SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 2001 Commission File Number: 0-3676
VSE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 54-0649263
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2550 Huntington Avenue
Alexandria, Virginia 22303-1499
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (703) 960-4600
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.05 per share
(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. Yes [x] No [ ]
Number of shares of Common Stock outstanding as of May 1, 2001: 2,125,863.
VSE Corporation and Subsidiaries
Forward Looking Statements
This filing contains statements which, to the extent they are not recitations
of historical fact, constitute "forward looking statements" under federal
securities laws. All such statements are intended to be subject to the safe
harbor protection provided by applicable securities laws. For discussions
identifying some important factors that could cause actual VSE Corporation
("VSE" or the "company") results to differ materially from those anticipated
in the forward looking statements contained in this statement, see VSE's
"Narrative Description of Business", "Management's Discussion and Analysis"
and "Notes to Consolidated Financial Statements" contained in VSE's Annual
Report and Form 10-K for the fiscal year ended December 31, 2000 (Form 10-K)
filed with the Securities and Exchange Commission. Readers are cautioned not
to place undue reliance on these forward looking statements, which reflect
management's analysis only as of the date hereof. The company undertakes no
obligation to publicly revise these forward looking statements to reflect
events or circumstances that arise after the date hereof. Readers should
carefully review the risk factors described in other documents the company
files from time to time with the Securities and Exchange Commission, including
the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K filed by
the company.
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets
- ------------------------------------------------------------------------------
(in thousands, except share amounts)
March 31, December 31,
2001 2000
---- ----
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . $ 695 $ 647
Accounts receivable, principally
U.S. Government, net . . . . . . . . . . . . . . 21,337 19,215
Deferred tax assets . . . . . . . . . . . . . . . 905 853
Other current assets . . . . . . . . . . . . . . . 1,820 1,533
-------- --------
Total current assets . . . . . . . . . . . . . . 24,757 22,248
Property and equipment, net . . . . . . . . . . . . 3,274 3,336
Deferred tax assets . . . . . . . . . . . . . . . . 823 847
Intangible assets, net . . . . . . . . . . . . . . . 2,056 2,134
Other assets . . . . . . . . . . . . . . . . . . . . 2,838 2,958
-------- --------
Total assets . . . . . . . . . . . . . . . . . . $ 33,748 $ 31,523
======== ========
Liabilities and Stockholders' Investment
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . $ 9,701 $ 8,678
Accrued expenses . . . . . . . . . . . . . . . . 4,972 5,121
Dividends payable . . . . . . . . . . . . . . . . 85 85
-------- --------
Total current liabilities . . . . . . . . . . . 14,758 13,884
Long-term debt . . . . . . . . . . . . . . . . . . . 1,304 -
Deferred compensation . . . . . . . . . . . . . . . 1,722 1,846
-------- --------
Total liabilities . . . . . . . . . . . . . . . 17,784 15,730
======== ========
Commitments and contingencies
Stockholders' investment:
Common stock, par value $.05 per share, authorized
5,000,000 shares; issued 2,197,863 shares in 2001
and 2,194,289 shares in 2000 . . . . . . . . . . 110 110
Paid-in surplus . . . . . . . . . . . . . . . . . 3,914 3,914
Retained earnings . . . . . . . . . . . . . . . . 12,732 12,561
Treasury stock, at cost (72,000 shares in 2001
and 2000) . . . . . . . . . . . . . . . . . . . (792) (792)
-------- --------
Total stockholders' investment . . . . . . . . . 15,964 15,793
-------- --------
Total liabilities and stockholders' investment . $ 33,748 $ 31,523
======== ========
The accompanying notes are an integral part of these financial statements.
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Statements of Income For the three months ended March 31,
- --------------------------------------------------------------------------------
(in thousands, except share amounts)
2001 2000
---- ----
Revenues, principally from contracts . . . . . . . . $ 30,442 $ 31,178
Costs and expenses of contracts . . . . . . . . . . 29,948 29,940
--------- ---------
Gross profit . . . . . . . . . . . . . . . . . . . . 494 1,238
Selling, general and administrative expenses . . . . 49 163
Interest expense, net . . . . . . . . . . . . . . . 15 54
--------- ---------
Income before income taxes . . . . . . . . . . . . . 430 1,021
Provision for income taxes . . . . . . . . . . . . . 174 403
--------- ---------
Net income . . . . . . . . . . . . . . . . . . . . . $ 256 $ 618
========= =========
Basic earnings per share:
Net income . . . . . . . . . . . . . . . . . . . . . $ 0.12 $ 0.29
========= =========
Basic weighted average shares outstanding 2,125,863 2,122,289
========= =========
Diluted earnings per share:
Net income . . . . . . . . . . . . . . . . . . . . . $ 0.12 $ 0.29
========= =========
Diluted weighted average shares outstanding 2,125,863 2,122,289
========= =========
The accompanying notes are an integral part of these financial statements.
