12,954       $  5,657
                                                                                 ==========         ===========      =========
</TABLE>

Supplemental Information of Noncash Investing Activities:
The Company  completed  the merger of its  wholly-owned  subsidiary,  DMR,  with
TekInsight.com,  Inc. on December 27, 2001. The Company obtained a 40% ownership
interest in DynTek,  Inc. and recognized a gain on disposition of $17.4 million.
The Company's  ownership interest in DynTek, Inc. was recorded at $19.4 million,
which  reflects the $17.4 million gain,  net book value of the assets  disposed,
and liabilities incurred.
The  accompanying  notes are an integral  part of these  consolidated  financial
statements.

<PAGE>

<TABLE>
<CAPTION>

                            DynCorp and Subsidiaries
                 Consolidated Statements of Stockholders' Equity
                           For the Fiscal Years Ended
                                 (In thousands)



                                                              Reclassification                                 Accumulated
                                                               of Redemption   Deficit              Unearned       Other
                                         Common      Paid-in   Value Greater   (Revised-  Treasury    ESOP     Comprehensive
                                          Stock      Surplus   than Par Value  See Note 2)  Stock    Shares    (Loss) Income
                                       --------------------------------------------------------------------------------------
<S>                                      <C>         <C>         <C>            <C>         <C>         <C>         <C>
Balance, December 31, 1998               $498        $127,216    $(183,140)     $(78,782)   $(35,640)   $(2,153)       $(10)
Employee compensation plans (option
 exercises, restricted stock plan,
 incentive bonus)                           7              22            -             -        (214)         -           -
Stock issued under mezzanine financing     43           6,006            -             -           -          -           -
Treasury stock purchased                    -               -            -             -      (7,208)         -           -
Payment received on ESOT note               -               -            -             -           -     10,577           -
Loans to ESOT                               -               -            -             -           -    (11,082)          -
Reclassification to redeemable common
 stock                                    (57)              -       (5,105)            -           -          -           -
Accretion of other redeemable common
     stock to redemption value              -              94          (94)          (94)          -          -           -
  Translation adjustment                    -               -            -             -           -          -           1
  Net earnings (Revised-See Note 2)         -               -            -         6,009           -          -           -
                                         ----        --------    ----------     ---------   ---------   --------    --------
Balance, December 30, 1999 (Revised-
See Note 2)                               491         133,338     (188,339)      (72,867)    (43,062)    (2,658)         (9)
Employee compensation plans (option
 exercises,  restricted stock plan,
 incentive bonus)                           -            (542)           -             -         920          -           -
Payment received on ESOT note               -               -            -             -           -      2,958           -
Loans to ESOT                               -               -            -             -           -       (300)          -
Reclassification to redeemable common
 stock                                    (15)              -      (55,359)            -           -          -           -
Accretion of other redeemable common
 stock to redemption value                  -           1,842       (1,842)       (1,842)          -          -           -
Translation adjustment and other            -               -            -             -           -          -          12
 Net loss (Revised-See
  Note 2)                                   -               -            -       (43,416)          -          -           -
                                         ----        --------    ----------     ---------   ---------   --------    --------
Balance, December 28, 2000 (Revised-
See Note 2)                               476         134,638     (245,540)     (118,125)    (42,142)         -           3
Employee compensation plans (option
  exercises,  restricted stock plan,
  incentive bonus, Savings' Plans
  contributions)                            1           1,024            -             -        (926)         -           -
Reclassification to redeemable common
  stock                                    53               -      (84,666)            -           -          -           -
Accretion of other redeemable common
  stock to redemption value                 -           2,390       (2,390)       (2,390)          -          -           -
Adjustment to fair value of derivative
  financial instrument                      -               -            -             -           -          -        (918)
Cumulative effect of change in
  accounting principle - (See Note 7)       -               -            -             -           -          -        (100)
Translation adjustment and other            -               -            -             -           -          -         (66)
Net earnings (Revised - See Note 2)         -               -            -        60,834           -          -           -
                                         ----        --------    ----------     ---------   ---------   --------    --------
Balance, December 27, 2001 (Revised-
  See Note 2)                            $530        $138,052    $(332,596)     $(59,681)   $(43,068)   $     -     $(1,081)
                                         ====        ========    ==========     =========   =========   ========    ========
</TABLE>

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



                            DynCorp and Subsidiaries
                   Notes to Consolidated Financial Statements
                     December 27, 2001 and December 28, 2000
                             (Revised - See Note 2)
    (Dollars in thousands, except per share amounts or where otherwise noted)

(1) The Company and Summary of Significant Accounting Policies

Description of Business and Organization:

DynCorp,  a  Delaware   corporation,   (the  "Company")   provides   diversified
management,  technical and professional  services  primarily to U.S.  Government
customers throughout the United States and  internationally.  Organized in 1946,
the Company  provides  services to various  branches of the U.S.  Departments of
Defense,  Energy,  State, and Justice, the Drug Enforcement Agency, the National
Institute  of Health,  the Defense  Information  Systems  Agency,  the  National
Aeronautics  and Space  Administration  and various other U.S.,  state and local
government  agencies,  commercial  clients and foreign  governments.  Generally,
these services are provided under both prime contracts and  subcontracts,  which
may be fixed-price,  time-and-material  or cost-type  contracts depending on the
work requirements and other individual circumstances. These services encompass a
wide range of management, technical and professional services.

Principles of Consolidation:

The consolidated  financial  statements  include the accounts of the Company and
its subsidiaries.  All significant  intercompany  transactions and balances have
been eliminated in  consolidation.  All  majority-owned  subsidiaries  have been
included in the financial  statements.  Investments  in which the Company owns a
20.0% to 50.0%  ownership  interest are accounted for by the equity method while
investments  of less  than  20.0%  ownership  are  accounted  for under the cost
method.  Outside  investors'  interest  in the  majority-owned  subsidiaries  is
reflected as minority interest.  Effective in 1999, the Company's fiscal year is
the 52 or 53-week period ending the last Thursday in December.  Previously,  the
Company had a calendar year end.

Use of Estimates:

The  preparation  of financial  statements  in  conformity  with U.S.  generally
accepted  accounting  principles  ("GAAP") requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Estimates include accrued liabilities such as contract losses,
litigation reserves,  and incentive  compensation awards, which are not paid out
until the following year. Actual results could differ from those estimates.

Contract Accounting (Revised - See Note 2):

Revenues for cost-reimbursement contracts are recorded as reimbursable costs are
incurred,   including   a  pro-rata   share  of  the   contractual   fees.   For
time-and-material  contracts,  revenue is  recognized  to the extent of billable
rates times hours delivered plus material and other reimbursable costs incurred.
For long-term fixed price production contracts,  revenue is recognized at a rate
per unit as the units are delivered.  Revenue from other  long-term  fixed price
contracts is recognized ratably over the contract period or by other appropriate
methods to measure  services  provided.  Contract costs are expensed as incurred
except for certain  limited  long-term  contracts  noted  below.  For  long-term
contracts  which are  specifically  described  in the scope  section of American
Institute  of  Certified  Public  Accountants  ("AICPA")  Statement  of Position
("SOP") No. 81-1,  "Accounting for Performance of Construction  Type and Certain
Production-Type  Contracts,"  or other  appropriate  accounting  literature  the
Company  applies the  percentage of completion  method.  Under the percentage of
completion  method,  income is recognized at a consistent profit margin over the
period of  performance  based on estimated  profit  margins at completion of the
contract. This method of accounting requires

<PAGE>


estimating  the total  revenues and total  contract  cost at  completion  of the
contract.  During the  performance of long-term  contracts,  these estimates are
periodically reviewed and revisions are made as required.  The impact on revenue
and contract profit as a result of these revisions is included in the periods in
which the revisions  are made.  This method can result in the deferral of costs,
including start-up costs, or the deferral of profit on these contracts.  Because
the Company  assumes  the risk of  performing  a fixed  price  contract at a set
price,  the failure to accurately  estimate  ultimate  costs or to control costs
during performance of the work could result, and in some instances has resulted,
in reduced profits or losses for such contracts.  Estimated  losses on contracts
at completion are recognized when identified.

Disputes arise in the normal course of the Company's  business on projects where
the Company is  contesting  with  customers  for  collection of funds because of
events such as delays, changes in contract  specifications and questions of cost
allowability  or  collectibility.  Such  disputes  are recorded at the lesser of
their  estimated net realizable  value or actual costs  incurred,  and only when
realization  is  probable  and can be  reliably  estimated.  Claims  against the
Company  are  recognized  where  loss  is  considered  probable  and  reasonably
determinable in amount.  Because there are estimates and judgments involved, the
actual  results could be different  from those  estimates.  Accounts  receivable
balances  related to such disputed  items were  immaterial at December 27, 2001,
December 28, 2000, and December 30, 1999.

Accounts Receivable:

It is the  Company's  policy  to  provide  reserves  for the  collectibility  of
accounts  receivable  when it is determined that it is probable that the Company
will not collect all amounts due and the amount of the reserve  requirement  can
be reasonably estimated.

Property and Equipment:

The Company  computes  depreciation  using  either the  straight-line  or double
declining  balance  method.   The  estimated  useful  lives  used  in  computing
depreciation are buildings,  15-33 years;  machinery and equipment,  3-15 years;
and leasehold improvements,  the lesser of the useful life or the remaining term
of the lease.  Depreciation  expense was $7,394 for 2001,  $7,044 for 2000,  and
$5,412 for 1999.

Cost of property  and  equipment  sold or retired  and the  related  accumulated
depreciation  or  amortization  are  removed  from the  accounts  in the year of
disposal,  and any gains or losses are reflected in the consolidated  statements
of operations.  Expenditures  for maintenance and repairs are charged to expense
as incurred, and major additions and improvements are capitalized.

Intangible Assets:

The major classes of intangible  assets,  net of accumulated  amortization as of
December 27, 2001 and December 28, 2000 are summarized below (in millions):

<TABLE>
<CAPTION>

                                                                       2001              2000
                                            Amortization         (Revised - See     (Revised - See
                                               Period                 Note 2)           Note 2)
                                               ------                 -------           -------
<S>                                        <C>                   <C>               <C>
Goodwill                                   10 to 40 years             $103.2            $108.0
Capitalized software                           8 years                  12.4               9.0
Core and developed technology                  5 years                   4.5               6.1
Contracts acquired                         up to 10 years                0.2               0.6
Assembled workforce                            7 years                   4.6               5.6
Patent                                        17 years                   5.5               5.9
                                                                     -------            ------
Total net intangibles                                                 $130.4            $135.2
</TABLE>

Intangible  assets are being  amortized using the  straight-line  method for the
periods noted above.  Intangible asset amortization expense was $8,363, $16,524,
and $12,586 in 2001, 2000, and 1999, respectively. Intangible asset amortization
expense for 1999 includes $1.2 million acceleration of goodwill amortization due
to impairment.
<PAGE>


Intangible  asset  accumulated  amortization  of $65,055  and  $65,742  has been
recorded through December 27, 2001 and December 28, 2000, respectively.

Long-lived  assets and  identifiable  intangibles  are reviewed  for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.  In performing the review for  impairment,  the
Company  estimates the future cash flows  expected to result from the use of the
asset.  If  impaired,  the Company  will write down the asset to its fair market
value.  If the asset is held for sale,  the Company  reviews its fair value less
cost to sell. In 1999,  the Company  expensed  $1.7 million  related to impaired
assets including the $1.2 million noted above.

The Company will adopt the Statement of Financial  Accounting Standards ("SFAS")
No. 142, "Goodwill and Other Intangible Assets," beginning on December 28, 2001,
as required.  The provisions of SFAS No. 142 eliminate  amortization of goodwill
and  identifiable  intangible  assets  with  indefinite  lives  and  require  an
impairment assessment at least annually by applying a fair-value based test.

Derivative Financial Instruments:

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

Recently Issued Accounting Standards:

In June 2001, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
141,  "Business  Combinations" and SFAS No. 142,  "Goodwill and Other Intangible
Assets." SFAS No. 141 requires all business  combinations  initiated  after June
30, 2001 to be accounted for using the purchase  method.  The provisions of SFAS
No. 142 eliminate  amortization of goodwill and identifiable  intangible  assets
with indefinite lives and require an impairment  assessment at least annually by
applying a  fair-value  based test.  Such testing  requires a  fair-value  based
assessment  by  reporting  unit  (which is  defined as an  operating  segment or
component of an  operating  segment) to determine if goodwill is impaired at the
reporting unit level.  SFAS No. 141 includes guidance relating to identification
of intangible assets that should be recognized apart from goodwill.  The Company
is  required to adopt SFAS No. 142 for fiscal  year 2002 (the  beginning  of the
fiscal year after December 15, 2001). The Company anticipates an annual increase
to common stockholders' share of net earnings of approximately $2.9 million (net
of tax),  or $0.26 per diluted  share,  from the  elimination  of  goodwill  and
assembled  workforce  amortization.  The Company has completed the first step of
the  transitional  impairment test in accordance with the provisions of SFAS No.
142 and has concluded that there has been no impairment of such assets as of the
beginning of fiscal year 2002.

In June 2001,  the FASB issued SFAS No. 143,  "Accounting  for Asset  Retirement
Obligations."  SFAS No. 143  addresses  financial  accounting  and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated  asset  retirement  costs.  This statement is effective for financial
statements  issued for fiscal years  beginning  after June 15,  2002.  In August
2001,  the FASB issued No. 144,  "Accounting  for the  Impairment or Disposal of
Long-Lived  Assets."  SFAS  No.  144  supersedes  SFAS  No.  121 and  Accounting
Principles  Board ("APB") No. 30 by establishing a single  accounting  model for
long-lived  assets to be disposed of by sale.  This  statement is effective  for
financial  statements  issued for fiscal years beginning after December 15, 2001
and interim  periods within those fiscal years.  Management does not expect SFAS
No. 143 or SFAS No. 144 to have a material  impact on the  Company's  results of
operations or financial condition.

<PAGE>


Consolidated Statements of Cash Flows:

The Company considers all highly liquid  investments  purchased with a remaining
maturity of three months or less to be cash equivalents.

Investing and financing activities include the following:

                                     2001              2000             1999
                                     ----              ----             ----
Acquisitions of businesses:
  Assets acquired                   $   -            $ 4,403          $ 212,642
  Liabilities assumed                   -             (2,783)           (45,138)
  Cash acquired                         -                  -                 36
                                    -----            --------         ----------
  Net cash                          $   -            $ 1,620          $ 167,540
                                    =====            ========         ==========

In 2000, the Company  acquired  certain assets and liabilities of a company that
developed  and  marketed  proprietary  decision-support  software  and  provided
related  consulting  services to evaluate and profile  performance  of providers
engaged in healthcare.  The Company also acquired GTE Information Systems LLC in
1999. The purchase price of these  acquisitions has been allocated to the assets
acquired and  liabilities  assumed based on estimated  fair value at the date of
acquisition, under the purchase method of accounting.

