Dynamics Research 8-K Fourth Quarter and Year-end 2010 Results

Exhibit 99.1

   News Release

DYNAMICS RESEARCH CORPORATION

TWO TECH DRIVE, ANDOVER, MASSACHUSETTS 01810-2434                                                                      TEL. 978/289-1500 www.drc.com

DRC REPORTS

FOURTH QUARTER AND YEAR-END 2010 RESULTS

-- Fourth Quarter Earnings from Continuing Operations Up 21 Percent  –

--  Federal Business Revenue Grew 11 Percent  --

Andover, Mass. - February 16, 2011 - Dynamics Research Corporation (Nasdaq: DRCO), a leading provider of innovative management consulting, engineering and information technology services and solutions to federal and state governments, today announced operating results for the fourth quarter and year ended December 31, 2010.

Financial Results

The Company reported net income from continuing operations for the fourth quarter of 2010 of $4.0 million, up 21 percent from $3.3 million for the same period in 2009.  Earnings from continuing operations per diluted share for the fourth quarter of 2010 were $0.39, up 18 percent from $0.33 for the same period in 2009.

For the full year 2010 net income from continuing operations was $12.3 million, up 19 percent from $10.3 million for 2009.  Earnings from continuing operations per diluted share were $1.22, up 15 percent from $1.06 for 2009.  Net Income for 2010, including discontinued operations, was $12.7 million, or $1.26 per diluted share.

For the fourth quarter of 2010 revenue was $69.8 million, up 6 percent from $65.8 million in the fourth quarter of 2009.  Federal revenue was $66.4 million for the fourth quarter of 2010, up 11 percent from $60 million for the same period a year ago.

For the year 2010 revenue was $272.1 million, as compared with $268.7 million for 2009.  Federal revenue for 2010 of $254.1 million was up 4 percent over 2009 revenue of $244.3 million.

Business Highlights

“We’re very pleased with our performance in the quarter, ending the year with strong momentum heading into 2011,” said Jim Regan, DRC’s chairman and chief executive officer.  “We saw double-digit growth in federal sector revenue during the period and continued to bid on a significant number of new business opportunities.  Our raw pipeline of $1.7 billion has risen 30% in the past 12 months, and we currently have $373 million in bids submitted and awaiting award.  In addition, we ended the year with $30 million in cash, driven by federal DSO’s of 55 days, and generated cash flow from operating activities of over $40 million.  We look forward to an other year of improved performance in 2011.”

Company Guidance

The Company reaffirms guidance issued on February 8, 2011.

Earnings for the full year 2011 are estimated to be in the range of $1.25 to $1.32 per diluted share, reflecting an increase of 5 to 10 percent over 2010 excluding a one-time tax benefit of 3 cents received in the first quarter of 2010.  Earnings per diluted share are forecast to be between $0.25 and $0.27 for the first quarter of 2011, up 4 to 13 percent over the first quarter of 2010 excluding the one-time tax benefit received in the prior-year period.  The Company’s estimate of revenue for 2011 is in the range of $281 to $289 million, reflecting anticipated top-line growth for DRC’s federal business of 5 to 8 percent.  For the first quart er of 2011, revenue is projected at $68 to $70 million, reflecting growth in the Company’s federal business of 3 to 6 percent.  These projections exclude the effects of future acquisitions and assume a tax rate of approximately 40 percent.

Conference Call

The Company will conduct its fourth quarter and year-end 2010 conference call on Thursday, February 17, 2011 at 10:00 a.m. ET.  The call will be available by telephone at 877-303-4382, and accessible by webcast at http://www.drc.com. Recorded replays of the conference call will be available on Dynamics Research Corporation's investor relations home page at http://www.drc.com and by telephone at 800-642-1687, replay passcode #41431225, beginning at 1:00 p.m. ET on February 17, 2011.

About Dynamics Research Corporation

Dynamics Research Corporation (DRC) is a leading provider of mission-critical technology management services and solutions for government programs.  DRC offers the capabilities of a large company and the responsiveness of a small company, backed by a history of excellence and customer satisfaction.  Founded in 1955, DRC is a publicly held corporation (Nasdaq: DRCO) and maintains more than 25 offices nationwide with major offices in Andover, Massachusetts and the Washington, D.C. area.  For more information please visit our website at www.drc.com.

Safe Harbor

Safe harbor statements under the Private Securities Litigation Reform Act of 1995: Some statements contained or implied in this news release, may be considered forward-looking statements, which by their nature are uncertain. Consequently, actual results could materially differ. For more detailed information concerning how risks and uncertainties could affect the Company's financial results, please refer to DRC's most recent filings with the SEC. The Company assumes no obligation to update any forward-looking information.