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Statements of Stockholders' Investment
- -------------------------------------------------------------------------------
(in thousands)
Common Stock Paid-In Retained Treasury
Shares Amount Surplus Earnings Stock
------ ------ ------- -------- -----
Balance at
December 31, 1999 . . . . 2,194 $ 110 $ 3,894 $ 11,933 $ (792)
Net income
for the year . . . . . . -- -- -- 968 --
Issuance of stock . . . . . 4 -- 20 -- --
Dividends declared
($.16) . . . . . . . . . -- -- -- (340) --
----- ------ ------- -------- -------
Balance at
December 31, 2000 . . . . 2,198 110 3,914 12,561 (792)
Net income
for the period . . . . . -- -- -- 256 --
Dividends declared
($.04) . . . . . . . . . -- -- -- (85) --
----- ------ ------- -------- -------
Balance at
March 31, 2001 . . . . . 2,198 $ 110 $ 3,914 $ 12,732 $ (792)
===== ====== ======= ======== =======
The accompanying notes are an integral part of these financial statements.
VSE Corporation and Subsidiaries
Consolidated Financial Statements (Unaudited)
Consolidated Statements of Cash Flows For the three months ended March 31,
- -----------------------------------------------------------------------------
(in thousands)
2001 2000
---- ----
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 256 $ 618
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization . . . . . . . . . . . 362 397
Loss (gain) on sale of property and equipment . . . . 9 (9)
Deferred compensation plan expense . . . . . . . . . 11 36
Net payments of deferred compensation . . . . . . . . (135) (5)
Change in Deferred taxes . . . . . . . . . . . . . . (28) 33
Change in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable . . . . . . . . . . . . . . . . . (2,122) 716
Other current assets and noncurrent assets . . . . . (167) (432)
Increase (decrease) in:
Accounts payable . . . . . . . . . . . . . . . . . . 1,023 (277)
Accrued expenses . . . . . . . . . . . . . . . . . . (149) (360)
------- -------
Net cash (used in)provided by operating activities (940) 717
------- -------
Cash flows from investing activities:
Purchase of property and equipment,
(net of dispositions) . . . . . . . . . . . . . . . . (231) (54)
------- -------
Net cash used in investing activities (231) (54)
------- -------
Cash flows from financing activities:
Net proceeds from bank loan . . . . . . . . . . . . . . 1,304 1,278
Cash dividends paid . . . . . . . . . . . . . . . . . . (85) (76)
------- -------
Net cash provided by financing activities 1,219 1,202
------- -------
Net cash provided by discontinued operations . . . . . . . - 25
------- -------
Net increase in cash and cash equivalents . . . . . . . . 48 1,890
Cash and cash equivalents at beginning of period . . . . 647 62
------- -------
Cash and cash equivalents at end of period . . . . . . . $ 695 $ 1,952
======= =======
The accompanying notes are an integral part of these financial statements.
VSE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
2001 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2001. For further information refer to the
consolidated financial statements and footnotes thereto included in the VSE
Corporation Annual Report on Form 10-K for the year ended December 31, 2000.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles 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.
Actual results could differ from those estimates.
Debt
VSE has a revolving loan agreement with a bank on which the company can borrow
up to $15 million, subject to a borrowing formula based on billed receivables.
Under terms of the agreement, the company pays a fixed amount annual commitment
fee and interest on any borrowings at a prime-based rate or an optional LIBOR-
based rate. The expiration date of the revolving loan is May 31, 2002. The loan
agreement contains collateral requirements by which company assets secure
amounts outstanding, restrictive covenants that include minimum tangible net
worth and profitability requirements, a limit on annual dividends, and other
affirmative and negative covenants. This loan agreement replaced the previous
loan agreement that had a maximum commitment of $30 million dollars. The
company determined that the new loan agreement was adequate to cover current and
future liquidity requirements.
Litigation
The company and its subsidiaries have, in the normal course of business, certain
other claims against them and against other parties. In the opinion of
management, the resolution of these claims will not have a material adverse
effect on the company's results of operations or financial position.
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
The term "VSE" or "company" means VSE and its subsidiaries and divisions unless
the context indicates operations of the parent company only. VSE's business
operations consist of the operations of the parent company, operations of the
company's wholly owned subsidiaries and operations of the company's divisions.