Comprehensive Income:

Effective  January 1, 1998, the Company  adopted the provisions of SFAS No. 130,
"Reporting Comprehensive Income," which requires the presentation and disclosure
of  comprehensive   income.   For  the  year  ended  December  27,  2001,  total
comprehensive income was $59.8 million and includes,  in addition to net income,
translation  adjustment and other of $0.07 million,  an adjustment to fair value
of the  derivative  financial  instruments  of $0.9 million,  and the cumulative
effect of a change in  accounting  principle of $0.1 million for the adoption of
SFAS No. 133 (see Note 7).  Translation  adjustment and other of $(0.01) million
is the only  component of  comprehensive  income for the year ended December 28,
2000, other than net income.

Reclassifications:

Certain prior year  information has been  reclassified to conform to the current
year presentation.

(2) Change in Accounting Method and Revision of Financial Statements

Subsequent to the issuance of the Company's  financial  statements  for the year
ended  December  27,  2001 on  April  11,  2002,  the  Company  revised  certain
information in the Consolidated  Financial Statements for the fiscal years ended
December 30, 1999, December 28, 2000 and December 27, 2001 following discussions
with the staff of the Securities and Exchange  Commission  ("SEC") regarding its
method of accounting  for certain  long-term  service  contracts and the related
applicability of the percentage of completion  method to service  contracts with
the  Federal  Government.   Previously,  the  Company  followed  the  historical
industry-wide  practice of recording  income from  long-term  service  contracts
using the percentage of completion  method,  in accordance with the AICPA "Audit
and  Accounting  Guide,   Audits  of  Federal  Government   Contractors,"  which
incorporates  as an appendix AICPA SOP No. 81-1,  "Accounting for Performance of
Construction  Type and Certain  Production-Type  Contracts."  Under this method,
income  is  recognized  at  a  consistent  profit  margin  over  the  period  of
performance  based on the  estimated  profit  margin  at the  completion  of the
contract.  Such a method has resulted in deferral of costs,  including  start-up
costs, and deferral of profits on certain contracts. Under SOP No. 81-1, revenue
can be recognized  based on costs incurred as a measurement of progress  towards
completion,  which can differ from other  revenue  recognition  methods  such as
those  outlined in SEC Staff  Accounting  Bulletin  ("SAB")  No.  101,  "Revenue
Recognition  in  Financial  Statements."  Following  discussions  with the SEC's
staff, it has been determined that
<PAGE>


percentage of  completion  accounting  should be applied to long-term  contracts
which are specifically  described in the scope section of AICPA SOP No. 81-1 and
other appropriate accounting literature.  All other long-term service contracts,
even those with the  Federal  Government,  should  not apply the  percentage  of
completion method. Accordingly, the Company changed its method for accounting on
these long-term  service  contracts to be in accordance with SEC SAB No. 101 and
other applicable generally accepted accounting principles.  As a result of these
changes,  profit  margins  on a  given  long-term  service  contract  could  now
fluctuate  from one  accounting  period to another  due to  fluctuations  in the
revenue earned and costs incurred in a given accounting period.

In accordance with the SEC Staff's guidance, the Company has applied this change
in accounting  method  retroactively  to January 2000 (the effective date of SAB
No.  101) and to the  acquisition  of DIS in  December  1999.  As a result,  the
financial  statements  of the Company for the fiscal  years ended  December  30,
1999,  December 28,  2000,  and December 27, 2001 have been revised to eliminate
the  deferral  of such  costs or  profits  on  service  contracts  and to adjust
revenue.  Revenue was adjusted for certain  fixed price  service  contracts  and
other  service  contracts,  which had used cost  incurred  in  relation to total
estimated  cost at completion as a measurement  of progress  towards  completion
under  percentage of completion,  in order to comply with SEC SAB No. 101, which
prescribes recognizing revenue on a straight-line basis over the contract period
or by other appropriate  methods to measure services provided.  The Company also
intends to amend its previously filed Form 10-Q for the three months ended March
28, 2002. The cumulative  effect of the change in accounting  principle on prior
years  resulted  in a  one-time,  non-cash  reduction  to net  earnings  of $4.8
million,  net of taxes of $2.6 million, or $0.46 per diluted share, in 2000. The
change in accounting  method did not have any effect on the Company's cash flows
in 2002, 2001, 2000, and 1999.

In the original 2001 Form 10-K/A filed on May 15, 2002,  the Company had revised
certain  information  in the  Consolidated  Financial  Statements for the fiscal
years ended December 30, 1999 and December 28, 2000 following  discussions  with
the staff of the SEC regarding accounting principles articulated in SFAS No. 38,
"Accounting for Preacquisition  Contingencies of Purchased  Enterprises" and APB
No. 16, "Business Combinations" as they related to the Company's  acquisition of
DIS from GTE Corporation in December 1999.

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

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

<PAGE>


The effects of the revisions  for the change in  accounting  method on long-term
service  contracts on the 2001,  2000, and 1999 financial  data, and on the 2001
and 2000 unaudited  quarterly  financial data are presented in the tables below.
The "As Reported"  numbers are taken from the previously  filed 2001 Form 10-K/A
and include the revisions to 2000 and 1999 results related to the acquisition of
DIS as previously disclosed.



<TABLE>
<CAPTION>

Statement of Operations Data:                2001          2001          2000          2000          1999          1999
-----------------------------                 As            As            As            As            As            As
                                              --            --            --            --            --            --
                                           Reported       Revised      Reported       Revised      Reported       Revised
                                           --------       -------      --------       -------      --------       -------
<S>                                      <C>           <C>           <C>           <C>           <C>           <C>
Revenues                                 $1,960,375    $1,955,973    $1,809,109    $1,805,155    $1,345,281    $1,345,281
Cost of services                          1,813,991     1,810,273     1,781,825     1,778,329     1,280,239     1,280,239
Amortization of intangibles of
  acquired companies                          6,234         6,394        14,762        14,922        11,408        11,408
Earnings (loss) from continuing
  operations before income taxes,
  minority interest, extraordinary
  item, and cumulative effect  of
  change in accounting principle             99,200        98,356       (56,233)      (56,851)       15,218        15,218
Provision (benefit) for income taxes         34,750        35,060       (20,936)      (20,827)        4,653         4,640
Minority Interest                             3,538         2,462         3,515         2,622         2,968         2,968
Net earnings (loss)                          60,912        60,834       (38,812)      (43,416)        5,996         6,009
Common stockholders' share of net
  earnings (loss)                            58,522        58,444       (40,654)      (45,258)        5,902         5,915
Common   stockholders' share  of  net
earnings (loss) per common share:
Basic earnings (loss) per share               $5.54         $5.53        $(3.88)       $(4.32)        $0.59         $0.59
Diluted earnings (loss) per share             $5.27         $5.26        $(3.88)       $(4.32)        $0.57         $0.58
Balance Sheet Data:
-------------------
Accounts receivable, net of
  allowance for doubtful accounts          $353,990      $345,358       $335,621     $332,583      $355,020      $358,811
Prepaid income taxes                          2,126         2,158          1,139        1,153         6,558         6,572
Other current assets                         37,310        35,775         34,707       28,101        26,348        17,684
Intangible assets, net of
  accumulated amortization                  126,107       130,425        130,766      135,244       143,266       147,904
Deferred income tax asset                         -             -         10,339       10,013             -             -
Other Assets                                 49,330        48,687         40,203       38,942        51,511        51,511
Total assets                                604,900       598,440        593,495      586,756       629,155       628,934
Accrued income taxes                            603           932          6,474        6,895         2,100         2,100
Accrued expenses                            208,666       207,029        200,006      198,330       131,274       130,989
Deferred income tax liability                 8,648        10,134              -            -         6,784         6,835
Other liabilities and deferred credits       36,603        34,634         87,566       86,673        38,409        38,409
Deficit                                     (55,012)      (59,681)      (113,534)    (118,125)      (72,880)      (72,867)
</TABLE>
<PAGE>


<TABLE>
<CAPTION>

                                                                        2001 Quarters
                                                                 (Unaudited and As Revised)
                                                                 --------------------------
                                           First Quarter           Second Quarter         Third Quarter          Fourth Quarter
                                           -------------           --------------         -------------          --------------
                                         As          As          As         As          As          As          As           As
                                      Reported     Revised    Reported    Revised     Reported    Revised     Reported    Revised
                                      --------     -------    --------    -------     --------    -------     --------    -------
<S>                                   <C>          <C>        <C>         <C>         <C>         <C>         <C>         <C>
Statement of Operations Data:
-----------------------------
Revenues                              $440,073     $438,979   $476,900    $476,611    $504,113    $502,856    $539,289    $537,527
Gross profit                            23,257       23,721     25,687      26,954      75,032      73,856      22,408      21,169
Earnings from continuing
  operations before income taxes and
  minority interest                      6,533        6,957      8,911      10,138      59,426      58,210      24,330      23,051
Provision for income taxes               2,546        2,787      3,430       4,086      21,221      20,060       7,553       8,127
Minority interest                          611          476        934         635         925         532       1,068         819
Net earnings                             3,376        3,694      4,547       5,417      37,280      37,618      15,709      14,105
Common stockholders' share
   of net earnings                       2,825        3,143      3,979       4,849      36,652      36,990      15,066      13,462
Common stockholders' share of net
  earnings per common share:
Basic earnings per share                 $0.27        $0.30      $0.38       $0.46       $3.47       $3.50       $1.42       $1.27
Diluted earnings per share               $0.26        $0.29      $0.36       $0.44       $3.30       $3.33       $1.35       $1.20

Balance Sheet Data:
-------------------
Accounts receivable, net of allowance
   for doubtful accounts              $314,825     $309,501   $322,910    $317,297    $316,653    $309,783    $353,990    $345,358
Other current assets                    40,280       36,237     36,900      34,288      39,134      36,477      39,436      37,933
Intangible assets, net of accumulated
   amortization                        127,908      132,346    125,495     129,893     124,672     129,030     126,107     130,425
Other assets                            49,284       47,852     46,163      44,886      38,184      37,062      49,330      48,687
Total assets                           568,224      561,863    562,349     557,245     557,650     551,360     604,900     598,440
Accrued expenses                       156,965      155,904    160,482     160,107     163,463     161,956     209,269     207,961
Other liabilities and deferred credits  85,590       84,562     86,719      85,392      38,782      39,571      45,251      44,768
Deficit                               (110,710)    (114,982)  (106,733)   (110,135)    (67,569)    (73,142)    (55,012)    (59,681)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

                                                                                2000 Quarters (a)
                                                                          (Unaudited and As Revised)
                                                                          --------------------------
                                          First Quarter          Second Quarter           Third Quarter       Fourth Quarter
                                           As        As          As           As        As           As        As         As
                                        Reported   Revised     Reported    Revised   Reported     Revised   Reported    Revised
                                        --------   -------     --------    -------   --------     -------   --------    -------
<S>                                     <C>        <C>         <C>         <C>       <C>          <C>       <C>         <C>
Statement of Operations Data:
-----------------------------
Revenues                                $428,500   $428,311    $445,302    $446,498  $467,673     $468,760  $467,634    $461,586
Gross profit (loss)                       19,650     15,217      25,024      24,374   (48,191)     (49,487)   30,801      36,722
Earnings (loss) from continuing
  operations before income taxes,
  minority interest, and cumulative
  effect of change in accounting
  principle                                  (54)    (4,527)      4,367       3,677   (69,199)     (70,535)    8,653      14,534
Provision (benefit) for income taxes        (313)    (1,786)      1,520       1,020   (24,717)     (24,794)    2,574       4,733
Minority interest                            577        577         635         764       625          304     1,678         977
Net earnings (loss)                         (318)    (8,088)      2,212       1,893   (45,107)     (46,045)    4,401       8,824
Common stockholders' share
  of net earnings (loss)                    (742)    (8,512)      1,775       1,456   (45,590)     (46,528)    3,903       8,326
Common stockholders' share of net
  earnings (loss) per common share:
Basic earnings (loss) per share           $(0.07)    $(0.82)      $0.17       $0.14    $(4.34)      $(4.43)    $0.36       $0.79
 Diluted earnings (loss) per share        $(0.07)    $(0.82)      $0.17       $0.14    $(4.34)      $(4.43)    $0.36       $0.79

Balance Sheet Data:
-------------------
Accounts receivable, net of allowance
    for doubtful accounts               $331,910   $332,637    $337,726    $339,649  $335,588     $338,598  $335,621    $332,583
Other current assets                      36,813     20,018      39,746      21,057    32,876       11,736    35,846      29,254
Intangible assets, net of accumulated
    Amortization                         138,723    143,321     136,038     140,596   135,043      139,561   130,766     135,244
Other assets                              52,987     51,206      44,704      43,096    61,560       60,125    50,542      48,955
Total assets                             606,537    593,286     604,550     590,735   623,996      608,949   593,495     586,756
Accrued expenses                         141,457    135,830     148,480     142,396   163,499      157,361   206,480     205,225
Other liabilities and deferred credits    46,015     46,066      35,809      35,989    82,377       82,236    87,566      86,673
Deficit                                  (73,591)   (81,266)    (71,969)    (79,881) (117,716)    (126,484) (113,534)   (118,125)
</TABLE>

<PAGE>


 (3) Fair Value of Financial Instruments

The following  methods and  assumptions  were used to estimate the fair value of
each class of financial  instruments for which it is practicable to estimate the
value:

Accounts  receivable  and  contracts  in process,  net,  prepaid  income  taxes,
accounts payable and accrued income taxes - The carrying amount approximates the
fair value due to the short maturity of these instruments.

Long-term debt and other  liabilities and deferred credits - The carrying values
of the  Company's  Senior  Secured  Credit  Agreement  Loans,  Revolving  Credit
Facility,  and the 15%  Subordinated  Notes  approximated  their fair  values at
December 27, 2001 and December 28, 2000.  The fair value of the Company's 9 1/2%
Senior  Subordinated  Notes,  based on the current rate as if the issue date was
December 27, 2001 and December 28, 2000,  was $102.2  million and $81.0 million,
respectively,  as compared to a book value of $99.7 million and $99.6 million as
of December  27, 2001 and December 28,  2000,  respectively.  For the  remaining
long-term  debt (see Note 5) and other  liabilities  and deferred  credits,  the
carrying amounts approximate the fair values.