ATTACHMENT I
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Three Months Ended
	December 31,
	2010			2009
Revenue	$	69,753		$	65,826
Cost of revenue		57,607			53,854
Gross profit		12,146			11,972
Selling, general and administrative expenses		5,301			5,477
Amortization of intangible assets		385			551
Operating income		6,460			5,944
Interest expense, net		(2	)		(494	)
Other income, net		219			106
Income from continuing operations before provision for income taxes		6,677			5,556
Provision for income taxes		2,686			2,270
Income from continuing operations		3,991			3,286
Effect of discontinued operations, net of tax		-			110
Net income	$	3,991		$	3,396
Earnings per share
Basic
Income from continuing operations	$	0.40		$	0.34
Effect of discontinued operations, net of tax		-			0.01
Net income	$	0.40		$	0.35
Diluted
Income from continuing operations	$	0.39		$	0.33
Effect of discontinued operations, net of tax		-			0.01
Net income	$	0.39		$	0.34
Weighted average shares outstanding
Basic		9,975,884			9,753,555
Diluted		10,137,032			9,981,292

ATTACHMENT II
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
(in thousands, except share and per share data)
	Twelve Months Ended
	December 31,
	2010			2009
Revenue	$	272,065		$	268,661
Cost of revenue		228,175			223,694
Gross profit		43,890			44,967
Selling, general and administrative expenses		21,534			23,754
Amortization of intangible assets		1,541			3,305
Operating income		20,815			17,908
Interest expense, net		(1,084	)		(2,024	)
Other income, net		453			691
Income from continuing operations before provision for income taxes		20,184			16,575
Provision for income taxes		7,871			6,262
Income from continuing operations		12,313			10,313
Effect of discontinued operations, net of tax		392			(141	)
Net income	$	12,705		$	10,172
Earnings per share (1)
Basic
Income from continuing operations	$	1.24		$	1.08
Effect of discontinued operations, net of tax		0.04			(0.01	)
Net income	$	1.28		$	1.06
Diluted
Income from continuing operations	$	1.22		$	1.06
Effect of discontinued operations, net of tax		0.04			(0.01	)
Net income	$	1.26		$	1.04
Weighted average shares outstanding
Basic		9,893,322			9,551,614
Diluted		10,078,937			9,772,722
(1)  Amounts may not add due to rounding.

ATTACHMENT III
DYNAMICS RESEARCH CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands)
	December 31,		December 31,
	2010		2009
Assets
Current assets
Cash and cash equivalents	$	30,163	$	55
Contract receivables, net		48,394		72,569
Prepaid expenses and other current assets		2,924		5,702
Discontinued operations		-		2,058
Total current assets		81,481		80,384
Noncurrent assets
Property and equipment, net		12,219		13,915
Goodwill		97,641		97,641
Intangible assets, net		2,533		4,074
Deferred tax asset		585		4,252
Other noncurrent assets		3,757		3,335
Total noncurrent assets		116,735		123,217
Total assets	$	198,216	$	203,601
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt	$	8,000	$	8,000
Accounts payable		16,883		18,299
Accrued compensation and employee benefits		18,046		16,357
Deferred taxes		2,418		7,046
Other accrued expenses		4,617		3,708
Discontinued operations		-		186
Total current liabilities		49,964		53,596
Long-term liabilities
Long-term debt		14,000		23,973
Other long-term liabilities		27,067		31,936
Total stockholders' equity		107,185		94,096
Total liabilities and stockholders' equity	$	198,216	$	203,601

ATTACHMENT IV
DYNAMICS RESEARCH CORPORATION
SUPPLEMENTAL INFORMATION (unaudited)
(dollars in thousands)
Contract revenues were earned from the following sectors:
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
	2010			2009			2010			2009
National defense and intelligence agencies	$	49,344		$	40,402		$	179,704		$	163,244
Homeland security		10,762			13,124			50,468			54,627
Federal civilian agencies		6,337			6,446			23,901			26,475
Total revenue from federal agencies		66,443			59,972			254,073			244,346
State and local government agencies		3,257			5,744			17,915			23,990
Other		53			110			77			325
Total revenue	$	69,753		$	65,826		$	272,065		$	268,661
Revenues by contract type as a percentage of contract revenue were as follows:
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2010			2009			2010			2009
Fixed price, including service-type contracts		50	%		45	%		47	%		40	%
Time and materials		29			36			32			42
Cost reimbursable		21			19			21			18
		100	%		100	%		100	%		100	%
Prime contract		74	%		71	%		73	%		71	%
Sub-contract		26			29			27			29
		100	%		100	%		100	%		100	%
	Three Months Ended						Twelve Months Ended
	December 31,						December 31,
		2010			2009			2010			2009
Net cash provided by operating activities - continuing operations	$	9,860		$	7,614		$	41,331		$	8,208
Capital expenditures	$	183		$	2,989		$	4,449		$	5,185
Depreciation	$	904		$	807		$	3,564		$	2,987
Bookings	$	46,555		$	73,736		$	272,143		$	282,311
	December 31,			December 31,
		2010			2009
Total backlog	$	400,881		$	434,475
Funded backlog	$	133,516		$	158,518
Employees		1,298			1,469

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