UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the three months ended ~~October~~April 2, ~~2010~~ 2011


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

Commission File Number 333-145355

VANGENT, INC.

Delaware (State or other jurisdiction of incorporation or organization) 20-1961427 (IRS Employer Identification No.)


Delaware		20-1961427
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)

4250 North Fairfax Drive
Suite 1200
Arlington, Virginia 22203
(703) 284-5600

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 þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer o		Non-accelerated filer þ		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

There were 100 shares of common stock of Vangent, Inc. issued and outstanding at ~~October~~April 2, ~~2010~~ 2011.

VANGENT, INC.
Table of Contents

	Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of October 2, 2010 and December 31, 2009 (Unaudited)		3
Condensed Consolidated Balance Sheets as of April 2, 2011 and December 31, 2010 (Unaudited)		3
Condensed Consolidated Statements of Operations for the three and nine months ended October 2, 2010 and September 26, 2009 (Unaudited)		4
Condensed Consolidated Statements of Operations for the three months ended April 2, 2011 and April 3, 2010 (Unaudited)		4
Condensed Consolidated Statements of Stockholder’s Equity and Comprehensive Loss for the nine months ended October 2, 2010 and September 26, 2009 (Unaudited)		5
Condensed Consolidated Statements of Equity and Comprehensive Income for the three months ended April 2, 2011 and April 3, 2010 (Unaudited)		5
Condensed Consolidated Statements of Cash Flows for the nine months ended October 2, 2010 and September 26, 2009 (Unaudited)		6
Condensed Consolidated Statements of Cash Flows for the three months ended April 2, 2011 and April 3, 2010 (Unaudited)		6
Notes to Condensed Consolidated Financial Statements (Unaudited)		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		2621
Item 3. Quantitative and Qualitative Disclosures about Market Risk		3831
Item 4T. Controls and Procedures		38
Item 4. Controls and Procedures		31
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		3832
Item 1A. Risk Factors		3832
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3832
Item 3. Defaults Upon Senior Securities		3832
Item 5. Other Information		3832
Item 6. Exhibits		3932
Signature		3932
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

Forward-Looking Statements

This quarterly report on Form 10-Q contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as expectation or belief concerning future events. Forward-looking statements are those that do not relate solely to historical fact. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “projects,” “likely,” “will,” “would,” “could” and similar expressions or phrases identify forward-looking statements. All forward-looking statements involve risks and uncertainties. The Company cautions that these statements are further qualified by important economic, competitive, governmental and technological factors that could cause our business, strategy or actual results of operations or events to differ materially from those in the forward-looking statements, including, without limitation, changes in the demand for services that the Company provides; our ability to generate new business in the United States and abroad; activities of competitors; bid protests; changes in costs or operating expenses; our substantial debt; changes in the availability of and cost of capital; general economic and business conditions and the other factors set forth under Risk Factors in our annual report on Form 10-K for the year ended December 31, ~~2009~~2010. Accordingly, such forward-looking statements do not purport to be predictions of future events or circumstances, and there can be no assurance that any forward-looking statement contained herein will prove to be accurate. The Company undertakes no obligation, and specifically declines any obligation, to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I. FINANCIAL INFORMATION


ITEM 1.		FINANCIAL STATEMENTS

Vangent, Inc.Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share and per-share amounts)

Condensed Consolidated Balance Sheets (Unaudited)


	April 2,			December 31,
	2011			2010
Assets
Current assets:
Cash and cash equivalents	$	46,438		$	27,194
Trade receivables, net		110,010			122,940
Prepaid expenses and other assets		13,467			12,572
Assets of discontinued operations		—			329

Total current assets		169,915			163,035

Property and equipment, net		26,581			28,031
Intangible assets, net		144,325			150,847
Goodwill		297,416			297,076
Deferred tax asset		19,977			21,923
Deferred debt financing costs		8,113			8,823

Total assets	$	666,327		$	669,735


Liabilities Equity
Current liabilities:
Current portion of long-term debt	$	—		$	1,401
Accounts payable and accrued liabilities		76,761			80,672
Accrued interest payable		2,803			7,781
Deferred revenue		10,389			7,964
Liabilities of discontinued operations		—			1,880

Total current liabilities		89,953			99,698

Long-term debt, net of current portion		405,353			405,353
Other long-term liabilities		4,961			5,453
Deferred tax liability		1,901			1,860

Total liabilities		502,168			512,364


Commitments and contingencies (Note 10)

Equity:
Common stock, $0.01 par value, 1,000 shares authorized, 100 shares issued and outstanding		—			—
Additional paid-in capital		208,473			208,272
Accumulated other comprehensive loss		(4,467	)		(8,917	)
Accumulated deficit		(40,390	)		(42,535	)

Total Vangent stockholder’s equity		163,616			156,820
Noncontrolling interest		543			551

Total equity		164,159			157,371

Total liabilities and equity	$	666,327		$	669,735

~~(in~~See ~~thousands,~~notes ~~except~~to ~~share~~the ~~and~~condensed ~~per-share~~consolidated ~~amounts)~~financial statements.

	October 2,			December 31,
	2010			2009
Assets
Current assets:
Cash and cash equivalents	$	22,568		$	44,638
Trade receivables, net		124,858			109,846
Prepaid expenses and other assets		11,896			7,424
Deferred contract costs		1,773			2,929
Assets of discontinued operations		7,794			15,036
Total current assets		168,889			179,873
Property and equipment, net		29,126			25,124
Intangible assets, net		161,551			151,860
Goodwill		299,056			268,212
Deferred debt financing costs and other		9,316			8,433
Assets of discontinued operations		—			6,727
Total assets	$	667,938		$	640,229
Liabilities and Stockholder’s Equity
Current liabilities:
Short-term borrowing and current portion of long-term debt	$	16,000		$	13,534
Accounts payable and accrued liabilities		79,348			64,849
Accrued interest payable		3,327			8,186
Deferred tax liability		4,180			5,628
Deferred revenue		9,157			3,976
Liabilities of discontinued operations		5,224			7,521
Total current liabilities		117,236			103,694
Long-term debt, net of current portion		406,754			406,832
Other long-term liabilities		7,185			7,194
Deferred tax liability		18,297			12,144
Liabilities of discontinued operations		1,343			502
Total liabilities		550,815			530,366
Commitments and contingencies (Note 11)
Stockholder’s equity:
Common stock, $0.01 par value, 1,000 shares authorized, 100 shares issued and outstanding		—			—
Additional paid-in capital		208,127			207,376
Accumulated other comprehensive loss		(10,622	)		(14,949	)
Accumulated deficit		(81,118	)		(82,564	)
Total Vangent stockholder’s equity		116,387			109,863
Noncontrolling interest		736			—
Total stockholder’s equity		117,123			109,863
Total liabilities and stockholder’s equity	$	667,938		$	640,229

See notes to condensed consolidated financial statements.

Vangent, Inc.

Condensed Consolidated Statements of Operations (Unaudited) (in thousands)

(in thousands)


	Three Months Ended
	April 2,			April 3,
	2011			2010
Revenue	$	175,849		$	194,197
Cost of revenue		145,192			158,226

Gross profit		30,657			35,971
General and administrative expenses		12,149			12,190
Selling and marketing expenses		5,138			5,675

Operating income		13,370			18,106
Interest expense, net		7,491			8,236

Income from continuing operations before income taxes		5,879			9,870
Provision for income taxes		3,730			1,834

Income from continuing operations		2,149			8,036
Loss from discontinued operations, net of tax		(12	)		(2,437	)

Net income		2,137			5,599
Net loss attributed to noncontrolling interest		(8	)		—

Net income attributable to Vangent	$	2,145		$	5,599

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2010			2009			2010			2009
Revenue	$	176,406		$	143,454		$	585,449		$	411,442
Cost of revenue		146,678			121,132			487,363			344,415
Gross profit		29,728			22,322			98,086			67,027
General and administrative expenses		11,208			10,275			34,892			29,513
Selling and marketing expenses		4,762			4,790			15,884			13,319
Operating income		13,758			7,257			47,310			24,195
Interest expense, net		7,703			8,502			23,301			25,386
Income (loss) from continuing operations before income taxes		6,055			(1,245	)		24,009			(1,191	)
Provision for income taxes		1,913			1,629			5,598			5,067
Income (loss) from continuing operations		4,142			(2,874	)		18,411			(6,258	)
Loss from discontinued operations, net of tax		(171	)		(2,393	)		(16,956	)		(4,157	)
Net income (loss)		3,971			(5,267	)		1,455			(10,415	)
Less: Net income attributed to noncontrolling interest		9			—			9			—
Net income (loss) attributable to Vangent	$	3,962		$	(5,267	)	$	1,446		$	(10,415	)

See notes to the condensed consolidated financial statements.

See notes to condensed consolidated financial statements.

Vangent, Inc.

Condensed Consolidated Statements of ~~Stockholder’s~~ Equity and Comprehensive ~~Loss~~ Income (Unaudited)

(in thousands, except share amounts)

					Accum-
					ulated						Total
					Other						Vangent						~~Total~~
			Additional		Compre-			Accum-			Stock-			Non-			~~Stock-~~
	Common		Paid-in		hensive			ulated			holder’s			controlling			~~holder’s~~Total
	Stock		Capital		Loss			Deficit			Equity			Interest			Equity
Balance, December 31, 2008	$	—	$	206,328	$	(13,135	)	$	(48,556	)	$	144,637		$	—		$	144,637
Effect of hedging activities, net of tax		—		—		2,162			—			2,162			—			2,162
Foreign currency translation adjustment		—		—		1,050			—			1,050			—			1,050
Net loss		—		—		—			(10,415	)		(10,415	)		—			(10,415	)
Total comprehensive loss												(7,203	)					(7,203	)
Equity-based compensation		—		776		—			—			776			—			776
Balance, September 26, 2009	$	—	$	207,104	$	(9,923	)	$	(58,971	)	$	138,210		$	—		$	138,210
Balance, December 31, 2009	$	—	$	207,376	$	(14,949	)	$	(82,564	)		109,863		$	—		$	109,863
Effect of hedging activities, net of tax		—		—		31,~~270~~331			—			31,~~270~~331			—			31,~~270~~331
Foreign currency translation adjustment		—		—		1,057			—			1,057			—			1,057
Foreign currency translation adjustments		—		—		(59	)		—			(59	)		—			(59	)
Net income		—		—		—			15,~~446~~599			15,~~446~~599			9—			15,~~455~~599
Total comprehensive income												—6,871			—			56,~~782~~871
Buccanneer acquisition		—		—		—			—			—			727			727
Equity-based compensation		—		262		—			—			262			—			262
Equity-based compensation		—		751		—			—			751			—			751
Balance, April 3, 2010	$	—	$	207,638	$	(13,677	)	$	(76,965	)	$	116,996		$	—		$	116,996
Balance, October 2, 2010	$	—	$	208,127	$	(10,622	)	$	(81,118	)	$	116,387		$	736		$	117,123
Balance, December 31, 2010	$	—	$	208,272	$	(8,917	)	$	(42,535	)		156,820		$	551		$	157,371
Effect of hedging activities, net of tax		—		—		2,005			—			2,005			—			2,005
Foreign currency translation adjustment		—		—		2,262			—			2,262			—			2,262
Defined benefit plan overfunding						183						183			—			183
Net income (loss)		—		—		—			2,145			2,145			(8	)		2,137
Total comprehensive income (loss)												6,595			(8	)		6,587
Equity-based compensation		—		201		—			—			201			—			201
Balance, April 2, 2011	$	—	$	208,473	$	(4,467	)	$	(40,390	)	$	163,616		$	543		$	164,159

See notes to the condensed consolidated financial statements.

Vangent, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Nine Months Ended
	Three Months Ended
	October 2,			September 26,
	April 2,			April 3,
	2010			2009
	2011			2010
Cash flows from operating activities
Net income (loss)	$	1,455		$	(10,415	)
Net income	$	2,137		$	5,599
Less: Loss from discontinued operations, net of tax		(16,956	)		(4,157	)
Loss from discontinued operations, net of tax		(12	)		(2,437	)
Income (loss) from continuing operations		18,411			(6,258	)
Income from continuing operations		2,149			8,036
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities, excluding effect of acquisition:
Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities:
Amortization of intangible assets		166,~~142~~763			155,~~881~~272
Depreciation and amortization		8,561			7,951
Depreciation and amortization of property and equipment		3,079			3,085
Amortization of deferred debt financing costs		~~1,778~~714			~~1,628~~563
Equity-based compensation expense		~~751~~201			~~776~~262
Deferred income taxes		43,~~004~~344			41,~~504~~656
Changes in operating assets and liabilities:
Trade receivables		313,~~883~~317			9(32,~~480~~066	)
Prepaid expenses and other assets		(~~1,250~~62	)		(~~693~~3,538	)
Accounts payable and other liabilities		(39,~~358~~993	)		(51,~~898~~635	)
Continuing operations, net		48,922			27,371
Deferred revenue		2,425			1,352
Discontinued operations, net		(1,180	)		(4,335	)
Continuing operations, net		21,937			(17,013	)
Net cash provided by operating activities		47,742			23,036
Discontinued operations, net		(87	)		(1,994	)
Net cash provided by (used in) operating activities		21,850			(19,007	)
Cash flows from investing activities
Acquisition, net of cash acquired		(59,102	)		—
Capital expenditures		(1,896	)		(1,304	)
Capital expenditures		(9,377	)		(8,453	)
Continuing operations, net		(1,896	)		(1,304	)
Continuing operations, net		(68,479	)		(8,453	)
Discontinued operations, net		118			(123	)
Discontinued operations, net		(2,729	)		(3,740	)
Net cash used in investing activities		(1,778	)		(1,427	)
Net cash used in investing activities		(71,208	)		(12,193	)
Cash flows from financing activities
Borrowing under revolving credit facility		1610,000			—
Repayment of senior secured term loan		(13,612	)		—
Repayment of borrowing under revolving credit facility		(10,000	)		—
Deferred debt financing costs and other		(2,011	)		(264	)
Repayment of senior secured term loan		(1,401	)		(13,612	)
Net cash provided by (used in) financing activities, continuing operations		377			(264	)
Other		—			(29	)
Effect of exchange rate changes on cash and cash equivalents		73			365
Net cash used in financing activities		(1,401	)		(13,641	)
Net increase (decrease) in cash and cash equivalents		(23,016	)		10,944
Effect of exchange rate changes on cash and cash equivalents		252			(146	)
Total cash and cash equivalents, beginning of period		45,584			21,134
Net increase (decrease) in cash and cash equivalents		18,923			(34,221	)
Total cash and cash equivalents, end of period		22,568			32,078
Total cash and cash equivalents, beginning of period		27,515			45,584
Less: Cash and cash equivalents, discontinued operations		—			2,451
Total cash and cash equivalents, end of period		46,438			11,363
Cash and cash equivalents, continuing operations	$	22,568		$	29,627
Less: Cash and cash equivalents, discontinued operations		—			645
Supplemental noncash investing and financing activities
Cash and cash equivalents, continuing operations	$	46,438		$	10,718
Leasehold improvements provided by lessor under operating leases	$	840		$	813
Notes receivable resulting from sale of subsidary in Argentina		590			—
Supplemental cash flow information
Interest paid, continuing operations	$	26,883		$	29,116
Interest paid	$	11,635		$	12,709
Income taxes paid:
Income taxes paid		257			54
Continuing operations		140			378
Discontinued operations		615			401

See notes to the condensed consolidated financial statements.

Vangent, Inc.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(dollars in thousands)

1. Organization and Basis of Presentation

Basis of Presentation

Vangent, Inc. (“Vangent” or “Company”) is a 100%-owned subsidiary of Vangent Holding Corp. Vangent Holding LLC isholds 100% of the ~~majority~~common ~~shareholder~~stock, but none of ~~Vangent~~the ~~Holding~~preferred ~~Corp.~~stock, ~~Vangent~~in Vangent Holding ~~LLC~~Corp. and is 90% owned by The Veritas Capital Fund III, L.P. and 10% owned by Pearson plc ~~(“Pearson”)~~.

The unaudited condensed consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries and 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. Certain information and note disclosures normally included in complete financial statements have been condensed or omitted pursuant to the applicable rules and regulations. The Company believes that all disclosures are adequate to make the information presented not misleading. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto included in our annual report on Form 10-K for the year ended December 31, ~~2009~~2010.

All normal and recurring adjustments necessary to fairly present the financial position and results of operations as of and for the periods presented have been included. The results of operations presented are not necessarily indicative of the results to be expected for the full fiscal year or for any future periods. The Company uses estimates and assumptions in the preparation of its financial statements. The estimates are primarily based on historical experience and business knowledge and are revised as circumstances change. Actual results could differ materially from those estimates.

Nature of Operations

Vangent ~~serves~~is ~~customers~~a inglobal provider of consulting, systems integration, human capital management and business process services to the U.S. ~~government,~~federal and international governments, higher education, institutions and ~~the private sector~~corporations. The Company’s primary customer focus is U.S. ~~and international~~ governmental ~~agencies~~ ~~that utilize third-party providers to design, build and operate technologically advanced systems~~agencies. The Department of ~~Commerce represented 31%, Department of~~ Health and Human Services (“HHS”) represented 3150%, and the Department of Education (“DoED”) represented 1417% of total revenue for the ~~nine~~ three months ended ~~October~~April 2, ~~2010~~2011.

Variable Interest Entities

The Company has interests in three joint ventures that provide government contract services in the United States, United Kingdom and the United Arab Emirates. The Company holds a 70% interest in the domestic joint venture. The Company holds less than a majority ownership interest in the two foreign joint ventures; however, the Company is entitled to a majority of the income and losses and has determined that it is the primary beneficiary of each of the two foreign joint ventures. The ownership shares of the joint ventures owned by other parties are reported as noncontrolling interest in the consolidated financial statements. The consolidated balance sheet at October 2, 2010, includes total assets of $12,724 and total liabilities of $7,901 for the three consolidated joint ventures.

Fiscal Year and Quarterly Periods

The Company’s fiscal year begins on January 1 and ends on December 31. Quarterly periods are based on a four-week, four-week, and five-week methodology ending on the Saturday nearest to the end of the quarter to align with the Company’s domestic business processes. ~~The nine-month period ended October 2, 2010, is 6 days, or 2%, longer that the corresponding period in 2009.~~ Foreign ~~subsidiaries~~ subsidiaries are consolidated based on the calendar quarter.

Principles of Consolidation

The condensed consolidated financial statements include the balance sheet accounts and the results of operations and cash flows of Vangent, its domestic and foreign subsidiaries, and variable interest entities for which the Company has determined it is the primary beneficiary. Business operations in Latin America are segregated and reported as discontinued operations. All intercompany balances and transactions have been eliminated.

The Company has a 70% ownership interest in a joint venture in the United States, a 49% ownership interest in a joint venture in the United Kingdom, and a 48% ownership interest in a joint venture in the United Arab Emirates. The Company has guaranteed performance under contracts for which the joint ventures earn revenue from government customers. The three joint ventures are fully consolidated in the financial statements; the consolidated balance sheets include joint-venture assets of $21,006 and liabilities of $17,339 at April 2, 2011, compared with assets of $12,129 and liabilities of $8,419 at December 31, 2010. The Company holds less than a majority ownership interest in the two foreign joint ventures; however, the Company is entitled to 100% of the income and losses and has determined that it is the primary beneficiary of each of the foreign joint ventures and there is no allocation of equity or income/loss attributed to noncontrolling interests.

The Company holds a 70% interest in the domestic joint venture; the remaining 30% ownership share is reported as noncontrolling interest in the consolidated financial statements.

2. Acquisition of Buccaneer Computer Systems & Service, Inc.

OnIn September ~~15,~~ 2010, Vangent completed the acquisition (“Buccaneer Acquisition”) of ~~Buccaneer~~ Buccaneer Computer Systems & Service, Inc. (“Buccaneer”). Buccaneer is a leading provider of IT services, infrastructure, secure data hosting and data analytics for the government healthcare market. ~~The financial position of Buccaneer is included in the consolidated balance sheet as of~~ ~~October 2,~~Vangent ~~2010,~~acquired ~~and~~all ~~the~~outstanding ~~results~~shares of ~~operations of~~ Buccaneer ~~for~~stock ~~the period September 15 to October 2, 2010, are included~~ in ~~the~~exchange ~~consolidated statements of operations and cash flows~~ for ~~the~~total ~~periods~~purchase ~~ended~~consideration ~~October 2,~~of ~~2010~~$64,635.

~~Vangent~~The ~~acquired all outstanding shares of~~ Buccaneer ~~stock~~Acquisition inhas ~~exchange~~been accounted for ~~aggregate consideration~~under ~~of $64,099 (~~the ~~“Merger~~acquisition ~~Consideration”).~~method ~~The~~of ~~Merger Consideration is subject to~~accounting ~~adjustment~~under ~~based~~which onthe ~~working~~total ~~capital~~purchase ~~and~~consideration ~~other~~is ~~adjustments.~~allocated ~~Pursuant~~ to the ~~terms~~assets ofacquired ~~the~~and ~~Buccaneer~~liabilities ~~Acquisition,~~assumed ~~$3,000~~based ofon ~~the~~estimates ~~Merger Consideration was placed in escrow to be used to satisfy certain tax obligations~~ of ~~Buccaneer~~fair value. The ~~amount~~excess of the ~~Merger~~purchase ~~Consideration~~consideration ~~paid~~over atthe ~~closing was $60,000,~~amounts ofassigned ~~which~~to ~~$44,000~~tangible ~~was~~or ~~paid~~intangible ~~with~~assets ~~available~~acquired ~~cash~~ and ~~$16,000~~liabilities ~~was~~assumed ~~funded~~is ~~with~~recognized ~~a variable-rate borrowing~~as ~~million drawn on the senior secured revolving credit facility~~goodwill.