(4) Accounts   Receivable   and   Contracts  in Process, Net

The  components of accounts  receivable and contracts in process were as follows
for the years ending December 27, 2001 and December 28, 2000:

<TABLE>
<CAPTION>

                                                      2001 (Revised -         2000 (Revised -
                                                        See Note 2)             See Note 2)
                                                        -----------             -----------
<S>                                                     <C>                     <C>
U.S. Government:
  Billed and billable                                   $282,266                 $254,731
  Recoverable costs and accrued profit on
   progress completed but not billed                      17,026                   22,763
  Retainage due upon completion of contract                1,048                    2,006
                                                        --------                 --------
                                                         300,340                  279,500
                                                        --------                 --------
Other Customers (primarily subcontracts
  from U.S. Government prime contracts and
  contracts with state, local and quasi-
  government agencies):
  Billed and billable (less allowance for
   doubtful accounts of $6,637 in 2001 and
    $2,804 in 2000)                                       37,315                   49,157
Recoverable costs and accrued profit on
   progress completed but not billed                       7,703                    3,926
                                                        --------                 --------
                                                          45,018                   53,083
                                                        --------                 --------
                                                        $345,358                 $332,583
                                                        ========                 ========
</TABLE>


Billed and  billable  include  amounts  earned  and  contractually  billable  at
year-end,  but which were not billed because customer  invoices had not yet been
prepared at year-end. Recoverable costs and accrued profit on progress completed
but not billed is composed  primarily of amounts  recognized  as  revenues,  but
which are not contractually  billable at the balance sheet dates. It is expected
that all amounts  outstanding at December 27, 2001 will be collected  within one
year except for approximately $6.3 million.

<PAGE>



(5) Long-term Debt

At December 27, 2001 and December 28, 2000, long-term debt consisted of:

<TABLE>
<CAPTION>
                                                                              2001                     2000
                                                                              ----                     ----
<S>                                                                         <C>                      <C>
Senior Secured Credit Agreement - Term A Loan                               $ 70,000                 $ 70,000
Senior Secured Credit Agreement - Term B Loan                                 76,900                   76,900
Senior Secured Credit Agreement - Revolving Credit Facility                        -                        -
15% Subordinated Notes                                                        37,903                   37,349
9 1/2% Senior Subordinated Notes                                              99,674                   99,627
Notes Payable                                                                    128                      137
                                                                            --------                 --------
                                                                             284,605                  284,013
Less current portion                                                          20,123                      124
                                                                            --------                 --------
                                                                            $264,482                 $283,889
                                                                            ========                 ========
</TABLE>
Debt maturities as of December 27, 2001, were as follows:

2002                          $ 20,123
2003                            25,005
2004                            28,083
2005                            29,400
2006                            47,500
Thereafter                     134,494
                              --------
                              $284,605
                              ========

On December 10, 1999, the Company and its wholly-owned  subsidiary,  Dyn Funding
Corporation,  entered  into a  Senior  Secured  Credit  Agreement  (the  "Credit
Agreement") with a group of financial institutions.  Under the Credit Agreement,
the Company  borrowed  $100.0  million under Term A Loans  maturing  December 9,
2004,  $100.0  million under Term B Loans  maturing  December 9, 2006, and $23.8
million  under a $90.0 million  revolving  line of credit  maturing  December 9,
2004. Of the total  borrowings  under the Credit  Agreement,  $125.0 million was
used for partial payment of the purchase price for GTE Information  Systems LLC.
An  additional  $112.0  million of the  borrowings  was used to make an optional
redemption of Dyn Funding  Corporation's  outstanding 7.486% Fixed Rate Contract
Receivable   Collateralized   Notes,  Series  1997-1,  Class  A  and  to  reduce
irrevocably  Dyn  Funding   Corporation's   Floating  Rate  Contract  Receivable
Collateralized  Notes,  Series  1997-1,  Class B. The  remainder was used to pay
transactional  expenses and for general corporate operating  purposes.  Upon the
closing of the Credit Agreement,  the Company  terminated its previous revolving
line of credit facility.

The Credit Agreement stipulates that the Company must maintain certain financial
ratios,  including  specified  ratios  of  earnings  to fixed  charges,  debt to
earnings, and accounts receivable to borrowings, under the Credit Agreement.

On December 10, 1999, the Company incurred an extraordinary loss of $2.5 million
($1.6  million  after tax or $0.16 for basic and diluted  earnings per share) in
connection  with the early  retirement  of the $50.0  million  7.486% Fixed Rate
Contract Receivable  Collateralized  Notes. The extraordinary loss was comprised
of the payment of a yield  maintenance  premium and the  write-off of associated
debt issuance costs.

On December 28, 2000,  the Company  voluntarily  repaid $30.0  million of Term A
Loans,  prepaying all scheduled principal installments due in 2001 and partially
prepaying  the  scheduled  principal  installment  due in  February  2002.  As a
consequence  of  this  prepayment,  the  Term A  Loans  are to be  repaid  in an
installment  of  $1.3  million  in  February  2002  and  then  eleven  quarterly
installments  of $6.3  million  beginning  in May 2002.  On March 7,  2000,  the
Company voluntarily repaid $7.1 million of Term B Loans, prepaying all scheduled
principal payments of Term B Loans from February 2001 through December 2004, and
partially  prepaying the scheduled  principal  payment due in February  2005. On
December 28, 2000, the Company voluntarily repaid $15.0 million of Term B Loans,
prepaying the  remaining  scheduled  principal  payment due in February 2005 and
partially prepaying the scheduled
<PAGE>


principal  payment due in May 2005. As a consequence of these  prepayments,  the
Term B Loans are to be repaid in an  installment of $5.7 million in May 2005 and
then six quarterly  installments  of $11.9 million  beginning in August 2005. At
the option of the Company,  borrowings  under the Credit Agreement bear interest
at either  LIBOR or a base rate  established  by the  bank,  plus a margin  that
varies based upon the Company's ratio of debt to earnings.

The Company is charged a commitment fee of 0.5% per annum on unused  commitments
under the  revolving  line of credit.  As of December  27, 2001 and December 28,
2000,  there were no borrowings and $11.1 million and $9.5 million of letters of
credit were outstanding,  respectively,  under the revolving line of credit. The
amount  available under the revolving line of credit was $78.9 million and $80.5
million,  respectively,  as of December  27, 2001 and  December  28,  2000.  The
Company also has $7.2 million in outstanding  surety obligations for performance
and payment  bonds  supporting  various  contracts.  These  bonds are  partially
collateralized  with  letters of credit,  the value  which is  included in $11.1
million noted above.

On December  10,  1999,  the Company  entered  into an  agreement  with  various
financial institutions for the sale of $40.0 million face value of the Company's
subordinated  pay-in-kind  notes due in 2007,  with an  estimated  fair value of
$33.9 million ("Subordinated  Notes"), and for the sale of 426,217 shares of the
Company's  stock with an estimated  fair value of $6.1 million (see Note 9). The
proceeds  were used for  payment of the  balance of the  purchase  price for GTE
Information  Systems  LLC.  The  Subordinated  Notes bear  interest at 15.0% per
annum, payable semi-annually.  The Company may, at its option, prior to December
15, 2004,  pay the interest in cash or in  additional  Subordinated  Notes.  The
Subordinated  Notes are  redeemable,  in whole or in part,  at the option of the
Company,  on or after  December 15, 2000 at a redemption  price that ranges from
114.0% in 2000 to  100.0% in 2006 and  thereafter.  The  Subordinated  Notes are
general  unsecured  obligations of the Company and will be subordinated in right
of payment to all  existing  and future  senior  debt of the  Company and to the
Senior  Subordinated  Notes. On December 28, 2000, the Company paid $3.2 million
cash  interest on the  Subordinated  Notes.  On December  26,  2001,  two of the
holders sold 140,000 of these shares on the Company's  internal market and those
shares  are no  longer  subject  to the  put  right.  This  transaction  reduced
Temporary Equity on the Consolidated Balance Sheet by $5.7 million.

On  March  17,  1997,  the  Company  issued  $100.0  million  of 9  1/2%  Senior
Subordinated  Notes ("Senior  Subordinated  Notes") with a scheduled maturity in
2007. Interest is payable semi-annually,  in arrears, on March 1 and September 1
of each year. The Senior Subordinated Notes are redeemable, in whole or in part,
at the option of the Company,  on or after March 1, 2002 at a  redemption  price
which ranges from 104.8% in 2002 to 100.0% in 2005 and thereafter.  In addition,
the  Company  may redeem up to 35.0% of the  aggregate  principal  amount of the
Senior  Subordinated  Notes (at a  redemption  price of  109.5%)  with  proceeds
generated  from a public  offering  of equity,  provided  at least  65.0% of the
original aggregate amount of the Senior Subordinated Notes remains  outstanding.
The Senior  Subordinated Notes are general unsecured  obligations of the Company
and will be  subordinated  in right of payment to all existing and future senior
debt of the Company.

The Credit  Agreement and the indentures for the  Subordinated  Notes and Senior
Subordinated Notes contain customary  restrictions on the ability of the Company
to undertake certain activities,  such as the incurrence of additional debt, the
payment of dividends on, or the repurchase of, the Company's  common stock,  the
merger of the Company into another company,  the sale of  substantially  all the
Company's  assets,  and the  acquisition of the stock or  substantially  all the
assets of another company. The Credit Agreement also stipulates that the Company
cannot exceed a certain level of capital  expenditures and must maintain certain
financial ratios,  including specified ratios of earnings to fixed charges, debt
to earnings,  and accounts  receivable to borrowings under the Credit Agreement.
At December 27, 2001 and December 28, 2000,  the Company was in compliance  with
these covenants.

The Company acquired the headquarters property of Technology Applications,  Inc.
("TAI") on November 12, 1993, in  conjunction  with its  acquisition of TAI, and
assumed a mortgage on the property of $3.3 million bearing  interest at 8.0% per
annum.  On February 29, 2000, the Company sold the property for $10.5 million in
cash and  simultaneously  entered into a lease  agreement for the property.  The
8.0% mortgage was repaid with proceeds from the sale of the property.

<PAGE>


Deferred debt issuance costs are being  amortized  using the effective  interest
rate  method over the term of the  related  debt.  At  December  27,  2001,  and
December 28, 2000,  unamortized  deferred  debt  issuance  costs were $8,105 and
$10,071,  respectively  and  amortization  for 2001,  2000, and 1999 was $1,966,
$2,300, and $1,210, respectively.  Amortization of debt issue discount was $601,
$43, and $39 in 2001, 2000, and 1999, respectively.

Cash paid for interest was $31,692 for 2001,  $31,458 for 2000,  and $16,209 for
1999.

(6) Accrued Expenses

At December 27, 2001 and December 28, 2000,  accrued  expenses  consisted of the
following:

<TABLE>
<CAPTION>

                                                           2001 (Revised -            2000 (Revised -
                                                            See Note 2)                See Note 2)
                                                            -----------                -----------
<S>                                                        <C>                        <C>
Salaries and wages                                          $ 96,348                  $  79,216
Insurance reserve                                             30,511                     25,298
Interest                                                       4,541                      7,279
Payroll and miscellaneous taxes                                9,726                     19,925
Accrued contingent liabilities and operating reserves         12,598                     16,734
Other accrued expenses                                        53,305                     49,878
                                                            --------                  ---------
                                                            $207,029                   $198,330
                                                            ========                  =========
</TABLE>

(7) Derivative Financial Instruments

The Company  adopted SFAS No. 133,  "Accounting  for Derivative  Instruments and
Hedging  Activities,"  and SFAS No.  138,  "Accounting  for  Certain  Derivative
Instruments and Certain Hedging  Activities - an Amendment of FASB Statement No.
133," on December 29, 2000. SFAS No. 133 requires the transition adjustment, net
of the tax effect,  resulting from adopting  these  Statements to be reported in
net income or other  comprehensive  income,  as  appropriate,  as the cumulative
effect  of a change  in  accounting  principle.  Changes  in the  fair  value of
derivatives are recorded each period in current earnings or other  comprehensive
income based on the  guidelines  stipulated in SFAS No. 133. The adoption of the
standard did not have a material impact on the Company's  results of operations,
financial   condition  or  cash  flows,   but  did  reduce   accumulated   other
comprehensive  income by $0.1  million,  or $0.01  per  diluted  share,  for the
cumulative effect of a change in accounting  principle.  The adjustments to fair
value of the derivative instruments during 2001 resulted in additional decreases
in accumulated other comprehensive income of $0.9 million.

The Company has managed its exposure to changes in interest rates by effectively
capping at 7.5% the base interest rate on a notional amount of $100.0 million of
its LIBOR  indexed  debt until  February  2002.  This option had no value at the
transition  date of SFAS No. 133. In December 2000,  the Company  entered into a
two year and 28-day swap agreement,  wherein the Company pays approximately 6.2%
annualized  interest on a notional  amount of $35.0 million on a quarterly basis
beginning  on January 4, 2001 and ending on January 6, 2003.  The  objective  of
this  transaction  is to  neutralize  the cash flow  variability  on  designated
portions of the Company's  Senior  Secured  Credit  Agreement  Term A and Term B
loans, which have a floating-rate,  that may be caused by fluctuations in market
interest  rates.  The  adjustments to fair value of this  derivative  instrument
during 2001 resulted in additional  decreases in accumulated other comprehensive
income of $0.9 million.  This swap is perfectly effective at its objective,  and
accordingly,  there are no existing gains or losses as of December 27, 2001 that
are expected to be reclassified into earnings within the next twelve months.

(8) Employee Stock Ownership Plan

In September  1988, the Company  established  an Employee  Stock  Ownership Plan
("ESOP").  The Company  borrowed $100.0 million and loaned the proceeds,  on the
same terms as the Company's borrowings, to the ESOP to purchase 4,123,711 shares
of common stock of the Company.  The ESOP acquired  additional  shares from 1993
through  2001  either  through  contributions  of  stock  from the  Company,  or
contributions of cash from the Company
<PAGE>


with  which the ESOP then  purchased  shares  either  from the  Company,  on the
Internal  Market,  or directly from other  stockholders.  From time to time, the
Company loaned  additional funds to the ESOP to buy shares,  and the ESOP issued
notes to the Company in like amounts.  The notes, and related accrued  interest,
were paid in full as of June 29, 2000.

