UseTable theseof links to rapidly review the document DYNCORP INTERNATIONAL INC. TABLE OF CONTENT ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. Contents

UNITED STATES ~~SECURITIES~~ ~~AND EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~ EXCHANGE COMMISSION

~~FORM 10-K~~ Washington, D.C. 20549

(Mark One)
ý	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 30, 2007
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-32869

Form 10-K

~~DYNCORP INTERNATIONAL INC.~~ (~~Exact~~Mark ~~name of registrant as specified in its charter~~One)

~~Delaware~~þ ~~(State~~ANNUAL orREPORT ~~other~~PURSUANT ~~jurisdiction~~TO ofSECTION ~~incorporation~~13 orOR ~~organization) 01-0824791~~ 15(~~I.R.S. Employer Identification No.~~d) ~~3190~~OF ~~Fairview~~THE ~~Park~~SECURITIES ~~Drive,~~EXCHANGE ~~Suite~~ACT ~~700,~~OF ~~Falls Church, Virginia 22042 (571) 722-0210 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)~~1934

~~Securities~~For ~~registered~~the ~~pursuant~~fiscal toyear ~~Section~~ended April ~~12(b)~~2, of2010 ~~the Act:~~

Title of Each Class		Name of Exchange on Which Registered
Class A common stock, par value $0.01 per share		New York Stock Exchange

~~Securities~~¨ ~~registered~~TRANSITION ~~pursuant~~REPORT toPURSUANT ~~Section 12~~TO SECTION 13 OR 15(gd) ofOF ~~the~~THE ~~Act:~~SECURITIES ~~None~~EXCHANGE ACT OF 1934

~~Indicate by~~Commission ~~check~~File ~~mark~~Number: ~~if the registrant is a well~~001-~~known~~32869 ~~seasoned issuer, as defined in Rule 405 of the Act. Yes o No ý~~

~~Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the~~DYNCORP ~~Act~~INTERNATIONAL INC. ~~Yes o No ý~~

~~Indicate by check mark whether the registrant~~ (~~1) has~~Exact ~~filed~~name ~~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~~as ~~required~~specified toin ~~file~~its ~~such reports~~charter), ~~and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o~~

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

Delaware

01-0824791

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

~~Indicate~~3190 byFairview ~~check~~Park ~~mark~~Drive, ~~whether the registrant is a large accelerated filer~~Suite 700, anFalls ~~accelerated filer~~Church, orVirginia a22042 ~~non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check One):~~

~~Large accelerated filer o Accelerated filer o Non~~(571) 722-~~accelerated filer ý~~0210

~~Indicate~~(Address, byincluding ~~check~~zip ~~mark~~code, ~~whether~~and ~~the~~telephone ~~registrant~~number, isincluding aarea ~~shell~~code, ~~company~~of ~~(as~~registrant’s ~~defined~~principal inexecutive ~~Rule 12b-2 of the Act~~offices)~~. Yes o No ý~~

~~The~~Securities ~~aggregate~~registered ~~market~~pursuant ~~value~~to ofSection 12(b) ~~the registrant's voting and non-voting common stock held by non-affiliates~~ of the ~~registrant~~Act: ~~at June 4, 2007, based on the $17.42 per share closing price for the registrant's common stock on the New York Stock Exchange on June 4, 2007, was approximately $435.5 million.~~

As of June 4, 2007, the registrant had 57,000,000 shares of its Class A common stock outstanding.


Title of Each Class		Name of Exchange on Which Registered
Class A common stock, par value $0.01 per share		New York Stock Exchange

Securities registered ~~Documents~~pursuant ~~Incorporated~~to bySection 12(g) ~~Reference~~ of the Act:

~~Portions~~None of the definitive proxy statement to be delivered in connection with DynCorp International Inc.'s annual shareholders' meeting pursuant to Regulation 14A, to be filed with the Securities and Exchange Commission on or about June 25, 2007, are incorporated by reference into Part III of this report.

Indicate ~~DYNCORP~~by ~~INTERNATIONAL INC. TABLE~~check OFmark ~~CONTENT~~ if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Act. Yes ¨ No þ

PART I.
Item 1.		Business
Item 1A.		Risk Factors
Item 1B.		Unresolved Staff Comments
Item 2.		Properties
Item 3.		Legal Proceedings
Item 4.		Submission of Matters to a Vote of Security Holders
PART II.
Item 5.		Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6.		Selected Financial Data
Item 7.		Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A.		Quantitative and Qualitative Disclosure About Market Risk
Item 8.		Financial Statements and Supplementary Data
Item 9.		Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A.		Controls and Procedures
Item 9B.		Other Information
PART III.
Item 10.		Directors, Executive Officers and Corporate Governance
Item 11.		Executive Compensation
Item 12.		Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
Item 13.		Certain Relationships and Related Transactions, and Director Independence
Item 14.		Principal Accounting Fees and Services
PART IV.
Item 15.		Exhibits and Financial Statement Schedules

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No þ

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 ~~PART~~90 I days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive ~~ITEM~~Data File required to be submitted and posted pursuant to Rule 1405 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). ~~BUSINESS.~~ Yes ¨ No ¨

~~Unless~~Indicate ~~the~~by ~~context~~check ~~otherwise~~mark ~~indicates,~~if ~~references~~disclosure ~~herein~~of todelinquent ~~"we,"~~filers ~~"our,"~~pursuant ~~"the Company," "us" or "DynCorp International" refer~~ to ~~DynCorp International~~Item ~~Inc.~~405 ~~and~~of ~~its~~Regulation ~~consolidated~~S-K ~~subsidiaries~~(§ 229.405 Weof ~~refer~~this tochapter) ~~our~~is not ~~subsidiary~~contained herein, ~~DynCorp~~and ~~International~~will ~~LLC~~not ~~and~~be ~~its subsidiaries~~contained, asto ~~our~~the ~~"operating~~best ~~company."~~of ~~All~~registrant’s ~~references~~knowledge, in ~~this~~definitive ~~Annual Report~~proxy toor ~~fiscal~~information ~~years made in connection with our financial~~ statements orincorporated ~~operating~~by ~~results~~reference ~~refer~~in ~~to the fiscal year ended on the Friday closest to March~~Part ~~31st~~III of ~~such~~this ~~year.~~Form ~~For~~10-K ~~example, "fiscal~~or ~~2007"~~any ~~refers~~amendment to ~~our fiscal year ended March~~this Form ~~30, 2007~~10-K. ¨

~~Overview~~ 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):

~~DynCorp~~Large ~~International Inc.,~~accelerated ~~through~~filer ~~its~~¨ ~~subsidiaries,~~Accelerated ~~provides~~filer ~~defense~~þ ~~and~~Non-accelerated ~~technical~~filer ~~services~~¨ ~~and~~Smaller ~~government~~reporting ~~outsourced~~company ~~solutions~~¨ ~~primarily to United States~~ (~~"U.S.")~~Do ~~government~~not ~~agencies.~~check ~~Our~~if ~~specific~~a ~~global~~smaller ~~expertise~~reporting is in law enforcement training and support, security services, base operations, and aviation services and operations. Our predecessor companies have provided essential services to numerous U.S. government departments and agencies since 1951 and we are the surviving company ~~of various mergers and acquisitions executed by our predecessor companies, as described herein. We are incorporated in the state of Delaware.~~ )

~~Our customers~~Indicate ~~include~~by ~~the~~check ~~U.S.~~mark ~~Department~~whether ~~of Defense ("DoD"),~~ the ~~U.S.~~registrant ~~Department~~is ofa ~~State~~shell company (~~"DoS"),~~as ~~allied~~defined ~~foreign~~in ~~governments,~~Rule 12b-2 ~~commercial customers and certain other U.S. federal, state~~of ~~and local government agencies. Revenue from~~ the UAct).S. Yes ¨ No þ ~~government accounted for approximately 97%, 97%, and 98% of total revenues in fiscal 2007, 2006, and 2005, respectively.~~

~~We conduct~~As ~~our~~of ~~operations~~October 2, ~~through~~2009, ~~two~~the last business ~~segments:~~day ~~Government~~of ~~Services~~the ~~("GS")~~registrant’s ~~and~~most ~~Maintenance~~recently ~~and~~completed ~~Technical~~second ~~Support~~fiscal ~~Services~~quarter, 34,801,366 shares of publically traded Class A common stock held by non-affiliates were outstanding with an aggregate market value of approximately $615 million (~~"MTSS"~~based upon the closing price on the New York Stock Exchange on October 2, 2009 of $17.67 per share). Aggregate market value is estimated solely for the purposes of this report.

~~In addition~~As toof ~~the~~June 1, ~~information presented below~~2010, ~~Note 14 to~~ the ~~consolidated financial statements contains additional information about our business segments and geographic areas~~ inregistrant ~~which~~had we56,307,871 ~~have~~shares ~~conducted~~of ~~business~~its ~~for~~Class A ~~fiscal~~common ~~years~~stock ~~2007, 2006 and 2005~~outstanding.

~~Government~~Documents Incorporated ~~Services~~ by Reference

~~GS,~~Portions ~~with~~of ~~revenues~~the ofregistrant’s ~~approximately~~Definitive ~~$1.4 billion,~~Proxy ~~$1.3 billion~~Statement ~~and~~regarding ~~$1.2 billion~~the ~~for~~merger ~~fiscal~~with ~~years~~Delta Tucker ~~2007~~Holdings, ~~2006~~Inc. and ~~2005~~Delta Tucker Sub, ~~respectively~~Inc., ~~provides outsourced~~each ~~technical~~of ~~services~~whom tois ~~government~~an ~~agencies~~affiliate of the private investment firm, ~~and~~Cerberus ~~commercial~~Capital ~~customers~~Management, ~~worldwide~~L.P., GSare ~~consists~~incorporated ofby ~~four~~reference ~~operating~~into ~~units (i)~~Part ~~Law~~III ~~Enforcement~~of ~~and~~this ~~Security,~~Report. ~~(ii) Contingency~~Such ~~and Logistics~~Definitive ~~Operations,~~Proxy ~~(iii) Operations~~Statement ~~Maintenance~~was filed ~~and~~with ~~Construction~~the ~~Management,~~Securities and ~~(iv) Specialty~~Exchange ~~Aviation~~Commission ~~and~~on ~~Counter-drug~~May 17, ~~Operations~~2010.