AThe ~~wholly-owned~~allocation ~~consolidated~~of ~~subsidiary~~the ofpurchase ~~Buccaneer~~price ~~that~~is ~~owns~~provisional ~~and~~pending, ~~leases~~among ~~real~~other ~~property~~things, tofinal ~~Buccaneer~~agreement ~~was~~of ~~not~~the ~~included~~adjustment into the ~~Buccaneer~~purchase ~~Acquisition.~~price ~~The~~based upon the level of net working capital transferred ~~stock~~at closing. A summary of the ~~subsidiary~~total ~~was~~purchase consideration and the allocation of the ~~spun~~purchase ~~off~~consideration asbased aon ~~dividend~~estimates ~~prior~~of tofair ~~closing.~~value for the assets acquired and the liabilities assumed follows:

The Buccaneer Acquisition has been accounted for under the acquisition method of accounting which requires the total purchase consideration to be allocated to the assets acquired and liabilities assumed based on estimates of fair value. The excess of the purchase consideration over the amounts assigned to tangible or intangible assets acquired and liabilities assumed is recognized as goodwill. Acquisition-related costs and expenses amounted to $650 and were charged to general and administrative expense.


Purchase Consideration
Cash paid	$	61,050
Other purchase consideration		3,585

	$	64,635

~~The~~Other ~~preliminary allocation of the~~ purchase ~~price~~consideration isrepresents ~~based~~estimated onfuture ~~the~~payments ~~best~~relating ~~information available and is provisional pending, among other things, final agreement of the adjustment~~ to the ~~purchase~~Company’s ~~price~~election ~~based~~under ~~upon~~Section 338 ~~the level of net working capital transferred at closing and the finalization of the valuation of assets and liabilities. During the measurement period~~ (~~which is not to exceed one year from the acquisition date~~h), ~~additional assets or liabilities may be recognized if new information is obtained about facts and circumstances that existed as~~ (10) of the ~~acquisition~~Internal ~~date~~Revenue ~~that, if~~Code ~~known,~~and ~~would have resulted in~~ the ~~recognition~~working ~~of those assets or liabilities as of that date.~~capital The preliminary purchase price allocation may be adjusted after obtaining additional information regarding, among other things, asset valuations, liabilities assumed and revisions of previous estimatesadjustment.

A summary of the purchase consideration and a preliminary allocation of the purchase consideration based on estimates of fair value for the assets acquired and the liabilities assumed follows:


Allocation of Purchase Consideration
Cash	$	897
Accounts receivable		18,224
Property and equipment		2,055
Definite-life intangible assets		25,792
Goodwill		30,457
Other assets		2,009
Less: Liabilities assumed		(14,072	)

Net assets acquired		65,362
Less: Noncontrolling interest		(727	)

	$	64,635


Allocation of Definite-Life Intangible Assets Acquired
Customer relationships (eight-year life)	$	23,809
Non-compete agreements (three-year life)		1,983

	$	25,792

Purchase Consideration
Cash paid at closing	$	60,000
Other adjustments, net		4,099
	$	64,099

Other purchase consideration adjustments, net, primarily represent an accrued acquisition liability of $4,129 relating to the Company’s election under Section 338(h) (10) of the Internal Revenue Code, and the expected settlement of the working capital adjustment.

Allocation of Purchase Consideration
Cash	$	897
Accounts receivable		18,736
Property and equipment		2,262
Intangible assets		25,792
Goodwill		31,267
Other assets		2,427
Less: Liabilities assumed		(16,555	)
Net assets acquired		64,826
Less: Noncontrolling interest		(727	)
	$	64,099
Allocation of Intangible Assets Acquired
Customer relationships (eight year life)	$	23,809
Non-compete agreements (three year life)		1,983
	$	25,792

The fair value of the intangible asset for customer relationships is based on customer contracts and relationships with existing customers and is expected to have an eight-year life. Amortization of the intangible asset for customer relationships is based on an accelerated method, and amortization of the intangible asset for non-compete agreements is based on straight line method. Amortization expense is included in cost of revenue.

Goodwill represents the excess of purchase consideration over the amounts assigned to tangible and intangible assets acquired and liabilities assumed. As a result of the election under Section 338(h) (10) of the Internal Revenue Code, the amount allocated to intangible assets and goodwill for tax purposes is expected to be tax deductible.

Buccaneer has a 70% ownership interest in Buccaneer Data Services, LLC, a joint venture that provides computer technical and other consulting services to an agency of the U.S. government. Buccaneer is entitled to a majority of the income and losses of the joint venture and has determined that it is the primary beneficiary. The joint venture is fully consolidated in the financial statements. Noncontrolling interest represents the remaining 30%.

~~Results~~Revenue of from ~~operations for~~ Buccaneer for the ~~period~~three ~~September 15~~months toended ~~October~~April 2, ~~2010,~~2011 ~~included revenue~~amounted ofto $432,~~082~~120 and ~~approximate~~is reported ~~breakeven~~as ~~net~~part of the Government Group business segment. Operating income ~~resulting~~was ~~from~~$1,132 and includes charges for the amortization of acquired intangible assets for customer relationships based on an accelerated method.

Unaudited Pro Forma Information

The following unaudited pro forma results of operations data for the three months ended April 3, 2010, are presented as if the Buccaneer Acquisition had occurred on January 1, ~~2009~~2010:

	Three Months Ended					Nine Months Ended
Revenue	$	216,788
	October 2,		September 26,			October 2,		September 26,
Income from continuing operations	$	9,025
	2010		2009			2010		2009
Revenue	$	204,492	$	159,348		$	668,962	$	449,640
Income (loss) from continuing operations	$	3,863	$	(3,027	)	$	19,144	$	(7,863	)

The unaudited pro forma results of operations data are derived from the consolidated financial statements of Vangent and Buccaneer and reflect pro forma adjustments ~~relating~~as toif the Buccaneer Acquisition had occurred on January 1, 2010. The unaudited pro forma ~~results of operations~~ data are being furnished solely for informational purposes and are not intended to represent or be indicative of the consolidated results of operations that the Company would have reported had ~~these~~ ~~transactions~~the Buccaneer Acquisition been completed as of the ~~dates~~date and for the ~~periods~~period presented, nor are they ~~necessarily~~ necessarily indicative of future results.

3. Discontinued Operations

In 2009, Vangent completed an evaluation of its international business and committed to a plan to sell its business operations in Latin America that are segregated and reported as discontinued operations. Vangent completed the sales of its operations in Argentina in the third quarter of 2010 and Mexico in the fourth quarter of 2010. The sale of operations in Venezuela was completed in February 2011. Summarized statement of operations data for discontinued operations follows:


	Three Months Ended
	April 2,			April 3,
	2011			2010
Statements of Operations Data
Revenue	$	137		$	7,135
Costs and expenses		144			7,500
Expected loss on sale or disposal		—			2,618
Other (income) expense, net		5			(753	)

Loss from discontinued operations before income taxes		(12	)		(2,230	)
Provision for income taxes		—			207

Loss from discontinued operations, net of tax	$	(12	)	$	(2,437	)

4. Recent Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”), Multiple-Deliverable Revenue Arrangements, to (i) provide guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated; (ii) require an allocation of revenue using estimated selling prices of deliverables if a vendor does not have vendor-specific objective evidence or third-party evidence of the selling price; and (iii) eliminate the residual method. The update became effective prospectively for new contracts beginning January 2011, and adoption did not have a material effect on the Company’s results of operations and cash flows or financial position.

3In October 2009, the FASB issued an ASU, Certain Revenue Arrangements that Include Software Elements, that amends existing requirements to exclude from its scope tangible products that contain both software and non-software components that function together to deliver a product’s essential functionality. ~~Discontinued~~The ~~Operations~~update became effective in January 2011, and adoption did not have a material effect on the Company’s results of operations and cash flows or financial position.

AtIn January 2010, the ~~end~~FASB ofissued ~~2009~~an ASU, ~~Vangent~~Improving ~~completed~~Disclosures anabout ~~evaluation~~Fair ofValue ~~its~~Measurements, requiring ~~international~~additional ~~business~~disclosures ~~and~~on fair value measurements. Disclosure requirements for transfers ~~committed~~in toand aout ~~plan~~of tolevels ~~sell~~1 ~~its~~and ~~business~~2 ~~operations~~of inthe ~~Latin~~hierarchy ~~America.~~for ~~The~~fair ~~condensed~~value ~~consolidated~~measurements became effective in ~~financial~~January 2010 ~~statements~~and ~~have~~disclosures ~~been~~about ~~revised~~purchases, sales, issuance, and settlements in a rollforward of activity for ~~all~~level ~~periods~~3 ~~presented~~fair tovalue ~~report~~measurements ~~Latin~~were ~~America~~deferred ~~as discontinued~~and ~~operations~~became effective in January 2011. Adoption ~~The~~did ~~discontinued~~not ~~operations~~have ~~include~~a ~~Vangent~~material effect on the Company’s ~~business~~results of operations ~~in Mexico,~~and ~~Argentina,~~cash ~~and~~flows ~~Venezuela~~or financial position.

AIn ~~summary~~April 2010, ofthe ~~assets~~FASB ~~and~~issued ~~liabilities~~an ASU, ~~revenue~~Revenue Recognition — Milestone Method, ~~and~~to ~~cost~~provide guidance on (i) defining a milestone, and ~~expenses~~(ii) determining ofwhen ~~the~~it ~~discontinued~~may be appropriate to apply the ~~operations~~milestone ~~that~~method ~~are~~of ~~segregated~~revenue ~~and~~recognition ~~reported~~for ~~separately~~research or development transactions. The update became effective in January 2011, and adoption did not have a material effect on the ~~condensed~~Company’s ~~consolidated~~results ~~financial~~of ~~statements~~operations ~~follows:~~and cash flows or financial position.

	October 2,			December 31,
	2010			2009
Balance Sheet Data
Cash	$	—		$	946
Trade receivables		10,865			9,323
Other assets		4,159			4,767
Allowance for expected loss on disposal		(7,230	)		—
Total current assets		7,794			15,036
Property and equipment, net		—			4,744
Deferred income taxes and other		—			1,983
Total assets		7,794			21,763
Current liabilities		5,224			7,521
Long-term liabilities		1,343			502
Net assets of discontinued operations	$	1,227		$	13,740

In December 2010, the FASB issued an ASU, Disclosure of Supplementary Pro Forma Information for Business Combinations effective for business combinations occurring after December 15, 2010, and an ASU, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts effective for fiscal years beginning after December 15, 2010. Adoption did not have a material effect on the Company’s results of operations and cash flows or financial position.

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2010			2009			2010			2009
Statements of Operations Data
Revenue	$	7,619		$	5,939		$	21,829		$	16,433
Costs and expenses		7,050			7,435			21,896			18,327
Expected loss on disposal		579			—			18,474			—
Other (income) expense, net		(198	)		879			(944	)		2,811
Income (loss) from discontinued operations before income taxes		188			(2,375	)		(17,597	)		(4,705	)
Provision (benefit) for income taxes		359			18			(641	)		(548	)
Loss from discontinued operations, net of tax	$	(171	)	$	(2,393	)	$	(16,956	)	$	(4,157	)

5. Trade Receivables

A ~~charge~~summary ~~for expected loss on disposal~~ of ~~discontinued~~trade ~~operations~~receivables of $5,000 was recorded for the year ended December 31, 2009. The charge was calculated based on estimates of fair value, less cost to sell, compared with net assets of discontinued operations. The fair value estimates were revised in 2010 resulting in an additional charge of $18,474 for the nine months ended October 2, 2010. The sale of operations in Argentina was completed in September 2010 and the sale of operations in Mexico was completed at the end of October 2010. follows:


	April 2,			December 31,
	2011			2010
Billed trade receivables	$	68,699		$	91,126
Billable trade receivables		31,303			22,391
Unbilled trade receivables pending completion of milestones, contract authorizations, or retainage		9,390			8,794
Other		763			806

		110,155			123,117
Allowance for doubtful accounts		(145	)		(177	)

Trade receivables, net	$	110,010		$	122,940


Trade accounts receivable from major customers
Department of Health and Human Services		49	%		46	%
Department of Education		15	%		17	%
Department of Defense		*			11	%


*		Less than 10%

~~Discontinued~~6. ~~Operations~~Long-Term ~~in Venezuela — Designation of Venezuelan Economy as Highly Inflationary~~Debt

~~Revenue from Vangent Venezuela, C.~~A. ~~was~~summary ~~$713~~of for the three months and $1,720 for the nine months ended October 2, 2010. Venezuela has experienced significant inflation in the last several years, and effective January 2010 the economy has been determined to be highly inflationary under U. S. generally accepted accounting principles. An economy is considered highly inflationary when cumulative threelong-~~year~~term ~~inflation~~debt exceeds 100% which occurred in the fourth quarter of 2009. As a result of accounting guidance, Vangent Venezuela uses the U.S. dollar as the functional currency effective January 2010, and net monetary assets held in bolivar fuertes are translated into U.S. dollars at each balance sheet date with remeasurement adjustments and any foreign currency transaction gains or losses recognized in income or expense. In June 2010, the Venezuelan government instituted foreign exchange controls that replaced the parallel or market rate, and Vangent began to use the foreign currency exchange rate controlled and regulated by the Central Bank of Venezuela under a system referred to as Sistema de Transacciones con Titulos en Moneda Extranjera, or SITME, in place of the parallel rate to consolidate Vangent Venezuela. Other income and expense, net, for discontinued operations includes net foreign currency gains from Vangent Venezuela of $52 for the nine months ended October 2, 2010. follows:

Discontinued Operations in Argentina — Variable Interest Entity


	April 2,		December 31,
	2011		2010
Long-term debt
Term loan under senior secured credit facility with interest at variable rates (2.32% at April 2, 2011), maturing February 15, 2013	$	215,353	$	216,754
9 5/8% Senior subordinated fixed rate notes, due February 15, 2015		190,000		190,000

		405,353		406,754
Less: current portion of long-term debt		—		1,401

Long-term debt, net of current portion	$	405,353	$	405,353


Scheduled maturities of long-term debt
2011	$	—
2012		310
2013		215,043
2014		—
2015		190,000

	$	405,353

~~The~~Senior ~~sale~~Secured ofCredit ~~operations in Argentina was completed in September 2010. Vangent Argentina, S.A.~~Facility held less than a majority ownership interest in a joint venture and was entitled to 50% of the income and losses. Vangent Argentina determined that it did not have the power to direct matters that most significantly impact the activities of the joint venture and that it was not the primary beneficiary. The joint venture was accounted for under the equity method of accounting as part of discontinued operations. Equity in net income of the joint venture of $278 for the three months and $1,054 for the nine months ended October 2, 2010, is included in loss from discontinued operations.

4At April 2, 2011, the senior secured credit facility consisted of a term loan of $215,353, and, subject to certain limitations, an available revolving credit facility of up to $49,758 that is scheduled to expire February 14, 2012. ~~Recent~~At ~~Accounting~~April 2, ~~Pronouncements~~2011, there was a letter of credit of $242 outstanding under the revolving credit facility. There were no borrowings outstanding under the revolving credit facility at April 2, 2011 or at December 31, 2010. A commitment fee of 0.5% per year is paid on the available unused portion of the revolving credit facility.

InBorrowings ~~October 2009,~~under the ~~Financial~~senior ~~Accounting~~secured ~~Standards~~credit ~~Board~~facility ~~(“FASB”)~~bear ~~issued~~interest anat ~~Accounting Standards~~a ~~Update~~rate ~~(“ASU”)~~equal to, ~~Multiple-Deliverable~~at ~~Revenue~~the Company’s ~~Arrangements~~option, toeither: (i) ~~provide~~the ~~guidance~~base ~~on whether~~rate, ~~multiple~~as ~~deliverables exist~~defined, ~~how~~plus an applicable margin of 1.00-1.50%, or (ii) the ~~arrangement~~adjusted ~~should~~LIBOR, beas ~~separated~~defined, ~~and~~plus ~~the~~an ~~consideration~~applicable margin of 2.00-2.50%. Borrowings are ~~allocated;~~subject to mandatory prepayment with (iii) ~~require~~100% anof ~~allocation~~the net cash proceeds of ~~revenue~~certain ~~using~~asset ~~estimated~~sales; ~~selling~~(ii) 25% ~~prices~~of the net cash proceeds of ~~deliverables~~equity ifofferings as long as the consolidated leverage ratio, as adefined, ~~vendor~~is ~~does~~below ~~not~~4.00 ~~have~~to ~~vendor-specific~~1. ~~objective~~and ~~evidence~~25% orof ~~third-party~~capital ~~evidence~~contributions subject to certain conditions; (iii) 100% of the ~~selling price~~net cash proceeds of additional debt; and (~~iii~~iv) ~~eliminate~~a ~~the~~percentage ~~residual~~of ~~method~~annual excess cash flow, as defined. ~~The~~Payments ~~update~~resulting ~~becomes~~from ~~effective~~the onannual aexcess ~~prospective~~cash ~~basis~~flow requirement are due 90 days infollowing ~~fiscal~~the ~~years~~year ~~beginning~~end. Based on orexcess ~~after~~cash ~~June 15~~flow, ~~2010,~~a ~~with~~mandatory ~~earlier~~repayment ~~application~~of ~~permitted.~~$1,401 ~~The Company~~was ~~does~~made ~~not~~March 31, ~~expect~~2011. ~~that~~Since ~~adoption~~the ~~will~~excess ~~have~~cash aflow ~~material~~requirement ~~effect~~is based on ~~its~~annual ~~results~~cash offlow, ~~operations~~it oris not possible ~~financial~~to ~~position~~determine the amount, if any, that would become payable in March 2012.

InBorrowings ~~October 2009,~~are ~~the~~secured ~~FASB~~by ~~issued~~accounts anreceivable, ~~ASU~~cash, ~~Certain~~intellectual ~~Revenue~~property ~~Arrangements~~and ~~that~~other ~~Include Software~~assets ~~Elements,~~and ~~that~~are ~~amends~~guaranteed ~~existing~~jointly ~~requirements~~and toseverally, ~~exclude~~by ~~from~~all ~~its~~existing ~~scope~~and ~~tangible~~future ~~products~~domestic ~~that~~subsidiaries. ~~contain~~Foreign ~~both~~subsidiaries ~~software~~do ~~and~~not ~~non-software~~guarantee ~~components~~the ~~that~~borrowings. ~~function~~The ~~together~~senior tosecured ~~deliver~~credit afacility ~~product’s~~contains ~~essential~~various ~~functionality.~~customary ~~The~~affirmative ~~update~~and ~~becomes~~negative ~~effective~~covenants onand aevents ~~prospective~~of ~~basis~~default, inincluding, ~~fiscal~~but ~~years~~not ~~beginning~~limited to, restrictions on orthe ~~after~~disposal ~~June 15~~of assets, ~~2010~~incurring additional indebtedness or guaranteeing obligations, ~~with~~paying ~~earlier~~dividends, ~~application~~creating ~~permitted.~~liens ~~The~~on ~~Company~~assets, ~~does~~making ~~not expect~~investments, ~~that~~loans ~~adoption~~or advances, ~~will~~and ~~have~~compliance with a ~~material~~maximum ~~effect~~consolidated onleverage ~~its~~ratio. ~~results~~As of ~~operations~~April 2, or2011, ~~financial~~the ~~position~~Company was in compliance with all of the affirmative and negative covenants.

InThe ~~January 2010,~~more ~~the~~restrictive ~~FASB~~covenants ~~issued~~relate anto ~~ASU,~~compliance ~~Improving~~with ~~Disclosures~~a ~~about~~maximum ~~Fair~~allowable ~~Value~~consolidated leverage ~~Measurements~~ratio, ~~requiring~~ ~~additional~~as ~~disclosures~~defined onin ~~fair~~the ~~value~~senior ~~measurements.~~secured ~~Disclosure~~credit ~~requirements~~facility, ~~for~~based ~~transfers~~on consolidated inindebtedness, ~~and~~as ~~out~~defined, ofreduced ~~levels~~by 1unrestricted cash and 2cash ofequivalents ~~the~~in ~~hierarchy~~excess ~~for~~of ~~fair~~$5,000, divided ~~value~~by ~~measurements,~~adjusted ~~that~~EBITDA ~~became~~(earnings ~~effective January 1~~before interest, ~~2010~~taxes, ~~did~~depreciation ~~not~~and ~~have~~amortization, adjusted afor ~~material~~certain ~~effect~~unusual onand ~~the~~non-recurring ~~Company’s~~items, ~~results~~as ofdefined) ~~operations~~for ora ~~financial position~~twelve-month period. ~~Disclosures about purchases~~At April 2, ~~sales~~2011, ~~issuance,~~the ~~and~~consolidated ~~settlements~~leverage inratio awas ~~rollforward~~3.82 ~~of activity~~to ~~for~~1, ~~level~~compared 3with ~~fair~~the ~~value~~maximum allowable ~~measurements~~ratio ~~are~~of ~~deferred~~5.50 ~~until~~to ~~fiscal~~1 ~~years~~applicable ~~beginning~~to ~~after December 15,~~the ~~2010~~period. The ~~Company~~maximum ~~does~~allowable ~~not~~consolidated leverage ~~expect~~ratio ~~that~~steps ~~adoption~~down ~~will~~to ~~have~~5.25 aat ~~material~~June 30, ~~effect~~2011 onand ~~its results~~to of5.00 ~~operations~~at orMarch 31, ~~financial position~~2012.