Wholly owned subsidiaries include Energetics Incorporated ("Energetics"), Human
Resource Systems, Inc. ("HRSI"), Ship Remediation and Recycling, Inc. ("SRR")
and VSE Services International, Inc. ("VSI"). Operations of unincorporated
divisions include BAV Division ("BAV"), Ordnance Division ("Ordnance"), Value
Systems Services Division ("VSS"), Fleet Maintenance Division ("Fleet
Maintenance"), Telecommunications Technologies Division ("TTD") beginning in
September 2000, GSA Services Division ("GSA Services"), and Land Systems
Division ("Land Systems") beginning in February 2001.
The following table sets forth certain items including consolidated revenues,
pretax income and net income, and the changes in these items for the three
month periods ended March 31, 2001 and 2000 (in thousands):
2001
Compared
to
2001 2000 2000
---- ---- ----
Revenues . . . . . . . . . . . . . . . . . $30,442 $31,178 $ (736)
======= ======= =======
Income before income taxes . . . . . . . . $ 430 $ 1,021 $ (591)
Provision for income taxes . . . . . . . . 174 403 (229)
------- ------- -------
Net income . . . . . . . . . . . . . . . $ 256 $ 618 $ (362)
======= ======= =======
Results of Operations
The discussion and analysis that follow are intended to assist in understanding
and evaluating the results of operations, financial condition, and certain
other matters of the company. The company is engaged principally in providing
engineering, logistics, management and technical services to the U.S. Government
(the "government") and other government prime contractors. All significant
intercompany transactions have been eliminated in consolidation. Certain prior
year balances have been reclassified for comparative purposes.
Revenues declined by approximately 2% for the three month period ended March 31,
2001, as compared to the same period of 2000. The decrease in revenues was
primarily due to the expiration of contracts performed by VSS for the U. S. Navy
(see "VSS Contract" below) and by VSE for the U. S. Postal Service (see "USPS
Contract" below), and a reduction in revenue associated with the company's sale
of its HRSI Health Care Division contracts in July of 2000. The reduction in
revenue from these contracts was offset substantially by increases in revenues
in some of the company's other divisions and subsidiaries, most notably by
increased revenues in TTD and SRR.
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
The company operates in one segment. Pretax income decreased by approximately
58% for the three month period ended March 31, 2001, as compared to the same
period of 2000. This decrease was primarily due to losses experienced by TTD
(see "New Business" below), to the loss of profits associated with the expira-
tion of the VSS and USPS contracts, and to a reduction in award fees to BAV
(see "BAV Contract" below).
The largest customer for the services rendered by the company is the U.S.
Department of Defense ("Defense"), including agencies of the U.S. Army, Navy,
and Air Force. VSE's revenues have historically been subject to annual fluctua-
tions resulting from changes in the level of Defense spending. Accordingly,
there can be no assurance that any future reductions in Defense spending will
not have a material adverse impact on the company's results of operations or
financial condition.
The company's revenues depend on the ability of the company to win new contracts
and on the amount of work ordered by the government under the company's existing
contracts. The company's ability to win new contracts is affected by government
acquisition policies and procedures, including government procurement practices
that in recent years have tended toward bundling work efforts under large
comprehensive ("omnibus") management contracts. This emphasis on large contracts
presents challenges to winning new contract work, including making it more
difficult for the company to qualify as a bidder, increases in the level of
competition due to the award of fewer contracts, and forcing the company into
competition with larger organizations that have greater financial resources and
larger technical staffs. Other government procurement practices that can affect
the company's revenues are the use of past performance criteria that may
preclude entrance into new government markets and government social programs
that limit contract work to small, woman, or minority owned businesses.
Additional risk factors that could potentially affect the company's revenues
are the government's right to terminate contracts for convenience, the
government's right to not exercise all of the option periods on a contract,
and funding delays caused by government political or administrative actions.
Several of the company's operating divisions were formed in recent years to bid
on and perform contract work that had been traditionally performed by VSE
(parent company). The formation of these divisions has enabled the company to
use an operating structure that is better suited to perform certain types of
contract work. The company anticipates that it will continue using its operating
divisions to bid and perform new contract work to better serve the needs of
customers. As the use of operating divisions for new contracts increases, the
company expects that the revenue of VSE (the parent company) will be reduced
in the future as parent company contracts are replaced by operating division
contracts. Management believes that the use of operating divisions to perform
future work and the associated improvements in servicing customers will better
position the consolidated entity for future revenue growth.