LawTable Enforcementof and Security – This operating unit provides international policing and police training, judicial support, immigration support and base operations. In addition, it provides security and personal protection for diplomats, designs, installs and operates security systems and develops security software, smart cards and biometrics for use by government agencies and commercial customers. Contents

~~Contingency~~DYNCORP ~~and~~INTERNATIONAL ~~Logistics Operations – This operating unit provides peace-keeping support, humanitarian relief, de-mining, worldwide contingency planning and other rapid response services~~INC. ~~In addition, it offers inventory procurement and tracking services, equipment maintenance, property control, data entry and mobile repair services.~~

~~Operations~~TABLE ~~Maintenance~~OF ~~and~~CONTENTS Construction Management – This operating unit provides facility and equipment maintenance and control and custodial and administrative services. In addition, it provides civil, electrical, infrastructure, environmental and mechanical engineering and construction management services.

Specialty Aviation and Counter-drug Operations – This operating unit provides services including drug eradication and host nation pilot and crew training.


		Page

	Forward-Looking Statements	2

	PART I.

Item 1.	Business	4
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	32
Item 2.	Properties	32
Item 3.	Legal Proceedings	32
Item 4.	Removed and Reserved	32

	PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	33
Item 6.	Selected Financial Data	36
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	61
Item 8.	Financial Statements and Supplementary Data	62
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	112
Item 9A.	Controls and Procedures	112
Item 9B.	Other Information	114

	PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	114
Item 11.	Executive Compensation	124
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	145
Item 13.	Certain Relationships, Related Transactions, and Director Independence	145
Item 14.	Principal Accountant Fees and Services	146

	PART IV.

Item 15.	Exhibits and Financial Statement Schedules	148
EX-10.29
EX-12.1
EX-21.1
EX-23.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

KeyTable GSof Contracts Contents

~~Civilian~~Forward-Looking ~~Police~~ Statements

~~The~~This ~~most~~Annual ~~significant~~Report ~~contract~~on ofForm ~~our~~10-K GScontains ~~operating~~various ~~segment~~forward-looking isstatements ~~our~~within ~~Civilian~~the ~~Police~~meaning ~~contract,~~of ~~awarded~~Section 27A toof usthe bySecurities ~~the~~Act of ~~DoS~~1933, inas ~~February 2004.~~amended, ~~Our~~and ~~Civilian~~Section 21E ~~Police contract~~of ~~has~~the anSecurities ~~estimated~~Exchange ~~value~~Act of ~~$2.45 billion~~1934, ~~over~~as amended (the ~~five-year~~“Exchange ~~term~~Act”). ofForward-looking ~~this~~statements, ~~program~~written, ~~through~~oral ~~February 2009.~~or ~~Through~~otherwise ~~the~~made, ~~Civilian~~represent ~~Police~~our ~~program,~~expectation weor ~~have~~belief ~~deployed~~concerning future events. ~~civilian~~Without ~~police~~limiting ~~officers~~the ~~from~~foregoing, the ~~U.S.~~words to“believes,” 12“thinks,” ~~countries~~“anticipates,” to“plans,” ~~train~~“expects” and ~~offer~~similar ~~logistics~~expressions ~~support~~are intended to ~~the~~identify ~~local~~forward-looking ~~police~~statements. ~~and~~Forward-looking statements ~~assist~~involve ~~them~~risks ~~with~~and ~~infrastructure reconstruction~~uncertainties. ~~Our~~Statements ~~first~~regarding ~~significant~~the ~~deployment~~amount of ~~civilian~~ ~~police~~our ~~personnel~~backlog, ~~began~~estimated inremaining ~~the~~contract ~~Balkans~~values inand ~~1996,~~estimated ~~where~~total ~~our~~contract ~~predecessor~~values ~~companies~~are ~~helped~~other ~~train~~examples ~~local~~of ~~police~~forward-looking ~~and~~statements. ~~provided~~We ~~support~~caution ~~during~~that ~~the~~these ~~height~~statements are offurther ~~the~~qualified ~~conflict.~~by Weimportant ~~remained~~economic, incompetitive, ~~the~~governmental, ~~region through~~international ~~2004.~~and Intechnological ~~addition,~~factors wethat ~~have~~could ~~been~~cause ~~awarded~~our ~~multiple~~business, ~~task~~strategy ~~orders~~or ~~under~~actual ~~the~~results ~~Civilian~~or ~~Police~~events ~~program~~to differ materially, ~~including~~or ~~assignments~~otherwise, from those in ~~Iraq~~the forward-looking statements. These factors, risks and ~~Afghanistan.~~uncertainties include, among others, the following:

• the occurrence of any event, change or other circumstances that could give rise to the termination of the Agreement and Plan of Merger, dated as of April 11, 2010 by and among DynCorp International, ~~Narcotics~~Inc., ~~Eradication~~Delta Tucker Holdings, Inc. and ~~Law~~Delta ~~Enforcement~~ Tucker Sub, Inc., including a termination under circumstances that could require us to pay a termination fee and/or reimburse expenses (subject to a cap);

In• ~~May of 2005,~~ the ~~DoS~~failure ~~awarded~~to usobtain ~~a contract in support of~~ the ~~International~~necessary ~~Narcotics~~equity and ~~Law~~debt ~~Enforcement~~financing ~~Air-Wing~~pursuant ~~program~~ to ~~aid in~~ the ~~eradication of~~applicable ~~illegal~~commitment ~~drug~~letters ~~operations.~~received Wein ~~are~~connection with the ~~sole~~transactions ~~awardee~~contemplated ofby ~~this~~the ~~contract,~~Merger ~~which~~Agreement ~~has~~or ~~an estimated value of $863 million for~~ the ~~first~~failure ~~three years~~ of ~~this~~such ~~ten-year~~financing ~~contract~~to ~~through October 2015.~~be ~~This~~sufficient ~~program~~to ~~has~~complete ~~been~~the ~~ongoing~~Merger ~~since 1991 in cooperation with multiple Latin American countries,~~ and wethe ~~recently~~transactions ~~commenced~~contemplated ~~support to a similar program in Afghanistan.~~ thereby;

~~War~~• ~~Reserve~~the ~~Material~~ inability to complete the Merger due to the failure to obtain stockholder approval or the failure to satisfy other conditions to complete of the Merger, including required regulatory approvals;

~~Through~~• ~~our War Reserve Material program, we provide management of~~ the ~~U.S.~~failure Air Force Southwest Asia War Reserve Material Pre-positioning program, which includes operations in Oman, Bahrain, Qatar, Kuwait and two locations in the U.S., Albany, Georgia and Shaw Air Force base, South Carolina. We store, maintain and deploy assets such as tents, generators, vehicles, kitchens and medical supplies to deployed forces in the Global War on Terror. During Operation Enduring Freedom and Operation Iraqi Freedom, we sent teams into the field to assist in the setup of ~~tent cities prior to~~ the ~~arrival~~Merger ~~of the deployed forces. The War Reserve Material program continues~~ to ~~partner~~close ~~with~~for ~~the~~any ~~U.S. Central~~other ~~Command Air Force in the development of new and innovative approaches to asset management.~~ reason;

~~The following~~• ~~table~~risks ~~sets~~that ~~forth~~the ~~certain~~proposed ~~information~~Merger ~~for~~(including ~~our~~the ~~principal~~efforts GSof ~~contracts~~the Company and/or its directors, ~~including~~officers ~~estimated~~and ~~total~~employees ~~values~~to ofconsummate the proposed Merger) disrupts current ~~contracts~~plans and operations and the potential difficulties in employee retention as ofa ~~March 30,~~result ~~2007:~~of the Merger;

Contract	Principal Customer	Initial/Current Award Date	Recompete Date	Estimated Total Contract Value
Civilian Police Program	Department of State	Feb 1994 / Feb 2004	Feb 2009	$2.45 billion(1)
International Narcotics and Law Enforcement	Department of State	Jan 1991 / May 2005	Oct 2015	$863 million(2)
War Reserve Material	U.S. Air Force	May 2000	Dec 2007	$548 million
Sudan	Department of State	May 2001	Not Applicable	$12 million(1)
California Department of Forestry	State of California	Jan 2002	Dec 2007	$83 million

•

the outcome of any legal proceedings that have been or may be instituted against the Company and/or others relating to the Merger Agreement;

2• the diversion of our management’s attention from our ongoing business concerns;

~~Maintenance &~~• ~~Technical~~the ~~Support~~effect ~~Services~~ of the announcement, pendency or anticipated consummation of the Merger on our customer, vendor and other business relationships, operating results and business generally;

~~MTSS,~~• ~~with~~the ~~revenues~~amount of ~~approximately~~the ~~$720.0 million~~costs, ~~$700.0 million~~fees, expenses and ~~$690.0 million~~charges ~~for~~incurred ~~fiscal~~by ~~years~~the ~~2007,~~Company ~~2006~~related ~~and~~to ~~2005, respectively, offers~~ the ~~following services:~~ Merger;

~~Aviation~~• Services and Operations – Our aviation services and operations include aircraft fleet maintenance, depot augmentation, aftermarket logistics support, aircrew services and training, ground equipment maintenance and modifications, quality control, Federal Aviation Administration ("FAA") certification, facilities and operations support, aircraft scheduling and flight planning and the ~~provisioning~~future impact of ~~pilots~~acquisitions, ~~test~~joint ~~pilots~~ventures ~~and~~or ~~flight~~teaming ~~crews. Services are provided from both main base locations and forward operating locations.~~ agreements;

~~Aviation~~• ~~Engineering –~~our ~~Our~~substantial ~~technicians~~level ~~manufacture and install aircraft modification programs for a broad range~~ of ~~weapons~~ ~~systems~~indebtedness and ~~aircraft~~changes ~~engines.~~in Inavailability ~~addition,~~of weor ~~provide~~cost ~~services~~of such as engineering design, kit manufacturing and installation, field installations, configuration management, avionics upgrades, cockpit and fuselage redesign and technical data, drawings and manual revisions. capital;

~~Aviation~~• ~~Ground~~the ~~Equipment~~outcome Support – Our services include ground equipment support, maintenance and overhaul, modifications and upgrades, corrosion control, engine rebuilding, hydraulic and load testing and serviceability inspections. We provide these services worldwide and offer both short- and long-duration field teams. As of ~~March 30,~~any ~~2007,~~material ~~we employed over 850 mechanics~~litigation, ~~technicians~~government ~~and~~investigation ~~support~~or ~~personnel~~other ~~who~~regulatory ~~perform depot level overhaul of ground support equipment for U.S. Navy and U.S. Coast Guard programs and provide depot level ground support equipment at 20 worldwide locations.~~ matters;

~~Ground~~• ~~Vehicle~~policy ~~Maintenance – Our ground vehicle maintenance services include vehicle maintenance, overhaul~~ and ~~corrosion~~/or ~~control~~spending ~~and~~changes ~~scheduling~~implemented ~~and~~by ~~work flow management. We perform maintenance and overhaul on wheeled and tracked vehicles for~~ the ~~U.S.~~Obama ~~Army~~administration ~~and~~or U.S. Marine Corps, in support of their pre-positioning programs. We also provide overall program management, logistics support, tear down and inspection of equipment cycled off of pre-positioned ships. Congress;