In April 2010, the FASB issued an ASU, Revenue Recognition — Milestone Method, to provide guidance on (i) defining a milestone; and (ii) determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions. The guidance applies to research or development deliverables or units of accounting under which a vendor satisfies its performance obligations over a period of time, and when a portion or all of the consideration is contingent upon uncertain future events and circumstances. The guidance becomes effective on a prospective basis for milestones achieved in fiscal years beginning on or after June 15, 2010, with early adoption and retrospective application permitted. The Company does not expect that adoption will have a material effect on its results of operations or financial position.

In9 ~~June 2009,~~5/8% ~~the~~Senior ~~FASB~~Subordinated ~~issued new requirements that are now part of the ASC topic on~~Notes Consolidations, dealing with the consolidation of variable interest entities. The new requirements change how a reporting entity determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated and requires a reporting entity to provide additional disclosures about its involvement with variable interest entities and any significant changes in risk exposure due to that involvement. The new requirements became effective on January 1, 2010. Adoption did not have a material effect on the Company’s results of operations or financial position.

In ~~July~~February ~~2010~~2007, the ~~FASB~~Company ~~issued~~completed an ~~ASU,~~offering ~~Disclosures~~of ~~about~~$190,000 ~~the~~principal ~~Credit~~amount ~~Quality~~ of ~~Financing~~9 5/8% ~~Receivables~~senior ~~and~~subordinated ~~the~~notes ~~Allowance~~due ~~for~~February 15, ~~Credit~~2015. ~~Losses,~~Interest toaccrues ~~expand~~at ~~disclosures~~the ~~for~~fixed ~~exposure~~rate toof ~~credit~~9 5/8% and ~~losses~~is ~~from~~paid ~~lending~~semi-annually. ~~arrangements,~~The ~~including~~notes ~~credit~~are ~~risks~~general ~~involved~~unsecured inobligations ~~financing~~of ~~receivables~~the Company and are ~~allowances~~subordinated ~~for~~to ~~credit~~all ~~losses.~~existing ~~The~~and ~~new~~future ~~requirements~~senior ~~will~~loans ~~become~~including ~~effective~~borrowings inunder ~~December 2010~~the senior secured credit facility. The ~~Company~~ ~~does~~notes ~~not~~are ~~expect~~guaranteed, ~~that~~jointly ~~adoption~~and ~~will~~severally, ~~have~~by aall ~~material~~existing ~~effect~~and onfuture domestic ~~its~~subsidiaries. ~~results~~Joint ofventures ~~operations~~and orforeign subsidiaries ~~financial~~do ~~position~~not guarantee the notes.

5The notes are redeemable at the option of the Company at the redemption price of 104.8125% ~~Trade~~of the ~~Receivables~~principal amount on or after February 15, 2011, 102.4063% on or after February 15, 2012, and 100% on or after February 15, 2013.

	October 2,			December 31,
	2010			2009
Billed trade receivables	$	88,637		$	74,929
Billable trade receivables		23,241			26,798
Unbilled trade receivables pending completion of milestones, contract authorizations, or retainage		12,233			7,432
Other		926			840
		125,037			109,999
Allowance for doubtful accounts		(179	)		(153	)
Trade receivables, net	$	124,858		$	109,846
Trade accounts receivable from major customers
Department of Health and Human Services		37	%		34	%
Department of Education		18	%		16	%
Department of Defense		10	%		12	%

7. Accumulated Other Comprehensive Loss

6.The ~~Intangible~~components ~~Assets~~of accumulated other comprehensive loss and ~~Goodwill~~a summary of changes in accumulated other comprehensive loss for hedging activities follows:

Intangible Assets


	April 2,			December 31,
	2011			2010
Accumulated other comprehensive loss
Effect of hedging activities, net of tax:
Interest rate swap agreements, net of tax	$	—		$	(391	)
Additional deferred tax effect relating to interest rate swap agreement		—			(1,614	)

Continuing operations, net of tax		—			(2,005	)
Foreign currency cumulative translation adjustments:
Continuing operations		(4,650	)		(5,359	)
Discontinued operations		—			(1,729	)

		(4,650	)		(7,088	)

Defined benefit plan overfunding, net of tax		183			176

Total accumulated other comprehensive loss	$	(4,467	)	$	(8,917	)

	Weighted
	Hedging
	Average Life			October 2,			December 31,
	Activities
	(in years)			2010			2009
	Interest Rate
Indefinite-life intangible assets
	Swap
Intellectual property	Indefinite			$	10,328		$	10,328
Summary of changes in accumulated other comprehensive loss
Definite-life intangible assets
Balance, December 31, 2010	$	(2,005	)
Customer relationships		10			224,860			201,101
Reclassification of loss to interest expense		646
Other		3			2,641			658
Reclassification tax effect to provision for income taxes		(255	)
					227,501			201,759
Reclassification of additional deferred tax effect to provision for income taxes		1,614
Accumulated amortization					(76,278	)		(60,227	)
Balance, April 2, 2011	$	—
Definite-life intangible assets, net					151,223			141,532
Intangible assets, net				$	161,551		$	151,860

~~The increases~~8. inDerivative ~~definite-life~~Instruments, ~~intangible~~Hedging ~~assets~~Activities ~~resulted~~and ~~from~~Financial ~~the Buccaneer Acquisition completed in~~Instruments ~~September 2010.~~

Vangent has used derivative financial instruments to manage interest rate risk. Interest rate swap agreements were used as cash-flow hedges against fluctuations in LIBOR interest rates on a portion of the term loan borrowings under the senior secured credit facility. The interest rate swap agreement in the notional amount of $150,000 to pay fixed interest at the rate of 3.28% and to receive variable interest based on three-month LIBOR matured in February 2011. For derivative financial instruments that qualify as a cash-flow hedge, the effective portion of the gain/loss is reported as a component of other comprehensive income/loss (“OCI”) and is subsequently reclassified to the statements of operations in the period or periods in which the hedged transaction affects the statement of operations.

~~Amortization~~Derivative ofInstruments ~~the unamortized balance of definite-life intangible assets for each of the next five years~~ and ~~thereafter~~Hedging ~~is scheduled as follows:~~Activities

Years Ending December 31
2010 (remaining three months)	$	6,737
2011		26,488
2012		25,664
2013		24,810
2014		15,038
Thereafter		52,486
	$	151,223

A tabular disclosure of the fair values of derivative instruments reported in the balance sheet and the effect of derivative instruments on the statements of operations follows:

Goodwill


Balance Sheet Data
		Fair Value of
		Liability Derivatives
		April 2,		December 31,
Derivative Contracts	Balance Sheet Location	2011		2010
Derivatives that qualify as cash flow hedges
Interest rate swap agreements	Accrued liabilities	$	—	$	646

October 2,

December 31,

Statements of Operations Data

2010

2009

Amount of Gain

Goodwill

299,056

268,212

(Loss) Recognized

Amount of Gain

Location of Gain

Amount of Gain

Location of Gain

in Income on

(Loss)

(Loss) Recognized in

Derivative

Recognized in

Reclassified from

Income on Derivative

(Ineffective

OCI on

Accumulated OCI

(Ineffective Portion

Portion and

Derivative

into Income

and Amount

Amount Excluded

(Effective

Excluded from

from Effectiveness

Derivative Contracts

Portion)

Effectiveness Testing)

Testing)

Three Months Ended April 2, 2011

Derivatives that qualify as cash flow hedges

Interest rate swap agreements

Interest expense

(646

)

Tax effect of interest rate swap agreements

Provision for income taxes

255

Additional deferred tax effect relating to interest rate swap agreements

Provision for income taxes

(1,614

)

Three Months Ended April 3, 2010

Derivatives that qualify as cash flow hedges

Interest rate swap agreements

(631

)

Interest expense

(1,666

)

Interest expense

Foreign currency forward contracts

)

Discontinued operations

(304

)

Derivatives that do not qualify as cash flow hedges

Foreign currency forward contracts

Discontinued operations

(89

)

~~The~~Fair ~~increase~~Value inof ~~goodwill~~Financial ~~resulted from the Buccaneer Acquisition completed in September 2010.~~Instruments

7.The ~~Short-Term~~fair ~~Borrowing~~values ~~and~~of ~~Long-Term~~financial ~~Debt~~instruments at April 2, 2011, follow:

	October 2,		December 31,
	Carrying
	2010		2009
	Amounts		Fair Value
Short-term borrowing
Revolving credit borrowing under senior secured credit facility with interest at variable rates (2.53% at October 2, 2010)	$	16,000	$	—
Long-term debt
Term loan under senior secured credit facility with interest at variable rates (2.32% at October 2, 2010)	$	216,754	$	230,366
Variable-rate term loan under the senior secured credit facility	$	215,353	$	215,353
9 5/8% Senior subordinated fixed rate notes, due February 15, 2015		190,000		190,000
9 5/8% senior subordinated notes, due February 15, 2015		190,000		189,525
		406,754		420,366
	$	405,353	$	404,878
Less: current portion of long-term debt		—		(13,534	)
Long-term debt, net of current portion	$	406,754	$	406,832
Scheduled maturities of long-term debt
2011	$	—
2012		1,711
2013		215,043
2014		—
2015		190,000
	$	406,754

Senior Secured Credit Facility

At October 2, 2010, the senior secured credit facility consisted of a term loan of $216,754 due February 14, 2013, and a short-term borrowing of $16,000 under the revolving credit facility in connection with the Buccaneer Acquisition. The revolving credit facility expires February 14, 2012. Subject to certain limitations, the remaining borrowing amount available under the revolving credit facility was $33,505. There were no borrowings outstanding under the revolving credit facility at December 31, 2009. A commitment fee of 0.5% per year is paid on the available unused portion of the revolving credit facility.

InThe ~~July 2010,~~carrying ~~Vangent~~amounts ~~and~~of the ~~banks~~variable-rate ~~that~~borrowing ~~are~~and ~~party~~term toloan under the senior secured credit facility ~~entered~~ ~~into~~approximate anfair ~~amendment~~value. ~~that~~The ~~allows~~fair ~~for~~value of the ~~sale~~9 of5/8% ~~Vangent’s~~senior ~~Latin~~subordinated ~~American~~notes ~~operations, expands~~is ~~the~~based ~~amounts~~on ~~allowed~~quoted ~~for~~market ~~acquisitions~~prices. toAt ~~$75~~April 2,~~000~~ ~~per acquisition and to $175~~2011,~~000~~ in the ~~aggregate, and~~quoted ~~reduces~~market ~~the~~price ~~mandatory~~was ~~prepayment~~$99.75 ~~requirement~~per ~~from~~$100 reflecting ~~net~~a ~~cash~~yield ~~proceeds~~ of ~~equity offerings to 25~~9.896% ~~from~~. ~~50%~~The ascarrying ~~long~~amounts asof ~~the~~other ~~consolidated~~financial ~~leverage ratio~~instruments, asincluding ~~defined, is below 4.00 to 1. Lender fees~~cash and ~~expenses~~cash ~~paid~~equivalents, inaccounts ~~connection~~receivable, ~~with~~and ~~the~~accounts ~~amendment~~payable ~~amounted~~and toaccrued $1liabilities,~~937 all of which were capitalized~~ asapproximate ~~part~~fair ofvalue ~~deferred~~due ~~debt financing costs that are amortized~~ to ~~interest~~their ~~expense~~short ~~over~~term ~~the remaining life of the loan~~nature.

~~Borrowings under the senior secured credit facility bear interest at a rate equal to, at the Company’s option, either: (i) the base rate, as defined, plus an applicable margin of 1~~9.~~00-1.50%, or~~ ~~(ii) the~~Income ~~adjusted LIBOR, as defined, plus an applicable margin of 2.00-2.50%. The applicable~~Taxes margin ranged from 2.0 to 2.25% at October 2, 2010. Borrowings are subject to mandatory prepayment with (i) 100% of the net cash proceeds of certain asset sales; (ii) 25% of the net cash proceeds of equity offerings as long as the consolidated leverage ratio, as defined, is below 4.00 to 1. and 25% of capital contributions subject to certain conditions; (iii) 100% of the net cash proceeds of additional debt; and (iv) a percentage of annual excess cash flow, as defined. Payments resulting from the annual excess cash flow requirement are due 90 days following the year end. Based on excess cash flow for the year ended December 31, 2009, a mandatory repayment of $13,612 was made March 31, 2010. Since the excess cash flow requirement is based on annual cash flow, it is not possible to determine the amount, if any, that would become payable in March 2011 or March 2012.

~~Borrowings~~The ~~are~~provision ~~secured~~for byincome ~~accounts~~taxes ~~receivable,~~is ~~cash~~composed of U.S. federal, ~~intellectual~~state ~~property~~and local and ~~other~~foreign ~~assets~~income ~~and~~taxes. ~~are~~The ~~guaranteed~~provision ~~jointly~~for ~~and~~income ~~severally,~~taxes byfor ~~all~~the ~~existing~~three ~~and~~months ~~future~~ended ~~domestic~~April 2, ~~subsidiaries.~~2011, includes an ~~Foreign~~additional ~~subsidiaries~~charge doof ~~not~~$1,614 ~~guarantee~~resulting from the ~~borrowings.~~deferred ~~The~~tax ~~senior~~effect ~~secured~~relating ~~credit~~to ~~facility~~the ~~contains~~interest rate ~~various~~swap ~~customary~~agreement ~~affirmative~~that ~~and~~matured ~~negative~~in ~~covenants~~the ~~and~~first ~~events~~quarter of ~~default,~~2011. ~~including,~~The ~~but~~deferred ~~not limited~~tax ~~to,~~effect ~~restrictions~~was onassociated with the amount ~~disposal~~that ofremained ~~assets~~in Other Comprehensive Income/Loss (“OCI”) at December 31, ~~incurring~~2010, ~~additional~~as ~~indebtedness~~a orresult ~~guaranteeing~~of ~~obligations,~~the ~~paying~~release ~~dividends,~~of ~~creating~~the ~~liens~~tax valuation allowance in 2010 on ~~assets,~~the ~~making~~beginning ~~investments,~~deferred ~~loans~~tax orasset balance ~~advances,~~through ~~and~~continuing ~~compliance~~operations ~~with~~and asubsequent ~~maximum~~activity ~~consolidated~~classified ~~leverage~~in ~~ratio~~OCI. AsThe maturity of ~~October 2, 2010,~~ the swap ~~Company~~agreement ~~was~~allows infor ~~compliance~~the ~~with~~clearing ~~all~~ of the ~~affirmative~~disproportionate ~~and~~tax ~~negative~~effect ~~covenants~~in OCI to continuing operations.

The ~~more~~provision ~~restrictive~~for ~~covenants~~income ~~relate~~taxes tofor ~~compliance~~the ~~with~~corresponding aperiod ~~maximum~~in ~~allowable~~2010 ~~consolidated leverage~~reflects ~~ratio,~~a asreduction ~~defined~~ in the ~~senior~~tax ~~secured~~valuation ~~credit~~allowance ~~facility,~~for ~~based~~deferred ontax ~~consolidated indebtedness,~~assets asfrom ~~defined,~~the ~~reduced~~utilization byof ~~unrestricted~~a ~~cash~~portion ~~and cash equivalents in excess~~ of ~~$5,000,~~the net ~~divided~~operating byloss ~~adjusted~~carryforward. ~~EBITDA~~The ~~(earnings~~Company ~~before~~has ~~interest,~~concluded ~~taxes,~~based ~~depreciation~~upon ~~and~~all ~~amortization, adjusted~~available ~~for certain unusual and non-recurring items~~evidence, asthat ~~defined) for a twelve-month period.~~it Atis ~~October 2,~~more ~~2010,~~likely ~~the~~than ~~consolidated~~not ~~leverage~~that ~~ratio was 3~~U.~~97 to 1, compared with the maximum allowable ratio of 5~~S.75 todeferred 1tax ~~applicable~~assets towill ~~the~~be ~~period.~~realizable, ~~The~~except ~~maximum~~for ~~allowable~~a ~~consolidated leverage~~portion ~~ratio~~relating ~~steps down~~ to ~~5.50~~a tonet 1capital atloss ~~December 31, 2010; 5~~carryforward.~~25 at June 30, 2011; and 5.00 at March 31,~~ ~~2012.~~

9The ~~5/8%~~Company ~~Senior~~has ~~Subordinated~~accrued ~~Notes~~a provision for income taxes of $229 on a specific portion of the current year’s undistributed earnings of one of its foreign operations since this specific portion is not considered to be reinvested indefinitely. When the earnings are distributed, federal income and foreign withholding taxes would apply. The amount of the unrecognized income tax associated with the undistributed earnings of all other foreign subsidiaries where the earnings are considered to be reinvested indefinitely was not material at April 2, 2011.

InASC ~~February 2007~~Topic 740, ~~the~~Income ~~Company~~Taxes, ~~completed~~prescribes ana ~~offering~~recognition ofthreshold ~~$190,000~~and ~~principal~~measurement ~~amount~~attribute ~~of 9 5/8 %~~for ~~senior~~the ~~subordinated~~financial ~~notes~~statement ~~due~~recognition ~~February 15,~~and ~~2015.~~measurement ~~Interest~~of ~~accrues~~tax atpositions ~~the~~taken, ~~fixed~~or ~~rate~~expected ofto 9be taken, ~~5/8%~~in ~~and is~~a ~~paid~~tax ~~semi-annually~~return. ~~The~~There ~~notes~~was ~~are~~no ~~general~~liability ~~unsecured~~for unrecognized ~~obligations~~tax ofbenefits ~~the~~at ~~Company~~April 2, ~~and~~2011 ~~are subordinated~~or toDecember 31, ~~all~~2010. ~~existing~~Vangent ~~and~~does ~~future~~not ~~senior~~expect ~~loans~~changes ~~including~~in unrecognized ~~borrowings~~tax ~~under~~benefits, ~~the~~if ~~senior~~any, ~~secured credit~~within ~~facility.~~the ~~The~~next ~~notes~~twelve ~~are~~months ~~guaranteed,~~to ~~jointly~~have ~~and~~a ~~severally,~~material byimpact ~~all~~on ~~existing and future~~the ~~domestic~~provision ~~subsidiaries.~~for ~~Foreign~~income ~~subsidiaries~~taxes door ~~not~~the ~~guarantee~~effective ~~the~~tax ~~notes~~rate.

~~The~~Vangent ~~Company~~and ~~may~~its ~~redeem~~subsidiaries ~~all~~conduct orbusiness ~~part~~and ofare ~~the~~subject ~~notes at any time prior~~ to ~~February 15, 2011,~~income attaxes ain ~~redemption price of 100% of~~ the ~~principal amount plus an applicable premium, as defined~~United States and ~~additional~~certain ~~interest,~~foreign ~~as defined~~countries. ~~The~~Vangent’s ~~notes~~income ~~are~~tax ~~redeemable~~returns atfor ~~the~~2007 ~~option~~and ofsubsequent ~~the Company at the~~years ~~redemption~~are ~~price~~subject ofto ~~104.8125%~~examination ofby ~~the~~federal, ~~principal~~state, ~~amount~~local, on or ~~after~~foreign ~~February 15,~~tax ~~2011, 102~~authorities.~~4063%~~ onInterest and orpenalties ~~after~~relating ~~February 15,~~to ~~2012,~~income ~~and~~taxes ~~100%~~are oncharged orto ~~after~~the ~~February 15,~~provision ~~2013~~for income taxes.

10. Commitments and Contingencies

Federal government agencies routinely audit the Company’s books and records. These agencies review contract performance, cost structure and compliance with applicable laws, regulations and standards. Such agencies also review the adequacy of, and compliance with, internal control systems and policies, including purchasing, property, estimating, compensation and management information systems. Audits of the Company’s incurred cost submissions for 2005 and subsequent years are open. The Company is also subject to audits, legal proceedings, investigations and claims arising out of the ordinary course of business and accrues a liability if an unfavorable outcome is probable. In the opinion of management, resolution of such matters is not expected to have a material effect on the Company’s results of operations and cash flows or financial position.

11. Equity-Based Compensation

No stock options are authorized and no stock options have been granted by Vangent.