In 1999,  the ESOP  utilized 1999  contributions  and loans to make the required
principal and interest payments on the aforementioned  notes, pay administrative
fees,  purchase  95,735  shares of stock on the  internal  market  and  purchase
273,139 shares of stock from other stockholders. In 2000, the ESOP utilized 2000
contributions and loans to make the required  principal and interest payments on
the  aforementioned  notes, pay administrative  fees,  purchase 27,490 shares of
stock on the  internal  market and  purchase  25,175  shares of stock from other
stockholders.  The ESOP  covered a majority  of the  employees  of the  Company.
Participants  in the ESOP  become  fully  vested  after four  years of  service.
Effective  January 1, 2001, the Company  established two new plans:  the Savings
and  Retirement   Plan  and  the  Capital   Accumulation   and  Retirement  Plan
(collectively,  the "Savings Plans"). At the same time, the ESOP was merged into
the two plans.  The  Company  stock  accounts of  participants  in the ESOP were
transferred to one or the other of the Savings Plans' trusts,  and Savings Plans
participants  have the same distribution and put rights for these ESOP shares as
they had in the  ESOP.  See Note 13 for  discussion  of the  Savings  Plans.  At
December 27, 2001 the Savings Plans owned  8,869,936  shares,  or 84.3% of total
outstanding  shares, of which 7,142,510 shares had ESOP put options. In 2000 and
1999, cash contributions to the ESOP were $13,350 and $13,220,  respectively and
were  charged to Cost of  Services  and  Corporate  General  and  Administrative
Expenses.  In 2001 the Company  made cash  contributions  to the  Savings  Plans
totaling  $20,975  (the  employer  match  and  supplemental  contribution).  The
employer match of $18,793 included in this total was charged to Cost of Services
and  Corporate  General  and   Administrative   Expenses  and  the  supplemental
contribution of $2,182 in this total was charged to Treasury Stock.

(9) Redeemable Common Stock

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

<TABLE>
<CAPTION>

                                                         Balance at                                     Balance at
                                         Redemption      December 27,                  Redemption      December 28,
                           Shares          Value            2001           Shares         Value            2000
                           ------          -----            ----           ------         -----            ----
<S>                     <C>               <C>             <C>            <C>            <C>              <C>
ESOP Shares             2,995,783           $47.00         $140,802      3,313,729        $35.25         $116,809
                        4,146,727           $44.75          185,566      4,190,924        $29.00          121,537
                        ---------                           -------      ---------                        -------
                        7,142,510                          $326,368      7,504,653                       $238,346
                        =========                           =======      =========                       ========
Other Redeemable
  Common Stock            286,217           $24.34         $  6,967        426,217        $18.73         $  7,984
                        =========                          ========      =========                       ========
</TABLE>

ESOP Shares

In accordance  with ERISA  regulations  and the ESOP  documents,  the respective
Trust may purchase and the Company is obligated to purchase  vested common stock
shares from ESOP  participants  (see Note 8) at the fair value (as determined by
an  independent  appraiser)  until such time as the  Company's  common  stock is
publicly traded.  The shares  initially  bought by the investors,  including the
ESOP, in 1988 were bought at a "control price," reflecting the higher price that
buyers  typically  pay when  they buy an entire  company  (as the ESOP and other
investors did in the 1988 Leveraged  Buy-Out).  A special  provision in the ESOP
permits  participants  to receive a "control  price" when they sell these shares
back to the Company  under the ESOP's "put  option"  provisions.  This  "control
price," as  determined  by the trustee  was $47.00 per share as of December  27,
2001. The additional  shares obtained by the ESOP in 1994 through 2001 were at a
"minority  interest price," reflecting the lower price that buyers typically pay
when they are buying  shares of a company in the market place.  Participants  do
not have the right to sell these  shares at the  "control  price".  The minority
interest  price as determined by the trustee was $44.75 per share as of December
27, 2001.  Participants  receive their vested shares upon  retirement,  becoming
disabled,  or death over a period of one to five years and for other  reasons of
termination  over a period  of one to ten  years,  all as set  forth in the Plan
documents. The ESOP Trust ("ESOT") or the Company purchases participants' shares
at the

<PAGE>


applicable price, utilizing cash available from the Company's  contributions and
loans (see Note 8). The participant can elect to retain  distributed ESOP shares
instead  of a  participant  put.  Based on fair  values of $47.00 and $44.75 per
share as of December 27, 2001,  the estimated  maximum  contingent  liability to
repurchase shares from the ESOP participants upon death, disability,  retirement
and  termination  is as follows:  $19,996 in 2002,  $24,340 in 2003,  $26,292 in
2004,  $24,228  in 2005,  $20,873  in 2006 and  $210,639  thereafter.  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.  As explained above in
Note 8, the ESOP was merged into the Savings  Plans  effective  January 1, 2001.
All rights and obligations of the ESOP and its participants remain intact in the
Savings Plans.

Other Redeemable Common Stock

On December  10,  1999,  the Company  entered  into an  agreement  with  various
financial institutions for the sale of 426,217 shares of the Company's stock and
Subordinated  Notes (see Note 5). Under a  contemporaneous  registration  rights
agreement,  the  holders  of these  shares of stock will have a put right to the
Company commencing on December 10, 2003, at a price of $40.53 per share,  unless
one of the following  events has occurred  prior to such date or the exercise of
the put right:  (1) an initial public offering of the Company's common stock has
been consummated;  (2) all the Company's common stock has been sold; (3) all the
Company's  assets have been sold in such a manner that the holders have received
cash payments;  or (4) the Company's  common stock has been listed on a national
securities  exchange or authorized for quotation on the NASDAQ  National  Market
System  for which  there is a public  market of at least  $100  million  for the
Company's  common  stock.  If, at the time of the  holders'  exercise of the put
right the Company is unable to pay the put price because of financial  covenants
in loan  agreements  or other  provisions of law, the Company will not honor the
put at that  time,  and the put price will  escalate  for a period of up to four
years,  at which time the put must be honored.  The  escalation  rate  increases
during  such  period  until  the put is  honored,  and the rate  varies  from an
annualized factor of 22.0% for the first quarter after the put is not honored up
to 52.0% during the sixteenth quarter. The annual accretion in the fair value of
these shares is reflected  as a reduction of Common  Stockholders'  Share of Net
Earnings on the Consolidated Statements of Operations. On December 26, 2001, two
of the holders sold 140,000 of these shares on the Company's internal market and
those shares are no longer subject to the put right.

In conjunction  with the acquisition of TAI in November 1993, the Company issued
put options on 125,714  shares of common stock.  The holder  could,  at any time
commencing  on December  31, 1998 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 ESOP control price at the time
of exercise.  On January 12, 1999, the holder  exercised the put option on these
shares at the applicable price of $24.25 per share.

<PAGE>




Following are the changes in  Redeemable  Common Stock for the three years ended
December 27, 2001:

<TABLE>
<CAPTION>

                                                                        Redeemable Common Stock
                                                            Other                  ESOP                 Total
                                                            -----                  ----                 -----
<S>                                                       <C>                   <C>                   <C>
Balance, December 31, 1998                                 $ 3,049               $180,812              $183,861
  Exercise of put option                                    (3,049)                     -                (3,049)
  Shares purchased by the Company                                -                 (1,899)               (1,899)
  Shares purchased by the ESOP                                   -                  6,466                 6,466
  Shares purchased on the Internal Market                        -                  2,319                 2,319
  Shares released from collateral                                -                 10,577                10,577
  Shares pledged as collateral                                   -                (11,082)              (11,082)
  ESOP diversification (a)                                       -                   (753)                 (753)
  Issuance of common stock with put rights                   6,048                      -                 6,048
  Adjustment of shares to fair value                            94                 (3,466)               (3,372)
                                                             -----                --------              --------
Balance, December 30, 1999                                   6,142                182,974               189,116
  Shares purchased by the ESOP                                   -                    568                   568
  Shares purchased on the Internal Market                        -                    612                   612
  Shares released from collateral                                -                  2,958                 2,958
  Shares pledged as collateral                                   -                   (300)                 (300)
  Adjustment of shares to fair market value                  1,842                 51,534                53,376
                                                             -----                -------               --------
Balance, December 28, 2000                                   7,984                238,346               246,330
  Shares purchased by/contributed to the
    Savings Plans                                                -                (11,569)              (11,569)
  Shares sold on the Internal Market                        (3,407)                (2,420)               (5,827)
  Shares purchased on the Internal Market                        -                  1,598                 1,598
  ESOP diversification (a)                                       -                 (1,046)               (1,046)
  Adjustment of shares to fair market value                  2,390                101,459               103,849
                                                             -----                -------               -------
Balance, December 27, 2001                                  $6,967               $326,368              $333,335
                                                             =====                =======               ========
</TABLE>

(a)  Under diversification rules, as defined by the Plan, ESOP participants have
     the option of receiving a  distribution  of up to 25.0% of their  aggregate
     accounts,   in  order  to  convert  Company  stock  into  another  type  of
     investment.  The option extends over a five-year period beginning after the
     participant  has reached age 55 and has ten years of  participation  in the
     ESOP. At the sixth year, the  distribution  right increases to 50.0% of the
     participant's account less any amounts previously paid.

(10) Common Stock

At December 27, 2001, common stock includes shares issued to outside  investors,
officers and directors,  current and former employees, the ESOP, and the Savings
Plans, as well as any ESOP or Savings Plan shares that have been  distributed in
kind to former participants in the plans.

(11) Restricted Stock

The Company had a Restricted  Stock Plan (the "Plan") under which management and
key  employees  could be awarded  shares of common stock based on the  Company's
performance. The Company initially reserved 1,023,037 shares of common stock for
issuance under the Plan.  Under the Plan,  Restricted Stock Units ("units") were
granted to participants who were selected by the  Compensation  Committee of the
Board of Directors.  Each unit entitled the participant  upon achievement of the
performance goals (as defined in the Plan) to receive one share of the Company's
common stock. Units could not be converted into shares of common stock until the
participant's interest in the Units had vested. Vesting occurred upon completion
of the specified  periods as set forth in the Plan.  All units granted under the
Plan  have  vested  or have  been  forfeited  and all  vested  shares  have been
subsequently
<PAGE>


distributed  or  deferred  until a future  distribution  date.  Of the  deferred
shares, 105,898 remain to be distributed.

(12) Acquisitions and Dispositions

On December  27,  2001,  the Company  completed  the merger of its  wholly-owned
subsidiary,  DynCorp Management Resources, Inc. ("DMR"), the Company's state and
local  government  services  subsidiary,  into  TekInsight.com,  Inc. The merger
between  TekInsight.com  Inc. and DMR formed the new entity DynTek, Inc. DynTek,
Inc. is a public company listed on NASDAQ under the symbol DYTK. DynTek, Inc. is
a provider of information technology and outsourced management services to state
and local governments  serving customers across 17 states. On a pro forma basis,
DynTek,  Inc. had revenues of  approximately  $77.2  million for the fiscal year
ended June 30, 2001.

The Company received  18,336,664 shares of class B common stock of DynTek,  Inc.
These  shares  are not  registered,  but the  Company  has the right to  require
DynTek,  Inc. to register the shares.  An independent  appraisal of these shares
resulted in a value of $31.0 million for these shares at December 27, 2001. This
transaction  resulted  in a gain on the  sale of  approximately  $29.1  million;
however, under GAAP the Company recognized only 60% of the gain or $17.4 million
for this  non-monetary  transaction  because  the  Company  has a 40%  ownership
interest in the new entity, DynTek, Inc.

The $17.4 million gain on the disposal of DMR is partially offset by DMR's $13.4
million operating loss. Since the Company has a 40% interest in DynTek, Inc. and
does not have control, it will account for its investment on the equity basis of
accounting  going forward.  The Company has the right to appoint people to three
of the seven director positions on the board of DynTek, Inc.

As part of the merger  agreement,  the  Company  has  contract  obligations  for
several  outstanding  performance  bonds on certain DMR  contracts,  which total
approximately $3.4 million as of December 27, 2001.  DynTek,  Inc. has agreed to
make its best effort to replace the bonds with its own obligations.  The Company
is also obligated to the Commonwealth of Virginia for  satisfactory  performance
on DMR's contract to provide  non-emergency medical  transportation  services in
Virginia.  Should DynTek,  Inc. default on the Virginia  contracts and/or any of
the performance bonds, it could result in financial losses for the Company.

In the first quarter of 2002,  the Company paid $2.6 million to DynTek,  Inc. in
resolution of a dispute  concerning the adequacy of DMR's working capital at the
time of closing. The Company recorded the $2.6 million payment as a liability at
December 27, 2001, and included the $2.6 million  payment in its  calculation of
the gain on the sale. DynTek, Inc. is currently seeking additional financing.

In September  2000,  the Company  purchased for $2.5 million  certain assets and
liabilities of a company which develops and markets proprietary decision-support
software  and  provides  related  consulting  services to  evaluate  and profile
performance  of healthcare  providers.  The purchase price has been allocated to
the assets acquired and liabilities assumed based on preliminary  estimated fair
value at the date of  acquisition,  under the  purchase  method  of  accounting.
Goodwill, net of accumulated amortization, associated with this purchase is $2.7
and $2.9 million as of December 27, 2001 and December 28, 2000, respectively and
is being amortized over 15 years.

On December  10,  1999,  the Company  acquired  GTE  Information  Systems LLC, a
subsidiary of GTE Corporation,  for $167.5 million in cash and has accounted for
the  acquisition  as a purchase.  The purchase price was allocated to the assets
acquired and the  liabilities  assumed based on estimated fair value at the date
of acquisition.  On December 13, 1999, the name of GTE  Information  Systems LLC
was  changed to DynCorp  Information  Systems  LLC  ("DIS").  It  operates  as a
separate subsidiary of the Company. Operating results for DIS have been included
from  the  date  of  acquisition.  Goodwill,  net of  accumulated  amortization,
associated with this purchase is $57.2 and $59.6 million as of December 27, 2001
and December 28, 2000, respectively, and is being amortized over 30 years.

The following  unaudited pro forma combined financial  information  presents the
historical  results  of  operations  of the  Company  and DIS,  with  pro  forma
adjustments as if DIS had been acquired as of the beginning of the period
<PAGE>



presented.  The unaudited pro forma information is not necessarily indicative of
what the results of operations  actually would have been if the  transaction had
occurred as of the beginning of the period,  or of future results of operations.
The  unaudited  pro  forma  information  does not  reflect  purchase  accounting
adjustments for any preacquisition contingencies or losses.