~~Key~~• ~~MTSS~~termination ~~Contracts~~ or modification of key United States (“U.S.”) government contracts;

~~Contract~~• ~~Field~~changes ~~Teams~~ in the demand for services that we provide or work awarded under our contracts, including without limitation, the Civilian Police, International Narcotics and Law Enforcement, Worldwide Personal Protection Services and Logistics Civil Augmentation Program contracts;

~~Contract~~• ~~Field~~pursuit ~~Teams~~of isnew ~~the~~commercial ~~most~~business ~~significant program~~ in our MTSS segment. Our Company and its predecessors have provided this service for over 55 consecutive years. This program deploys highly mobile, quick-response field teams to customer locations to supplement a customer's workforce. Services under the ~~Contract Field Teams contract generally include providing mission support to aircraft and weapons systems in addition to depot-level repair~~U. ~~The principal customer for our Contract Field Teams program is the DoD~~S. ~~Our Contract Field Teams contract is up for re-competition in March 2008. This contract has a $2.48 billion estimated value over a ten~~ and ~~one-half year term through March 2008.~~ abroad;

~~Life~~• ~~Cycle~~activities ~~Contractor~~of ~~Support~~ competitors and the outcome of bid protests;

~~This~~• ~~MTSS~~changes program consists of contracts with both the U.S. Army and the U.S. Navy. Under the Life Cycle Contractor Support-Army contracts, the Company provides aircraft maintenance and logistics for 165 C-12/RC-12 and 27 UC-35 aircraft, as well as services for a major avionics suite upgrade of 39 aircraft for Global Air Traffic Management compliance. Under our Life Cycle Contractor Support-Navy contracts, our Company and its predecessors provide aircraft maintenance and logistics for the U.S. Navy's 6 UC-35 aircraft. We entered into the Life Cycle Contractor Support-Army and Life Cycle Contractor Support-Navy contracts in ~~August 2000~~significant ~~and~~operating the Global Air Traffic Management portion of our Army contract in March 2003. The Life Cycle Contractor Support-Army and Life Cycle Contractor Support-Navy contracts are up for re-competition in January 2010. These contracts have estimated values of $986.0 million and $33.0 million for Life Cycle Contractor Support-Army and Life Cycle Contractor Support-Navy, respectively. expenses;

AndrewsTable Airof Force Base Contents

~~Under~~• ~~the~~general ~~Andrews Air Force Base contract~~political, ~~the~~economic ~~Company performs aircraft maintenance~~ and ~~base~~business ~~supply~~conditions ~~functions,~~in ~~including full back shop support, organizational level maintenance, fleet fuel services and supply, launch and recovery and FAA repair services. Our principal customer under this contract is~~ the U.S. ~~Air Force. We entered into this contract in January 2001 and it is up for re-competition in December 2011. This contract has a $337 million estimated value.~~ ;

~~The following~~• ~~table~~acts ~~sets forth certain information for our principal MTSS contracts, including estimated values~~ of ~~the~~war ~~current~~or ~~contracts~~terrorist ~~as of March 30, 2007:~~ activities;

Contract	Principal Customer	Initial/Current Award Date	Recompete Date	Estimated Total Contract Value
Contract Field Teams	Department of Defense	Oct 1951 / Oct 1997	Mar 2008	$2.48 billion	(1)
Life Cycle Contractor Support	U.S. Army and U.S. Navy	Aug 2000	Jan 2010	$1.02 billion
Andrews Air Force Base	U.S. Air Force	Jan 2001	Dec 2011	$337 million
Columbus Air Force Base	U.S. Air Force	Oct 1998 / Jul 2005	Sep 2012	$261 million
Army Prepositions Stocks Afloat	U.S. Army	Feb 1999	Feb 2009	$232 million
Eglin Air Force Base	U.S. Air Force	Nov 2002	Nov 2010	$80 million
F/A-18	Kuwaiti Air Force(2)	Sep 1997 / Dec 2005	Dec 2010	$70 million

•

variations in performance of financial markets;

~~Contract~~• ~~Types~~ the inherent difficulties of estimating future contract revenue and changes in anticipated revenue from indefinite delivery, indefinite quantity contracts;

~~Our~~• ~~contracts~~changes ~~typically~~in ~~have~~expected apercentages ~~term~~ of ~~three~~future torevenue ~~ten~~represented ~~years~~by ~~consisting~~fixed-price ofand ~~a base period of one year with multiple one~~time-~~year~~and-materials ~~options. Our~~ contracts ~~typically are awarded for an estimated dollar value based on the forecast of the work to be performed under the contract over its maximum life. In addition~~, weincluding ~~have~~increased ~~historically~~competition ~~received~~with ~~additional revenues~~respect through increases in program scope beyond that of the original contract. These contract modifications typically consist of "over and above" requests derived from changing customer requirements and are reviewed by the Company for appropriate revenue recognition. The government is not obligated to ~~exercise~~task ~~options~~orders ~~under~~subject ~~a contract after the base period. At the time of completion of the contract term of a government contract, the contract is re-competed~~ to ~~the~~such ~~extent~~contracts; ~~that the service is still required.~~ and

~~Contracts between~~• ~~our~~statements ~~operating~~covering ~~company~~our ~~and~~business ~~the U.S. government or the government's prime contractor (to the extent that we are a subcontractor) generally contain standard~~strategy, ~~unilateral provisions~~those ~~under~~described ~~which~~in ~~the~~“Item ~~customer may terminate for convenience or for default~~1A. ~~Government~~Risk ~~contracts~~Factors” ~~generally~~and ~~also~~other ~~contain~~risks ~~provisions~~detailed ~~that allow the U.S. government to unilaterally suspend us~~ from ~~receiving~~ ~~new~~time ~~contracts pending resolution of alleged violations of procurement laws or regulations, reduce the value of existing contracts, issue modifications~~ to atime ~~contract~~in ~~and~~our ~~control~~reports ~~and potentially~~filed ~~prohibit~~with the ~~export~~Securities ~~of our services~~ and ~~associated~~Exchange ~~materials~~Commission.

4Accordingly, such forward-looking statements do not purport to be predictions of future events or circumstances and therefore there can be no assurance that any forward-looking statement contained herein will prove to be accurate. We assume no obligation to update the forward-looking statements.

~~Our business~~Fiscal ~~generally~~Year ~~is performed under fixed-price, time-and-materials or cost-reimbursement contracts. Each of these is described below.~~

~~Any of~~We ~~these~~report ~~three~~the ~~types~~results ~~discussed~~of ~~above~~our ~~may~~operations beusing ~~executed~~a ~~under~~52-53 week anbasis. ~~indefinite~~Throughout ~~delivery,~~this ~~indefinite quantity ("IDIQ") contract~~report, ~~which~~each ~~are~~quarter ~~often~~of ~~awarded~~the tofiscal ~~multiple~~year ~~contractors. An IDIQ~~contains ~~contract~~13 weeks, ~~does~~except ~~not represent a firm order~~ for ~~services.~~the ~~Our~~infrequent ~~Civilian~~fiscal ~~Police~~years ~~and~~with ~~Contract~~53 weeks, ~~Field~~in ~~Teams~~which ~~programs~~case ~~are~~one ~~examples~~quarter ofwill ~~IDIQ~~contain ~~contracts~~14 weeks. InThe fiscal ~~2007,~~years ~~2006~~ended ~~and~~April 2, ~~2005~~2010, ~~56.7%~~March 28, ~~58.9% and 56.3% of our revenues~~2008, ~~respectively~~March 30, ~~were attributable to IDIQ contracts. When a customer wishes to order services under an IDIQ contract~~2007, ~~the customer issues a task order request for proposal to the contractor awardees. The contract awardees then submit proposals to the customer~~ and ~~task~~March 31, ~~orders~~2006 ~~are~~were ~~typically awarded under a best~~52-~~value~~week years ~~approach.~~whereas ~~However, many IDIQ contracts permit~~ the ~~customer~~ tofiscal ~~direct~~year ~~work to~~ended ~~a particular contractor. In some instances~~April 3, ~~the~~2009 ~~contractor~~was ~~may identify specific projects and propose to perform the service for~~ a ~~customer~~53 ~~within~~week ~~the scope of the IDIQ contract, although the customer is not obligated to order the services~~year.

~~We believe~~3 that our profitability will continue to improve as our customers continue to shift away from cost-reimbursement to time-and-materials contracts and fixed-price contracts. We base our belief on recent trends in our revenues, the nature of the contracts on which we are bidding and the pricing mechanisms proposed in our fixed-price and time-and-materials contracts, which generally results in higher margins than those of cost-reimbursement type contracts.

Our historicalTable contract mix by type for the last three fiscal years, as a percentage of revenue, is indicated in the table below. Contents

	Fiscal Year
Contract Type	2007	2006	2005
Fixed-Price	43%	34%	27%
Time-and-Materials	36%	38%	39%
Cost-Reimbursement	21%	28%	34%
	100%	100%	100%

PART I

~~Many~~ITEM ~~of our contracts involve subcontracts with other companies, which we rely upon to perform all or a portion of the services we are required to provide to our customers~~1. ~~Often we enter into subcontract arrangements in order to meet government requirements that certain categories of services be awarded to small businesses~~BUSINESS. We use subcontractors primarily for specialized technical labor and certain functions such as construction and catering. For fiscal 2007, 2006 and 2005, we paid our subcontractors approximately $227.0 million, $229.0 million and $175.0 million, respectively.

5Unless the context otherwise indicates, references herein to “we,” “our,” “us,” “the Company” or “DynCorp International” refer to DynCorp International Inc. and our consolidated subsidiaries. DynCorp International Inc., incorporated in the state of Delaware, is a holding company that owns the equity securities of DynCorp International LLC, organized in the state of Delaware. We refer to our wholly-owned operating subsidiary, DynCorp International LLC as our “Operating Company”. Our principal executive offices are located at 3190 Fairview Park Drive, Suite 700, Falls Church, Virginia 22042, telephone number (571) 722-0210.