Certain members of management of Vangent and independent directors of Vangent Holding Corp. have been granted Class B or B-1 membership interests in Vangent Holding LLC. In the three months ended April 2, 2011, the membership interests previously granted to independent directors were redeemed. Vangent Holding LLC holds 100% of the common stock, but none of the preferred stock, in Vangent Holding Corp., which in turn owns all of Vangent’s common stock. At April 2, 2011, the outstanding balance of grants of Class B and B-1 membership interests represented 6.2% of the net profit interests in Vangent Holding LLC. Pursuant to the terms of the operating agreement governing Vangent Holding LLC, the Class B and B-1 membership interests are subject to a five-year vesting schedule, except in the event of a change of control. The unvested portion of Class B or B-1 membership interests resulting from forfeitures reverts to the holders of Class A membership interests in Vangent Holding LLC. Holders of Class B and B-1 membership interests are entitled to receive their respective proportional interest in all distributions made by Vangent Holding LLC, provided the holders of the Class A membership interests have received an 8% per annum internal rate of return on their invested capital. ~~Accumulated~~Class B ~~Other~~and ~~Comprehensive~~B-1 ~~Loss~~membership interests are granted with no exercise price and no expiration date. Class B membership interests have been granted with no threshold or floor value and Class B-1 membership interests have been granted with a threshold or floor value and earn a proportional interest in distributions above the floor valuation. Grants of Class B or B-1 membership interests are limited in the aggregate to 7.5% of the net profits interests in Vangent Holding LLC.

~~The~~A ~~components~~summary of ~~accumulated~~activity ~~other~~for ~~comprehensive~~grants ~~loss~~ and athe ~~summary~~outstanding balance of ~~changes~~Class B inmembership ~~accumulated~~interests ~~other~~in ~~comprehensive~~Vangent ~~loss~~Holding ~~for~~LLC ~~hedging activities follows~~follow:

	October 2,			December 31,
	Class B and B-1 Membership Interests
	2010			2009
	Available for						Fair Value at
Accumulated other comprehensive loss
	Grant			Outstanding			Date of Grant
Effect of hedging activities, net of tax:
Balance, December 31, 2010		1.6	%		5.9	%	$	5,987
Continuing operations — Interest rate swap agreements	$	(1,674	)	$	(4,634	)
Granted		(0.9	)		0.9			850
Discontinued operations — Foreign currency forward contracts		(82	)		(392	)
Forfeited and redeemed		0.6			(0.6	)		(289	)
		(1,756	)		(5,026	)
Balance, April 2, 2011		1.3	%		6.2	%	$	6,548
Foreign currency cumulative translation adjustments:
At April 2, 2011:
Continuing operations		(5,416	)		(5,287	)
Vested					3.3	%
Discontinued operations		(3,450	)		(4,636	)
Not yet vested					2.9
		(8,866	)		(9,923	)
					6.2	%
Total accumulated other comprehensive loss	$	(10,622	)	$	(14,949	)

	Hedging Activities
	Continuing			Discontinued
	Operations			Operations
				Foreign
	Interest			Currency
	Rate			Forward
	Swaps			Contracts			Total
Summary of changes in accumulated other comprehensive loss for hedging activities
Balance, December 31, 2009	$	(4,634	)	$	(392	)	$	(5,026	)
Change in fair value		(898	)		(8	)		(906	)
Reclassification of loss to interest expense		3,858			—			3,858
Reclassification of loss to discontinued operations		—			318			318
Balance, October 2, 2010	$	(1,674	)	$	(82	)	$	(1,756	)

Charges for equity-based compensation expense amounted to $301 for three months ended April 2, 2011 and $262 for the corresponding period in 2010. The unamortized amount of equity-based compensation was $2,398 at April 2, 2011, and is scheduled to be charged to expense as follows:

9. Derivative Instruments, Hedging Activities and Financial Instruments


Years Ending December 31
2011 (remaining nine months)	$	809
2012		545
2013		437
2014		321
2015		257
2016		29

	$	2,398

~~Vangent, Inc~~12. ~~uses~~Related ~~derivative~~Party ~~financial instruments to manage interest rate risk and Vangent~~Transactions Mexico, S.A. de C.V., a 100%-owned subsidiary included as part of discontinued operations, has used derivative instruments to manage certain foreign currency exchange rate risks. Interest rate swap agreements are used as cash-flow hedges of interest rate risk associated with variable-rate borrowings under the senior secured credit facility. Foreign currency contracts have been used to hedge exchange rate risks associated with purchase commitments and obligations in currencies other than the Mexican peso. Derivatives can involve credit risk from possible non-performance by the parties. At October 2, 2010, the fair values of the derivative contracts resulted in derivative liabilities, and the fair value liabilities reflect the Company’s credit adjusted discount rate. The Company does not enter into derivative transactions for trading or speculative purposes.

~~For~~Vangent ~~derivative~~is ~~financial instruments that qualify as~~ a ~~cash~~100%-~~flow~~owned ~~hedge,~~subsidiary ~~the effective portion~~ of ~~the~~Vangent ~~gain/loss~~Holding isCorp. ~~reported~~Vangent asHolding aLLC ~~component~~holds 100% of the ~~other~~common ~~comprehensive~~stock, ~~income/loss~~but ~~(“OCI”)~~none ~~and~~of ~~is subsequently reclassified to~~ the ~~statements~~preferred ofstock, ~~operations~~ in ~~the~~Vangent ~~period~~Holding orCorp. ~~periods~~and inis ~~which~~90% ~~the hedged~~owned ~~transaction~~by ~~affects~~The Veritas ~~the~~Capital ~~statement~~Fund ofIII, ~~operations~~L.P.

~~Interest~~Robert ~~Rate~~B. ~~Swap~~McKeon ~~Agreements~~is onthe ~~Variable-Rate~~sole ~~Term~~member ~~Loan~~of the board of directors of Vangent, is chairman of the board of Vangent Holding Corp., and is the president of Veritas Capital Partners III, LLC. Mr. Ramzi Musallam is a director of Vangent Holding Corp. and is a partner at Veritas Capital.

~~The~~Certain ~~Company~~members ~~has~~of ~~entered~~management ~~into interest rate swap agreements with a commercial bank to hedge fluctuations in LIBOR interest rates on a portion~~ of ~~the~~Vangent ~~term~~have ~~loan~~been ~~borrowing~~granted ~~under the senior secured credit facility. The Company exchanged its variable LIBOR interest rate for a fixed interest rate. At October~~Class 2,B ~~2010,~~or anB-1 ~~interest~~membership ~~rate swap agreement at the notional amount of~~interests ~~$150,000~~in toVangent ~~pay~~Holding ~~fixed interest at the rate of 3~~LLC.~~28% and to receive variable interest based on~~ ~~three-month LIBOR was outstanding and scheduled to mature in February 2011.~~

Vangent pays an annual management fee of $1,000 to Veritas Capital of which $250 was paid for the three months ended April 2, 2011, along with advisory fees of $13.

~~The~~Vangent ~~Company~~purchased ~~documented~~administrative ~~its~~services ~~risk~~under ~~management~~contracts ~~objective~~ and ~~nature~~leases ofwith ~~the~~Pearson ~~risks~~amounting being hedged and designated the interest rate swaps as cash flow hedges at inception of the agreements. The Company performs a quarterly analysis of the effectiveness of the hedge transactions and has concluded that the hedging relationship is highly effective due to ~~the consistency of critical terms of the~~ ~~interest rate swap agreements and related term loan under the senior secured credit facility. The fair value of the interest rate swap liability was~~ $1,~~674~~404 atfor ~~October 2,~~the ~~2010,~~three ~~and~~months ~~$4,657~~ended ~~at December~~April 312, ~~2009~~2011. ~~The~~Pearson ~~unrealized~~holds ~~loss~~$35,000 onof ~~interest~~Series A ~~rate~~preferred ~~swaps~~stock and ~~was~~ $15,~~674~~000 atof ~~October~~Series 2,B ~~2010,~~preferred ~~all~~stock ~~of which included~~ in ~~accumulated~~Vangent ~~OCI~~Holding inCorp., ~~the~~and ~~consolidated~~holds ~~statement~~10% of ~~stockholder’s~~the ~~equity and is~~Class A ~~expected~~membership tointerests bein ~~reclassified~~Vangent toHolding ~~interest expense by February 2011~~LLC.

~~Discontinued~~13. ~~Operations~~Business —Segments ~~Foreign~~and ~~Currency~~Major ~~Contracts~~Customers

InOperating ~~2009~~segments ~~Vangent~~are ~~Mexico~~defined ~~entered~~as ~~into~~components ~~foreign~~of ~~currency~~an ~~forward~~enterprise ~~exchange~~about ~~contracts~~which ~~with~~separate afinancial ~~commercial~~information ~~bank~~is toavailable ~~hedge~~that ~~fluctuations~~is inevaluated ~~the~~regularly ~~Mexican~~by ~~peso~~the ~~exchange~~chief ~~rates.~~operating Atdecision ~~October 2,~~maker ~~2010, there~~in ~~were~~deciding nohow ~~foreign~~to ~~currency~~allocate ~~forward~~resources ~~exchange~~and ~~contracts~~in ~~outstanding.~~assessing ~~At inception the foreign currency contracts qualified as cash flow hedges~~performance. ~~Certain~~Vangent ~~hedge~~reports ~~contracts~~operating ~~no longer qualified as cash flow~~results ~~hedges~~and ~~since~~financial ~~forecasted~~data ~~transactions were no longer likely to occur. Accordingly, cost of revenue~~ for ~~discontinued~~three ~~operations~~business ~~for~~segments: the ~~nine~~Government ~~months ended October 2~~Group, ~~2010,~~the ~~includes~~International ~~a loss of $89 reclassified from OCI for contracts that no longer qualify. For hedge contracts that qualify as cash flow hedges~~Group, ~~an unrealized loss of $82 at October 2, 2010, is included in accumulated OCI in the consolidated statement of stockholder’s equity~~ and ~~is expected to be reclassified to~~ ~~discontinued operations over~~ the ~~next~~Human ~~twelve~~Capital ~~months~~Group.

~~Derivative~~Government ~~Instruments~~Group customers are primarily U.S. federal agencies. The Government Group assists civilian, defense and ~~Hedging~~intelligence ~~Activities~~agencies as well as government related entities with the design and execution of information and technology strategy, helps develop and maintain their complex, mission critical systems and delivers a wide range of business process outsourcing solutions. The operations of Buccaneer acquired in September 2010 are part of the Government Group.

AThe ~~tabular~~International ~~disclosure~~Group ofserves ~~the~~government ~~fair~~and ~~values~~commercial ofcustomers ~~derivative instruments reported~~ in the ~~balance~~United Kingdom and ~~sheet~~Canada and ~~the~~provides ~~effect~~consulting, ofsystems ~~derivative~~integration ~~instruments~~and onbusiness ~~the~~process ~~statements~~outsourcing ~~of operations follows:~~solutions.

~~Balance~~The ~~Sheet~~Human ~~Data~~Capital Group primarily serves the private sector and provides workforce solutions that automate and improve the recruitment, assessment, selection, training and development of a customer’s workforce and provides learning infrastructure development solutions for public sector clients.

		Fair Value of
		Liability Derivatives
		October 2,		December 31,
Derivative Contracts	Balance Sheet Location	2010		2009
Derivatives that qualify as cash flow hedges
Interest rate swap agreements	Accrued liabilities	$	1,674	$	4,657
Foreign currency forward contracts	Discontinued operations		—		251
Derivatives that do not qualify as cash flow hedges
Foreign currency forward contracts	Discontinued operations		—		88

~~Statements~~A summary of ~~Operations~~revenue ~~Data~~and operating income by business segment follows:

										Amount of Gain
	Three Months Ended
										(Loss) Recognized
	April 2,			April 3,
	Amount of Gain					Amount of Gain			Location of Gain	in Income on
	2011			2010
	(Loss)					(Loss)			(Loss) Recognized in	Derivative
Revenue by business segment
	Recognized in					Reclassified from			Income on Derivative	(Ineffective
Government Group	$	152,048		$	177,237
	OCI on			Location of Gain (Loss)		Accumulated OCI			(Ineffective Portion	Portion and
International Group		19,009			11,825
	Derivative			Reclassified from		into Income			and Amount	Amount Excluded
Human Capital Group		4,922			6,135
	(Effective			Accumulated OCI into		(Effective			Excluded from	from Effectiveness
Elimination		(130	)		(1,000	)
Derivative Contracts	Portion)			Income (Effective Portion)		Portion)			Effectiveness Testing)	Testing)
Total revenue	$	175,849		$	194,197
Three Months Ended October 2, 2010
Operating income (loss) by business segment
Derivatives that qualify as cash flow hedges
Government Group	$	13,213		$	18,869
Interest rate swap agreements	$	(276	)	Interest expense		$	(1,106	)	Interest expense	$	—
International Group		935			62
Three Months Ended September 26, 2009
Human Capital Group		(750	)		(820	)
Derivatives that qualify as cash flow hedges
Other		(28	)		(5	)
Interest rate swap agreements		1,006		Interest expense			(1,807	)	Interest expense		—
Total operating income		13,370			18,106
Foreign currency forward contracts		34		Discontinued operations			(192	)	—		—
Interest expense, net		7,491			8,236
Nine Months Ended October 2, 2010
Income from continuing operations before income taxes	$	5,879		$	9,870
Derivatives that qualify as cash flow hedges
Depreciation and amortization
Interest rate swap agreements		(898	)	Interest expense			(3,881	)	Interest expense		23
Government Group	$	8,674		$	7,305
Foreign currency forward contracts		(8	)	Discontinued operations			(229	)	—		—
International Group		976			727
Derivatives that do not qualify as cash flow hedges
Human Capital Group		192			325
Foreign currency forward contracts		—		—			—		Discontinued operations		(89	)
Total depreciation and amortization	$	9,842		$	8,357
Nine Months Ended September 26, 2009
Revenue from major customers as a percent of total revenue
Derivatives that qualify as cash flow hedges
Department of Health and Human Services		50	%		34	%
Interest rate swap agreements		(1,927	)	Interest expense			(4,600	)	Interest expense		(70	)
Department of Education		17	%		15	%
Foreign currency forward contracts		(730	)	Discontinued operations			(219	)	—		—
Department of Commerce		*			26	%

~~Fair~~* ~~Value~~Less ~~Measurements~~ than 10%.

Fair value is the price that would be received to sell an asset or to transfer a liability in an orderly transaction between market participants at the measurement date. A summary of the bases used to measure financial assets and financial liabilities reported at fair value on a recurring basis in the consolidated balance sheets follows:

	October 2,		December 31,
	2010		2009
Liabilities
Level 1 — Quoted prices in active markets for identical items	$	—	$	—
Level 2 — Significant other observable inputs:
Interest rate swap agreements		1,674		4,657
Foreign currency forward contracts		—		339
Level 3 — Significant unobservable inputs		—		—

~~Fair~~14. ~~Value~~Condensed ofIssuer, Guarantor and Non-Guarantor Financial ~~Instruments~~Information

Debt issued by Vangent Inc. (“Issuer”) includes the term loan under the senior secured credit facility, borrowings drawn from time to time under the revolving credit facility, and the senior subordinated notes. The ~~fair~~debt ~~values~~of the Issuer is guaranteed, jointly and severally, by its domestic subsidiaries (“Guarantor Subsidiaries”). Joint ventures and foreign subsidiaries do not guarantee the debt (“Non-Guarantor Subsidiaries”). Condensed combining balance sheets, statements of operations, ~~financial~~and ~~instruments~~statements atof ~~October 2~~cash flows for the Issuer, ~~2010~~Guarantor Subsidiaries, and Non-Guarantor Subsidiaries follow:

	Carrying
	Amounts		Fair Value
Short-term borrowing
Variable-rate revolving credit borrowing under the senior secured credit facility	$	16,000	$	16,000
Long-term debt
Variable-rate term loan under the senior secured credit facility	$	216,754	$	216,754
9 5/8% senior subordinated notes, due February 15, 2015		190,000		174,563
	$	406,754	$	391,317
Interest rate swap agreements to pay fixed and receive variable
Accrued liabilities	$	1,674	$	1,674

Condensed Combining Balance Sheets (Unaudited)

The carrying amounts of the variable-rate borrowing and term loan under the senior secured credit facility approximate fair value. The fair value of the 9 5/8% senior subordinated notes is based on quoted market prices. At October 2, 2010, the quoted market price was $91.875 per $100 reflecting a yield of 12.3%. The fair value of interest rate swap agreements is based on quoted prices for similar assets or liabilities in active markets adjusted for non-performance risk. The carrying amounts of other financial instruments, including cash and cash equivalents, accounts receivable, and accounts payable and accrued liabilities, approximate fair value due to their short term nature.


			Guarantor			Non-Guarantor
	Issuer		Subsidiaries			Subsidiaries		Eliminations			Consolidated
	April 2, 2011
Current assets:
Cash and cash equivalents	$	29,660	$	22		$	16,756	$	—		$	46,438
Trade receivables, net		77,084		23,748			9,178		—			110,010
Prepaid expenses and other		9,286		1,141			3,040		—			13,467

Total current assets		116,030		24,911			28,974		—			169,915
Property and equipment, net		19,190		2,790			4,601		—			26,581
Goodwill and intangible assets		372,564		50,733			18,444		—			441,741
Deferred tax asset (liability)		20,659		(682	)		—		—			19,977
Deferred debt financing costs		6,971		867			275		—			8,113
Investment in and advances to subsidiaries		99,868		—					(99,868	)		—

Total assets	$	635,282	$	78,619		$	52,294	$	(99,868	)	$	666,327


Current liabilities	$	61,565	$	10,094		$	21,510	$	(3,216	)	$	89,953
Long-term debt		405,353		—			—		—			405,353
Other long-term liabilities		4,205		711			1,946		—			6,862

Total liabilities		471,123		10,805			23,456		(3,216	)		502,168

Total equity		164,159		67,814			28,838		(96,652	)		164,159

Total liabilities and equity	$	635,282	$	78,619		$	52,294	$	(99,868	)	$	666,327


	December 31, 2010

Current assets:
Cash and cash equivalents	$	20,477	$	—		$	6,717	$	—		$	27,194
Trade receivables, net		90,879		20,504			11,557		—			122,940
Prepaid expenses and other		9,140		1,227			2,534		—			12,901

Total current assets		120,496		21,731			20,808		—			163,035
Property and equipment, net		20,640		2,393			4,998		—			28,031
Goodwill and intangible assets, net		377,721		52,075			18,127		—			447,923
Deferred tax asset		21,923		—			—		—			21,923
Deferred debt financing costs and other		8,089		471			263		—			8,823
Investment in and advances to subsidiaries		94,738		—			—		(94,738	)		—

Total assets	$	643,607	$	76,670		$	44,196	$	(94,738	)	$	669,735


Current liabilities	$	76,188	$	12,572		$	16,039	$	(5,101	)	$	99,698
Long-term debt, net of current portion		405,353		—			—		—			405,353
Other long-term liabilities		4,695		711			1,907		—			7,313

Total liabilities		486,236		13,283			17,946		(5,101	)		512,364
Total equity		157,371		63,387			26,250		(89,637	)		157,371

Total liabilities and equity	$	643,607	$	76,670		$	44,196	$	(94,738	)	$	669,735

10. Income Taxes

The provision for income taxes is composed of U.S. federal, state and local and foreign income taxes. The provision for income taxes of $5,598 for the nine months ended October 2, 2010, is net of a reduction of $3,314 for a change in the tax valuation allowance for deferred tax assets resulting from the utilization of a portion of the net operating loss carryforward against taxable income earned for the nine months ended October 2, 2010.

A tax valuation allowance is recorded against deferred tax assets when it is more likely than not that a tax benefit will not be realized in the future. The assessment requires judgment with respect to tax benefits that may be realized. The Company considers all available positive and negative evidence, including future reversals of temporary differences, projected future taxable income, tax planning strategies, and recent financial results. The Company continues to conclude as of October 2, 2010, based upon all available evidence, that it is more likely than not that the U.S. deferred tax assets will not be realizable. The tax valuation allowance amounted to $39,100 at October 2, 2010. In the event the Company determines in a future period that realization of deferred tax benefits, primarily net operating loss carryforwards, is more likely than not, all or a portion of the tax valuation allowance would be reversed. A reversal or reduction to the tax valuation allowance would be recorded as a reduction to the provision for income taxes

Deferred tax liabilities aggregated $22,477 at October 2, 2010, and were primarily related to goodwill that is amortized for tax purposes, but is not amortized for financial accounting and reporting purposes.

The ASC topic on Income Taxes prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of tax positions taken, or expected to be taken, in a tax return. Vangent is indemnified and is not liable for any income taxes that relate to the pre-acquisition periods prior to February 15, 2007. There was no liability for unrecognized tax benefits at October 2, 2010. Vangent does not expect changes in unrecognized tax benefits, if any, within the next twelve months to have a material impact on the provision for income taxes or the effective tax rate.

Vangent and its subsidiaries conduct business and are subject to income taxes in the United States and certain foreign countries. Vangent’s income tax returns for 2007 and subsequent years are subject to examination by federal, state, local, or foreign tax authorities. Interest and penalties relating to income taxes are charged to the provision for income taxes.

~~11.~~Condensed ~~Commitments~~Combining ~~and~~Statements ~~Contingencies~~of Operations (Unaudited)

Payments to the Company by U. S. Government agencies on cost-plus contracts are provisional and are subject to adjustment based on audits performed by the Defense Contract Audit Agency. Audits of incurred cost submissions for 2005 and subsequent years are open. The Company is also subject to audits, legal proceedings, investigations and claims arising out of the ordinary course of business and accrues a liability if an unfavorable outcome is probable. In the opinion of management, resolution of such matters is not expected to have a material effect on the Company’s results of operations or financial position.