                                                      1999
                                            (Unaudited and Revised -
                                                   See Note2)
                                                   ----------
Revenue                                            $1,560,971
Net earnings                                       $    4,164
Basic earnings per share                           $     0.42
Diluted earnings per share                         $     0.41

(13) Savings Plans

In 2000 and 1999, the Company had a Savings and  Retirement  Plan ("SARP") which
was  intended to qualify  under  section  401(k) of the  Internal  Revenue  Code
("IRC").  The plan  allowed  eligible  employees to defer 1.0% to 15.0% of their
compensation on a pretax basis for contribution to their SARP accounts. In 1996,
the Company began  matching  100.0% of the first 1.0% of employee  deferrals and
25.0%  of the  next  4.0%  of  employee  contributions,  provided  the  employee
contribution  was invested in Company stock funds.  Matching  contributions  are
invested in additional shares of the Company's common stock.

Effective  January 1, 2001, the Company revised its SARP to establish two plans:
the Savings and Retirement Plan and the Capital Accumulation and Retirement Plan
("Savings  Plans"),  which are intended to qualify under  section  401(k) of the
IRC. At the same time, the ESOP was merged into the two plans. The Company stock
accounts of participants in the ESOP were transferred to one or the other of the
Savings Plans, and Savings Plan  participants have the same distribution and put
rights  for  these  ESOP  shares  as they  had in the  ESOP.  Substantially  all
employees participate in one of the two Savings Plans.

Under the revised  Savings and Retirement  Plan, the Company may make a matching
contribution of 50.0% of the first 8.0% of compensation deferred by the employee
and  an  additional  matching  contribution  of  50.0%  of  the  first  3.0%  of
compensation so deferred which is invested in the Company stock investment fund;
the Company may also make a  discretionary  contribution of 1.0% of compensation
on behalf of eligible  participants.  All Company  contributions are invested in
the  Company  stock  investment  fund for such  participants.  Under the Capital
Accumulation and Retirement  Plan, the initial Company matching  contribution is
25.0% of the  first  8.0% of  compensation  deferred  by the  employee,  and the
additional matching contribution for investments in the Company stock investment
fund is the same.  Under the  Capital  Accumulation  and  Retirement  Plan,  the
Company may also make a discretionary contribution of 2.0% of compensation.  All
Company contributions,  other than those used to pay administrative expenses are
either in the form of Company  stock or cash to be used by the Savings  Plans to
acquire  Company  stock.  Beginning in January  2001,  the Plans allow  eligible
employees  to defer 1.0% to 18.0% of their  compensation  on a pretax  basis for
contribution to their Savings Plans' accounts.

In 2001,  the  Company  contributed  $2,182  to the  Savings  Plans to cover the
difference between the control price and the minority interest price on the ESOP
shares  which were put back to the  Company  during  2001 under the ESOP's  "put
option" provisions. This amount was recorded as an increase to Treasury Stock on
the Consolidated  Balance Sheet in 2001, due to the put obligation on the shares
being removed at the time the shares were purchased back by the Company.

The Company has expensed  approximately  $2,617,  and $1,937 in 2000,  and 1999,
respectively,  related to the employer matching contributions to the SARP. These
amounts   were  charged  to  Cost  of  Services   and   Corporate   General  and
Administrative Expenses.

In 2001, the Company expensed  approximately $18,792 for the employer match into
the Savings  Plans which was charged to Cost of Services and  Corporate  General
and Administrative Expenses.

<PAGE>



(14) Income Taxes

As  prescribed  by SFAS No.  109,  "Accounting  for Income  Taxes,"  the Company
utilizes the asset and liability  method of accounting  for income taxes.  Under
this method,  deferred  income taxes are recognized for the tax  consequences of
temporary  differences  by applying  enacted  statutory tax rates  applicable to
future years to differences between the financial statement carrying amounts and
the tax bases of  existing  assets and  liabilities.  Valuation  allowances  are
provided if required.

Earnings  (loss)  from  continuing  operations  before  income  taxes,  minority
interest,  extraordinary  item (see Note 5), and cumulative  effect of change in
accounting principle (see Note 2) were derived from the following:

                                         Fiscal Years Ended
                         2001 (Revised -    2000 (Revised -    1999 (Revised -
                          See Note 2)        See Note 2)        See Note 2)
                          -----------        -----------        -----------
Domestic operations       $ 96,895           $ (57,248)          $ 14,489
Foreign operations           1,461                 397                729
                          --------           ----------          --------
                          $ 98,356           $ (56,851)          $ 15,218
                          ========           ==========          ========

The provision (benefit) for income taxes consisted of the following:

                                                  Fiscal Years Ended
                   2001 (Revised -        2000 (Revised -        1999 (Revised -
                    See Note 2)            See Note 2)            See Note 2)
                    -----------            -----------            -----------
Current:
  Federal            $ 5,017             $ 11,525                $ 1,564
  Foreign                546                1,700                    120
  State                  437                  471                    636
                      -------             --------                ------
                       6,000               13,696                  2,320
                      -------             --------                ------
Deferred:
  Federal             29,060              (34,793)                 4,465
  Foreign                  -                    -                      -
  State                  374                 (486)                (2,167)
                      -------             --------                -------
                      29,434              (35,279)                 2,298
                      -------             --------                -------
Valuation Allowance:
  Federal                  -                    -                      -
  State                 (374)                 756                     22
                      -------             --------                -------
                        (374)                 756                     22
                      -------             --------                -------
Total                $35,060             $(20,827)               $ 4,640
                      =======             ========                =======


<PAGE>


The components of deferred taxes are as follows:

<TABLE>
<CAPTION>

                                                           December 27, 2001           December 28, 2000
                                                         (Revised - See Note 2)      (Revised - See Note 2)
                                                         ----------------------      ----------------------
<S>                                                      <C>                         <C>
Deferred tax liabilities:
  Employee benefits                                             $  (450)                     $ (901)
  Contract revenue recognition                                  (15,094)                     (8,154)
  Other, net                                                     (6,693)                       (847)
                                                                --------                     --------
Total deferred tax liabilities                                  (22,237)                     (9,902)
                                                                --------                     --------

Deferred tax assets:
  Deferred compensation                                           1,029                       1,085
  Operating reserves and other accruals                          19,880                      35,372
  Depreciation and amortization                                     443                       1,620
  Benefit of state tax on temporary differences
   and state net operating loss carryforwards                     5,140                       5,514
                                                                --------                    ---------
  Total deferred tax assets                                      26,492                      43,591
                                                                --------                    ---------

  Total temporary differences before valuation
    allowances                                                    4,255                      33,689

Valuation Allowances:
  State                                                          (5,140)                     (5,514)
                                                                --------                    ---------

  Total temporary differences affecting tax
    provision                                                      (885)                     28,175
  "Safe harbor" leases                                           (3,903)                     (4,035)
  Acquired postretirement benefit plan liability                  3,056                       4,055
                                                                --------                    ---------

Net deferred tax (liability) asset                              $(1,732)                    $28,195
                                                                ========                    =========
</TABLE>

No  valuation  allowance  was required for the  Company's  federal  deferred tax
assets at December 27, 2001 and December 28, 2000.  State  valuation  allowances
represent  reserves for income tax  benefits,  which are not  recognized  due to
uncertainty regarding future earnings in the applicable states. The net deferred
tax asset  includes  current  deferred  tax assets of $8,402  and  $18,182 as of
December 27, 2001 and December  28,  2000,  respectively,  which are included in
Other Current Assets on the Consolidated Balance Sheets.

The  Company's  U.S.  federal  income tax returns have been cleared with the IRS
through 1997.

Cash paid for income taxes was $12,084 for 2001, $5,514 for 2000, and $4,942 for
1999.


<PAGE>


The tax provision  (benefit)  differs from the amounts  obtained by applying the
statutory  U.S.  federal  income  tax  rate  to  the  earnings  from  continuing
operations before minority interest. The differences are reconciled as follows:

<TABLE>
<CAPTION>


                                                                  Fiscal Years Ended
                                               2001 (Revised -       2000 (Revised -      1999 (Revised -
                                                 See Note 2)           See Note 2)          See Note 2)
                                                 -----------           -----------          -----------
<S>                                              <C>                   <C>                  <C>
Expected   federal   income  tax  provision
(benefit)                                         $  34,425            $ (19,898)            $ 5,326
Minority interest not included in tax
  provision                                            (405)                (519)               (446)
State and local income taxes, net of
  federal income tax benefit (provision)                284                  482              (1,637)
Nondeductible amortization of in-
  tangibles and other costs                             601                  590               1,160
Foreign income tax provision                            546                1,700                 120
Foreign and fuel tax credits                           (592)              (2,614)                (54)
Other, net                                              201                 (568)                171
                                                   ---------            ---------             --------
Tax provision (benefit)                            $ 35,060             $(20,827)            $ 4,640
                                                   =========            =========             ========
</TABLE>


The Company  has state net  operating  loss  carryforwards  available  to offset
future  taxable  income.  Following  are the  net  operating  losses  by year of
expiration:

       Year of Expiration              State Net Operating Losses
       ------------------              --------------------------
        2001                                 $    607
        2002                                      727
        2003                                    1,079
        2004                                    5,290
        2005                                      956
        Through 2020                           62,181
                                               ------
                                             $ 70,840
                                               ======

(15) Pension and Postretirement Benefits Plans

Multi-employer Pension Plan
---------------------------

Union  employees who normally are not  participants in the ESOP or Savings Plans
may be covered by  multi-employer  pension  plans under  which the Company  pays
fixed amounts,  generally based on hours worked,  according to the provisions of
the various labor  contracts.  In 2001,  2000,  and 1999,  the Company  expensed
$5,063,  $4,077, and $3,954,  respectively,  for these plans. Under the Employee
Retirement Income Security Act of 1974 as amended by the Multi-employer  Pension
Plan  Amendments  Act of 1980,  an employer is liable  upon  withdrawal  from or
termination of a multi-employer  plan for its proportionate  share of the plan's
unfunded  vested  benefits  liability.  Based  on  information  provided  by the
administrators of the majority of these  multi-employer  plans, the Company does
not believe there is any significant  amount of unfunded vested  liability under
these plans.

Defined Benefit Pension Plans
-----------------------------

On December 11, 1999, the Company's subsidiary, DIS, established the DIS Pension
Plan for Salaried Employees,  which is a noncontributory defined benefit pension
plan sponsored by DIS,  covering a majority of DIS's employees.  The benefits to
be paid under this plan are  generally  based on years of  credited  service and
average final  earnings.  DIS' funding  policy,  subject to the minimum  funding
requirements of employee  benefit and tax laws, is to contribute such amounts as
are determined on an actuarial basis to accumulate  funds sufficient to meet the
plan's benefit obligation to employees upon their retirement.  The assets of the
plan  consist  primarily  of  corporate  equities,  government  securities,  and
corporate debt securities.


<PAGE>


Certain  participants  who terminate from the Company as a result of a reduction
in work force  receive  Involuntary  Separation  Payments  ("ISEP") from the DIS
Pension Plan for Salaried Employees, based on salary and length of service.

Also on December 11, 1999, certain of DIS's union employees began  participating
in  the  DynCorp  Information  Systems  LLC  Union  Pension  Plan,  which  is  a
noncontributory  defined  benefit  pension  plan.  DIS union  employees are also
eligible  for a  postretirement  healthcare  and life  insurance  benefit  plan,
sponsored by DIS.

Postretirement Benefit Plan
---------------------------

On December 11, 1999, a majority of DIS's then-current  employees became covered
under a postretirement  healthcare and life insurance  benefit plan sponsored by
DIS. The  determination  of benefit cost for the  postretirement  health plan is
generally based on  comprehensive  hospital,  medical and surgical  benefit plan
provisions.

The following is a reconciliation of the benefit  obligations,  plan assets, and
funded status of the Company's  Defined  Benefit Pension and Union Pension Plans
and Postretirement Benefit Plan:

<TABLE>
<CAPTION>


Change in Benefit Obligation:                              Pension Benefits              Postretirement Benefits
                                                           ----------------              -----------------------
                                                         2001           2000             2001              2000
                                                         ----           ----             ----              ----
<S>                                                     <C>            <C>              <C>             <C>
Benefit obligation at beginning of year                  $37,455        $ 44,448         $22,632        $21,608
Service cost                                               3,148           2,943              78            188
Interest cost                                              3,302           3,633           1,552          1,631
Actuarial loss (gain)                                      6,722         (3,761)            (913)           779
Participant contributions                                      -              -              102             96
ISEP benefits paid                                       (2,228)           (563)               -              -
Other benefits paid                                      (6,348)         (9,245)          (1,327)        (1,670)
                                                         -------         -------         --------        -------
Benefit obligation at end of year                        $42,051         $37,455         $22,124        $22,632
                                                         -------         -------         --------        -------
</TABLE>

<TABLE>
<CAPTION>
Change in Plan Assets:                                     Pension Benefits              Postretirement Benefits
                                                           ----------------              -----------------------
                                                          2001             2000          2001               2000
                                                          ----             ----          ----               ----
<S>                                                     <C>               <C>            <C>             <C>
Fair value of assets at beginning of year                $50,540          $57,604         $ 7,021          $12,090
Actual return on plan assets                             (1,962)            2,744         (2,996)                -
Employer contributions                                         -                -           1,226          (3,495)
Employee contributions                                         -                -             102               96
ISEP benefits paid                                       (2,228)            (563)               -                -
Other benefits paid                                      (6,348)          (9,245)         (1,327)          (1,670)
                                                         -------          -------         -------          -------
Fair value of assets at end of year                      $40,002          $50,540         $ 4,026          $ 7,021
                                                         -------          -------         -------          -------
</TABLE>

<TABLE>
<CAPTION>
Funded Status Reconciliation:                              Pension Benefits              Postretirement Benefits
                                                           ----------------              -----------------------
                                                        2001             2000           2001               2000
                                                        ----             ----           ----               ----
<S>                                                     <C>              <C>           <C>                <C>
Funded status                                           $(2,049)          $13,085       $(18,098)          $(15,611)
Unrecognized prior service cost                               2                 -               -                  -
Unrecognized net actuarial (gain) loss                   11,615           (1,564)           4,102              1,545
                                                        --------          -------       ---------          ---------
Net prepaid (unfunded) benefit cost                      $9,568          $11,521        $(13,996)          $(14,066)
                                                        ========          =======       =========          =========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