~~Competition~~ Overview

We ~~compete~~are ~~with various entities across geographic and business lines based on~~ a ~~number~~leading provider of ~~factors~~specialized, ~~including~~mission-critical ~~services~~professional ~~offered, experience, price, geographic reach~~ and ~~mobility.~~support ~~Most~~services ~~activities~~outsourced inby ~~which~~the weU.S. ~~engage~~military, ~~are very competitive and require that we have highly skilled and experienced technical personnel to compete~~non-military U.S. ~~Some~~governmental ofagencies ~~our competitors have greater financial~~ and ~~other~~foreign ~~resources than we do or are better positioned than we are to compete for certain contract opportunities~~governments. Our ~~competitors~~specific ~~include~~global ~~Civilian~~expertise ~~Police~~is ~~International,~~in ~~Science~~law ~~Applications International~~enforcement ~~Corporation,~~training ~~ITT~~and ~~Industries~~support, ~~KBR~~security services, ~~IAP~~base ~~Worldwide~~and ~~Services, Inc.,~~logistics ~~Blackwater~~operations, ~~Triple~~intelligence ~~Canopy~~training, ~~Lockheed~~rule ~~Martin~~of ~~Corporation,~~law ~~Sikorsky~~development, ~~United~~construction ~~Technologies~~management, ~~L-3, Aerospace~~ ~~Industrial~~platform ~~Development~~services ~~Corporation~~and operations, ~~Al Salam Aircraft Company Ltd.~~ and ~~Serco~~linguist ~~Group Plc~~services. We ~~believe~~also ~~that~~provide ~~the~~logistics ~~primary~~support ~~competitive factors~~ for all our services. ~~include~~Through ~~reputation,~~our ~~technical~~predecessor ~~skills~~companies, ~~past~~ ~~contract~~we ~~performance,~~have ~~experience~~provided inessential ~~the~~services ~~industry,~~to ~~cost~~numerous ~~competitiveness~~U.S. government departments and ~~customer~~agencies ~~relationships.~~since 1951.

~~Backlog~~ Our customers include the U.S. Department of Defense (“DoD”), the U.S. Department of State (“DoS”), the U.S. Agency for International Development (“USAID”), foreign governments, commercial customers and certain other U.S. federal, state and local government departments and agencies. Revenue from the U.S. government accounted for approximately 97%, 96% and 95% of total revenue in fiscal years 2010, 2009, and 2008, respectively. Our contracts’ revenue and percentage of total revenue from the U.S. government fluctuates from year to year. These fluctuations can be due to contract length or contract structure, such as with indefinite delivery, indefinite quantity type contracts (“IDIQ”). The majority of our contracts are awarded for one year base periods with subsequent option years available subject to changing governmental priorities. IDIQ type contracts are often awarded to multiple contractors and provide the opportunity for awarded contractors to bid on task orders issued under the contract.

WeDuring ~~track~~fiscal ~~contracted~~year ~~backlog~~2008, inwe ~~order~~conducted ~~to assess~~ our ~~current~~operations ~~business~~through ~~development~~two ~~effectiveness~~reportable ~~and~~segments: toGovernment ~~assist~~Services us(“GS”) inand Maintenance ~~forecasting~~and ~~our~~Technical ~~future~~Support ~~business~~Services ~~needs and financial performance~~(“MTSS”). ~~Backlog~~In ~~consists~~fiscal ofyear ~~orders~~2009, ~~and~~we ~~priced~~divided ~~options under~~ our ~~contracts.~~GS Weoperating ~~define~~segment ~~contracted~~into ~~backlog~~two asnew ~~the~~segments, ~~estimated~~International ~~value~~Security ofServices ~~contract~~(“ISS”) ~~modifications~~and ~~received~~Logistics ~~from~~and ~~customers~~Construction ~~that~~Management ~~have~~(“LCM”). ~~not~~On ~~been~~April 6, ~~recognized~~2009, aswe ~~revenue.~~announced ~~Our~~a ~~backlog~~further ~~consists~~reorganization of ~~funded~~our ~~and~~business ~~unfunded~~structure ~~amounts.~~to ~~Funded~~better ~~backlog~~align iswith ~~based~~strategic ~~upon~~markets ~~amounts actually appropriated by a customer for payment of goods~~ and ~~services less~~to ~~actual~~streamline ~~revenue~~our ~~recorded~~infrastructure. asUnder of the ~~measurement~~new ~~date~~alignment, ~~under~~our ~~that~~three ~~appropriation.~~reportable ~~Unfunded~~segments ~~backlog~~were realigned isinto ~~the~~three ~~actual~~new ~~dollar~~segments, ~~value~~two of ~~unexercised~~which, ~~contract~~Global ~~options.~~Stabilization ~~Most~~and ofDevelopment ~~our~~Solutions ~~U.S.~~(“GSDS”) ~~government~~and ~~contracts allow~~Global ~~the~~Platform ~~customer~~Support ~~the~~Solutions ~~option~~(“GPSS”), toare ~~extend~~wholly-owned, ~~the~~and ~~period~~a ofthird ~~performance~~segment, ofGlobal aLinguist ~~contract~~Solutions (“GLS”), ~~for~~which is a ~~period~~51% ofowned ~~one~~joint ~~or more years~~venture. ~~These~~The ~~options~~new ~~may~~structure bebecame ~~exercised~~effective atApril 4, 2009, the ~~sole~~start ~~discretion~~ of ~~the~~our ~~customer.~~2010 ~~Historically~~fiscal year, it ~~has~~and ~~been~~is ~~our~~more ~~experience~~fully ~~that~~described ~~the~~in ~~customer~~Note ~~has~~13 ~~exercised~~to ~~contract~~our ~~options~~consolidated financial statements.

~~Firm funding~~In ~~for~~addition ~~our~~to ~~contracts~~the isinformation ~~usually~~presented ~~made for one year at a time~~below, ~~with~~Note ~~the~~13 ~~remainder~~to ofour ~~the~~consolidated ~~contract~~financial ~~period~~statements ~~consisting~~contains ofadditional ainformation ~~series~~about our ofoperating ~~one-year~~segments ~~options.~~and Asgeographic isareas ~~the~~in ~~case with~~which ~~the~~we ~~base~~have ~~period~~conducted ofbusiness ~~our~~during ~~U.S.~~fiscal ~~government~~years ~~contracts~~2010, ~~option~~2009, ~~periods~~and ~~are subject to the availability of funding for contract performance~~2008. ~~The~~We ~~U.S.~~have ~~government~~restated ~~is legally prohibited from ordering work under a contract in~~ the ~~absence~~corresponding items of ~~funding.~~segment ~~Our~~information ~~historical~~during ~~experience~~fiscal ~~has~~years ~~been~~2008 ~~that~~and ~~the~~2009 ~~government~~to ~~generally~~conform ~~has~~to ~~funded~~our ~~the~~fiscal ~~option~~year 2010 ~~periods~~segment ~~of our contracts~~presentation.

~~The following~~Recent ~~table~~Developments ~~sets~~— ~~forth~~Merger ~~our~~Agreement ~~approximate contracted backlog as of the dates indicated:~~

(Dollars in millions)	March 30, 2007		March 31, 2006		April 1, 2005
Funded Backlog	$	1,402	$	1,024	$	1,140
Unfunded Backlog		4,730		1,617		900
Total Backlog	$	6,132	$	2,641	$	2,040

As discussed in detail in the definitive proxy statement filed by us with the SEC on May 17, 2010 (the “Definitive Proxy Statement”), on April 11, 2010 we entered into an Agreement and Plan of Merger (the “Merger

In December 2006, the Company, through a joint venture named Global Linguist Solutions LLC ("GLS"), was awarded the Intelligence and Security Command ("INSCOM") contract by the U.S. Army for management of translation and interpretation services in support of Operation Iraqi Freedom. The five-year contract has a maximum value of approximately $4~~.6 billion.~~ We have a 51% ownership interest in GLS and will consolidate the joint venture in our financial statements. As of March 30, 2007, the funded and unfunded backlog related to this program was $49.0 million and $3.3 billion, respectively, and has been included in the table above. However, the incumbent contractor's protest of the award to GLS was sustained by the Government Accountability Office ("GAO"). Our backlog and estimated remaining contract value metrics may require future adjustment depending on the outcome of future procurement actions taken by the Army in implementing the GAO's recommendation.

6Table of Contents

~~Estimated~~ Agreement”) ~~Remaining~~with ~~Contract~~Delta ~~Value~~ Tucker Holdings, Inc. (“Parent”) and Delta Tucker Sub, Inc. (“Merger Sub”), each of whom is an affiliate of the private investment firm, Cerberus Capital Management, L.P. Pursuant to the terms of the Merger Agreement, Merger Sub will be merged with and into the Company, and as a result the Company will continue as the surviving corporation and be a wholly owned subsidiary of Parent (the “Merger”). The Merger Agreement was approved by the Company’s Board of Directors (the “Board”). The transaction is expected to close in the third or fourth quarter of calendar year 2010, but could close as early as late June.

~~Our~~Pursuant ~~estimated~~to ~~remaining~~the ~~contract~~Merger ~~value~~Agreement, ~~represents~~at ~~total~~the ~~backlog~~effective ~~plus~~time ~~management's estimate~~ of ~~future~~the ~~revenues~~Merger, ~~under~~each ~~IDIQ~~issued ~~contracts~~and ~~that~~outstanding ~~have~~share ~~not~~of ~~been funded, or~~the ~~award~~Company’s ~~term~~Class A ~~periods~~common ~~that~~stock, ~~have~~par ~~not~~value ~~yet been earned~~$0.01 ~~These~~per ~~future~~share ~~revenues~~(the ~~would~~“Class A beCommon ~~our~~Stock”), ~~estimate~~other ofthan ~~revenue~~shares ~~that~~owned ~~would~~by ~~occur from~~ the ~~end~~Company, ofParent ~~currently~~or ~~funded~~Merger ~~task~~Sub, ~~orders~~or ~~until~~by ~~the~~any ~~end~~stockholders ofwho ~~the~~have ~~IDIQ contracts.~~perfected ~~Our~~and ~~estimated~~not ~~remaining~~withdrawn ~~contract~~a ~~value~~demand isfor appraisal ~~based~~rights ~~on our experience~~ under ~~contracts~~Delaware law, ~~and~~will webe ~~believe~~canceled ~~our~~and ~~estimates~~will ~~are reasonable. However, there can~~ be noautomatically ~~assurance~~converted ~~that~~into ~~our~~the ~~existing contracts~~right ~~will~~to ~~result~~receive $17.55 in ~~actual~~cash ~~revenues~~(the in“Per ~~any~~Share ~~particular~~Merger ~~period~~Consideration”), orwithout ~~at all~~interest. ~~These~~Additionally, ~~amounts~~the ~~could~~Company’s ~~vary~~restricted orstock units ~~even~~granted ~~change~~under ~~significantly~~the ~~depending~~DynCorp ~~upon~~International ~~government~~2007 ~~policies,~~Omnibus ~~government~~Incentive ~~budgets, appropriations~~Plan ~~and~~will ~~the~~vest ~~outcome~~at ofthe ~~protested~~effective ~~contract~~time ~~awards.~~of ~~The~~the ~~following~~Merger ~~table~~and ~~sets~~will ~~forth~~be ~~our~~converted ~~estimated~~into ~~remaining~~the ~~contract~~right ~~value~~to asreceive of the ~~dates~~Per ~~indicated:~~Share Merger Consideration.