			Guarantor		Non-Guarantor
	Issuer		Subsidiaries		Subsidiaries			Eliminations			Consolidated
	Three Months Ended April 2, 2011
Revenue	$	124,946	$	29,680	$	21,336		$	(113	)	$	175,849
Cost of revenue		101,025		26,616		17,664			(113	)		145,192

Gross profit		23,921		3,064		3,672			—			30,657
General and administrative expenses		8,854		1,437		1,858			—			12,149
Selling and marketing expenses		4,039		467		632			—			5,138

Operating income		11,028		1,160		1,182			—			13,370
Interest expense, net		7,437		—		54			—			7,491
Equity in net income of subsidiaries		1,579		—		—			(1,579	)		—

Income from continuing operations before income taxes		5,170		1,160		1,128			(1,579	)		5,879
Provision for income taxes		3,033		465		232			—			3,730

Income from continuing operations		2,137		695		896			(1,579	)		2,149
Loss from discontinued operations, net of tax		—		—		(12	)		—			(12	)

Net income		2,137		695		884			(1,579	)		2,137
Net loss attributable to noncontrolling interest		—		—		(8	)		—			(8	)

Net income attributable to Vangent	$	2,137	$	695	$	892		$	(1,579	)	$	2,145

12. Equity-Based Compensation


	Three Months Ended April 3, 2010
Revenue	$	182,423		$	—	$	11,774		$	—	$	194,197
Cost of revenue		148,150			—		10,076			—		158,226

Gross profit		34,273			—		1,698			—		35,971
General and administrative expenses		11,588			—		602			—		12,190
Selling and marketing expenses		5,131			—		544			—		5,675

Operating income		17,554			—		552			—		18,106
Interest expense, net		8,285			—		(49	)		—		8,236
Equity in net (loss) of subsidiaries		(1,676	)		—		—			1,676		—

Income from continuing operations before income taxes		7,593			—		601			1,676		9,870
Provision for income taxes		1,715			—		119			—		1,834

Income from continuing operations		5,878			—		482			1,676		8,036
Loss from discontinued operations, net of tax		(279	)		—		(2,158	)		—		(2,437	)

Net income (loss)	$	5,599		$	—	$	(1,676	)	$	1,676	$	5,599

No stock options are authorized and no stock options have been granted by Vangent.

Certain members of management of Vangent and outside directors of Vangent Holding Corp. have been granted Class B membership interests in Vangent Holding LLC, the majority shareholder of Vangent Holding Corp. which in turn owns all of Vangent’s common stock. At October 2, 2010, the outstanding balance of grants of Class B membership interests represented 5.5% of the profit interests in Vangent Holding LLC. Pursuant to the terms of the operating agreement governing Vangent Holding LLC, the Class B membership interests are subject to a five-year vesting schedule, except in the event of a change of control. The unvested portion of Class B membership interests resulting from forfeitures reverts to the holders of Class A membership interests in Vangent Holding LLC. Class B membership interests are granted with no exercise price or expiration date. Holders of Class B membership interests are entitled to receive their respective proportional interest of all distributions made by Vangent Holding LLC provided the holders of the Class A membership interests have received an 8% per annum internal rate of return on their invested capital. Grants of Class B membership interests are limited to 7.5% of the profits interest in Vangent Holding LLC in the aggregate.

A summary of activity for grants and the outstanding balance of Class B membership interests in Vangent Holding LLC follow:

	Class B						Fair Value of
	Membership						Class B
	Interests			Class B			Membership
	Available for			Interests			Interests at Date of
	Grant			Outstanding			Grant
Balance, December 31, 2009		2.0	%		5.6	%	$	5,602
Granted		(0.2	)		0.2			153
Forfeited		0.2			(0.3	)		(178	)
Balance, October 2, 2010		2.0	%		5.5	%	$	5,577
At October 2, 2010:
Vested					2.9	%
Not yet vested					2.6
					5.5	%

Vangent charges equity-based compensation expense for awards of Class B membership interests in Vangent Holding LLC granted to its employees and independent directors. Equity-based compensation expense is amortized on a straight-line basis over the total requisite service period for the award. The unamortized amount of equity-based compensation expense was $1,812 at October 2, 2010, and amortization is scheduled as follows:

Years Ending December 31
2010 (remaining three months)	$	253
2011		1,011
2012		352
2013		151
2014		45
	$	1,812

~~13.~~Condensed ~~Related~~Combining ~~Party~~Statements ~~Transactions~~of Cash Flows (Unaudited)

Vangent is a 100%-owned subsidiary of Vangent Holding Corp. Vangent Holding LLC is the majority shareholder in Vangent Holding Corp. and is 90% owned by The Veritas Capital Fund III, L.P.


				Guarantor			Non-Guarantor			Elim-
	Issuer			Subsidiaries			Subsidiaries			inations			Consolidated
	Three Months Ended April 2, 2011
Cash flows from operating activities
Continuing operations, net	$	8,140		$	874		$	12,923		$	—			21,937
Discontinued operations, net		—			—			(87	)		—			(87	)

Net cash provided by operating activities		8,140			874			12,836			—			21,850


Cash flows from investing activities
Intercompany loan from Vangent Ltd. to Vangent, Inc.		3,216						—			(3,216	)		—
Capital expenditures		(772	)		(852	)		(272	)		—			(1,896	)

Continuing operations, net		2,444			(852	)		(272	)		(3,216	)		(1,896	)
Discontinued operations, net		—			—			118			—			118

Net cash provided by (used in) investing activities		2,444			(852	)		(154	)		(3,216	)		(1,778	)


Cash flows from financing activities
Intercompany loan from Vangent Ltd. to Vangent, Inc.		—			—			(3,216	)		3,216			—
Repayment of senior secured loan		(1,401	)		—			—			—			(1,401	)

Net cash provided by (used in) financing activities		(1,401	)		—			(3,216	)		3,216			(1,401	)
Effect of exchange rate changes on cash and cash equivalents		—			—			252			—			252

Net increase in cash and cash equivalents		9,183			22			9,718			—			18,923
Total cash and cash equivalents, beginning of period		20,477			—			7,038			—			27,515

Total cash and cash equivalents, end of period	$	29,660		$	22		$	16,756		$	—		$	46,438


	Three Months Ended April 3, 2010
Cash flows from operating activities
Continuing operations, net	$	(18,109	)	$	—		$	1,096		$	—		$	(17,013	)
Discontinued operations, net		—			—			(1,994	)		—			(1,994	)

Net cash used in operating activities		(18,109	)		—			(898	)		—			(19,007	)


Cash flows from investing activities
Loans to Non-Guarantor Subsidiary, net		(605	)		—			—			605			—
Capital expenditures		(1,163	)		—			(141	)		—			(1,304	)

Continuing operations, net		(1,768	)		—			(141	)		605			(1,304	)
Discontinued operations, net		—			—			(123	)		—			(123	)

Net cash used in investing activities		(1,768	)		—			(264	)		605			(1,427	)


Cash flows from financing activities
Repayment of senior secured loan		(13,612	)		—			—			—			(13,612	)
Other		(29	)					—						(29	)

Continuing operations, net		(13,641	)		—			—			—			(13,641	)
Discontinued operations, net		—			—			605			(605	)		—

Net cash provided by (used in) financing activities		(13,641	)		—			605			(605	)		(13,641	)

Effect of exchange rate changes on cash and cash equivalents		—			—			(146	)		—			(146	)

Net decrease in cash and cash equivalents		(33,518	)		—			(703	)		—			(34,221	)
Total cash and cash equivalents, beginning of period		41,099			—			4,485			—			45,584

Total cash and cash equivalents, end of period		7,581			—			3,782			—			11,363
Less: Cash and cash equivalents, discontinued operations		—			—			645			—			645

Cash and cash equivalents, continuing operations	$	7,581		$	—		$	3,137		$	—		$	10,718

Robert B. McKeon is the sole member of the board of directors of Vangent, is chairman of the board of Vangent Holding Corp., and is the president of Veritas Capital Partners III, LLC. Mr. Ramzi Musallam is a director of Vangent Holding Corp. and is a partner at Veritas Capital.

Certain members of management of Vangent and certain outside directors of Vangent Holding Corp. have been granted Class B membership interests in Vangent Holding LLC, the majority shareholder in Vangent Holding Corp.

Vangent pays an annual management fee of $1,000 to Veritas Capital, of which $750 was paid for the nine months ended October 2, 2010, along with fees of $73 for third-party advisory services and expenses.

14. Business Segments and Major Customers

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

Vangent reports operating results and financial data for three business segments: the Government Group; the International Group; and the Human Capital Group. Government Group customers are primarily U.S. federal agencies. The Government Group assists civilian, defense and intelligence agencies as well as government related entities with the design and execution of information and technology strategy, helps develop and maintain their complex, mission critical systems and delivers a wide range of business process outsourcing solutions. The operations of Buccaneer acquired in mid September 2010 are part of the Government Group. The International Group provides consulting, systems integration and business process outsourcing solutions to both commercial and foreign local and central government customers. The Human Capital Group designs, builds, and operates workforce solutions that automate and improve the recruitment, assessment, selection and development of a customer’s workforce.

A summary of revenue and operating income (loss) by business segment follows:

	Three Months Ended						Nine Months Ended
	October 2,			September 26,			October 2,			September 26,
	2010			2009			2010			2009
Revenue by business segment
Government Group	$	158,523		$	125,714		$	534,407		$	359,061
International Group		12,775			11,072			35,748			31,330
Human Capital Group		5,447			7,712			17,416			24,569
Elimination		(339	)		(1,044	)		(2,122	)		(3,518	)
Total revenue	$	176,406		$	143,454		$	585,449		$	411,442
Operating income (loss) by business segment
Government Group	$	14,080		$	7,989		$	48,914		$	26,340
International Group		346			20			416			(90	)
Human Capital Group		(660	)		(738	)		(2,002	)		(2,023	)
Other		(8	)		(14	)		(18	)		(32	)
Total operating income		13,758			7,257			47,310			24,195
Interest expense, net		7,703			8,502			23,301			25,386
Income (loss) from continuing operations before income taxes	$	6,055		$	(1,245	)	$	24,009		$	(1,191	)
Depreciation and amortization
Government Group	$	7,579		$	6,530		$	22,067		$	20,434
International Group		374			789			1,669			2,286
Human Capital Group		309			372			967			1,112
Total depreciation and amortization	$	8,262		$	7,691		$	24,703		$	23,832
Revenue from major customers as a percent of total revenue
Department of Commerce		22	%		*			31	%		*
Department of Health and Human Services		33	%		41	%		31	%		43	%
Department of Education		15	%		16	%		14	%		17	%
Department of Defense		*			*			*			10	%

* Less than 10%.

	October 2,		December 31,
	2010		2009
Goodwill
Government Group	$	281,648	$	250,381
International Group		8,927		9,350
Human Capital Group		8,481		8,481
Total goodwill	$	299,056	$	268,212

15. Condensed Issuer, Guarantor and Non-Guarantor Financial Information

In connection with the acquisition by Veritas Capital and the related financing in February 2007, Vangent, Inc. (“Issuer”) issued $190,000 of 9 5/8% senior subordinated notes due 2015. The notes were sold to qualified institutional buyers pursuant to Rule 144A under the Securities Act and to non-U.S. persons pursuant to Regulation S under the Securities Act. Vangent’s domestic subsidiaries have guaranteed the notes (“Guarantors”). The following foreign subsidiaries do not guarantee the notes (“Non-Guarantors”) and are reported as part of continuing operations: Vangent Canada Limited and Vangent, Ltd. In addition, the following foreign subsidiaries of do not guarantee the notes (“Non-Guarantors”) and are reported as part of discontinued operations: Vangent Mexico, S.A. de C.V.; Vangent Servicios de Mexico, S.A. de C.V.; Vangent Venezuela, C.A.; and Proyectos Prohumane México, S. A. de C. V.; and Vangent Argentina, S.A. up to the date of its sale in September 2010. Condensed combining balance sheets, statements of operations, and statements of cash flows for the Issuer, Guarantors, and Non-Guarantors follow:

Issuer and Non-Guarantor Financial Information Condensed Combining Balance Sheets (Unaudited)

	October 2, 2010											December 31, 2009
					Non-									Non-
			Guar-		Guar-		Elimin-							Guar-		Elimin-
	Issuer		antors		antors		ations			Total		Issuer		antors		ations			Total
Assets
Current assets:
Cash and cash equivalents	$	13,714	$	1,999	$	6,855	$	—		$	22,568	$	41,098	$	3,540	$	—		$	44,638
Trade receivables, net		96,436		18,256		10,166		—			124,858		101,410		8,436		—			109,846
Prepaid expenses and other		9,034		1,653		2,982		—			13,669		8,594		1,759		—			10,353
Assets of discontinued operations		—		—		7,794		—			7,794		—		15,036		—			15,036
Total current assets		119,184		21,908		27,797		—			168,889		151,102		28,771		—			179,873
Property and equipment, net		21,940		2,258		4,928		—			29,126		22,499		2,625		—			25,124
Intangible assets, net		129,293		24,240		8,018		—			161,551		144,764		7,096		—			151,860
Goodwill		258,905		29,963		10,188		—			299,056		258,905		9,307		—			268,212
Deferred debt financing costs and other		8,578		682		56		—			9,316		8,379		54		—			8,433
Investment in and advances to subsidiaries		96,244		—		—		(96,244	)		—		37,299		—		(37,299	)		—
Assets of discontinued operations		—		—		—		—			—		—		6,727		—			6,727
Total assets	$	634,144	$	79,051	$	50,987	$	(96,244	)	$	667,938	$	622,948	$	54,580	$	(37,299	)	$	640,229
Liabilities and Stockholder’s Equity
Current liabilities:
Current portion of long-term debt	$	16,000	$	—	$	—	$	—		$	16,000	$	13,534	$	—	$	—		$	13,534
Accounts payable and other liabilities		69,870		16,620		15,580		(6,058	)		96,012		74,655		8,154		(170	)		82,639
Liabilities of discontinued operations		1,676		—		8,389		(4,841	)		5,224		1,230		9,564		(3,273	)		7,521
Total current liabilities		87,546		16,620		23,969		(10,899	)		117,236		89,419		17,718		(3,443	)		103,694
Long-term debt, net of current portion		406,754		—		—		—			406,754		406,832		—		—			406,832
Other long-term liabilities		6,425		711		49		—			7,185		7,132		62		—			7,194
Deferred tax liability		16,296		—		2,001		—			18,297		9,702		2,442		—			12,144
Liabilities of discontinued operations		—		—		1,343		—			1,343		—		502		—			502
Total liabilities		517,021		17,331		27,362		(10,899	)		550,815		513,085		20,724		(3,443	)		530,366
Total stockholder’s equity		117,123		61,720		23,625		(85,345	)		117,123		109,863		33,856		(33,856	)		109,863
Total liabilities and stockholder’s equity	$	634,144	$	79,051	$	50,987	$	(96,244	)	$	667,938	$	622,948	$	54,580	$	(37,299	)	$	640,229

Issuer and Non-Guarantor Financial Information Condensed Combining Statements of Operations (Unaudited)

	Three Months Ended October 2, 2010															Three Months Ended September 26, 2009
							Non												Non
				Guar-			Guar-			Elimin-									Guar-			Elimin-
	Issuer			antors			antors			ations			Total			Issuer			antors			ations		Total
Revenue	$	159,619		$	3,603		$	13,184		$	—		$	176,406		$	132,519		$	10,935		$	—	$	143,454
Cost of revenue		132,234			3,291			11,153			—			146,678			111,159			9,973			—		121,132
Gross profit		27,385			312			2,031			—			29,728			21,360			962			—		22,322
General and administrative expenses		9,695			384			1,129			—			11,208			9,976			299			—		10,275
Selling and marketing expenses		4,329			4			429			—			4,762			4,229			561			—		4,790
Operating income		13,361			(76	)		473			—			13,758			7,155			102			—		7,257
Interest expense, net		7,738			1			(36	)		—			7,703			8,519			(17	)		—		8,502
Equity in net income (loss) of subsidiaries		287			—			—			(287	)		—			(2,093	)		—			2,093		—
Income (loss) from continuing operations before income taxes		5,910			(77	)		509			(287	)		6,055			(3,457	)		119			2,093		(1,245	)
Provision for income taxes		1,783			—			130			—			1,913			1,582			47			—		1,629
Income (loss) from continuing operations		4,127			(77	)		379			(287	)		4,142			(5,039	)		72			2,093		(2,874	)
Loss from discontinued operations, net of tax		(156	)		—			(15	)		—			(171	)		(228	)		(2,165	)		—		(2,393	)
Net income (loss)		3,971			(77	)		364			(287	)		3,971			(5,267	)		(2,093	)		2,093		(5,267	)
Less: Net income attributed to noncontrolling interest		—			—			9			—			9			—			—			—		—
Net income (loss) attributable to Vangent	$	3,971		$	(77	)	$	355		$	(287	)	$	3,962		$	(5,267	)	$	(2,093	)	$	2,093	$	(5,267	)

	Nine Months Ended October 2, 2010														Nine Months Ended September 26, 2009
							Non											Non
				Guar-			Guar-			Elimin-								Guar-			Elimin-
	Issuer			antors			antors			ations		Total			Issuer			antors			ations		Total
Revenue	$	545,807		$	3,603		$	36,039		$	—	$	585,449		$	380,493		$	30,949		$	—	$	411,442
Cost of revenue		453,176			3,291			30,896			—		487,363			316,623			27,792			—		344,415
Gross profit		92,631			312			5,143			—		98,086			63,870			3,157			—		67,027
General and administrative expenses		31,721			384			2,787			—		34,892			28,445			1,068			—		29,513
Selling and marketing expenses		14,432			4			1,448			—		15,884			11,826			1,493			—		13,319
Operating income		46,478			(76	)		908			—		47,310			23,599			596			—		24,195
Interest expense, net		23,506			1			(206	)		—		23,301			25,434			(48	)		—		25,386
Equity in net income (loss) of subsidiaries		(16,783	)		—			—			16,783		—			(2,980	)		—			2,980		—
Income (loss) from continuing operations before income taxes		6,189			(77	)		1,114			16,783		24,009			(4,815	)		644			2,980		(1,191	)
Provision for income taxes		5,213			—			385			—		5,598			4,864			203			—		5,067
Income (loss) from continuing operations		976			(77	)		729			16,783		18,411			(9,679	)		441			2,980		(6,258	)
Income (loss) from discontinued operations, net of tax		479			—			(17,435	)		—		(16,956	)		(736	)		(3,421	)		—		(4,157	)
Net income (loss)		1,455			(77	)		(16,706	)		16,783		1,455			(10,415	)		(2,980	)		2,980		(10,415	)
Less: Net income attributed to noncontrolling interest		—			—			9			—		9			—			—			—		—
Net income (loss) attributable to Vangent	$	1,455		$	(77	)	$	(16,715	)	$	16,783	$	1,446		$	(10,415	)	$	(2,980	)	$	2,980	$	(10,415	)

Issuer and Non-Guarantor Financial Information Condensed Combining Statements of Cash Flows (Unaudited)

	Nine Months October 2, 2010															Nine Months Ended September 26, 2009
							Non			Elimin-									Non			Elimin-
	Issuer			Guarantors			Guarantors			ations			Total			Issuer			Guarantors			ations			Total
Cash flows from operating activities
Continuing operations, net	$	42,146		$	(2,476	)	$	9,252		$	—			48,922		$	22,558		$	4,813		$	—		$	27,371
Discontinued operations, net		—			—			(1,180	)		—			(1,180	)		—			(4,335	)		—			(4,335	)
Net cash provided by (used in) operating activities		42,146			(2,476	)		8,072			—			47,742			22,558			478			—			23,036
Cash flows from investing activities
Acquisition, net of cash acquired		(58,205	)		—			(897	)		—			(59,102	)		—			—			—			—
Loans to subsidiaries, net		(5,980	)		—			—			5,980			—			(4,448	)		—			4,448			—
Capital expenditures		(5,723	)		(25	)		(3,629	)		—			(9,377	)		(8,262	)		(191	)		—			(8,453	)
Continuing operations, net		(69,908	)		(25	)		(4,526	)		5,980			(68,479	)		(12,710	)		(191	)		4,448			(8,453	)
Discontinued operations, net		—			—			(2,729	)		—			(2,729	)		—			(3,740	)		—			(3,740	)
Net cash used in investing activities		(69,908	)		(25	)		(7,255	)		5,980			(71,208	)		(12,710	)		(3,931	)		4,448			(12,193	)
Cash flows from financing activities
Borrowing under revolving credit facility		16,000			—			—			—			16,000			—			—			—			—
Loans from Vangent, Inc., net		—			4,500			—			(4,500	)
Repayment of senior secured loan		(13,612	)		—			—			—			(13,612	)		—			—			—			—
Deferred debt financing fees and other		(2,011	)		—			—			—			(2,011	)		(191	)		(40	)		—			(231	)
Continuing operations, net		377			4,500			—			(4,500	)		377			(191	)		(40	)		—			(231	)
Discontinued operations, net		—			—			1,480			(1,480	)		—			—			4,415			(4,448	)		(33	)
Net cash provided by (used in) financing activities		377			4,500			1,480			(5,980	)		377			(191	)		4,375			(4,448	)		(264	)
Effect of exchange rate changes on cash and cash equivalents		—			—			73			—			73			—			365			—			365
Net increase (decrease) in cash and cash equivalents		(27,385	)		1,999			2,370			—			(23,016	)		9,657			1,287			—			10,944
Total cash and cash equivalents, beginning of period		41,099			—			4,485			—			45,584			15,519			5,615			—			21,134
Total cash and cash equivalents, end of period		13,714			1,999			6,855			—			22,568			25,176			6,902			—			32,078
Less: Cash and cash equivalents, discontinued operations		—			—			—			—			—			—			2,451						2,451
Cash and cash equivalents, continuing operations	$	13,714		$	1,999		$	6,855		$	—		$	22,568		$	25,176		$	4,451		$	—		$	29,627

16. Subsequent Event

Sale of Discontinued Operations

At the end of October 2010, Vangent completed the sale of its principal operations in Mexico. The sale of operations in Argentina was completed in September 2010, and the pending sale of operations in Venezuela is expected to be completed by the end of 2010.