BAV Contract. VSE's BAV Division has a contract with the U.S. Navy to provide
engineering, technical and logistical support services associated with the sale,
lease, or transfer of Navy ships to foreign governments. Contract terms
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
specify award fee payments to BAV that are determined by performance and level
of contract activity. The contract accounted for approximately 38% and 36% of
consolidated revenues from operations during the three month periods ended March
31, 2001 and 2000, respectively. The level of revenues and associated profits
resulting from award fees generated by this contract varies depending on a
number of factors including the timing of ship transfers and associated support
services ordered by foreign governments and economic conditions of potential
customers worldwide. Award fees received during the three month period ended
March 31, 2001, which were based on reduced revenue levels experienced during
the fourth quarter of 2000, were lower than award fees received during the
three month period ended March 31, 2001. This contributed to the decline in
pretax income during 2001 as compared to 2000. The company has experienced
significant quarterly and annual revenue fluctuations and anticipates that
future quarterly and annual revenues will be subject to significant variations
primarily due to changes in the level of activity on this contract.
VSS Contract. VSE's VSS Division had a U.S. Navy contract to provide data
management and documentation, logistics support services and configuration
management services to the Naval Air Systems Command. VSS began work on this
contract in 1994 and the last option year was scheduled to end in 1999. The
government extended the contract through April 28, 2000. VSS was not awarded
the successor contract and work on this contract effort terminated as of April
28, 2000. The contract accounted for a majority of the work in the VSS Division
during the period from 1995 through 1999, but represented less than 10% of the
company's revenues during this time. The loss of revenues associated with the
expiration of this contract contributed to the decline in revenues and pretax
income during the first three months of 2001 as compared to 2000.
USPS Contract. VSE had a contract to provide engineering support services to the
U. S. Postal Service. VSE was not awarded the successor contract, and work on
this contract effort terminated as of January 31, 2001. Revenues on this
contract represented approximately 8% of the company's revenues during 2000.
The loss of revenues from this contract expiration contributed to the decline
in revenues and pretax profit during the first three months of 2001 as compared
to 2000. The company's future revenues and pretax income will be reduced by the
loss of revenues associated with the expiration of this contract.
Discontinued Operations. On May 21, 1999, the company sold its CMstat subsidiary
for an $800 thousand promissory note. While the sale was a divestiture for legal
and tax purposes, for accounting purposes, the sale was not originally provided
discontinued operations treatment under Staff Accounting Bulletin No. 30
"Accounting for Divestiture of a Subsidiary or Other Business Operation"("SAB
No. 30") since the sale did not transfer the risks of ownership because the
sales price was primarily dependent on the buyer's ability to repay the
promissory note. In December 2000, the company determined that the promissory
note acquired from the sale of its CMstat subsidiary was not collectible and
the remaining balance was written off. Accordingly, the company's consolidated
financial statements were restated to reflect the disposition of its CMstat
subsidiary as discontinued operations.
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
Financial Condition
VSE's financial condition did not change materially during the three month
period ended March 31, 2001. The company's largest asset is its accounts
receivable and its largest liabilities are its accounts payable and accrued
expenses. An increase in accounts receivable of approximately $2 million at
March 31, 2001, as compared to December 31, 2000, and a corresponding increase
of approximately $2 million in accounts payable and long-term bank debt
combined, resulted primarily from a large subcontractor invoice that was
processed in March 2001, by BAV. Other assets and liabilities remained
substantially unchanged. The increase in total stockholder's investment during
this period resulted from earnings and dividend activity.
Liquidity and Capital Resources
Cash and cash equivalents increased by approximately $48 thousand during the
three month period ended March 31, 2001. Cash provided by financing activities
was approximately $1.2 million. Cash used in operating activities was
approximately $900 thousand and cash used in investing activities was
approximately $200 thousand. Significant financing activities included an
increase of approximately $1.3 million in bank loan borrowings. Investing
activities consisted of purchases of property and equipment, net of
dispositions.
Cash and cash equivalents increased by approximately $1.9 million during the
three month period ended March 31, 2000. Cash from financing activities
contributed approximately $1.2 million of the increase and cash from operating
activities contributed approximately $717 thousand. Approximately $54 thousand
was used in investing activities. Significant financing activities included an
increase of approximately $1.3 million in bank loan borrowings. Investing
activities consisted of purchases of property and equipment, net of
dispositions.
The difference between cash used in operating activities of approximately $900
thousand in 2001 as compared to cash provided by operating activities of
approximately $700 thousand in 2000 is primarily due to changes in the levels of
accounts receivable and accounts payable resulting from fluctuations in BAV
contract activity, the expiration of the VSS and USPS contracts, and an increase
in the company's business from SRR and TTD.