(Dollars in millions)		March 30, 2007			March 31, 2006			April 1, 2005
Estimated remaining contract value		$	8,991		$	5,727		$	4,413

Consummation of the Merger is subject to customary conditions, including without limitation (i) approval by the holders of a majority of the outstanding shares of the Company’s Class A Common Stock entitled to vote on the Merger, (ii) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (iii) the absence of any law, order or injunction prohibiting the Merger. Moreover, each party’s obligation to consummate the Merger is subject to certain other conditions, including without limitation (a) the accuracy of the other party’s representations and warranties (subject to customary materiality qualifiers) and (b) the other party’s compliance with its covenants and agreements contained in the Merger Agreement (subject to customary materiality qualifiers). On May 27, 2010, we received notice from the U.S. Department of Justice that early termination of the waiting period under the HSR Act, as amended, was granted effective immediately. The termination had the effect of ending the HSR Act waiting period relating to the Merger.

~~Regulatory~~Concurrently ~~Matters~~ with the execution and delivery of the Merger Agreement, DIV Holding LLC (“DIV Holding”), the largest stockholder of the Company’s Common Stock, and affiliates thereof, entered into a voting agreement (the “Voting Agreement”) with Parent and Merger Sub whereby DIV Holding and its affiliate, committed, among other things, subject to the terms and conditions of the Voting Agreement, to vote 34.9% of the outstanding shares of Common Stock for the adoption of the Merger Agreement. The Voting Agreement automatically terminates upon the termination of the Merger Agreement.

~~Contracts~~Parent ~~with~~and Merger Sub have obtained equity and debt financing commitments for the ~~U.S.~~transaction ~~government~~contemplated ~~are~~by ~~subject~~the Merger Agreement, the aggregate proceeds of which will be sufficient for Parent to ~~certain~~pay ~~regulatory~~the ~~requirements.~~aggregate ~~Under~~Per ~~U.S.~~Share ~~government~~Merger ~~regulations,~~Consideration ~~certain~~and ~~costs,~~all ~~including~~related ~~certain~~fees ~~financing~~and expenses. Cerberus ~~costs~~Series Four Holdings, ~~portions~~LLC, ofan ~~research~~investment ~~and~~fund ~~development~~affiliated ~~costs,~~with ~~lobbying~~Cerberus ~~expenses~~Capital Management, ~~certain~~L.P. ~~types~~(“Cerberus”), ofhas ~~legal~~committed ~~expenses~~to ~~and~~purchase ~~certain~~equity ~~marketing~~interests ~~expenses~~in ~~related~~Parent amounting to $591.6 million in the ~~preparation~~aggregate ofon ~~bids~~the terms and ~~proposals~~subject to the conditions set forth in an equity commitment letter dated April 11, ~~are~~2010 ~~not~~(the ~~allowed for~~“Equity ~~pricing~~Commitment ~~purposes~~Letter”), and ~~calculation~~have provided the Company with a limited guarantee in favor of ~~contract~~the ~~reimbursement~~Company ~~rates~~dated ~~under~~April 11, ~~cost-reimbursement~~2010 ~~contracts.~~(the “Limited ~~The~~Guarantee”), ~~U.S.~~guaranteeing, ~~government~~subject ~~also~~to ~~regulates~~the terms and conditions of the ~~methods~~Limited byGuarantee, ~~which~~the ~~allowable~~payment ~~costs~~of certain monetary obligations that may be ~~allocated~~ ~~under~~owed ~~U.S.~~by ~~government~~Parent ~~contracts~~pursuant to the Merger Agreement.

~~Our government~~Bank ~~contracts~~of ~~are~~America ~~subject~~Securities toLLC, ~~audits~~Barclays atBank ~~various~~PLC, ~~points~~Citigroup inGlobal ~~the~~Markets ~~contracting process~~Inc., ~~Pre-award~~Deutsche ~~audits~~Bank ~~are~~Trust ~~performed~~Company atAmericas, ~~the~~and ~~time~~certain aof their ~~proposal~~respective isaffiliates ~~submitted to~~ (the ~~U.S. government~~“Debt ~~for~~Commitment ~~cost-reimbursement~~Parties”) ~~contracts.~~have ~~The~~committed ~~purpose~~to ofprovide aup ~~pre-award audit is~~ to ~~determine~~$715 million ~~the~~in ~~basis~~senior ofsecured ~~the~~credit ~~bid~~facilities ~~and~~(comprised ~~provide~~of ~~the~~a ~~information~~term ~~required~~loan ~~for~~facility ~~the~~of ~~U.S.~~up ~~government~~ to ~~negotiate~~$565 million ~~the~~and ~~contract effectively. In addition, the U.S. government may perform~~ a ~~pre-award~~revolving ~~audit~~credit tofacility of ~~determine~~up ~~our capability~~ to ~~perform~~$150 million) ~~under~~and asenior ~~contract.~~unsecured ~~During~~term ~~the~~loans ~~performance~~ of ~~a contract,~~up ~~the~~to ~~U.S.~~$455 million, ~~government~~on ~~may~~the ~~have~~terms ~~the~~and ~~right~~subject to ~~examine~~the ~~our~~conditions ~~costs~~set ~~incurred~~forth in ~~the~~a ~~contract,~~commitment ~~including~~letter ~~any~~dated ~~labor charges~~April 11, ~~material~~2010 ~~purchases~~(the ~~and~~“Debt ~~overhead~~Commitment ~~charges~~Letter”). ~~Upon~~The ~~a contract's completion, the~~obligations ~~U.S. government performs an incurred cost audit~~ of ~~all~~the ~~aspects~~Debt ofCommitment ~~contract~~Parties ~~performance for cost-reimbursement contracts~~ to ~~ensure~~provide ~~that~~debt wefinancing ~~have~~under ~~performed~~ the ~~contract~~Debt inCommitment aLetter ~~manner consistent with our proposal. The government also may perform a post-award audit for proposals that~~ are subject to ~~the~~a ~~Truth~~number inof ~~Negotiations Act~~conditions, which we believe are ~~proposals~~customary infor ~~excess~~financings of ~~$600,000,~~this ~~to determine~~type ifor ~~the~~are ~~cost~~otherwise ~~proposed~~consistent ~~and~~with ~~negotiated~~certain ~~was~~conditions ~~accurate,~~in ~~current and complete as of~~ the Merger ~~time~~Agreement. ofThe ~~negotiations.~~final

~~The Defense~~5 Contract Audit Agency ("DCAA") performs these audits on behalf of the U.S. government. The DCAA also reviews the adequacy of, and our compliance with, our internal control systems and policies, including our purchasing, property, estimating, compensation and management information systems. The DCAA has the right to perform audits on our incurred costs on all contracts on a yearly basis. We have DCAA auditors on site to monitor our billing and back office operations. An adverse finding under a DCAA audit could result in the disallowance of our costs under a U.S. government contract, termination of U.S. government contracts, forfeiture of profits, suspension of payments, fines and suspension and prohibition from doing business with the U.S. government. In the event that an audit by the DCAA recommends disallowance of our costs under a contract, we have the right to appeal the findings of the audit under applicable dispute resolution provisions. Approval of submitted yearly contract incurred costs can take from one to three years from the date of submission of the contract costs. All of our contract incurred costs for U.S. government contracts completed through fiscal year 2003 have been audited by the DCAA and approved by the Defense Contract Management Agency. The audits for such costs during subsequent periods are continuing. See "Risk Factors – A negative audit or other actions by the U.S. government could adversely affect our operating performance."

At anyTable given time, many of our contracts are under review by the DCAA and other government agencies. We cannot predict the outcome of such ongoing audits and what, if any, impact such audits may have on our future operating performance. Contents

7 termination date for the Debt Commitment Letter is the same as under the Merger Agreement, except to the extent the Merger Agreement is extended by Parent in accordance with the terms thereof.

~~Sales~~The Merger Agreement contains certain termination rights for the Company and ~~Marketing~~ Parent, including the right of the Company to terminate the Merger Agreement to accept a superior proposal. Upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay Parent a termination fee of $30 million. The Company may also be obligated to reimburse transaction expenses incurred by Parent and Merger Sub up to $12 million upon termination of the Merger Agreement under specified circumstances. Upon termination of the Merger Agreement under specified circumstances, Parent will be required to pay the Company a reverse termination fee of $100 million. In addition, under certain circumstances, in the event that a party establishes that the other party has committed a “Willful Breach” (as defined in the Merger Agreement) of the Merger Agreement, then the party that has committed the Willful Breach shall be required to pay the non-breaching party liquidated damages in the amount of $300 million.

WeThe ~~market~~foregoing ~~through~~descriptions ~~relationships~~of ~~with~~the ~~military~~Merger ~~and government officials~~Agreement, ~~joint~~Limited ~~ventures~~Guarantee and ~~international~~Voting ~~trade~~Agreement ~~shows.~~do ~~Personnel~~not ~~profiles~~purport ~~range~~to ~~from~~be ~~employees~~complete ~~with~~and are ~~marketing~~qualified ~~degrees~~in their entirety by reference to ~~retired~~the ~~senior~~full ~~officers~~text ~~from~~of the ~~various~~Merger ~~U.S.~~Agreement, Limited Guarantee and ~~foreign~~Voting ~~military~~Agreement, ~~branches.~~as ~~Most~~applicable, ~~senior~~a ~~personnel~~copy ~~engaged~~of ineach ~~sales~~of which was filed as Exhibit 2.1, Exhibit 10.1 and ~~marketing~~Exhibit 9.1, ~~have~~as ~~long~~applicable, to our April 12, 2010 Form 8-~~term~~K ~~operations~~and ~~experience~~the respective terms of which are incorporated herein by reference.

~~Our~~Contract ~~approach~~Types is to establish marketing activities in the area or region that we believe presents the greatest opportunity to grow and develop our business. We have an organization and presence in Dubai, UAE which we believe, together with our Company and its predecessors' long-standing presence in the Middle East, enables us to continually pursue opportunities in that region. We have an office in Germany to develop business with the U.K. Ministry of Defense, United States, national and NATO military commands. We have frontline sales and marketing personnel in the United States, Europe, Africa and Asia-Pacific. In each office, to assist us in the regions we serve, we employ personnel who are fluent in both English and the local language and familiar with local culture. We also utilize focus groups to target our services to geographic markets and provide local training to our sales force.