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

The following discussion and analysis of our consolidated financial condition and results of operations and cash flows should be read in conjunction with the unaudited condensed consolidated ~~financial~~ financial statements contained elsewhere in this quarterly report on Form 10-Q and the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the audited consolidated financial statements and notes thereto, included in our annual report on Form 10-K for the year ended December 31, ~~2009~~2010.

Overview

We are a leading provider of information management and business process outsourcing services to several U.S. public health care and other civilian government agencies, as well as selected U.S. defense and intelligence agencies, foreign governments and private sector entities. We design, build and operate mission-critical systems and processes to seamlessly deliver vital information, services and programs to our customers and their constituents. Most of our revenue is generated from long-term contracts that typically have duration of approximately five years, including option years. As of ~~October~~April 2, ~~2010~~2011, our total contract backlog was $21.08 billion, ~~about~~compared ~~the~~with ~~same~~$1.9 billion at asthe ~~at December 31,~~end ~~2009~~of 2010.

The Department of ~~Commerce (“DoC”) represented 31%, the Department of~~ Health and Human Services (“HHS”) represented 3150%, and the Department of Education (“DoED”) represented 1417% of total revenue for the ~~nine~~three months ended ~~October~~April 2, ~~2010~~2011. We manage our business through three segments: the Government Group; the International Group; and the Human Capital Group.

The Government Group is our largest segment and has many years of experience in providing information management and business process outsourcing to several civilian and defense agencies of the federal government, including ~~a 29-year history with~~ the Department of Education, ~~over 10 years with the Defense Information Systems Agency~~ and ~~eight years with~~ the Centers for Medicare and Medicaid Services (“CMS”). The Government Group is ~~also~~ responsible for the development, management, analysis and dissemination of healthcare information to the public sector and is one of the largest non-government providers of health information in the United States. The Government Group is also responsible for managing and disseminating information for the application process of DoED’s federal student aid program. The operations of Buccaneer acquired in September 2010 are part of the Government Group. The Government Group represented 86% of total revenue for the three months ended April 2, 2011.

The ~~Government~~International Group serves government customers in the United Kingdom and Canada and provides consulting, systems integration, and business process outsourcing solutions. The International Group represented 9111% of total revenue for the ~~nine~~three months ended ~~October~~April 2, ~~2010~~2011.

The ~~International~~Human Capital Group ~~serves government customers,~~ primarily inserves the ~~United~~private ~~Kingdom~~sector and ~~Canada,~~ ~~and~~ provides ~~consulting,~~workforce ~~systems~~solutions that ~~integration,~~automate ~~business process outsourcing,~~ and improve the ~~management~~ ofrecruitment, ~~data~~assessment, ~~identity~~selection, ~~revenue~~training and ~~human~~development ~~capital. As~~ of ~~October 2, 2010, the Company~~a customer’s ~~business~~ ~~operations~~workforce, ~~in Latin America were held for sale~~ and ~~are~~provides ~~classified~~learning asinfrastructure ~~discontinued operations~~development insolutions ~~the~~for ~~condensed~~public ~~consolidated financial statements. These operations were formerly part~~sector ~~of the International Group~~clients. The ~~International~~Human Capital Group represented 63% of total revenue for the ~~nine~~ three months ended ~~October~~ April 2, ~~2010~~2011.

~~The~~Buccaneer ~~Human~~Acquisition ~~Capital~~in Group designs, builds, and operates workforce solutions that automate and improve the recruitment, assessment, selection, training and development of a customer’s workforce. We provide solutions that automate pre-employment screening which improves the quality and retention of new employees and reduces the cost and time associated with workforce planning and hiring. The Human Capital Group represented 3% of total revenue for the nine months ended October 2, September 2010.

26In September 2010, Vangent acquired Buccaneer Computer Systems & Service, Inc. (“Buccaneer Acquisition”). Buccaneer is a leading provider of IT services, infrastructure, secure data hosting and data analytics for the government healthcare market. Vangent acquired all outstanding shares of Buccaneer stock in exchange for purchase consideration of $64.6 million.

Buccaneer Acquisition

On September 15, 2010, Vangent completed the acquisition (“Buccaneer Acquisition”) of Buccaneer Computer Systems & Service, Inc. (“Buccaneer”). Buccaneer is a leading provider of IT services, infrastructure, secure data hosting and data analytics for the government healthcare market. Vangent acquired all outstanding shares of Buccaneer stock in exchange for purchase consideration of $64.1 million. Vangent funded the $60.0 million paid at closing with available cash of $44.0 million and a variable-rate borrowing of $16.0 million drawn on its senior secured revolving credit facility. The purchase consideration is subject to working capital and other adjustments.

Discontinued Operations

At the end of 2009, Vangent completed an evaluation of its international business and made the determination to sell its business operations in Latin America. ~~The~~that ~~condensed~~are ~~consolidated financial~~reported ~~statements have been revised for all periods presented to report Latin America~~ as ~~discontinued~~ ~~operations. The~~ discontinued operations ~~include Vangent’s business operations~~ in ~~Mexico,~~ ~~Argentina,~~the ~~and~~consolidated ~~Venezuela~~financial statements. ~~The~~Sales ~~sale~~ of business operations in Argentina ~~was~~and Mexico were completed in ~~September~~ 2010, and the sale of operations in ~~Mexico~~Venezuela was completed atin February 2011 to complete the ~~end~~disposal of ~~October 2010~~discontinued operations.

Nature of Our Contracts

Contracts funded by U.S. government agencies represented 8984% of total revenue for the ~~nine~~three months ended ~~October~~April 2, ~~2010~~2011, compared with 8488% for the corresponding period in ~~2009~~2010. Revenue from contracts in which we acted as the prime contractor represented 6386% of total revenue, aan ~~reduction~~increase from 8767% for the corresponding period in ~~2009~~2010 ~~due~~that toincluded subcontract work performed on the U.S. ~~Census~~ ~~contract~~Census ~~in 2010~~contract. The continuation and renewal of our existing government contracts and new government contracts are, among other things, contingent upon the availability of adequate funding for the various federal government agencies with which we do business. Refer to our annual report on Form 10-K for the year ended December 31, ~~2009~~2010, for additional information concerning our business and the factors that could impact federal government spending and our federal government contracting business.

We have cost-plus, fixed-price and time and materials contracts. Fixed-priced contracts generally offer a higher profit margin opportunity but involve higher risks associated with potential cost overruns. Revenue from each type of contract as a percent of total revenue follows:

	Three Months Ended						~~Nine Months Ended~~
	October 2,			September 26,			October 2,			September 26,
	April 2,			April 3,
	2010			2009			2010			2009
	2011			2010
Cost-plus		6357	%		5665	%		67	%		53	%
Fixed-price		3336	%		4030	%		29	%		42	%
Time and materials		47	%		45	%		4	%		5	%
		100	%		100	%		~~100~~	%		~~100~~	%

The ~~increases~~decrease in the ~~percentages~~percentage of revenue from cost-plus contracts for the three ~~and nine~~ months ended ~~October~~ April 2, ~~2010~~2011, is primarily due to work performed on the U.S. 2010 Census contract that was completed in 2010.

Contract Backlog

Total contract backlog is the amount of revenue we expect to realize over the remaining term of the contracts. We include in backlog task orders awarded, but not contract ceiling values, under government-wide acquisition contracts or indefinite delivery, indefinite quantity contracts. Funded backlog is the portion for which funding has been authorized. Most of our federal government contracts allow the customer the option of extending the period of performance for a period of one or more years. A summary of contract backlog by business segment follows (in millions):

	October 2, 2010				December 31, 2009
	April 2, 2011				December 31, 2010
	Total		Funded		Total		Funded
Government Group	$	1,~~719~~480.15	$	~~326~~219.75	$	1,~~782~~629.62	$	~~313~~241.43
International Group		~~268~~247.70		~~181~~150.6		~~291~~251.29		~~196~~161.8
Human Capital Group		11107.31		1158.35		713.12		713.12
Discontinued operations		50.5		50.5		44.9		44.9
	$	1,834.6	$	428.6	$	1,894.3	$	416.3
	$	2,049.6	$	570.1	$	2,125.8	$	562.2

The ~~net~~reduction ~~change~~ in ~~total~~ contract backlog for the Government Group from December 31, ~~2009~~2010, reflects revenue earned on a major ~~contracts~~contract awarded in a prior ~~years,~~year. ~~including~~The ~~contracts~~increase ~~with~~for the ~~Centers~~Human ~~for Medicare and~~Capital ~~Medicaid~~Group ~~Services~~represents ~~and~~a ~~the~~new ~~U.S. Census~~ contract, ~~and~~for alearning ~~slowdown~~infrastructure indevelopment for the ~~level of~~ U. S. ~~government contract awards, partially offset by the addition of backlog from the Buccaneer Acquisition~~Army.

Critical Accounting Policies

~~The~~A ~~process~~number of ~~preparing~~our ~~financial~~accounting ~~statements~~policies inrequire ~~conformity~~the ~~with~~application ~~generally~~of ~~accepted~~significant ~~accounting~~judgment by ~~principles~~management, ~~requires~~and such judgments are reflected in the ~~use~~amounts ofreported ~~estimates~~in ~~and~~the ~~judgments~~condensed toconsolidated financial ~~determine~~statements. ~~certain~~In ofapplying ~~the~~these ~~assets~~policies, management uses its judgment to determine the ~~liabilities,~~appropriate ~~revenue~~assumptions ~~and~~to ~~expenses.~~be ~~These~~used in the determination of estimates. Estimates and ~~judgments~~assumptions are based upon what we believe is ~~the~~ the best information available, athistorical experience, the ~~time~~terms of existing contracts, observations of trends in the industry, information provided by our customers, and information available from other outside sources. Estimates and ~~judgments~~assumptions could change materially as conditions within and beyond our control change. ~~Accordingly,~~We ~~actual~~evaluate the estimates and judgments relating to critical accounting policies on an ongoing basis. Actual results ~~could~~may differ ~~materially~~ significantly from ~~those~~the estimates reflected in the consolidated financial statements. ~~The~~There ~~critical~~have been no significant changes in the critical accounting estimates and judgments used in the preparation of the condensed consolidated financial statements that are described in our annual report on Form 10-K for the year ended December 31, 2010, ~~2009:~~and include revenue recognition and cost estimation on long-term contracts;, definite-life intangible assets;, goodwill and an indefinite-life intangible asset;, equity-based compensation;, income taxes and ~~income~~tax ~~taxes~~valuation allowance, and discontinued operations.

AThere ~~significant~~have ~~change~~been inno ~~critical~~impairment ~~accounting~~charges ~~estimates~~for the Government Group and ~~judgments~~we ~~resulted~~do innot aexpect ~~charge~~the Government Group to be at risk for impairment charges. Based on our most recent goodwill evaluation, we have determined under step one of the goodwill impairment test that the estimated ~~$18.5 million~~fair value amount for the ~~nine~~Government ~~months~~Group ~~ended~~significantly ~~October 2,~~exceeded ~~2010,~~the ~~representing~~carrying anvalue ~~addition~~of the reporting unit. With respect to the Human Capital Group, any adverse changes in expected operating ~~loss~~results onand/or ~~disposal~~unfavorable ofchanges ~~discontinued~~in ~~operations~~economic ~~based~~factors onused to estimate fair ~~value~~values ~~estimates~~could result in non-cash impairment charges in a future period.

~~Goodwill and Indefinite-Life Intangible Asset~~23

Vangent performs annual impairment assessments of goodwill for each reporting unit, or segment, and of the indefinite-life intangible asset (not subject to amortization) of the Human Capital Group in the fourth quarter of each year based on estimated fair values or more frequently if indicators of impairment exist. Fair values are determined using the income approach based on a discounted cash flow methodology. The Human Capital Group experienced an operating loss of $2.0 million and a negative operating margin of 11% for the nine months ended October 2, 2010, and an operating loss of $5.1 million and a negative operating margin of 15%, including impairment charges that reduced the carrying amount of goodwill to fair value, for the year ended December 31, 2009. The remaining balance of Human Capital Group goodwill was $8.5 million and indefinite-life intangible asset was $10.3 million at October 2, 2010. Continuing adverse changes in expected operating results and/or unfavorable changes in economic factors used to estimate fair values could result in non-cash impairment charges for the Human Capital Group in a future period.

Tax Valuation Allowance

A tax valuation allowance is recorded against deferred tax assets when it is more likely than not that a tax benefit will not be realized in the future. The assessment requires judgment with respect to tax benefits that may be realized. The Company considers all available positive and negative evidence, including future reversals of temporary differences, projected future taxable income, tax planning strategies, and recent financial results. The Company continues to conclude as of October 2, 2010, based upon all available evidence, that it is more likely than not that the U.S. deferred tax assets will not be realizable. The tax valuation allowance amounted to $39.1 million at October 2, 2010. The Company has recently experienced positive trends in its continuing operating performance, and the positive trends may continue in future periods. In the event the Company determines in a future period that realization of deferred tax benefits, primarily net operating loss carryforwards, is more likely than not, all or a portion of the tax valuation allowance would be reversed. A reversal or reduction to the tax valuation allowance would be recorded as a reduction to the provision for income taxes.

Recent Accounting Pronouncements

Reference is made to the notes to the condensed consolidated financial statements for information on recent accounting pronouncements.

Results of Operations

Statements of operations data follow (dollars in thousands):

	Three Months Ended									~~Nine Months Ended~~
	October 2,			September 26,			Increase			October 2,			September 26,			Increase
	April 2,			April 3,			Increase
	2010			2009			(Decrease)			2010			2009			(Decrease)
	2011			2010			(Decrease)
Statements of Operations Data
Revenue	$	~~176~~175,~~406~~849		$	~~143~~194,~~454~~197		$	32(18,~~952~~348	)	$	~~585,449~~		$	~~411,442~~		$	~~174,007~~
Cost of revenue		~~146~~145,~~678~~192			~~121~~158,~~132~~226			25(13,~~546~~034	)		~~487,363~~			~~344,415~~			~~142,948~~
Gross profit		2930,~~728~~657			2235,~~322~~971			7(5,~~406~~314	)		~~98,086~~			~~67,027~~			~~31,059~~
General and administrative expenses		1112,~~208~~149			1012,~~275~~190			~~933~~(41	)		~~34,892~~			~~29,513~~			~~5,379~~
Selling and marketing expenses		45,~~762~~138			45,~~790~~675			(28537	)		~~15,884~~			~~13,319~~			~~2,565~~
Operating income		13,~~758~~370			718,~~257~~106			6(4,~~501~~736	)		~~47,310~~			~~24,195~~			~~23,115~~
Interest expense, net		7,~~703~~491			8,~~502~~236			(~~799~~745	)		~~23,301~~			~~25,386~~			~~(2,085~~	)
Income (loss) from continuing operations before income taxes		6,055			(1,245	)		7,300			24,009			(1,191	)		25,200
Income from continuing operations before income taxes		5,879			9,870			(3,991	)
Provision for income taxes		13,~~913~~730			1,~~629~~834			~~284~~1,896			~~5,598~~			~~5,067~~			~~531~~
Income (loss) from continuing operations		4,142			(2,874	)		7,016			18,411			(6,258	)		24,669
Income from continuing operations		2,149			8,036			(5,887	)
Loss from discontinued operations, net of tax		(~~171~~12	)		(2,~~393~~437	)		2,~~222~~425			~~(16,956~~	)		~~(4,157~~	)		~~(12,799~~	)
Net income (loss)		3,971			(5,267	)		9,238			1,455			(10,415	)		11,870
Net income		2,137			5,599			(3,462	)
Less: Net income attributed to noncontrolling interest		9			—			9			9			—			9
Net loss attributed to noncontrolling interest		(8	)		—			(8	)
Net income (loss) attributable to Vangent	$	3,962		$	(5,267	)	$	9,229		$	1,446		$	(10,415	)	$	11,861
Net income attributable to Vangent	$	2,145		$	5,599		$	(3,454	)
Statements of Operations Data as a Percent of Revenue
Revenue		100.0	%		100.0	%					~~100.0~~	%		~~100.0~~	%
Cost of revenue		8382.16			8481.45						~~83.2~~			~~83.7~~
Gross profit margin		1617.94			1518.65						~~16.8~~			~~16.3~~
General and administrative expenses		6.49			76.23						~~6.0~~			~~7.2~~
Selling and marketing expenses		2.79			32.39						~~2.7~~			~~3.2~~
Operating income margin		7.86			59.13						~~8.1~~			~~5.9~~
Interest expense, net		4.43			64.02						~~4.0~~			~~6.2~~
Income (loss) from continuing operations before income taxes		3.4			(0.9	)					4.1			(0.3	)
Income from continuing operations before income taxes		3.3			5.1
Provision for income taxes		12.1			10.19						~~1.0~~			~~1.2~~
Income (loss) from continuing operations		2.3			(2.0	)					3.1			(1.5	)
Income from continuing operations		1.2			4.2
Loss from discontinued operations, net of tax		—			(1.73	)					~~(2.9~~	)		~~(1.0~~	)
Net income (loss)		2.3			(3.7	)					0.2			(2.5	)
Net income		1.2			2.9
Less: Net income attributed to noncontrolling interest		—			—						—			—
Net loss attributed to noncontrolling interest		—			—
Net income (loss) attributable to Vangent		2.3	%		(3.7	)%					0.2	%		2.5	%
Net income attributable to Vangent		1.2	%		2.9	%

29Three Months Ended April 2, 2011 and April 3, 2010

Three and Nine Months Ended October 2, 2010 and September 26, 2009

Overview

The Company’s fiscal year begins on January 1 and ends on December 31. Quarterly periods are based on a four-week, four-week, and five-week methodology ending on the Saturday nearest to the end of the quarter to align with the Company’s domestic business processes. There are 275 days in the nine-month period ended October 2, 2010, compared with 269 days in the corresponding period in 2009. Results of operations cover a period that is 6 days, or 2%, longer than the corresponding period in 2009. Foreign subsidiaries are consolidated based on the calendar quarter.

Buccaneer Acquisition

OnIn September ~~15,~~ 2010, Vangent completed the Buccaneer Acquisition. The results of operations of of Buccaneer ~~for the period September 15 to October 2, 2010,~~ are included in the consolidated statements of operations and cash flows for the ~~periods~~three months ended ~~October~~April 2, ~~2010~~2011. ~~The results of~~ ~~operations for Buccaneer reflect accelerated amortization of acquired intangible assets.~~

Revenue

The Department of Health and Human Services (“HHS”) represented 50% and the Department of Education (“DoED”) represented 17% of total revenue for the three months ended April 2, 2011.

A summary of revenue by business segment follows (dollars in thousands):

	Three Months Ended												~~Nine Months Ended~~
	October 2,			September 26,			Increase (Decrease)						October 2,			September 26,			Increase (Decrease)
	April 2,			April 3,			Increase (Decrease)
	2010			2009			Amount			Percent			2010			2009			Amount			Percent
	2011			2010			Amount			Percent
Revenue by business segment
Government Group	$	~~158~~152,~~523~~048		$	~~125~~177,~~714~~237		$	32(25,~~809~~189	)		26(14	)%	$	~~534,437~~		$	~~359,061~~		$	~~175,376~~			49	%
International Group		1219,~~775~~009			11,~~072~~825			17,~~703~~184			1561	%		~~35,748~~			~~31,330~~			~~4,418~~			14	%
Human Capital Group		54,~~447~~922			76,~~712~~135			(21,~~265~~213	)		(2920	)%		~~17,416~~			~~24,569~~			~~(7,153~~	)		~~(29~~	)%
Elimination		(~~339~~130	)		(1,~~044~~000	)		~~705~~870			6887	%		~~(2,152~~	)		~~(3,518~~	)		~~1,366~~			39	%
	$	~~176~~175,~~406~~849		$	~~143~~194,~~454~~197		$	32(18,~~952~~348	)		23(9	)%	$	~~585,449~~		$	~~411,442~~		$	~~174,007~~			42	%
Business segment revenue as a percent of total revenue
Government Group		8986.95	%		8791.63	%								~~91.3~~	%		~~87.3~~	%
International Group		710.28			76.71									~~6.1~~			~~7.6~~
Human Capital Group		32.18			53.42									~~3.0~~			~~6.0~~
Elimination		(0.21	)		(0.76	)								~~(0.4~~	)		~~(0.9~~	)
		100.0	%		100.0	%								~~100.0~~	%		~~100.0~~	%

Government Group Revenue

~~The~~Government Group revenue declined $25.2 million, or 14%. Revenue from contracts with the Department of Commerce (“DoC”) ~~represented~~declined ~~31%~~$50.0 million for the three months ended April 2, 2011, as a result of the ~~Department~~completion of ~~Health~~the ~~and~~U.S. ~~Human~~2010 Census contract at the end of 2010. Revenue from the ~~Services~~2010 ~~(“HHS”)~~U.S. ~~represented~~census ~~31%,~~contract ~~and~~totaled $166.8 million for the ~~Department~~full ofyear ~~Education~~2010, ~~(“DoED”)~~and, ~~represented~~as ~~14%~~a ofresult ~~total~~of completion of the census contract, revenue from DoC contracts for the ~~nine~~remainder ~~months~~of ~~ended~~2011 ~~October 2,~~will continue to be lower than 2010.