Assumptions:                                               Pension Benefits              Postretirement Benefits
                                                           ----------------              ------------------------
                                                        2001             2000            2001               2000
                                                        ----             ----            ----               ----
<S>                                                     <C>              <C>             <C>                <C>
Discount rate                                           7.3%             7.5%            7.3%               7.5%
Varying rates of increase in
     compensation levels based on age                   4.8%             5.0%             N/A                N/A
Expected weighted-average long-term
     rate of return on assets                           9.0%             9.0%            6.8%               6.8%
Assumed health care cost trend rate:
     Post-65 claim group                                 N/A              N/A            6.3%               6.5%
     Pre-65 claim group                                  N/A              N/A            6.3%               6.5%
</TABLE>

Net  periodic  pension  cost  and  postretirement  benefit  costs  included  the
following:
<TABLE>
<CAPTION>

                                                            Pension Benefits              Postretirement Benefits
                                                            ----------------              -----------------------
                                                          2001           2000             2001               2000
                                                          ----           ----             ----               ----
<S>                                                      <C>            <C>              <C>                <C>
Service cost                                             $ 3,146        $ 2,943          $   78             $  188
Interest cost                                              3,302          3,633           1,552              1,631
Expected return on plan assets                           (4,496)        (4,942)           (474)              (765)
                                                         -------        -------          ------             ------
Net periodic pension cost                                $ 1,952        $ 1,634          $1,156             $1,054
                                                         =======        =======          ======             ======
</TABLE>

For the postretirement benefit plan the health care cost trend rates are assumed
to decline  gradually by 0.3% until the ultimate rate of 5.5% is reached in 2004
for post-65 and pre-65  claim  groups and will remain at that level  thereafter.
Assumed  health care cost trend rates have a  significant  effect on the amounts
reported  for the health care plans.  A  one-percentage-point  change in assumed
health care cost trend rates would have the following effects:

                                    1-Percentage-Point        1-Percentage-Point
                                          Increase                  Decrease
Effect on total of service and
     interest cost components             $    89                  $   (81)
Effect on accumulated
     postretirement benefit obligation    $ 1,223                  $(1,111)

(16)  Net Earnings (Loss) Per Common Share

Basic  earnings  (loss) per common share ("EPS") is computed by dividing  common
stockholders'  share of net earnings  (loss) by the  weighted-average  number of
common shares outstanding and contingently issuable shares. The weighted-average
number of common shares  outstanding  includes issued shares less shares held in
treasury and any unallocated ESOP shares.  Shares earned and vested but unissued
under the Restricted Stock Plan are contingently issuable shares whose condition
for  issuance  have  been  satisfied  and as  such  have  been  included  in the
calculation  of  basic  EPS.  Diluted  EPS  is  computed  similarly  except  the
denominator  is  increased  to  include  the  weighted-average  number  of stock
warrants and options outstanding, assuming the treasury stock method.

The following is a reconciliation  of shares for basic EPS to shares for diluted
EPS for the fiscal years ended:

<TABLE>
<CAPTION>

                                                                                   2001           2000          1999
                                                                                   ----           ----          ----
<S>                                                                             <C>             <C>           <C>
Weighted-average shares outstanding for basic EPS                                10,559          10,477        10,044
   Effect of dilutive securities:
      Stock options                                                                 554               -           229
                                                                                 ------          ------        ------
Weighted-average shares outstanding for diluted EPS                              11,113          10,477        10,273
                                                                                 ======          ======        ======
</TABLE>
<PAGE>


(17) Incentive and Deferred Compensation Plans

The Company has several  formal  incentive  compensation  plans that provide for
incentive  payments of cash and stock to officers and key  employees.  Incentive
payments under these plans are based upon  operational  performance,  individual
performance,  or a combination  thereof,  as defined in the plans.  In 2000, the
chief  executive  officer was awarded 25,000 shares of the Company's stock under
the Company's  Long-Term  Incentive Stock Plan, which would vest entirely and be
distributable  at such time as, but only in the event that,  the price of common
stock  exceeded  $40.00 per share by a date no later than  December 31, 2002. In
December  2001,  these  25,000  options  vested when the common  stock traded at
$40.50 per share on the  Company's  internal  market.  The expense of $1,013 was
recorded in December 2001, when the restrictions on the shares lapsed.

In November 2001 the Company entered into three-year  employment agreements with
certain executives  specifying annual salaries and incentive plan target bonuses
and providing for payment of salary and pro-rated bonuses following termination.
The employment agreements also provide, in the event of involuntary  termination
without cause, for consulting payments and non-compete  payments for a period of
thirty months,  and, if the executive is terminated in connection  with a change
in control of the Company, payment of an additional lump-sum amount.

The  Company  has  several  types of  deferred  compensation  plans for  certain
executives.  In 1998 the  Company  established  the Key  Executive  Share-Option
Compensation Plan, which offers certain executives and key management  employees
the opportunity to defer any selected portion of annual salary and bonuses.  The
Company has  recorded an asset and a liability  at the fair market  value of the
investments  made with the  deferrals  in the  amount of $1.5  million  and $1.0
million as of December 27, 2001 and December 28, 2000, respectively. The related
investment  asset  is  treated  as  a  trading  security  under  SFAS  No.  115,
"Accounting for Certain Investments in Debt and Equity Securities" and therefore
the  related  fluctuations  in the fair market  value are  charged to  Corporate
General and Administrative Expenses and Cost of Services.

In 1997 the Company  established the  Supplemental  Executive  Retirement  Plan,
which offers certain executives  additional retirement benefits in the form of a
ten-year  certain  stream of payments based on a percentage of final year annual
compensation.  The plan also  includes pre- and  post-retirement  lump sum death
benefit  provisions.  The Company has recorded a liability in the amount of $2.6
million  and $2.4  million  as of  December  27,  2001 and  December  28,  2000,
respectively, for these retirement balances.

In 1980,  the Company began allowing  certain  executives to defer any amount of
their base salary in excess of the Social Security wage base until retirement or
any set date more than five years in the future.  These  balances are to be paid
out in either  lump  sums or over a  certain  number of years up to ten years as
agreed to in the original deferred compensation  agreements with each executive.
The  deferred  balances  earn  interest  based on a rate  equal  to the  average
interest rates of interest paid for one-year certificates of deposit. There have
not been any  additional  deferrals  since  1988.  The  Company  has  recorded a
liability in the amount of $0.2 million as of December 27, 2001 and December 28,
2000, which includes all future pay-outs and accrued interest.

(18) Stock Option Plans

In March 1999,  the  Company  adopted a Long-Term  Incentive  Stock Plan,  which
authorizes the grant of performance-based  stock and cash incentive compensation
in  the  form  of  non-qualified  stock  options,   stock  appreciation  rights,
restricted stock,  performance  grants and awards,  and other stock-based grants
and awards.  Specific  terms  relating to the grant are set by the  Compensation
Committee at the time of the grant.  Stock options granted under the Plan permit
optionees  to  purchase  a  designated  number of  shares of common  stock at an
exercise  price set by the  Committee,  which  establishes  vesting and exercise
provisions to be set forth in individual option  agreements.  The exercise price
may not be lower  than the fair  market  value of the  shares as of the time the
option is granted. Following an action by the Compensation Committee in February
2001,  options  granted during 1999 and 2000 will generally vest over a six-year
period or over a lesser  period if certain stock price targets are met in future
years.  Options that are not exercised  within  ten-years of the grant date will
expire.


<PAGE>



The Company adopted a non-qualified  Stock Option Plan in 1995,  whereby options
could be granted to officers,  directors,  and other key employees to purchase a
maximum of  1,250,000  common  shares at an option  price not less than the most
recently  determined  fair  market  value as of the grant  date.  The grants are
exercisable only when vested and vest  proportionately  over a period of four or
five years,  depending on the date of the grant.  Options that are not exercised
within ten or seven years from the date of the grant,  depending  on the date of
the grant,  shall  expire.  The fair value of each option  grant is equal to the
Formula Price at the date of grant. The Company's ability to grant options under
the 1995 Stock Option Plan ended on June 30, 2001.

Stock option activity was as follows:
<TABLE>
<CAPTION>

                                                                2001                  2000              1999
-------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                   <C>                <C>
Outstanding, beginning of year                             1,625,000             1,603,150          1,238,600
Granted                                                      339,200               447,000            468,750
Exercised                                                    (42,764)              (95,813)            (5,400)
Canceled or terminated                                       (56,586)             (329,337)           (98,800)
-------------------------------------------------------------------------------------------------------------
Outstanding, December 27, 28, and 30                       1,864,850             1,625,000          1,603,150
Exercisable                                                  973,535               698,450            590,200

Average price
     Outstanding, beginning of year                           $20.82                $20.29            $18.69
     Granted                                                   29.78                 23.50             24.38
     Exercised                                                 20.05                 17.04             17.26
     Canceled or terminated                                    23.77                 22.95             19.82
     Outstanding, end of year                                  22.38                 20.82             20.29
</TABLE>

<TABLE>
<CAPTION>
Weighted-average  grant date fair value of options was $6.51,  $6.25,  and $6.10
for 2001, 2000, and 1999, respectively.

The following table summarizes  information  about stock options  outstanding at
December 27, 2001:

                                                                                            Weighted-Average
Range of                                        Number         Weighted-Average                    Remaining
Prices                                     Outstanding           Exercise Price             Contractual Life
-------------------------------------------------------------------------------------------------------------
<S>                                        <C>                 <C>                          <C>
$14.90 - 19.00                                 598,700                   $16.85                         1.15
 20.00 - 23.25                                 316,500                    21.65                         6.07
 23.50 - 24.50                                 672,650                    23.89                         8.07
 31.00 - 31.50                                 277,000                    31.49                         9.57
</TABLE>

<TABLE>
<CAPTION>
The following table summarizes  information  about stock options  exercisable at
December 27, 2001:

Range of                                                          Number                    Weighted-Average
Prices                                                       Exercisable                      Exercise Price
-------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                          <C>
$14.90 - 19.00                                                   586,700                              $16.81
 20.00 - 23.25                                                   202,950                               21.46
 23.50 - 24.50                                                   182,885                               24.01
 31.00 - 31.50                                                     1,000                               31.50
</TABLE>

<PAGE>


Pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation," the Company
has elected to account for its employee  stock option plan under APB Opinion No.
25,  "Accounting  for Stock Issued to Employees."  Accordingly,  no compensation
cost has been recognized for this plan. Had compensation  cost for the plan been
determined  based on the fair value at the grant date  consistent  with SFAS No.
123, common  stockholders'  share of net earnings (loss) and earnings (loss) per
share would have been as follows:

<TABLE>
<CAPTION>
                                                  2001 (Revised -     2000 (Revised - See   1999 (Revised -
Fiscal Years Ended                                  See Note 2)             Note 2)           See Note 2)
-------------------------------------------------------------------------------------------------------------
<S>                                               <C>                           <C>             <C>
Common stockholders' share of
net earnings (loss)
     As reported                                             $58,444             $(45,258)           $ 5,915
     Pro forma                                               $56,840             $(46,863)           $ 4,141
Basic earnings (loss) per share
     As reported                                             $  5.53             $  (4.32)           $  0.59
     Pro forma                                               $  5.38             $  (4.47)           $  0.41
Diluted earnings (loss) per share
     As reported                                             $  5.26             $  (4.32)           $  0.58
     Pro forma                                               $  5.11             $  (4.47)           $  0.40
</TABLE>


The  minimum  value  is  estimated  on the date of grant  assuming  a five  year
expected life of the options,  a volatility  factor of zero, a dividend yield of
zero, and risk-free  interest rates of 5.01%,  6.28%,  and 5.78% for 2001, 2000,
and 1999, respectively.

(19)   Leases

Future  minimum  lease  payments  required  under  operating  leases  that  have
remaining  noncancellable lease terms in excess of one year at December 27, 2001
are summarized below:

Fiscal Years Ending
-------------------
2002                                              $ 46,963
2003                                                42,968
2004                                                36,790
2005                                                27,600
2006                                                25,643
Thereafter                                          69,818
                                                  --------
Total minimum lease payments                      $249,782
                                                  ========

Rent expense for leases of $40,734,  $42,426,  and $34,769 for 2001,  2000,  and
1999,  respectively,  has been charged to Cost of Services and Corporate General
and Administrative  Expense.  Of these 2001 rent expenses,  approximately  $21.5
million  was  directly  charged to cost  reimbursable  contracts.  Of the future
minimum lease payments, approximately $155.9 million are expected to be directly
charged to cost reimbursable contracts.

(20) Contingencies and Litigation

The Company and its  subsidiaries  and affiliates are involved in various claims
and lawsuits,  including  contract  disputes and claims based on  allegations of
negligence and other tortuous  conduct.  The Company is also potentially  liable
for certain personal  injury,  tax,  environmental,  and contract dispute issues
related to the prior  operations of divested  businesses.  In addition,  certain
subsidiary companies are potentially liable for environmental,  personal injury,
and contract and dispute claims. In most cases, the Company and its subsidiaries
have denied, or believe they have a basis to deny, liability,  and in some cases
have  offsetting  claims against the  plaintiffs,  third  parties,  or insurance
carriers.  The total amount of damages  currently  claimed by the  plaintiffs in
these  cases  is  estimated  to  be   approximately   $7.0  million   (including
compensatory  punitive  damages and  penalties).  The Company  believes that the
amount that will actually be recovered in these cases will be substantially less
than the amount  claimed.  After taking into account  available  insurance,  the
Company believes it is adequately reserved with respect to the potential


<PAGE>


liability for such claims.  The estimates set forth above do not reflect  claims
that may have  been  incurred  but have not yet  been  filed.  The  Company  has
recorded  such  damages  and  penalties  that  are  considered  to  be  probable
recoveries against the Company or its subsidiaries.

In  September,   2000,  the  Company  became  aware  of  significant  errors  in
preacquisition  estimates  of the  cost to  complete  a major  ten-year  federal
government telephone  installation and operation contract that was undertaken in
1998 by GTE Information  Systems LLC, now known as DynCorp  Information  Systems
LLC, a wholly-owned  subsidiary of the Company ("DIS"). The Company acquired GTE
Information  Systems LLC from  Contel,  Inc.,  a  subsidiary  of GTE,  Inc.,  in
December  1999. As a consequence  of these errors,  the Company  recorded a loss
reserve for the contract in the amount of $69.0  million,  which had a remaining
balance of $53.8 million at December 28, 2000. Effective August 1, 2001, DIS and
the federal  government  customer  entered into a bilateral  modification of the
contract as a consequence of which the Company  reduced the previously  recorded
loss  reserve  by $44.7  million  effective  in the  third  quarter  2001.  This
reduction   resulted  from  the  government's   elimination  of  certain  future
liabilities  from the contract,  an increase in future  billing rates for calls,
and a decrease in future call  revenue  shared with the  government  agency.  On
August 10, 2001, the Company instituted suit against GTE, Inc. claiming breaches
of the  acquisition  agreement  representations  and  warranties  and for  other
relief.