~~Intellectual~~Our ~~Property~~ contracts typically have a term of three to ten years consisting of a base period of one year with multiple one-year options. Our contracts typically are awarded for an estimated dollar value based on the forecast of the work to be performed under the contract over its maximum life. In addition, we have historically received additional revenue through increases in program scope beyond that of the original contract. These contract modifications typically consist of “over and above” requests derived from changing customer requirements and are reviewed by us for appropriate revenue recognition. The U.S. government is not obligated to exercise options under a contract after the base period. At the time of completion of the contract term of a government contract, the contract is re-competed to the extent that the service is still required.

WeOur ~~hold~~contracts anwith ~~exclusive,~~the ~~perpetual,~~U.S. ~~irrevocable,~~government ~~worldwide,~~or ~~royalty-free~~the ~~and~~government’s ~~fully~~prime ~~paid~~contractor ~~license~~ (to ~~use~~ the ~~"Dyn~~extent ~~International"~~that ~~and~~we ~~"DynCorp~~are a ~~International"~~subcontractor) ~~names~~generally incontain ~~connection~~standard, ~~with~~unilateral ~~aviation~~provisions ~~services,~~under ~~security~~which ~~services,~~the ~~technical~~customer ~~services~~may ~~and~~terminate ~~marine~~for ~~services~~convenience or default. WeU.S. dogovernment ~~not~~contracts ~~own~~generally ~~any~~also ~~trademarks~~contain orprovisions ~~patents~~that ~~and~~allow dothe ~~not~~U.S. ~~believe~~government ~~our~~to ~~business~~unilaterally issuspend us ~~dependent~~from onobtaining ~~trademarks~~new contracts pending resolution of alleged violations of procurement laws or ~~patents~~regulations, reduce the value of existing contracts, issue modifications to a contract and control and potentially prohibit the export of our services and associated materials.

~~Environmental~~Most ~~Matters~~ of our contracts are to provide services to our customers, resulting in the majority of costs being labor related. For this reason, we flexibly staff for each contract. If we lose a contract, we terminate or reassign the employees associated with the contract, hence cutting direct cost and overhead. The elimination of employees would not generate significant separation costs. Additionally, the indirect costs that are absorbed by any one contract could be absorbed by the remaining contracts without a significant impact to our business or competitiveness. Accordingly, the termination of any distinct contract could be absorbed by us without significant disruption to existing business and pursuit of new business.

Our ~~operations~~capital ~~include~~structure ~~the~~also ~~use,~~provides ~~generation~~us ~~and~~flexibility ~~disposal~~as ofour ~~petroleum~~primary ~~products~~capital ~~and~~requirements ~~other hazardous materials. We~~ are ~~subject~~working tocapital ~~various U.S. federal~~related, ~~state,~~which ~~local~~are variable ~~and~~with ~~foreign~~our ~~laws~~overall ~~and~~revenue ~~regulations~~stream. ~~relating~~The tonature ~~the protection~~ of ~~the~~our ~~environment,~~contracts ~~including~~does ~~those~~not ~~governing~~typically ~~the~~require ~~management~~investments ~~and~~in ~~disposal~~fixed ofassets ~~hazardous substances~~ and ~~wastes,~~we ~~the~~do ~~cleanup~~not ofhave ~~contaminated sites~~significant ~~and~~fixed ~~the~~asset ~~maintenance~~investments ofor asignificant ~~safe workplace.~~agreements Wetied ~~believe~~to wea ~~have~~single ~~been~~contract ~~and~~upon ~~are~~which inour ~~substantial~~business materially ~~compliance~~depends. ~~with environmental laws and regulations~~Additionally, ~~and~~our wecontract ~~have~~mix nogives ~~liabilities~~us ~~under environmental requirements that would have~~ a ~~material adverse~~degree ~~effect~~of onflexibility ~~our~~to ~~business,~~utilize ~~results~~assets ofpurchased ~~operations~~for orcertain ~~financial~~programs ~~condition.~~to Webe ~~have~~deployed ~~not~~on ~~incurred,~~other ~~nor~~programs doin wecases ~~expect~~where tothe ~~incur,~~scope ~~material~~of ~~costs~~our ~~relating~~deliverables ~~to environmental compliance~~changes.

~~Employees~~ 6

WeTable currently employ approximately 14,600 employees in 33 countries, of which approximately 1,500 are represented by labor unions. Contents

~~Company~~Our ~~History~~business generally is performed under fixed-price, time-and-materials ~~Certain~~or cost-reimbursement ~~Relationships~~ contracts. Each of these is described below.

~~Our~~• ~~predecessor~~Fixed-Price ~~companies~~Type ~~have~~Contracts: ~~provided~~In ~~essential~~a ~~services~~fixed-price tocontract, ~~numerous~~the ~~U.S.~~price ~~government~~is ~~departments~~not ~~and~~subject ~~agencies~~to ~~since~~adjustment ~~1951.~~based Weon ~~operated~~costs asincurred, awhich ~~separate~~can ~~subsidiary of~~favorably ~~DynCorp~~or ~~from~~adversely ~~December 2000~~impact toour ~~March 2003~~profitability ~~and~~depending ~~Computer~~upon ~~Sciences~~our ~~Corporation~~execution ~~from~~in ~~March 2003~~performing ~~until February 2005. On February 11, 2005, Computer Sciences Corporation and DynCorp,~~ the ~~Company's~~contracted ~~former~~service. ~~parent,~~Our ~~sold~~fixed-price ~~DynCorp~~contracts ~~International~~include ~~LLC~~firm ~~to DynCorp International Inc.~~fixed-price, afixed-price ~~newly~~with ~~formed~~economic ~~entity controlled by The Veritas Capital Fund II~~adjustment, ~~L.P.~~ and ~~its~~fixed-price ~~affiliates ("Veritas Capital")~~incentive. ~~The Company has no operations independent of DynCorp International LLC.~~

8• Time-and-Materials Type Contracts: Time-and-materials type contracts provide for acquiring supplies or services on the basis of direct labor hours at fixed hourly/daily rates plus materials at cost.

~~Equity~~• ~~Offering~~ Cost-Reimbursement Type Contracts: Cost-reimbursement type contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract, plus a fixed-fee, award-fee or incentive-fee. Award-fees or incentive-fees are generally based upon various objective and subjective criteria, such as aircraft mission capability rates and meeting cost targets.

OnAny ~~May 9,~~of ~~2006,~~these ~~the~~three ~~Company~~types ~~consummated~~of ancontracts ~~equity~~discussed ~~offering~~above ofmay ~~25,000,000~~be ~~shares~~executed ofunder ~~its~~an ~~Class A~~IDIQ ~~common stock~~contract, ~~par~~which ~~value~~are often ~~$0.01~~awarded ~~per~~to ~~share,~~multiple atcontractors. aAn ~~price of~~IDIQ ~~$15.00~~contract ~~per~~does ~~share~~not ~~(the~~represent ~~"Equity~~a ~~Offering"),~~firm ~~less~~order ~~the~~for ~~underwriters'~~services. ~~discount~~Our ofCivilian 6%Police ~~per~~and ~~share.~~Contract ~~The~~Field ~~gross~~Teams ~~proceeds~~programs ~~from~~are ~~the~~two ~~Equity~~examples ~~Offering~~ of ~~$375 million,~~IDIQ ~~together~~contracts. ~~with~~In ~~cash~~fiscal onyears ~~hand~~2010, ~~were~~2009, ~~used: (i) to~~and ~~redeem~~2008, ~~all~~76%, of73%, ~~the~~and ~~Company's~~70% of ~~outstanding~~our ~~preferred stock~~revenue, ~~of which $222.8 million in stated amount~~respectively, ~~including~~were ~~accrued~~attributable ~~and~~to ~~unpaid~~IDIQ ~~dividends~~contracts. ~~thereon,~~When ~~was~~a ~~outstanding~~customer aswishes ~~of May 9, 2006; (ii)~~ to ~~pay~~order aservices ~~special~~under ~~Class B~~an ~~distribution~~IDIQ incontract, the ~~amount~~customer ofissues ~~$100.0 million, representing~~ a ~~return~~task oforder ~~capital~~request offor ~~$95.9 million~~proposal to ~~DIV~~the ~~Holding~~contractor ~~LLC,~~awardees. ~~the holder~~The ofcontract ~~the~~awardees ~~Company's~~then ~~common~~submit proposals ~~stock; (iii)~~ to ~~redeem $28.0 million of~~ the ~~Company's~~customer ~~senior~~and ~~subordinated~~task ~~notes~~orders onare ~~June 8,~~typically ~~2006;~~awarded ~~(iv) to~~under ~~pay~~a ~~prepayment~~best-value ~~penalties of $8~~approach.~~4 million~~ However, ~~$5.7 million~~many ofIDIQ ~~which~~contracts ~~represented~~permit ~~prepayment~~the ~~penalties~~customer onto ~~the~~direct ~~Company's~~work ~~preferred~~to ~~stock~~a ~~and~~particular $2contractor.~~7 million~~ ofIn ~~which~~some ~~represented~~instances, ~~prepayment penalties on~~ the ~~Company's senior~~contractor ~~subordinated~~may ~~notes;~~identify ~~and~~specific ~~(v) to pay transaction expenses~~projects ofand ~~approximately~~propose ~~$30.0 million,~~to ~~including~~perform anthe ~~underwriters'~~service ~~commission~~for ~~of $22.5 million,~~ a ~~fee~~customer ofwithin ~~$5.0 million~~the toscope ~~Veritas~~of ~~Capital~~the ~~and~~IDIQ ~~approximately~~contract, ~~$2.5 million~~although ~~of miscellaneous~~the ~~fees~~customer ~~and~~is ~~expenses~~not ~~related~~obligated to order the ~~Equity Offering~~services.

~~Availability~~Our ofhistorical ~~Forms~~contract ~~Filed~~mix ~~With~~by type for the ~~U.S.~~last ~~Security~~three ~~and~~fiscal ~~Exchange~~years, ~~Commission~~ as a percentage of revenue, is indicated in the table below.