The ~~nine~~Buccaneer ~~month~~Acquisition ~~period~~completed isin 6September ~~days,~~2010 orcontributed ~~2%, longer than the corresponding period in 2009 generating additional~~ revenue of $1132.61 million. Afor the ~~summary~~three ofmonths ~~increases~~ended inApril 2, ~~Government~~2011. ~~Group~~Revenue ~~revenue for~~from HHS contracts, primarily the ~~three~~Centers for Medicare and ~~nine~~Medicaid ~~months~~Services ~~ended October 2~~(“CMS”), ~~2010,~~represented ~~compared~~77% ~~with~~of ~~the~~Buccaneer’s ~~corresponding~~revenue ~~periods~~for ~~in 2009~~the ~~follows:~~period.

•Other ~~Revenue~~changes ~~from~~in ~~DoC~~Government ~~contracts~~Group ~~increased~~revenue, ~~$33.2~~excluding ~~million~~Buccaneer, for the three months ~~and~~ended April 2, ~~$167.9~~2011, ~~million~~compared ~~for~~with the ~~nine~~corresponding ~~months~~period in 2010 include: (i) revenue from ~~the~~HHS contracts, ~~processing~~primarily ofCenters ~~census~~for ~~forms~~Medicare and ~~data~~Medicaid ~~capture~~Services ~~under~~(“CMS”), ~~the~~declined U$4.S.4 million ~~Census~~from lower contract ~~that~~volume, ~~was~~and ~~substantially~~(ii) revenue ~~completed~~from incontracts with the ~~third~~Department ~~quarter~~ of ~~2010~~Labor declined $1.9 million.

• Revenue from DoED increased $4.3 million for the three months and $9.1 million for the nine months primarily from contracts with the Office of Federal Student Aid.

• The Buccaneer Acquisition completed in mid September 2010 contributed revenue of $4.1 million from the date of acquisition for the three and nine month periods.

• Revenue from HHS contracts, primarily Centers for Medicare and Medicaid Services (“CMS”), declined $1.4 million for the three months but increased $2.8 million for the nine months.

• Revenue from Department of Defense (“DoD”) contracts increased $1.4 million for the three months and $2.5 million for the nine months as work on new contracts offset lower revenue on the traumatic brain injury contract.

The increases were partially offset by (i) a reduction of $8.8 million for the three and nine months resulting from the one-time cash-for-clunkers work for the Department of Transportation in 2009, and (ii) reductions of $1.8 million for the three months and $5.2 million for the nine months resulting from the transition to automated processing of ERISA filings under contracts with the Department of Labor (“DoL”).

International Group Revenue

~~The increases in~~ International Group revenue ~~reflect~~increased ~~increases of~~ $17.2 million, ~~for~~or ~~the three months and $2~~61%.~~3 million~~ ~~for~~The ~~the~~increase ~~nine~~reflects ~~months~~revenue ~~ended October 2, 2010,~~ from the ~~start~~ramp up of a ~~major~~ contract in the United Kingdom,. ~~partly~~Compared ~~offset~~with by2010, ~~reductions~~revenue from ~~lower~~this contract ~~volume~~will incontinue ~~Canada~~to be accretive for the remainder of 2011. Changes in foreign currency exchange rates increased revenue ~~for the nine months~~ by $10.24 million, compared with the ~~average exchange rates prevailing during the~~ corresponding period in ~~2009~~2010.

Human Capital Group Revenue

~~The reductions in~~ Human Capital Group revenue ~~reflect~~declined ~~reductions of~~ $21.82 million, ~~for~~or ~~the three months and $9~~20%.~~3 million~~ ~~for~~The ~~the~~reduction ~~nine~~reflects ~~months ended October 2, 2010, from the completion of a foreign~~lower ~~military~~assessment ~~contract~~and ~~with~~training ~~the~~services ~~U.S.~~for ~~Air~~commercial ~~Force~~customers tofrom ~~modernize~~continued ~~the~~high ~~Royal~~unemployment ~~Saudi Air Force learning infrastructure~~levels.

Cost of Revenue

The ~~increases~~reduction in cost of revenue ~~for~~of ~~the~~$13.0 million, ~~three~~or ~~and~~8%, ~~nine~~primarily ~~months~~reflects ~~ended~~the ~~October 2,~~completion ~~2010,~~of ~~primarily~~work ~~reflect~~performed ~~costs~~by ~~incurred~~the ~~for~~Government ~~contract~~Group ~~work performed~~ under the U.S. 2010 Census contract with DoC ~~that~~at ~~was substantially completed in~~ the ~~third~~end ~~quarter~~ of ~~2010. The average number of employees~~ ~~increased 36% primarily for the U.S. Census contract. The Buccaneer Acquisition completed in mid-September~~ 2010 ~~increased~~as costs for ~~the~~salaries ~~three~~ and ~~nine~~wages ~~months~~declined 26%, ~~including~~employee ~~accelerated amortization~~benefits ofdeclined ~~acquired~~30%, ~~intangible~~and subcontractors ~~assets.~~and ~~The~~agencies ~~nine-month~~declined ~~period is 6 days, or 2~~44%, ~~longer~~compared ~~than~~with the corresponding period in ~~2009~~2010. ~~resulting~~The Buccaneer Acquisition in ~~additional~~September 2010 ~~costs~~partially ofoffset ~~$9.6 million.~~this ~~Changes~~decline inas ~~foreign exchange~~it ~~rates~~ increased costs ofby $29.0 million, ~~the~~including ~~International~~amortization ~~Group~~of by $1.03 million for ~~the~~acquired ~~nine~~intangible ~~month~~assets for customer ~~period~~relationships.

~~The increases in the gross profit margin, or the ratio of gross profit to revenue, to 16.8%~~25 ~~for the three and nine months, compared with 15.6 % and 16.3% for the corresponding periods in 2009, primarily reflects changes in the mix of contracts.~~

General and Administrative Expenses

The increases in general and administrative expenses reflect increased incentive compensation expense of $0.9 million for the three months and $3.9 million for the nine months, an increase in legal and consulting fees, and acquisition-related costs and expenses of $0.7 million relating to the Buccaneer Acquisition completed in mid September 2010. Incentive compensation expense is accrued based upon the level of operating results compared to established targets; there was no incentive compensation expense accrued for the corresponding periods in 2009. In addition, the nine-month period is 6 days, or 2%, longer than the corresponding period in 2009 resulting in additional expenses of $0.6 million.

As a percentage of revenue, general and administrative expenses declined 6.4% for the three months and 6.0% for the nine months, compared with 7.2% for the corresponding periods in 2009, reflecting the revenue earned on the U.S. Census contract for which there was minimal incremental general and administrative expenses.

Costs for the International Group increased due to the ramp up of a contract in the United Kingdom. Changes in foreign exchange rates increased costs of the International Group by $0.4 million, compared with the corresponding period in 2010.

The reduction in the gross profit margin to 17.4% from 18.5% primarily reflects the completion of work on the U.S. 2010 Census contract with DoC at the end of 2010.

General and Administrative Expenses

Although total general and administrative expenses of $12.1 million were about the same as for the corresponding period in 2010, the Buccaneer Acquisition completed in September 2010 increased expenses by $1.5 million and expenses increased from the ramp up of a contract in the United Kingdom. The increases were offset by reductions totaling $1.5 million from lower consulting, legal and other expenses and cost reduction initiatives.

General and administrative expenses were 6.9% of revenue, compared with 6.3% for the corresponding period in 2010. The increase reflects the reduction in revenue from the U.S. 2010 Census contract that was completed in 2010 for which there was minimal incremental general and administrative expense.

Selling and Marketing Expenses

The ~~increase~~reduction in selling and marketing expenses ~~for~~of ~~the~~$0.5 million, ~~nine~~or ~~months~~9%, primarily reflects an ~~increase~~reduced instaffing ~~the~~and ~~number~~lower ofcommissions, ~~new~~offset ~~business~~by ~~development~~added ~~employees~~expenses in$0.5 million from the ~~Government Group~~Buccaneer Acquisition.

Operating Income

A summary of operating income by business segment follows (dollars in thousands):

	Three Months Ended												~~Nine Months Ended~~
							Increase												Increase
	April 2,			April 3,			Increase (Decrease)
	October			September			(Decrease)						October			September			(Decrease)
	2011			2010			Amount			Percent
	2, 2010			26, 2009			Amount			Percent			2, 2010			26, 2009			Amount		Percent
Operating income (loss) by business segment
Operating income (loss) by business segment
Government Group	$	13,213		$	18,869		$	(5,656	)		(30	)%
Government Group	$	14,080		$	7,989		$	6,091			76	%	$	48,914		$	26,340		$	22,574		86	%
International Group		935			62			873			1,408
International Group		346			20			326			—	%		416			(90	)		506		—	%
Human Capital Group		(750	)		(820	)		70			9
Human Capital Group		(660	)		(738	)		78			11	%		(2,002	)		(2,023	)		21		1	%
Corporate		(28	)		(5	)		(23	)		(460	)
Other		(8	)		(14	)		6			—	%		(18	)		(32	)		14		—	%
	$	13,370		$	18,106		$	(4,736	)		(26	)%
	$	13,758		$	7,257		$	6,501			90	%	$	47,310		$	24,195		$	23,115		96	%
Operating margin by business segment
Operating margin by business segment
Government Group		8.7	%		10.7	%
Government Group		8.9	%		6.4	%								9.2	%		7.3	%
International Group		4.9	%		0.5	%
International Group		2.7	%		0.2	%								1.2	%		(0.3	)%
Human Capital Group		(15.2	)%		(13.4	)%
Human Capital Group		(12.1	)%		(9.6	)%								(11.5	)%		(8.2	)%

The ~~increases~~reduction in Government Group operating income ~~for~~of ~~the~~$5.7 million, ~~three~~or 30%, and ~~nine~~the ~~months~~reduction in ~~ended~~the ~~October 2,~~operating ~~2010,~~margin to 8.7% from 10.7% primarily reflect the completion of work on the U.S. 2010 Census contract with DoC ~~that~~at ~~was substantially completed in~~ the ~~third~~end ~~quarter~~ of 2010. Award fees earned under cost-plus contracts, including the U.S. 2010 Census contract, ~~increased~~declined ~~$2.2 million~~by ~~for the three months and~~ $~~16.~~5.9 million ~~for the nine months,~~ compared with the corresponding period ~~periods~~ in ~~2009~~2010. The ~~increase~~Buccaneer Acquisition in ~~operating income for the nine months was partly offset by (i)~~September ~~reductions~~2010 ofcontributed $1.31 million ~~for the three months and $3.7 million for the nine months from contracts with DoL resulting from the transition~~ to ~~automated~~operating ~~processing~~income ~~of ERISA filings~~ and ~~upfront~~reflects ~~development~~charges ~~costs~~for onamortization ~~a fixed-price contract, and (ii) higher accrued expenses~~ of ~~$3.7 million~~intangible assets for ~~incentive~~customer ~~compensation compared with the corresponding period in 2009 when no incentive compensation was earned or accrued~~relationships.

The increase in International Group operating ~~results~~income ~~improved~~of ~~but~~$0.9 million ~~continued~~and toincrease ~~reflect~~in ~~low~~ the operating ~~margins as~~margin ~~higher~~to ~~income~~4.9% ~~from~~reflects the ~~start~~ramp up of a ~~major~~ contract in the United Kingdom ~~was partly offset with lower income from Canada~~.

~~The continuing operating loss for the Human Capital Group for the three and nine months ended~~26 October 2, 2010, reflects the adverse impact of lower revenue from completion of the Royal Saudi Air Force contract in the 2010 periods and reductions in training needs and customer hiring patterns from continued high unemployment levels in the United States.

Interest Expense, Net

The reductions in interest expense, net, of $0.8 million for the three months and $2.1 million for the nine months ended October 2, 2010, resulted from lower average interest rates and a reduction in February 2010 in the notional amount and the average interest rate on the hedged portion of the term loan. The reduction for the nine months was partly offset by the period that is 6 days, or 2%, longer than the corresponding period in 2009 resulting in additional interest expense of $0.5 million.

The Human Capital Group operating losses and negative operating margins reflect the adverse impact of lower revenue from reductions in training needs and customer hiring patterns from continued high unemployment levels.

Interest Expense, Net

The reduction in interest expense, net, of $0.7 million, or 9%, resulted from the lower variable rates that replaced the higher fixed rate on the hedged portion of the term loan under the interest rate swap agreement that matured in February 2011. The interest rate swap agreement with a notional amount of $150.0 million under which we paid a fixed rate of 3.28% matured in February 2011. The full amount of the term loan amounting to $215.4 million is now subject to variable interest rate risk. The debt repayment of $13.6 million at the end of March 2010 contributed to the reduction in interest expense. Variable rates under the term loan averaged 2.31%, a decline of 20 basis points from the corresponding period in 2010.

Provision for Income Taxes

The provision for income taxes increased $1.9 million, or 103%. A summary of the provision for income taxes and changes follows (in thousands):

	Three Months Ended									~~Nine Months Ended~~
	October 2,			September 26,			Increase			October 2,			September 26,		Increase
	April 2,						Increase
	2010			2009			(Decrease)			2010			2009		(Decrease)
	2011			2010			(Decrease)
Provision for income taxes excluding tax valuation allowance	$	3,047		$	84		$	2,963		$	8,912		$	1,834	$	7,078
Provision (benefit)for income taxes
Tax valuation allowance		(1,134	)		1,545			(2,679	)		(3,314	)		3,233		(6,547	)
Before effects of adjustment and tax valuation allowance	$	2,116		$	2,904		$	(788	)
Total provision for income taxes	$	1,913		$	1,629		$	284		$	5,598		$	5,067	$	531
Deferred tax effect of interest rate swap agreement		1,614			—			1,614
Reversal of tax valuation allowance		—			(1,070	)		1,070
Total provision for income taxes	$	3,730		$	1,834		$	1,896
Effective tax rate
Before effects of adjustment and tax valuation allowance		36	%		29	%		7	%
Deferred tax effect of interest rate swap agreement		27			—			27
Reversal of tax valuation allowance		—			(10	)		10
Total provision for income taxes		63	%		19	%		44	%

The provision for income taxes is composed of U.S. federal, state and local and foreign income taxes. The provision for income taxes for the ~~nine~~three months ended ~~October~~April 2, ~~2010~~2011, isincludes ~~net of a~~an ~~reduction~~additional charge of $31.36 million ~~for~~resulting afrom ~~change in~~ the ~~tax valuation allowance for~~ deferred tax ~~assets resulting~~effect ~~from~~relating ~~the~~to ~~utilization of a portion of~~ the ~~net~~interest rate ~~operating~~swap ~~loss~~agreement ~~carryforward~~that ~~against~~matured ~~taxable income~~in ~~earned for~~ the ~~nine~~first ~~months~~quarter ~~ended~~of ~~October 2, 2010~~2011. The ~~Company~~ ~~continues~~deferred totax ~~conclude~~effect aswas ofassociated ~~October~~with 2,the ~~2010,~~amount ~~based~~that ~~upon~~remained ~~all~~in ~~available~~Other ~~evidence,~~Comprehensive ~~that~~Income/Loss it(“OCI”) isat ~~more~~December 31, ~~likely~~2010, ~~than~~as ~~not~~a result ~~that~~of the ~~U.S.~~release ~~deferred tax~~of ~~assets~~the ~~will not be realizable. The~~ tax valuation allowance ~~amounted~~in ~~to $39.1 million at October 2,~~ 2010. Inon the ~~event~~beginning ~~the Company determines in a future period that realization of~~ deferred tax asset ~~benefits,~~balance ~~primarily~~through ~~net~~continuing ~~operating~~operations ~~loss~~and ~~carryforwards,~~subsequent isactivity ~~more~~classified ~~likely~~in ~~than~~OCI. ~~not,~~The ~~all~~maturity ~~or a portion~~ of the ~~tax~~swap ~~valuation~~agreement ~~allowance~~allows ~~would~~for bethe ~~reversed.~~clearing Aof ~~reversal or reduction to~~ the disproportionate tax ~~valuation allowance~~effect ~~would~~in beOCI ~~recorded as a reduction~~ to ~~the provision for income taxes~~continuing operations.

~~Discontinued~~The ~~Operations~~provision for income taxes for the corresponding period in 2010 reflects a reduction in the tax valuation allowance for deferred tax assets from the utilization of a portion of the net operating loss carryforward. The Company has concluded based upon all available evidence, that it is more likely than not that U.S. the benefits from deferred tax assets will be realized, except for a portion relating to a net capital loss carryforward.

~~A summary of revenue, cost and expenses for discontinued operations in Mexico, Argentina, and~~27 ~~Venezuela that are segregated and reported separately in the condensed consolidated financial statements follows (in thousands):~~

	Three Months Ended									Nine Months Ended
	October 2,			September 26,			Increase			October 2,			September 26,			Increase
	2010			2009			(Decrease)			2010			2009			(Decrease)
Revenue	$	7,619		$	5,939		$	1,680		$	21,829		$	16,433		$	5,396
Costs and expenses		7,050			8,140			(1,090	)		21,896			20,982			914
Expected loss on disposal		579			—			579			18,474			—			18,474
Other (income) expense, net		(198	)		174			(372	)		(944	)		156			(1,100	)
Income (loss) from discontinued operations before income taxes		188			(2,375	)		2,563			(17,597	)		(4,705	)		(12,892	)
Provision (benefit) for income taxes		359			18			341			(641	)		(548	)		(93	)
Loss from discontinued operations, net of tax	$	(171	)	$	(2,393	)	$	2,222		$	(16,956	)	$	(4,157	)	$	(12,799	)

Revenue and costs and expenses for discontinued operations are denominated in multiple foreign currencies, primarily the Mexican Peso, and are significantly affected by foreign currency exchange rate changes.

The increases in revenue from discontinued operations for the three and nine months ended October 2, 2010, resulted primarily from a contract with Mexico’s social security agency that was in the start up phase and experienced operational delays in the corresponding periods in 2009. Although revenue from Mexico increased, revenue continued to be adversely affected by low member enrollments under the social security contract. The increases were partially offset by the completion of a contract with the Mexican tax authority in March 2010. Changes in foreign currency exchange rates, primarily the Mexican Peso, reduced revenue by $1.0 million, or 5%, for the nine months, compared with the average exchange rates prevailing during the corresponding period in 2009.

~~The~~Discontinued ~~reduction in costs and expenses for discontinued operations for the three months resulted~~Operations primarily from the completion of a contract in March 2010. The increase in costs and expenses for the nine months ended October 2, 2010, resulted from the contract with Mexico’s social security agency that was in the start up phase with operational delays in the corresponding period in 2009. Under fair-value accounting for discontinued operations, there is no depreciation and amortization expense for the nine months ended October 2, 2010, compared with $1.0 million for the corresponding period in 2009.

~~Breakeven~~At ~~operating~~the ~~results~~end of 2009, ~~excluding~~Vangent ~~expected~~completed ~~loss~~an onevaluation ~~disposal~~of ~~and~~its ~~other~~international ~~income,~~business ~~were~~and made the ~~achieved~~determination ~~from~~to ~~discontinued~~sell its business operations ~~for~~in Latin America that are reported as discontinued operations in the ~~nine~~consolidated ~~months~~financial ~~ended~~statements. ~~October 2,~~The ~~1010,~~sale ~~from~~of ~~actions~~business ~~taken~~operations in Argentina towas ~~stabilize~~completed in the ~~operational~~third ~~aspects~~quarter of 2010 and the ~~social~~sale ~~security~~of ~~contract~~operations in Mexico ~~and~~was ~~from~~completed in the fourth quarter of 2010. The sale of operations in Venezuela was completed in February 2011 to ~~suspension~~complete the disposal of ~~depreciation~~discontinued operations. A summary of revenue and ~~amortization.~~cost and expenses for discontinued operations in Latin America that are segregated and reported separately in the condensed consolidated financial statements follows (in thousands):

A charge for expected loss on disposal of discontinued operations of $5.0 million was recorded for the year ended December 31, 2009. The charge was calculated based on estimates of fair value, less cost to sell, compared with net assets of discontinued operations. The fair value estimates were revised in 2010 resulting in an additional charge of $18.5 million for the nine months ended October 2. 2010. The sale of operations in Argentina was completed in September 2010, and the sale of operations in Mexico was completed at the end of October 2010.