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

Regarding   environmental   issues,   neither  the  Company,   nor  any  of  its
subsidiaries,  is named a  Potentially  Responsible  Party  (as  defined  in the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"))
at any  site.  The  Company,  however,  did  undertake,  as  part  of  the  1988
divestiture of a petrochemical  engineering subsidiary, an obligation to install
and  operate  a soil and  water  remediation  system  at a  subsidiary  research
facility  site in New Jersey and also is required to pay the costs of  continued
operation of the remediation system. In addition,  the Company,  pursuant to the
1995 sale of its commercial  aviation business,  is responsible for the costs of
the clean up of environmental conditions at certain designated sites. Such costs
may include  the  removal  and  subsequent  replacement  of  contaminated  soil,
concrete,  and underground  storage tanks, that existed prior to the sale of the
commercial aviation business. The resolution of these matters is not expected to
have a material  impact on the  Company's  results of  operations  or  financial
condition.  The Company  believes it has adequate  accruals for any liability it
may incur arising from the designated sites.

The  Company  has been  advised by the  purchasers  of two  former  subsidiaries
(DynAir Tech of Florida,  Inc. and DynAir Services Inc.) of environmental claims
by Dade  County,  Florida,  arising out of the former  subsidiaries'  conduct of
business at Miami International Airport ("MIA").  Claims for indemnification are
being asserted  against the Company pursuant to divestiture  agreements  entered
into in 1995. The Company has assumed defense of these  allegations  with a full
reservation  of  rights.  A lawsuit  was filed in April  2001 by Dade  County in
Florida State Court  against  DynAir  Tech's  successor-in-interest,  Sabretech,
Inc.,  and 16 other  defendants,  but  neither  Sabretech  nor any  other  named
defendant has been served.  DynAir Services is not presently a named  defendant,
although it is one of an additional 200 companies that the County has identified
as having possible responsibility for


<PAGE>


contamination at MIA. Under the terms of the DynAir Tech divestiture  agreement,
the purchaser is responsible for the first $125,000 of cost incurred as a result
of such claims;  however,  the Company is required to assume full responsibility
for all costs to the extent  claims exceed  $125,000 up to an aggregate  maximum
amount of $2.5 million. If the Company is required to indemnify under the DynAir
Services divestiture  agreement,  it would be responsible for all related costs.
The County's  complaint  specifies $200.0 million of incurred and $250.0 million
of future  damages  against the named  defendants.  Defense has been tendered to
certain of the Company's insurance carriers,  although no coverage determination
has  been  made.   Both  DynAir   Services  and  Sabretech  are  represented  by
environmental  defense  counsel  and intend to  vigorously  defend  against  the
allegations. At this time, the Company cannot reasonably determine the exposure,
if any, to possible losses from these claims.

The Company is a party to other civil and contractual  lawsuits that have arisen
in the normal course of business for which potential liability,  including costs
of defense,  constitutes the remainder of the $7.0 million  discussed above. The
estimated probable liability (included in Other Liabilities and Deferred Credits
on the  Consolidated  Balance  Sheet)  for these  issues is  approximately  $4.0
million and is substantially covered by insurance. All of the insured claims are
within policy  limits and have been  tendered to and accepted by the  applicable
carriers. The Company has recorded an offsetting asset (included in Other Assets
on the  Consolidated  Balance  Sheet) of $3.3  million at December  27, 2001 for
these items.

The Company has recorded its best estimate of the aggregate  liability that will
result from these  matters.  While it is not possible to predict with  certainty
the outcome of litigation and other matters  discussed  above, it is the opinion
of the Company's management,  based in part upon opinions of counsel,  insurance
in force,  and the facts currently  known,  that  liabilities in excess of those
recorded,  if any,  arising from such matters would not have a material  adverse
effect  on the  results  of  operations,  consolidated  financial  condition  or
liquidity of the Company over the  long-term.  However,  it is possible that the
timing of the  resolution  of  individual  issues could result in a  significant
impact  on the  operating  results  and/or  liquidity  for  one or  more  future
reporting periods.

The  major  portion  of  the  Company's   business  involves   contracting  with
departments and agencies of, and prime contractors to, the U.S. Government,  and
such contracts are subject to possible  termination  for the  convenience of the
government  and to audit and possible  adjustment to give effect to  unallowable
costs under cost-type  contracts or to other regulatory  requirements  affecting
both cost-type and fixed-price  contracts.  Payments received by the Company for
allowable  direct and indirect  costs are subject to  adjustment  and  repayment
after audit by government  auditors if the payments  exceed  allowable  costs. A
majority of the audits have been  completed on the Company's  incurred  contract
costs  through 1999.  The Company has included an allowance for excess  billings
and contract  losses in its  financial  statements  that it believes is adequate
based on its  interpretation  of contracting  regulations  and past  experience.
There can be no assurance,  however,  that this allowance will be adequate.  The
Company is aware of  various  costs  questioned  by the  government,  but cannot
determine  the outcome of the audit  findings  at this time.  In  addition,  the
Company is occasionally the subject of investigations  by various  investigative
organizations,  resulting from employee and other allegations regarding business
practices.  In  management's  opinion,  there are no outstanding  issues of this
nature at  December  27,  2001 that will have a material  adverse  effect on the
Company's consolidated financial condition, results of operations, or liquidity.

(21) Business Segments

Effective  January 1, 2001, the Company  realigned its three Strategic  Business
Segments  into five focused  sectors in order to further  expand its business in
the  growing   international  market  and  also  to  segregate  out  its  health
information  and  technology  services.   These  five  reportable  segments  are
strategic business units that provide distinctly different services to a variety
of customers.  DI&ET was divided into AdvanceMed ("ADVMED") and DI&ET. ADVMED is
structured  as  a   business-to-business,   eHealth  decision  support  solution
organization  and provides an integrated  set of decision  support tools to meet
the needs of healthcare payers and providers.  DI&ET provides a wide range of IT
services and other  professional  services  including network and communications
engineering,  government operational outsourcing,  and security and intelligence
programs. DI&ET includes DMR, which was divested in December 2001 (see Note 12).
DynCorp  Technical  Services ("DTS") was divided into DynCorp  International LLC
("DI") and DTS. DI handles all of the Company's overseas business, including IT


<PAGE>


solutions,  and will continue to provide  maintenance  worldwide to support U.S.
military  aircraft.  DTS  provides a myriad of  specialized  technical  services
including  aviation services,  range technical  services,  base operations,  and
logistics support.  DynCorp  Information Systems LLC ("DIS") offers a full range
of  integrated  telecommunications  services  and IT  solutions  in the  area of
professional services, business systems integration,  information infrastructure
solutions, and IT operations and support.

The  purpose  of these  realignments  was to  provide  focus and  clarity to the
Company's  businesses  and enable the Company to better  serve its  customers by
concentrating and segregating the  international and healthcare  information and
technology  services.  Business segment information for 2000 has been revised to
give effect to this change.

The Company evaluates  performance based primarily on operating profit, but also
evaluates return on net assets and days sales  outstanding.  Operating profit is
the excess of revenues  over cost of services and certain  non-operating  income
and expenses included in Other Income,  net of Other  Miscellaneous  Expenses on
the Consolidated Statements of Operations.

The Company derived 96.0%,  98.0%,  and 97.0% of its revenues from contracts and
subcontracts  with the U.S.  Government in 2001,  2000, and 1999,  respectively.
Prime contracts  comprised  87.6% of revenue in 2001,  78.7% of revenue in 2000,
and 74.6% of revenue in 1999.  Prime  contracts  with the  Department of Defense
("DoD")  represented  49.0% of  revenue in 2001,  44.0% of revenue in 2000,  and
40.0% of  revenue  in 1999.  In 2001 and  2000,  the  Company's  second  largest
customer was the Department of State,  comprising 11.0% of revenue. In 1999, the
Company's second largest customer was the Department of Energy, comprising 14.0%
of revenue.  No other customer  accounted for more than 10.0% of revenues in any
year.


<PAGE>


Revenue,  operating  profit,  identifiable  assets,  capital  expenditures,  and
depreciation and amortization by segment are presented below:

<TABLE>
<CAPTION>

                                                                Fiscal Years Ended

                                                           2001            2000(e)
                                                       (Revised -        (Revised -
                                                       See Note 2)       See Note 2)         1999(e)
                                                       -----------       -----------         -------
<S>                                                    <C>               <C>              <C>
Revenue
-------
DI&ET                                                   $  588,014        $  606,715       $  581,904
DTS                                                        514,497           446,210          361,880
DI                                                         545,836           459,085          333,619
DIS                                                        246,308           228,480           13,901
ADVMED                                                      61,318            64,665           53,977
                                                        ----------        ----------       ----------
                                                        $1,955,973        $1,805,155       $1,345,281
                                                        ==========        ==========       ==========

Operating Profit (Loss)
-----------------------
DI&ET (a)                                               $   39,746        $   37,174       $   29,954
DTS                                                         15,058            13,825           12,140
DI                                                          38,094            25,068           19,383
DIS (b)                                                     67,932           (55,340)             989
ADVMED                                                       2,652             3,692              621
                                                        ----------        ----------       ----------
                                                           163,482            24,419           63,087

Corporate general and administrative                        29,456            29,350           21,741
Interest expense                                            31,521            41,408           18,943
Interest income                                               (657)           (1,471)          (1,393)
Goodwill amortization (c)                                    3,089             4,167            2,947
Amortization of other intangibles of
   acquired companies (d)                                    3,305            10,755            8,461
Costs associated with divested
   businesses                                                    -               148              286
Minority interest included in operating
   profit (loss)                                            (2,462)           (2,622)          (2,968)
Other miscellaneous                                            874              (465)            (148)
                                                        ----------        -----------      -----------
Earnings (loss) from continuing operations
before income taxes, minority interest,
   extraordinary  item,  and  cumulative  effect of
       change in accounting principle                   $   98,356        $  (56,851)      $   15,218
                                                        ==========        ===========      ===========
</TABLE>

(a)      2001 includes a $17.4 million gain on disposition of DMR (see Note 12).
(b)      2001  includes  $44.7  million  of  income  primarily from revised loss
         estimates due to  contract modifications in 2001 on a contract acquired
         with  the  purchase  of  DIS.  2000  includes  a  $76.2  million charge
         primarily from revised loss estimates on the same contract.
(c)      1999  includes  a  write-off of the unamortized goodwill balance of an
         impaired investment.
(d)      1999 includes write-off of in-process research and development.
<PAGE>




                     Fiscal Years Ended

                                  2001            2000(e)
                               (Revised -       (Revised -
                               See Note 2)      See Note 2)
                               -----------      -----------
Identifiable Assets
-------------------
DI&ET                           $131,780          $138,809
DTS                               97,468           104,878
DI                                94,464            83,588
DIS                              162,058           153,123
ADVMED                            26,880            26,815
Corporate                         85,790            79,543
                                --------          --------
                                $598,440          $586,756
                                ========          ========

<TABLE>
<CAPTION>

                                                Fiscal Years Ended
                                         2001            2000(e)           1999(e)
                                         ----            -------           -------
<S>                                    <C>              <C>               <C>
Capital Expenditures
--------------------
DI&ET                                   $ 2,785          $ 3,084           $  8,173
DTS                                         461            2,141              2,223
DI                                          387              251                296
DIS                                       1,636           12,231                872
ADVMED                                      227              843                 93
Corporate                                 1,574            2,410              2,221
                                        -------          --------          --------
                                        $ 7,070          $20,960           $ 13,878
                                        =======          ========          ========

                                         2001            2000(e)
                                      (Revised -       (Revised -
Depreciation and Amortization         See Note 2)      See Note 2)         1999(e)
-----------------------------         -----------      -----------         -------
DI&ET                                  $  3,480         $  4,041          $  5,692
DTS                                       1,211            1,105             1,950
DI                                          749              240               182
DIS                                       5,791           14,247               849
ADVMED                                    1,264              559               949
Corporate                                 7,415            6,862             3,939
                                       --------         --------          --------
                                       $ 19,910         $ 27,054          $ 13,561
                                       ========         ========          ========
</TABLE>

(e)  Data has been revised to give recognition to the current reportable segment
     structure.

DMR's results of operations and financial  position have been included in all of
the DI&ET segment balances noted above. DMR reported  revenues of $41.9 million,
$27.0 million and $24.5 million in 2001,  2000,  and 1999,  respectively.  DMR's
operating results were $4.0 million,  $0.1 million,  and $(1.4) million in 2001,
2000, and 1999,  respectively.  DMR's 2001 operating results include the gain on
disposition  of $17.4  million,  which is  offset  by $13.4  million  loss  from
operations.  Capital  expenditures for DMR were $1.2 million,  $0.2 million, and
$0.1  million  in  2001,   2000,  and  1999,   respectively.   Depreciation  and
amortization for DMR totaled $0.4 million,  $0.2 million,  $0.1 million in 2001,
2000, and 1999, respectively.  DMR's identifiable assets were $0.0 million, $5.2
million, and $6.8 million in 2001, 2000, and 1999, respectively.
<PAGE>




The  equity in net  income  of  investees  accounted  for by the  equity  method
included  in  operating  profit and the amount of  investment  in equity  method
investees included in identifiable assets for each segment is presented below:



                                                  Fiscal Years Ended
                                        2001             2000            1999
                                        ----             ----            ----
Equity in Investees' Earnings
-----------------------------
DTS                                   $2,396            $2,366         $2,114
DI                                       935                 -              -
                                      ------            ------         ------
                                      $3,331            $2,366         $2,114
                                      ======            ======         ======
Investment in Equity Investees
------------------------------
DTS                                   $1,462            $3,695         $2,490
DI                                       935                 -              -
DI&ET                                      -                25              -
                                      ------            ------         -------
                                      $2,397            $3,720         $2,490
                                      ======            ======         =======

The Company provides services in foreign countries under contracts with the U.S.
Government and foreign customers.

The risks associated with the Company's foreign  operations  relating to foreign
currency  fluctuation and political and economic conditions in foreign countries
have not had a significant negative impact to the Company.

The  Company's  foreign  operations  are  significantly  influenced  by the U.S.
Government's foreign policy and funding for such operations. Revenues in foreign
countries under contracts with the U.S. Government  represent  approximately 98%
of all foreign operations revenue for 2001 and 99% for 2000 and 1999.