Our shareholders may obtain, free of charge, copies of the following documents (and any amendments thereto) as filed with, or furnished to, the U.S. Security and Exchange Commission ("SEC") as soon as reasonably practical after such material is filed with or furnished to the SEC:


	Fiscal Year
Contract Type	2010		2009		2008
Fixed-Price	26	%	27	%	37	%
Time-and-Materials	16	%	24	%	33	%
Cost-Reimbursement	58	%	49	%	30	%

Totals	100	%	100	%	100	%

~~A copy~~The oftask ~~these~~orders ~~filings~~under ~~may~~the beLogistics ~~obtained~~Civil byAugmentation ~~going~~Program to(“LOGCAP ~~our~~IV”) ~~Internet website at www.dyn-intl.com~~ and ~~selecting~~Intelligence ~~"Investor Relations"~~ and Security ~~selecting~~Command ~~"Financial~~(“INSCOM”) ~~Information."~~contracts, ~~Copies may~~which ~~also~~are bedescribed ~~obtained~~below byunder ~~providing~~“Strategic aBusiness ~~written~~Areas ~~request~~and ~~for~~Service ~~such~~Offerings ~~copies~~— orGlobal ~~additional~~Stabilization ~~information~~and ~~regarding~~Development ~~our~~Solutions ~~operating~~(“GSDS”)” orand ~~financial~~“— Global Linguist ~~performance~~Solutions to(“GLS”),” ~~Cindy~~are ~~Roberts,~~predominantly ~~Director~~cost-reimbursement oftype ~~Investor~~task ~~Relations,~~orders. ~~DynCorp International,~~We ~~8445 Freeport~~anticipate ~~Parkway,~~that ~~Suite 400,~~revenue ~~Irving,~~from ~~Texas~~cost-reimbursement ~~75063.~~type ~~Except~~contracts aswill ~~otherwise~~continue ~~stated~~to increase in ~~these~~fiscal ~~reports,~~year ~~the~~2011 ~~information~~primarily ~~contained~~due onto ~~our~~the ~~website~~full oryear ~~available~~impact of bythe ~~hyperlink~~southern ~~from our~~Afghanistan ~~website~~LOGCAP isIV ~~not~~task ~~incorporated~~order. ~~into~~Cost-reimbursement ~~this~~type ~~Annual~~contracts ~~Report~~typically oncarry ~~Form 10-K~~lower ormargins than other ~~documents~~contract wetypes, ~~file~~but ~~with,~~also orcarry ~~furnish~~lower ~~to,~~risk ~~the~~of ~~SEC~~loss.

~~Forward-Looking~~Under ~~Statements~~ many of our contracts, we rely on subcontractors to perform all or a portion of the services we are obligated to provide to our customers. We often enter into subcontract arrangements in order to meet government requirements that certain categories of services be awarded to small businesses. We use subcontractors primarily for specialized, technical labor and certain functions such as construction and catering.

~~This~~Strategic ~~Annual~~Business ~~Report~~Areas ~~on Form 10-K contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),~~ and ~~Section 21E~~Service ofOfferings the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements, written, oral or otherwise made, represent the Company's expectation or belief concerning future events. Forward-looking statements involve risks and uncertainties. Without limiting the foregoing, the words "believes," "thinks," "anticipates," "plans," "expects" and similar expressions are intended to identify forward-looking statements. 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 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; additional work awarded under the Civilian Police and International Narcotics and Law Enforcement contracts; pursuit of new commercial business in the U.S. and abroad; activities of competitors; bid protests; changes in significant operating expenses; changes in availability of capital; general economic and business conditions in the U.S.; acts of war or terrorist activities; variations in performance of financial markets; estimates of contract values; anticipated revenues from IDIQ contracts; expected percentages of future revenues represented by fixed-price and time-and-materials contracts; and statements covering our business strategy, those described in "Risk Factors" and other risks detailed from time to time in the Company's reports filed with the SEC. Accordingly, such forward-looking statements do not purport to be predictions of future events or circumstances; therefore, there can be no assurance that any forward-looking statement contained herein will prove to be accurate. The Company assumes no obligation to update the forward-looking statements.

9We group our various programs within each operating segment into service offerings or business areas, terms we use interchangeably, to manage, review and assess our business performance at a program level. A description of our service offerings/business areas by operating segment are as follows:

7 ~~ITEM 1A. RISK FACTORS.~~

YouTable should carefully consider the risks described below, together with all of the other information contained in this Form 10-K. Any of the following risks could materially and adversely affect our financial condition or results of operations.Contents

WeGlobal ~~rely~~Stabilization on sales to U.S. government entities. A loss of contracts with the U.S. government, a failure to obtain new contracts or a reduction of sales under existing contracts could adversely affect our operating performance and ~~our~~Development ~~ability~~Solutions to(“GSDS”) ~~generate cash flow to fund our operations.~~

WeGSDS ~~derive~~provides ~~substantially~~a ~~all~~diverse collection of ~~our~~outsourced ~~revenues~~services ~~from contracts and subcontracts with the U.S. government and its agencies,~~ primarily the DoD and the DoS. The remainder of our revenues represents commercial contracts and contracts with foreign governments. We expect that U.S. government contracts, particularly with the DoD and the DoS, will continue to ~~be our primary source of revenue for the foreseeable future. Continuation and renewal of our existing~~ government ~~contracts and new government contracts are, among other things, contingent upon the availability of adequate funding for various U.S. government~~ agencies, ~~including the DoD and the DoS~~worldwide. ~~Changes~~GSDS inincludes ~~U.S.~~four ~~government spending could directly affect our operating performance and lead to an~~service ~~unexpected~~offerings/business ~~loss~~areas ofas ~~revenue.~~described ~~Among the factors that could impact U.S. government spending and that would reduce our federal government contracting business include~~below:

~~These or~~Training & ~~other~~Mentoring ~~factors~~— ~~could~~This ~~cause~~service ~~U.S.~~offering ~~government~~provides international ~~agencies~~policing toand ~~reduce~~police ~~their~~training, ~~purchases~~judicial ~~under our contracts~~support, toimmigration ~~exercise~~support ~~their~~and ~~right~~base tooperations. ~~terminate~~Under ~~our~~this ~~contracts~~service ~~in whole or in part~~offering, ~~to issue~~we ~~temporary~~also ~~stop-work~~provide ~~orders,~~senior oradvisors ~~decline~~and tomentors ~~exercise options~~ to ~~renew,~~foreign ~~our~~governmental ~~contracts~~agencies. ~~The~~In ~~loss or significant curtailment of our material government contracts~~addition, orwe ~~our~~provide ~~failure~~security ~~to renew~~and ~~existing~~personal ~~contracts~~protection orfor ~~enter~~diplomats ~~into new contracts could adversely affect our operating performance~~ and ~~lead~~senior togovernmental ~~an unexpected loss of revenue~~officials.

~~Our~~Logistics ~~U.S.~~— ~~government~~This ~~contracts~~service ~~may~~offering ~~be terminated by the~~ supports U.S. ~~government~~military atoperations ~~any~~and ~~time~~maintenance ~~prior~~support, including but not limited to: ~~their~~construction ~~completion~~services, ~~and~~facilities ~~contain~~management, ~~other~~electrical ~~unfavorable~~power, ~~provisions~~water, ~~which~~ ~~could~~sewage ~~lead~~and towaste ~~unexpected~~management, ~~loss~~laundry ofoperations, ~~revenues~~food services and ~~reduction~~transportation inmotor ~~backlog~~pool operations.

~~Under~~Operations & ~~the~~Development ~~terms~~— ofThis ~~our~~service ~~contracts,~~offering ~~the U.S. government may unilaterally~~provides:

10• peacekeeping logistics support;

~~The U.S.~~• ~~government~~humanitarian can terminate or modify any of its contracts with us either for its convenience or if we default by failing to perform under the terms of the applicable contract. A termination arising out of our default could expose us to liability and adversely affect our operating performance and lead to an unexpected loss of revenue. relief;

~~Our government~~• ~~contracts~~weapons ~~typically~~removal have an initial term of one year with multiple option periods, exercisable at the discretion of the government at previously negotiated prices. The government is not obligated to exercise any option under a contract. Furthermore, the government is required to compete all programs and, therefore, may not automatically renew a contract. In addition, at the time of completion of any of our government contracts, the contract is required to be re-competed if the government still requires the services covered by the contract. abatement;

~~If the~~• ~~U.S.~~worldwide ~~government~~contingency ~~terminates~~planning and~~/or~~ ~~materially~~other ~~modifies~~rapid ~~any~~response of our contracts or if option periods are not exercised, our failure to replace revenue generated from such contracts would result in lower revenues and would likely adversely affect our earnings, which would have a material adverse effect on our financial condition and results of operations. services;

~~Our~~• ~~U.S.~~inventory ~~government~~procurement ~~contracts are subject to competitive bidding, both upon initial issuance~~ and ~~re-competition.~~tracking ~~If we are unable to successfully compete in the bidding process or if we fail to receive renewal, it could adversely affect our operating performance and lead to an unexpected loss of revenue.~~ services;

~~Substantially~~• ~~all~~property of our U.S. government contracts are awarded through a competitive bidding process upon initial award and renewal, and we expect that this will continue to be the case. There often is significant competition and pricing pressure as a result of this process. The competitive bidding process presents a number of risks, including the following: control;

~~The government~~• ~~contracts~~mobile ~~for~~repair which we compete typically have multiple option periods, and if we fail to win a contract or a task order, we generally will be unable to compete again for that contract for several years. If we fail to win new contracts or to receive renewal contracts upon re-competition, it may result in additional costs and expenses and possible loss of revenue, and we will not have an opportunity to compete for these opportunities again until the current task orders expire. services;

~~Our~~• ~~operations~~facility ~~involve considerable risks~~ and ~~hazards.~~equipment Anmaintenance ~~accident or incident involving our employees or third parties could harm our reputation, affect our ability to compete for business,~~ and ~~if not adequately insured or indemnified against, could adversely affect our results of operations and financial condition.~~ control;

We• ~~are~~custodial exposed to liabilities arising out of the services we provide. Such liabilities may relate to an accident or incident involving our employees or third parties, particularly where we are deployed on-site at active military installations or in locations experiencing political or civil unrest, or they may relate to an accident or incident involving aircraft or other equipment we have serviced or used in the course of our business. Any of these types of accidents or incidents could involve significant potential claims of injured employees and ~~other~~administrative ~~third parties and claims relating to loss of or damage to government or third-party property.~~ services;

~~We maintain~~• ~~insurance~~civil, ~~policies~~electrical, ~~that~~environmental ~~mitigate against risk~~ and ~~potential~~mechanical ~~liabilities~~engineering; ~~related to our operations. This insurance is maintained in amounts that we believe is reasonable. Our insurance coverage may not be adequate to cover those claims or liabilities~~ and we may be forced to bear substantial costs from an accident or incident. Substantial claims in excess of our related insurance coverage could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

11• construction management services.

~~Furthermore, any~~This ~~accident~~service oroffering ~~incident~~also ~~for~~includes ~~which~~new weactivities ~~are~~as ~~liable,~~a ~~even if fully insured, may~~ result inof ~~negative~~the ~~publicity~~acquisition ~~which~~of ~~could~~Casals ~~adversely affect our reputation among our customers, including our government customers,~~ and ~~the public~~Associates, ~~which~~Inc. ~~could~~(“Casals”) such ~~result~~as insupporting usU.S. ~~losing~~foreign ~~existing~~policy and ~~future~~international ~~contracts~~development orpriorities ~~make~~by itassisting ~~more~~in ~~difficult~~the ~~for~~development usof tostable ~~compete~~and ~~effectively.~~democratic ~~This~~governments, ~~could~~implementing ~~adversely~~anti-corruption ~~affect our~~initiatives, ~~operating performance~~ and ~~may~~aiding ~~result~~the ingrowth ~~additional~~of ~~expenses~~democratic public and ~~possible loss of revenue~~civil institutions.