	Three Months Ended
	April 2,			April 3,
	2011			2010

Revenue	$	137		$	7,135
Costs and expenses		144			7,500
Expected loss on sale or disposal		—			2,618
Other (income) expense, net		5			(753	)

Loss from discontinued operations before income taxes		(12	)		(2,230	)
Provision for income taxes		—			207

Loss from discontinued operations, net of tax	$	(12	)	$	(2,437	)

Other income from discontinued operations for the nine months ended October 2, 2010, includes equity in net income of $1.1 million from a joint venture in Argentina that began operating in the second quarter of 2009.

Liquidity and Capital Resources

Our primary sources of liquidity are available cash and cash equivalents, a line of credit under the revolving credit facility, and cash flows from operating activities. ~~Cash and cash~~ equivalents amounted to $22.6 million at October 2, 2010. Subject to certain limitations, including compliance with the maximum allowable limits under the leverage ratio covenant under the senior secured credit facility, the remaining borrowing amount available under the line of credit under the revolving credit facility was $33.5 million at October 2, 2010. The revolving credit facility expires February 14, 2012. Based on our current planned level of operations, we believe our cash and cash equivalents, cash flow from operations, and available line of credit will be adequate to meet our liquidity needs for at least the next twelve months, including scheduled debt and interest payments, scheduled lease payments, noncancelable purchase and other contractual commitments, and planned capital expenditures.

OnCash ~~September~~and cash equivalents amounted to $46.4 15million at April 2, ~~2010~~2011, of which 64% was held by Vangent ~~completed~~in the ~~Buccaneer~~United ~~Acquisition~~States and ~~funded~~ the ~~$60~~remaining portion was held by foreign subsidiaries or joint ventures.0 Cash held by foreign subsidiaries would be subject to U. S. federal income taxes in the ~~million~~event ~~paid~~the atfunds ~~closing~~were ~~with~~repatriated ~~available~~to ~~cash~~the United States. The Company has accrued a provision for income taxes of $~~44.~~0.2 million ~~and~~on a ~~variable-rate~~specific ~~borrowing~~portion of ~~$16.0 million~~the ~~drawn~~current onyear’s undistributed earnings of one of its ~~senior~~foreign ~~secured~~operations ~~revolving~~since ~~credit~~this ~~facility~~specific portion is not considered to be reinvested indefinitely.

~~Cash~~Subject ~~and~~to ~~cash~~certain ~~equivalents~~limitations, ~~are~~the ~~composed~~amount ofavailable ~~cash~~under inthe ~~banks~~revolving ~~and~~credit ~~highly~~facility ~~liquid instruments with~~was ~~original~~$49.8 million ~~maturities~~at ~~of 90~~April ~~days~~2, or2011; ~~less.~~the ~~Cash~~revolving ~~equivalents~~credit orfacility ~~marketable~~is ~~securities~~scheduled ~~are~~to ~~comprised~~expire ofin February ~~repurchase~~2012. ~~agreements~~Based ~~and~~on ~~money~~our ~~market~~current ~~securities~~planned ~~with~~level ~~major~~of ~~commercial~~operations, ~~banks~~we ~~under~~believe ~~which~~our cash ~~is primarily~~and ~~invested~~cash inequivalents, cash ~~U.S.~~flow ~~Treasury~~from operations, and ~~U.S.~~available ~~government~~line ~~agency~~of ~~securities.~~credit ~~The~~will ~~Company~~be ~~does~~adequate ~~not invest~~to inmeet ~~high~~our ~~yield~~liquidity needs orfor ~~high~~at ~~risk~~least ~~securities.~~the ~~Cash~~next intwelve ~~bank~~months, ~~accounts~~including atscheduled ~~times~~interest ~~may~~payments, ~~exceed~~scheduled ~~federally~~lease ~~insured~~payments, ~~limits~~noncancelable purchase and other contractual commitments, and planned capital expenditures.

~~Short-Term~~Cash ~~Borrowing~~and cash equivalents are comprised of cash in banks and ~~Long-Term~~highly ~~Debt~~liquid instruments with original maturities of 90 days or less. Cash equivalents or marketable securities in the United States are comprised of institutional money market funds with major commercial banks under which cash is primarily invested in U.S. Treasury bills, notes and other obligations issued or guaranteed by the U.S. government or its agencies, and repurchase agreements secured by such obligations. The Company does not invest in high yield or high risk securities. Cash in bank accounts at times may exceed federally insured limits.

~~Refer to the notes to the condensed consolidated financial statements for information on short~~Long-~~term~~Term ~~borrowing and long-term debt, revolving credit facility, scheduled maturities of~~Debt long-term debt, affirmative and negative covenants including the maximum allowable consolidated leverage ratio, interest rate swap agreements on variable-rate term loan, and the fair value of the interest rate swap liability.

~~Total~~Long-term debt ofamounted to $~~422~~405.84 million at ~~October~~April 2, ~~2010~~2011, isand ~~scheduled~~consists toof ~~mature~~a asterm ~~follows:~~loan ~~(i) the~~of ~~short-term~~$215.4 million ~~revolving~~and ~~credit~~senior ~~borrowing~~subordinated notes of $16190.0 million. ~~resulting~~Long-term ~~from~~debt ~~the~~is ~~Buccaneer~~scheduled ~~Acquisition is~~to ~~expected~~mature toas befollows: ~~repaid by December 31, 2010,~~ (iii) ~~the~~ term loan ~~of $216.8 million~~ under the senior secured credit facility is scheduled to mature in February 2013, and (~~iii~~ii) the senior subordinated fixed- rate notes ~~of $190.0 million~~ are scheduled to mature in February 2015. Our ability to generate sufficient cash flow from operations to repay ~~short and~~ long-term debt when it matures, or to refinance debt when it matures, depends on numerous factors beyond our control, including those discussed under Risk Factors reported in our annual report on Form 10-K for the year ended December 31, ~~2009~~2010. In view of current credit market conditions and the credit ratings assigned to our outstanding debt and corporate credit by credit rating agencies, in the event we were to refinance the senior secured credit facility or the senior subordinated notes, we would likely encounter higher interest rates.

3428

~~Debt~~Borrowings ~~Covenants~~are secured by accounts receivable, cash, intellectual property and other assets and are guaranteed jointly and severally, by all existing and future domestic subsidiaries. Foreign subsidiaries do not guarantee the borrowings. The senior secured credit facility contains various customary affirmative and negative covenants and events of default, including, but not limited to, restrictions on the disposal of assets, incurring additional indebtedness or guaranteeing obligations, paying dividends, creating liens on assets, making investments, loans or advances, and compliance with a maximum consolidated leverage ratio. As of April 2, 2011, the Company was in compliance with all of the affirmative and negative covenants.

The more restrictive debt covenants relate to compliance with a maximum allowable consolidated leverage ratio. The consolidated leverage ratio, as defined in the senior secured credit facility, is based on consolidated indebtedness, as defined, reduced by unrestricted cash and cash equivalents in excess of $5.0 million, divided by adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and adjusted for certain unusual and non-recurring items, as defined) for a twelve-month period. At ~~October~~April 2, ~~2010~~2011, the consolidated leverage ratio was 3.9782 to 1, compared with the maximum allowable ratio of 5.7550 to 1 applicable to the period. The maximum allowable consolidated leverage ratio steps down to 5.~~50 to 1 at December 31, 2010; 5.~~25 at June 30, 2011;, and to 5.00 at March 31, 2012.

Interest Rate Swaps on Variable-Rate Term Loan under Senior Secured Credit Facility

The Company has entered into interest rate swap agreements to hedge fluctuations in LIBOR interest rates on a portion of the term loan borrowing under the senior secured credit facility. The Company exchanged its variable LIBOR interest rate for a fixed interest rate. At October 2, 2010, the total notional amount of the pay-fixed/receive-variable interest rate swap agreements was $150.0 million scheduled to mature in February 2011.

The fair value of the net interest rate swap liability was $1.7 million at October 2, 2010, all of which represents an unrealized loss that is reported in accumulated other comprehensive loss in the consolidated statement of stockholder’s equity. The fair value is based on quoted prices for swaps in active markets adjusted for non-performance risks. The Company does not hold or issue derivative financial instruments for speculative purposes.

Working Capital

A summary of working capital follows (in thousands):

							Effect on
	April 2,			December 31,			Increase
	October 2,			December 31,			Working
	2011			2010			(Decrease)
	2010			2009			Capital
Cash and cash equivalents	$	46,438		$	27,194		$	19,244
Cash and cash equivalents	$	22,568		$	44,638		$	(22,070	)
Trade receivables, net		110,010			122,940			(12,930	)
Trade receivables, net		124,858			109,846			15,012
Prepaid expenses and other		13,467			12,572			895
Prepaid expenses and other		13,669			10,353			3,316
Current portion of long-term debt		—			(1,401	)		1,401
Short-term borrowing and current portion long-term debt		(16,000	)		(13,534	)		(2,466	)
Accounts payable and accrued liabilities		(76,761	)		(80,672	)		3,911
Accounts payable and accrued liabilities		(79,348	)		(64,849	)		(14,499	)
Accrued interest payable		(2,803	)		(7,781	)		4,978
Accrued interest payable		(3,327	)		(8,186	)		4,859
Deferred revenue		(10,389	)		(7,964	)		(2,425	)
Other liabilities		(13,337	)		(9,604	)		(3,733	)
Discontinued operations, net		—			(1,551	)		1,551
Discontinued operations, net		2,570			7,515			(4,945	)
Net working capital	$	79,962		$	63,337		$	16,625
Net working capital	$	51,653		$	76,179		$	(24,526	)

The ~~increases~~reduction of $12.9 million in trade receivables, ~~accounts~~resulted ~~payable~~primarily ~~and~~from ~~accrued~~a ~~liabilities,~~faster ~~and short-term~~than ~~borrowings~~normal ~~resulted~~collection ~~primarily~~ from ~~the~~a ~~Buccaneer~~large ~~Acquisition completed in September 2010~~customer. Trade receivables at ~~October~~April 2, ~~2010~~2011, ~~adjusted to exclude trade receivables acquired in the Buccaneer Acquisition,~~ reflect DSO (days sales outstanding) of 5556 days, compared with 5762 days at December 31, ~~2009~~ 2010.

Cash Flows

A summary of net cash flows follows (in thousands):

	Nine Months Ended
	Three Months Ended
	October 2,			September 26,			Increase
	April 2,			April 3,			Increase
	2010			2009			(Decrease)
	2011			2010			(Decrease)
Net cash provided by (used in)
Operating activities:
Operating activities	$	21,850		$	(19,007	)	$	40,857
Continuing operations	$	48,922		$	27,371		$	21,553
Investing activities		(1,778	)		(1,427	)		(351	)
Discontinued operations		(1,180	)		(4,335	)		3,153
Financing activities		(1,401	)		(13,641	)		12,240
Investing activities:
Continuing operations		(68,479	)		(8,453	)		(60,026	)
Discontinued operations		(2,729	)		(3,470	)		741
Financing activities:
Continuing operations		377			(264	)		641

Net Cash Provided by (Used in) Operating Activities

In assessing cash flows from operating activities ~~for continuing operations~~, we consider several principal factors: (i) income ~~or loss~~ from continuing operations, (ii) adjustments for non-cash charges, ~~primarily~~including amortization of intangible assets, depreciation and amortization of property and equipment, and deferred income taxes, and (iii) the extent to which trade receivables, accounts payable and other liabilities, or other working capital components increase or decrease.

~~Net cash provided by operating activities for continuing operations was $48.9 million for the~~29 nine months ended October 2, 2010, compared with $27.4 million for the corresponding period in 2009. Income/loss from continuing operations adjusted for non-cash charges generated operating cash flows of $49.6 million for the nine months ended October 2, 2010, compared with $24.5 million for the corresponding period in 2009.

Net reductions in operating trade receivables of $3.9 million for the nine months ended October 2, 2010, and $9.5 million for the corresponding period in 2009 contributed to cash flows from operating activities. The changes primarily reflect the timing of collections from customers.

Net reductions in operating accounts payable and other liabilities of $3.4 million for the nine months ended October 2, 2010, and $5.9 million for the corresponding period in 2009 reduced cash flows from operating activities. The reduction for 2009 reflects payments of $6.3 million for incentive compensation that had been earned and accrued in 2008. There were no payments for incentive compensation in 2010. The timing of payments to vendors affects the level of accounts payable and the effect on operating cash flow, including the level of activities with small-business vendors and subcontractors that require more frequent cash payments.

Discontinued operations used net cash flow of $1.2 million for operating activities for the nine months ended October 2, 2010, compared with $4.3 million for the corresponding period in 2009. The reduction in the use of operating cash primarily reflects the higher revenue and breakeven operating results for the nine months ended October 2, 2010.

Net Cash Used in Investing Activities

In September 2010, Vangent completed the Buccaneer Acquisition and paid cash of $59.1 million, net of cash acquired.

Capital expenditures were $9.4 million for continuing operations for the nine months ended October 2, 2010, compared with $8.5 million for the corresponding period in 2009. Capital expenditures for discontinued operations were $2.7 million for the nine months ended October 2, 2010, compared with $3.7 million for the corresponding period in 2009 primarily for a contract in Mexico. Total capital expenditures of $12.5 million are expected for 2010.

Net ~~Cash~~cash ~~Provided~~provided by ~~(Used~~operating ~~in)~~activities was $21.9 million for the three months ended April 2, 2011, compared with negative cash flow of $19.0 million for the corresponding period in ~~Financing~~2010. Income ~~Activities~~from continuing operations adjusted for non-cash charges generated operating cash flows of $16.3 million, compared with $18.8 million for the corresponding period in 2010.

~~Net~~A ~~cash~~net ~~provided~~decrease byin ~~financing~~trade ~~activities~~receivables ~~for continuing operations for the nine months ended October 2, 2010, reflects a variable-rate borrowing~~ of $1613.03 million ~~drawn~~increased oncash ~~the~~flow ~~senior~~from ~~secured~~operating ~~revolving~~activities ~~credit~~for ~~facility~~the tothree ~~fund~~months aended ~~portion~~April 2, of2011; the ~~purchase~~decrease ~~consideration~~primarily ~~paid~~reflects ~~for~~ the ~~Buccaneer~~timing of ~~Acquisition.~~collections ~~Cash~~from ~~flow~~customers. ~~was~~A ~~reduced~~net byincrease ~~a mandatory term loan repayment~~ of $1332.61 million ~~under~~for the ~~senior~~ ~~secured~~corresponding ~~credit~~period ~~facility~~in ~~resulting~~2010 reduced ~~from excess~~ cash flow ~~for~~and ~~2009.~~resulted ~~Based~~in onnegative ~~the excess~~ cash flow ~~for~~from ~~2008,~~operating ~~there~~activities ~~was~~for nothe ~~excess~~period; ~~cash~~the increase ~~flow~~resulted ~~payment~~from ~~required~~higher revenue in ~~2009.~~the ~~Cash~~first ~~flow~~quarter ~~was~~of ~~also~~2010 ~~reduced by~~compared ~~debt~~with ~~financing~~the ~~costs~~last quarter of ~~$1.9 million~~2009 ~~resulting~~and ~~from~~the ~~amendments~~timing toof ~~the~~collections ~~senior~~from ~~secured credit facility~~customers.

A net decrease in accounts payable and other liabilities of $10.0 million reduced cash flow from operating activities for the three months ended April 2, 2011, compared with a net decrease of $1.6 million for the corresponding period in 2010. The decreases primarily reflect the timing of payments to vendors.

A net increase in deferred revenue of $2.4 million contributed to cash flow from operating activities for the three months ended April 2, 2011, compared with a net increase of $1.4 million for the corresponding period in 2010. The increases result from payments from customers in advance of revenue recognition, including advance payments for 2011 under a contract in the United Kingdom.

Net Cash Used in Investing Activities

Capital expenditures were $1.9 million for the three months ended April 2, 2011, compared with $1.3 million for the corresponding period in 2010. Capital expenditures of $11.0 million are expected for 2011.

Net Cash Used in Financing Activities

Net cash used in financing activities for the three months ended April 2, 2011, reflects a term loan repayment of $1.4 million under the senior secured credit facility resulting from excess cash flow, compared with a repayment of $13.6 million for the corresponding period in 2010.

Contractual Obligations

Contractual commitments to make future cash payments under long-term debt agreements, lease contracts, and ~~contingent~~other commitments atas ~~October~~of April 2, ~~2010~~2011, follow (in millions):

			Payments Due by Year
			2010 *
	Total		2011*		2012		2013		2014		2015		Thereafter
			and
Long-Term Debt:
	Total		2011		2012		2013		2014		2015		Thereafter
Term loan under senior secured credit facility due February 2013 (1)	$	215.4	$	—	$	0.3	$	215.1	$	—	$	—	$	—
Debt:
Senior subordinated notes due February 2015		190.0		—		—		—		—		190.0		—
Borrowing under revolving credit facility	$	16.0	$	16.0	$	—	$	—	$	—	$	—	$	—
Interest relating to debt (2)		83.4		13.2		23.4		19.4		18.3		9.1		—
Term loan under senior secured credit facility due February 2013 (1)		216.8		—		1.7		215.1		—		—		—
Operating leases (3)		70.9		14.8		17.6		13.1		6.6		4.9		13.9
Senior subordinated notes due 2015		190.0		—		—		—		—		190.0		—
Purchase and other contractual commitments (4)		22.2		14.0		6.4		0.9		0.6		0.3		—
Interest relating to debt (2)		97.5		27.3		23.4		19.4		18.3		9.1		—
	$	581.9	$	42.0	$	47.7	$	248.5	$	25.5	$	204.3	$	13.9
Operating leases		78.6		26.0		15.5		11.9		6.5		4.6		14.1
Purchase and other contractual commitments (3)		16.9		3.9		11.3		0.6		0.7		0.4		—
	$	615.8	$	73.2	$	51.9	$	247.0	$	25.5	$	204.1	$	14.1

*		Remaining ~~three~~nine months.
(1)		Scheduled payments for the term loan under the senior secured credit facility do not give effect to a possible future mandatory ~~prepayments~~prepayment in March ~~2011 or~~ 2012 that could result from excess cash flow, ~~from~~if ~~the~~any, ~~prior~~for ~~calendar~~the year ended December 31, 2011.
(2)		Future interest payments consist of interest on the variable-rate ~~borrowings~~term-loan borrowing under the senior secured credit facility ~~based on the prevailing rates, estimated future payments based on fair value of the related interest rate swaps,~~ and interest based on the fixed rate of 9 5/8 % for the senior subordinated notes.
(3)		Purchase and other contractual commitments include minimum noncancelable obligations under service and other agreements, primarily for information technology and telecommunications services.

~~Off-Balance Sheet Arrangements~~30

As of October 2, 2010, there were no off-balance sheet arrangements other than operating leases for office facilities and equipment for which future minimum lease payments aggregated $78.6 million.


(3)		Future contractual obligations for leases represent future minimum payments under noncancelable operating leases primarily for office space, reduced by sublease income under contract.

(4)		Purchase and other contractual commitments include minimum noncancelable obligations under service and other agreements, primarily for information technology and telecommunications services.

Off-Balance Sheet Arrangements

There were no off-balance sheet arrangements other than operating leases for office facilities and equipment for which future minimum lease payments aggregated $70.9 million as reported above for Contractual Obligations.

Transactions with Related Parties

Reference is made to the notes to the consolidated financial statements for information on transactions with related parties.

Recent Accounting Pronouncements

Reference is made to the notes to the condensed consolidated financial statements for information on recent accounting pronouncements.


ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in market risk from the information provided under Quantitative and Qualitative Disclosures about Market Risk in our annual report on Form 10-K for the year ended December 31, ~~2009~~2010.

ITEM 4T4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act are: (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

During the three months ended ~~October~~April 2, ~~2010~~2011, there have been no changes in the internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting.

PART II — OTHER INFORMATION


ITEM 1.		LEGAL PROCEEDINGS

The Company is subject to legal proceedings, investigations and claims arising out of the ordinary course of business and accrues a liability if an unfavorable outcome is probable. In the opinion of management, resolution of such matters is not expected to have a material effect on the Company’s results of operations or financial position.


ITEM 1A.		RISK FACTORS

There have been no material changes in risk factors from the information provided under Risk Factors in our annual report on Form 10-K for the year ended December 31, 2009, except, as described under Management’s Discussion and Analysis, continuing adverse changes in expected operating results and/or unfavorable changes in economic factors used to estimate fair values could result in non-cash impairment charges for the Human Capital Group in a future period2010.


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

None


ITEM 3.		DEFAULTS UPON SENIOR SECURITIES

None


ITEM 5.		OTHER INFORMATION

None


ITEM 6.		EXHIBITS


Exhibit
Number		Description
31.1 *		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 *		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 *		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 *		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


*		Filed herewith.

SIGNATURE

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.

	Vangent, Inc.	~~Vangent, Inc.~~
November 15, 2010		/s/ James C. Reagan James C. Reagan
May 17, 2011	/s/ James C. Reagan
		Senior Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer)
	James C. Reagan
	Senior Vice President and Chief Financial Officer (Principal Financial and Principal Accounting Officer)

3932

EXHIBIT INDEX


Exhibit
Number		Description
	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

4033

Filing Compare · Vangent, Inc.