The company's internal sources of liquidity result primarily from operating
activities, specifically from changes in the level of revenues and associated
accounts receivable from period to period and from profitability. Significant
increases or decreases in revenue and accounts receivable can cause significant
increases or decreases in internal liquidity. The increase in accounts
receivable for the three month period ended March 31, 2001 has resulted in a
decrease in internally generated cash flows. Accounts receivable arise
primarily from billings made by the company to the government or other
government prime contractors for services rendered and generally do not present
collection problems. Accounts receivable levels can also be affected by
contract retainages, start-up and termination costs associated with new
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
or completed contracts, and differences between the provisional billing rates
authorized by the government compared to the costs actually incurred by the
company. Internal liquidity is also affected by the acquisition of capital
assets for office and computer support and by the payment of cash dividends.
Purchases of capital assets for office and computer support may fluctuate from
quarter to quarter, but have not varied significantly on an annual basis in
recent years.
VSE's external sources of liquidity consist of a revolving bank loan agreement
that provides loan financing based on the company's accounts receivable. (See
"Debt" note in "Notes to Consolidated Financial Statements".) The bank financing
complements the internal sources of liquidity by providing increasing levels of
borrowing capacity as accounts receivable levels increase. The bank loan
agreement provided loan financing up to a maximum commitment of $15 million as
of the quarter ended March 31, 2001. This loan agreement replaced a previous
loan agreement that had a maximum commitment of $30 million in the prior year.
The company determined that the new loan amount was adequate to cover current
and future liquidity requirements.
Performance of work under the BAV contract has the potential to cause
substantial requirements for cash; however, management believes that the cash
flows from future operations and the bank loan commitment are adequate to meet
current operating cash requirements.
Quarterly cash dividends at the rate of $.04 per share were declared during the
three month period ended March 31, 2001. Pursuant to its bank loan agreement,
the payment of cash dividends by VSE is subject to a maximum annual rate. VSE
has paid cash dividends each year since 1973.
Inflation and Pricing
Most of the contracts performed by VSE provide for estimates of future labor
costs to be escalated for any option periods provided by the contracts, while
the non-labor costs included in such contracts are normally reimbursable at
cost. VSE property and equipment consists principally of computer systems equip-
ment and furniture and fixtures. The overall impact of inflation on replacement
costs of such property and equipment is expected to be insignificant.
Forward-Looking Disclosures
New Business
VSE has begun several new business initiatives in recent years. The company
expects these new business initiatives to contribute to future revenue growth.
In August 2000, VSE formed TTD to continue a strategy to support customers with
effective multimedia and information technology solutions. In December
2000, VSE invested $960 thousand in the acquisition of certain contract and
VSE CORPORATION AND SUBSIDIARIES
Management Discussion and Analysis
marketing rights to enhance TTD's growth opportunities. TTD markets the
company's growing capability to provide customers with the latest products,
services, and support in network, multimedia, and audio-visual technology. TTD
specializes in maintaining and staffing products and services to create state
of the art, network and multimedia technology systems. This includes "turnkey"
design, installation, management and support for a wide variety of voice, data,
multimedia and related projects.
In June 1999, VSE formed SRR to pursue business opportunities associated with
dismantling ships that are no longer usable. SRR is a partner in a joint venture
that was awarded a contract associated with a new government program to
dismantle and recycle inactive U.S. Navy ships. The contract requires the joint
venture to dismantle U.S. Navy ships and recover costs by selling salvageable
materials and parts. Work on this contract began in February 2000. SRR is
pursuing additional opportunities associated with dismantling ships and
salvaging materials and spare parts.
Quantitative and Qualitative Disclosures about Market Risk
Global Economic Conditions
VSE's business is subject to the risks arising from global economic conditions
associated with potential foreign customers served through VSE's contracts with
the U.S. Government. For example, an economic slowdown in countries served under
the BAV contract could potentially affect BAV sales. Severe adverse global
economic conditions could potentially have a material adverse impact on the
company's results of operations.
VSE CORPORATION AND SUBSIDIARIES
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has omitted all other items contained in "Part II. Other
Information" because such other items are not applicable or are not required
if the answer is negative or because the information required to be reported
therein has been previously reported.
VSE CORPORATION AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
VSE CORPORATION
Date: May 1, 2001 /s/ C. S. Weber
_____________________________________
C. S. Weber, Executive Vice President
and Chief Financial Officer
Date: May 1, 2001 /s/ T. R. Loftus
_____________________________________
T. R. Loftus, Senior Vice President
and Comptroller
(Principal Accounting Officer)
The financial information included in this report reflects all known
adjustments normally determined or settled at year-end which are, in the opinion
of management, necessary to a fair statement of the results for the interim
periods. The accompanying notes to consolidated financial statements are an
integral part of this report.