Revenue from foreign operations by segment was as follows:

                                                 Fiscal Years Ended
                                      2001              2000
                                   (Revised -        (Revised -
                                   See Note 2)       See Note 2)        1999
                                   -----------       -----------        ----
Foreign Operations Revenue
--------------------------
DI&ET                              $  10,232         $   4,552      $   4,304
DTS                                   15,471            15,967         14,794
DI                                   304,616           344,529        234,787
DIS                                   21,844            18,805          1,352
ADVMED                                     -               955          2,455
                                    --------         ---------        -------
                                   $ 352,163         $ 384,808      $ 257,692
                                   =========         =========      =========




<PAGE>


(22)  Quarterly Financial Data (Unaudited)

A summary of quarterly financial data for 2001 and 2000 is as follows:

<TABLE>
<CAPTION>

                                         2001 Quarters                                       2000 Quarters (a)
                                   (Unaudited and Revised                                 (Unaudited and Revised
                                        - See Note 2)                                          - See Note 2)
                                        -------------                                          -------------
<S>                                <C>       <C>       <C>       <C>          <C>         <C>         <C>          <C>
                                    First    Second     Third     Fourth       First      Second       Third        Fourth
                                    -----    ------     -----     ------       -----      ------       -----        ------
Revenues                          $438,979    $476,611  $502,856   $537,527   $428,311     $446,498   $468,760      $461,586
Gross profit (loss)(a)              23,721      26,954    73,856     21,169     15,217       24,374    (49,487)       36,722
Earnings(loss)from continuing
  operations before income
  taxes, minority interest,
  and cumulative effect
  of change in
  accounting principle               6,957      10,138    58,210     23,051     (4,527)       3,677    (70,535)       14,534
Minority interest                      476         635       532        819        577          764        304           977
Cumulative effect of change in
accounting principle                     -           -         -          -      4,770            -          -             -
Net earnings (loss)                  3,694       5,417    37,618     14,105     (8,088)       1,893    (46,045)        8,824
Common stockholders' share
  of net earnings (loss) per
  common share:
Basic earnings (loss) per share      $0.30       $0.46     $3.50      $1.27     $(0.82)       $0.14     $(4.43)      $0.79
Diluted earnings (loss) per share    $0.29       $0.44     $3.33      $1.20     $(0.82)       $0.14     $(4.43)      $0.79
</TABLE>

(a)  2000  fourth  quarter  includes  $1.1  million  of  closedown  costs  on an
     operation which supported the Department of Justice.

DMR's quarterly revenue and operating results were the following:
($ thousands)
<TABLE>
<CAPTION>

                                    2001 Quarters (a)(b)                               2000 Quarters
                                         (unaudited)                                    (unaudited)
                                         -----------                                    -----------
<S>                <C>          <C>       <C>        <C>             <C>       <C>        <C>       <C>
                     First      Second     Third      Fourth         First     Second     Third     Fourth
                     -----      ------     -----      ------         -----     ------     -----     ------
Revenue             $7,134      $7,270    $13,925      $13,601        $6,555    $7,127     $6,107    $7,194
Gross  (loss)
profit              $ (40)      $(524)    $   577     $(13,369)       $  486    $  211     $(737)    $  116
</TABLE>

(a) 2001 fourth quarter includes a $9.4 million loss on a DMR contract providing
non-emergency medical  transportation  services in the Commonwealth of Virginia.

(b) 2001 fourth  quarter gross loss does not include the gain on  disposition of
DMR of $17.4 million (see Note 12).

(23) Subsequent Events

During the second quarter of 2002, the Company  recorded a $15.8 million loss on
an  investment  due to an  other  than  temporary  decline  in its  value.  Also
regarding that same investment, in the third quarter of 2002 the Company entered
into an  agreement  with the  investee  pursuant  to which the  Company  and its
investee  agreed to settle all disputes  between them. As part of the agreement,
the Company agreed to loan $5.0 million to the investee which was fully reserved
for in the third quarter of 2002.
<PAGE>


ITEM  9.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURES

As disclosed in the Current reports,  during the two most recent fiscal years of
the Company ended  December 27, 2001 and December 28, 2000,  and the  subsequent
interim period  through May 30, 2002,  there were no  disagreements  between the
Company and its former  accountant,  Arthur  Andersen LLP  ("Andersen"),  on any
matters of accounting principles or practices,  financial statement disclosures,
or  auditing  scope  or  procedure,  which  disagreements,  if not  resolved  to
Andersen's  satisfaction,  would have caused  Andersen to make  reference to the
subject matter of the  disagreement in connection with its reports,  and, during
the interim  period  between its  engagement  on May 30, 2002 and  September 18,
2002,  there were no  disagreements  between  the  Company and Ernst & Young LLP
("E&Y")  on  any  matters  of  accounting  principles  or  practices,  financial
statement disclosures,  or auditing scope or procedure, which disagreements,  if
not resolved to E&Y's  satisfaction,  would have caused E&Y to make reference to
the subject matter of the  disagreement  in connection  with its report,  had it
issued a report.

As reported on Current Report on Form 8-K on May 31, 2002, as amended on June 3,
2002, the Board of Directors of DynCorp (the "Company"), upon the recommendation
of its  Audit  Committee,  authorized  the  engagement  of E&Y to  serve  as the
Company's independent public accountants for the fiscal year ending December 26,
2002.  As reported  on Current  Report on Form 8-K on  September  23,  2002,  on
September 18,2002 the Audit Committee determined to engage Deloitte & Touche LLP
("D&T") as the Company's  independent auditor. D&T has been engaged to audit the
Company's  financial  statements  for the fiscal years ended  December 30, 1999,
December 28, 2000,  and December 27, 2001 and to audit the  Company's  financial
statements for the fiscal year ending December 26, 2002.


                                         PART III

Item 10.  Directors and Executive Officers of the Registrant

The  information  required to be set forth  herein is included in the  Company's
Definitive Proxy Statement, which is incorporated herein by reference.

Item 11.  Executive Compensation

The  information  required to be set forth  herein is included in the  Company's
Definitive Proxy Statement, which is incorporated herein by reference.

Item 12.  Security Ownership of Certain Beneficial Owners and Management

The  information  required to be set forth  herein is included in the  Company's
Definitive Proxy Statement, which is incorporated herein by reference.

Item 13.  Certain Relationships and Related Information

The  information  required to be set forth  herein is included in the  Company's
Definitive Proxy Statement, which is incorporated herein by reference.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) The  following  documents  are filed as part of this Form 10-K/A - Amendment
No. 2:

1.       All financial statements.

2.       Financial statement Schedules.
<PAGE>

Schedule II - Valuation and Qualifying Accounts for the Years Ended December 27,
2001, December 28, 2000 and December 30, 1999.

All other  financial  schedules  not listed have been omitted since the required
information is included in the  Consolidated  Financial  Statements or the notes
thereto, or is not applicable or required.

3.       Exhibits.

Exhibit        Description
-------        -----------

3.1            Certificate of Incorporation,  as currently in effect, consisting
               of  Amended   and   Restated   Certification   of   Incorporation
               (incorporated by reference to Registrant's  Form 10-K/A for 1995,
               File No.  1-3879)

3.2            Registrant's   By-laws  as  amended  to  date   (incorporated  by
               reference to Registrant's Form 10-K for 1999, File No. 1-3879)

4.1            Indenture,  dated  March 17,  1997,  between the  Registrant  and
               United  States Trust  Company of New York  relating to the 9-1/2%
               Senior  Subordinated Notes due 2007 (incorporated by reference to
               Registrant's Form S-4, File No. 333-25355)

4.2            Specimen Common Stock  Certificate  (incorporated by reference to
               Registrant's Form 10-K for 1988, File No. 1-3879)

4.3            Article  Four  of  the  Amended  and  Restated   Certificate   of
               Incorporation  (incorporated  by reference to  Registrant's  Form
               10-K/A for 1995, File No. 1-3879)

4.4            Credit  Agreement by and among  Citicorp  U.S.A.,  Inc.,  certain
               Lenders,  the  Registrant  and  Dyn  Funding  Corporation,  dated
               December 10, 1999 (incorporated by reference to Registrant's Form
               8-K, filed December 27, 1999, File No. 1-3879)


4.5            Purchase  Agreement  dated as of December 10, 1999 among  certain
               Purchasers and the Registrant  relating to $40,000,000  Aggregate
               Principal  Amount  of 15%  Senior  Subordinated  Notes  due  2007
               (incorporated  by  reference  to  Registrant's  Form  8-K,  filed
               December 27, 1999, File No. 1-3879)

4.6            Registration  Rights  Agreement,  dated as of December  10, 1999,
               among  the   Registrant,   DB  Capital   Investors,   L.P.,   The
               Northwestern Mutual Life Insurance Society,  and Wachovia Capital
               Investors  (incorporated  by reference to Registrant's  Form 8-K,
               filed December 27, 1999, File No. 1-3879)

10.1           Deferred   Compensation   Plan   (incorporated  by  reference  to
               Registrant's Form 10-K for 1987, File No. 1-3879)

10.2           Management   Incentive   Plan   (incorporated   by  reference  to
               Registrant's Form 10-K for 1999, File No. 1-3879)

10.3           Executive   Incentive   Plan   (incorporated   by   reference  to
               Registrant's Form 10-K for 1999, File No. 1-3879)

10.4           Employment Agreement of Paul V. Lombardi,  dated November 1, 2001
               (incorporated  by reference to  Registrants'  Form 10-K for 1987,
               File No.1-3879)

10.5           Employment Agreement of Patrick C. FitzPatrick, dated November 1,
               2001 (previously filed)

10.6           Employment  Agreement of Marshall S. Mandell,  dated  November 1,
               2001 (previously filed)

10.7           Employment  Agreement of David L.  Reichardt,  dated  November 1,
               2001 (previously filed)

10.8           Restricted Stock Plan  (incorporated by reference to Registrant's
               Form 10-K/A for 1995, File No. 1-3879)

<PAGE>

10.9           1995 Stock Option Plan, as amended (previously filed)

10.10          1999  Long-Term  Incentive  Stock  Plan,  as amended  (previously
               filed)

10.11          Key Executive  Share-Option  Compensation  Plan  (incorporated by
               reference to Registrant's Form 10-K for 1999, File No. 1-3879)

10.12          Change in Control Agreement of W. Ben Medley (previously filed)

21             Subsidiaries of the Registrant (previously filed)

23             Consent of Independent Public Accountants (filed herewith)

99             The Registrant's Letter to the Securities and Exchange Commission
               pursuant to the Commission's  Temporary Order issued on March 14,
               2002 (previously filed)

99.1           Certification  by  Chief  Executive  Officer  Pursuant  to 18 USC
               Section  1350,  as  Adopted   Pursuant  to  Section  906  of  the
               Sarbanes-Oxley Act of 2002 (filed herewith)

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

Reports on Form 8-K

Form 8-K was filed on March 19, 2002, which included as an exhibit a copy of the
March 14, 2002 notice to the  Company's  stockholders  and  participants  in its
Savings and Retirement  Plan,  Capital  Accumulation  and  Retirement  Plan, and
former  Employee Stock  Ownership Plan advising them that the Board of Directors
had authorized  management to consider interests of third parties in a merger or
sale of the  Company.  The  notice  stated  that  there  was the  potential  for
increasing  share value,  but noted that no formal agreement had been negotiated
or  executed.  The notice  advised  plan  participants  on how they could cancel
outstanding liquidation or distribution orders under the employee plans.

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

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

Form 8-K was filed on August 6, 2002 to note the decision  made on May 30, 2002,
by the DynCorp Savings and Retirement Plan and DynCorp Capital  Accumulation and
Retirement Plan (collectively,  the "Plans"),  to not engage Arthur Andersen LLP
as the Plans'  auditor for the plan year ending  December 31, 2001 and to engage
Ernst & Young LLP to serve as the auditor for such plan year.

Form 8-K was filed on September  23, 2002 to note the decision made on September
18,  2002,  by the Audit  Committee,  to  engage  Deloitte  & Touche  LLP as the
Company's  independent  public  accountant.  D&T has been  engaged  to audit the
Company's  financial  statements  for the fiscal years ended  December 30, 1999,
December 28, 2000,  and December 27, 2001 and to audit the  Company's  financial
statements for the fiscal year ending December 26, 2002.


<PAGE>



                                   SIGNATURES

Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities  and
Exchange Act of 1934,  the  Registrant has duly caused this amended report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                                             DYNCORP

Date:November 1, 2002            By:/S/ P. C. FitzPatrick
                                    ---------------------
                                       P. C. FitzPatrick
                                       Senior Vice President -
                                       Chief Financial Officer

Date:November 1, 2002            By: /S/ J. J. Fitzgerald
                                     --------------------
                                       J. J. Fitzgerald
                                       Vice President
                                       and Controller








<PAGE>

                  Certification of the Chief Executive Officer

I, Paul V. Lombardi, hereby certify that:

1.  I have reviewed this annual report on Form 10-K;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report; and

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report.


Date: November 1, 2002                    /S/ Paul V. Lombardi
                                          --------------------
                                          Paul V. Lombardi
                                          President and Chief Executive Officer



<PAGE>


                  Certification of the Chief Financial Officer

I, Patrick C. FitzPatrick, hereby certify that:

1.  I have reviewed this annual report on Form 10-K;

2.  Based on my  knowledge, this to annual  report  does not  contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report; and

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this to annual report.


Date: November 1, 2002                    /S/ Patrick C. FitzPatrick
                                          --------------------------
                                          Patrick C. FitzPatrick
                                          Senior Vice President -
                                          Chief Financial Officer







<PAGE>


DynCorp and Subsidiaries
Schedule II - Valuation and Qualifying Accounts
For the Fiscal Years Ended, 2001, 2000 and 1999
(Dollars in thousands)
<TABLE>
<CAPTION>


                                         Balance at      Charged to      Write-off of                   Balance
                                         Beginning       Costs and       Uncollectible                  At End
Description                              of Period       Expenses        Accounts       Other           of Period
-----------                              ---------       --------        --------       -----           ---------
<S>                                      <C>             <C>             <C>           <C>              <C>    <C>

 Year Ended December 27, 2001
  allowance for doubtful accounts        $  2,804        $  2,605        $  (667)       $1,895          $  6,637
 Year Ended December 28, 2000
  allowance for doubtful accounts        $  3,156        $  220          $  (588)       $   16          $  2,804
 Year Ended December 30, 1999
  allowance for doubtful accounts        $  1,126        $  1,434        $  (130)       $  726          $  3,156
</TABLE>



<PAGE>