~~Political~~Intelligence ~~destabilization~~Training orand ~~insurgency~~Solutions in— ~~the~~This ~~regions~~service inoffering ~~which~~provides weproprietary ~~operate~~training ~~may~~courses, management ~~have~~consulting aand ~~material~~augmentation ~~adverse~~services ~~effect~~to onthe intelligence community and expands our ~~operating~~services ~~performance~~to the intelligence community and national security clients.

~~Certain~~Key ~~regions~~GSDS inContracts which we operate are highly unstable. Insurgent activities in the areas in which we operate may cause further destabilization in these regions. There can be no assurance that the regions in which we operate will continue to be stable enough to allow us to operate profitably or at all. For fiscal 2007 and 2006, respectively, revenues generated from our operations in the Middle East contributed 46% and 48% of our revenues. Insurgents in Iraq and Afghanistan have targeted installations where we have personnel and have contributed to instability in these countries. This could impair our ability to attract and deploy personnel to perform services in either or both locations. In addition, we have been required to increase compensation to our personnel as an incentive to deploy them to these regions. To date, we have been able to recover this added cost under the contracts, but there is no guarantee that future increases, if required, will be able to be passed onto our customers through our contracts. To the extent that we are unable to pass through such increased compensation costs to our customers, our operating margins would be adversely impacted, which could adversely affect our operating performance. In addition, increased insurgent activities or destabilization, including civil unrest or a civil war in Iraq or Afghanistan, may lead to a determination by the U.S. government to halt our operations in a particular location, country or region and to perform the services using military personnel. Furthermore, in extreme circumstances, the U.S. government may decide to terminate all U.S. government activities including our operations under U.S. government contracts in a particular location, country or region and to withdraw all military personnel. This could adversely affect our operating performance and may result in additional costs and expenses and loss of revenue.

Civilian Police (“CivPol”). The CivPol program was awarded to us by the DoS in February 2004. Our ~~IDIQ~~CivPol ~~contracts~~program ~~are~~has an ~~not~~estimated ~~firm~~total ~~orders~~contract ~~for~~value ~~services,~~of $4.0 billion over the six and one-half year term of this program through August 2010. Through this program, we ~~may~~have ~~never~~deployed ~~receive~~civilian ~~revenues~~police officers from ~~these~~the ~~contracts~~U.S. to several countries to train and offer logistics support to the local police and assist them with infrastructure reconstruction. Our first significant deployment of civilian police personnel began in the Balkans in 1996, ~~which~~where ~~could~~we ~~adversely~~helped ~~affect~~train ~~our~~local ~~operating~~police and provided support ~~performance~~during the conflict. Our security trainers and mentors remained in the region through 2004. In addition, we have been awarded multiple task orders under the Civilian Police program, including assignments in Iraq and Afghanistan. Our current task orders are primarily time-and-materials and cost-reimbursement.

~~Many~~8 of our government contracts are IDIQ contracts, which are often awarded to multiple contractors. Award of an IDIQ contract does not represent firm orders for services. Generally, under an IDIQ contract, the government is not obligated to order a minimum of services or supplies from its contractor, irrespective of the total estimated contract value. Furthermore, under an IDIQ contract, the customer develops requirements for task orders that are competitively bid against all of the contract awardees, usually under a best-value approach. However, many contracts also permit the government customer to direct work to a specific contractor. Our Civilian Police and Contract Field Team programs are two of our contracts performed under IDIQ contracts. We may not win new task orders under these contracts for various reasons such as failing to rapidly deploy personnel or high prices, which would have an adverse effect on our operating performance and may result in additional expenses and loss of revenue. In fiscal 2007 and 2006, 56.7% and 58.9% of our revenues, respectively, were attributable to IDIQ contracts.

12Table of Contents

~~Our~~Logistics ~~cost~~Civil Augmentation Program (“LOGCAP IV”). On April 17, 2008, we were selected as one of ~~performing~~three prime contractors to provide logistics support under ~~time-~~the LOGCAP IV contract. LOGCAP IV is the Army component of the DoD’s initiative to award contracts to U.S. companies with a broad range of logistics capabilities to support U.S. and~~-materials~~ allied forces during combat, peacekeeping, humanitarian and ~~fixed-price~~training ~~contracts~~operations. ~~may~~The ~~exceed~~contract ~~our~~has ~~revenues~~a ~~which~~term ~~would~~of ~~result~~up into ten years, a ceiling value of $50 billion and an annual ceiling value to us and our ~~recorded~~subcontractors ~~loss~~of on$5 billion per year per contractor. Under LOGCAP IV the Army contracts to perform selected services in a theater of operations to augment U. S. Army forces and release military units for other missions or to fill U.S. Army resource shortfalls. Our current task orders are primarily cost-reimbursement.

~~Our~~Worldwide ~~government~~Personal ~~contract~~Protection ~~services have three distinct pricing structures: cost-reimbursement, time-and-materials and~~Service ~~fixed-price~~(“WPPS”). ~~With~~We ~~cost-reimbursement~~provide ~~contracts,~~protective soservice ~~long~~details asto ~~actual~~protect ~~costs~~U.S. ~~incurred are within the contract funding~~ and ~~allowable~~foreign ~~under~~government ~~the~~senior ~~terms~~officials ofin ~~the~~Iraq ~~contract, we are entitled to reimbursement of the costs plus a stipulated fixed fee~~ and, ~~in some cases, an incentive-based award fee~~Pakistan. We ~~assume~~have ~~additional~~provided ~~financial~~personal ~~risk~~protective onservices ~~time-and-materials~~for ~~and fixed-price contracts, because we assume~~ the ~~risk~~DoS ofsince ~~performing those contracts at~~ the ~~stipulated~~WPPS ~~prices~~program orinception ~~negotiated~~in ~~hourly/daily rates~~1996. ~~If we do not accurately estimate ultimate costs and control~~Our ~~costs~~current ~~during~~task ~~performance~~orders ~~of the work, we could lose money on a particular contract or have lower than anticipated margins. Also, we assume the risk of damage or loss to government property and we~~ are ~~responsible~~ ~~for~~primarily ~~third~~time-~~party claims under fixed~~and-~~price~~materials ~~contracts.~~and ~~The failure to meet contractually defined performance standards may result in a loss of a particular contract or lower~~cost-~~than-anticipated margins~~reimbursement. ~~This could adversely affect our operating performance and may result in additional costs and expenses and possible loss of revenue.~~

AAfrica ~~negative~~Peacekeeping ~~audit~~(“AFRICAP”). We orhave ~~other~~assumed ~~actions~~increasing byresponsibilities in Africa through our Africa Peacekeeping contract operations, supporting the UDoS in Ethiopia, Liberia, Senegal, Somalia, and Sudan.S We believe our experience in logistics and contingency operations is a valuable asset to many efforts such as peacekeeping, humanitarian aid, and national reconstruction. ~~government~~We ~~could~~arrange ~~adversely~~transportation, ~~affect~~manage ~~our~~construction ~~operating~~and ~~performance~~provide security and equipment training. We also provide advisors and serve as a liaison with the DoS. Our current task orders are fixed-price, time-and-materials, and cost-reimbursement.

AtWar ~~any~~Reserve ~~given~~Materiel. Through ~~time,~~our ~~many~~War ofReserve ~~our~~Materiel ~~contracts~~program, ~~are~~we ~~under~~provide ~~review~~management byof the ~~DCAA~~U.S. ~~and~~Air ~~other~~Force ~~government~~Southwest ~~agencies.~~Asia ~~These~~War ~~agencies~~Reserve ~~review~~Materiel ~~our~~Pre-positioning ~~contract performance~~program, ~~cost structure~~which ~~and~~includes ~~compliance~~operations ~~with~~in ~~applicable~~Oman, ~~laws~~Bahrain, ~~regulations~~Qatar, Kuwait and ~~standards.~~two ~~Such~~locations ~~DCAA~~in ~~audits~~the ~~may~~U.S. ~~include~~(Albany, Georgia ~~contracts~~and ~~under~~Shaw ~~which~~Air weForce ~~have~~base, ~~performed~~South ~~services~~Carolina). inWe ~~Iraq~~store, maintain and ~~Afghanistan~~deploy ~~under~~assets ~~especially demanding~~such ~~circumstances.~~as ~~The~~tents, ~~DCAA~~generators, ~~also reviews the adequacy of~~vehicles, kitchens and ~~our~~medical ~~compliance~~supplies ~~with,~~to ~~our~~deployed ~~internal~~forces ~~control~~in ~~systems~~the ~~and~~global ~~policies,~~war ~~including~~on ~~our~~terror. ~~purchasing,~~During ~~property,~~Operation ~~estimating,~~Enduring ~~compensation~~Freedom and Operation ~~management~~Iraqi ~~information~~Freedom, ~~systems.~~we ~~Any~~sent ~~costs~~teams ~~found~~into the field to beassist ~~improperly~~in ~~allocated~~the tosetup aof ~~specific~~tent ~~contract~~cities ~~will~~prior ~~not~~to bethe ~~reimbursed.~~arrival Inof ~~addition,~~the ~~government~~deployed ~~contract~~forces. ~~payments~~The ~~received~~War byReserve usMateriel ~~for~~program ~~allowable~~continues ~~direct and~~to ~~indirect~~partner ~~costs~~with ~~are~~the ~~subject~~U.S. toCentral ~~adjustment~~Command ~~after~~Air ~~audit~~Force byin ~~government~~the ~~auditors~~development of new and ~~repayment~~innovative approaches to ~~the~~asset ~~government~~management. ifOur ~~the~~contract ~~payments~~is ~~exceed~~primarily ~~allowable~~cost-reimbursement ~~costs~~with asa ~~defined~~smaller inportion ~~the~~of ~~government~~fixed-price ~~contracts~~services.

~~Audits have~~Global ~~been~~Platform ~~completed~~Support onSolutions ~~our~~(“GPSS”) incurred contract costs through fiscal year 2005 and the Defense Contract Management Agency has approved these costs through fiscal year 2003. Audits and approvals are continuing for subsequent periods. We cannot predict the outcome of such audits and what, if any, impact such audits may have on our future operating performance. For further discussion, see "Legal Proceedings" below.

WeGPSS ~~are~~provides ~~subject~~a towide ~~investigation~~range byof ~~the~~technical, ~~U.S. government~~engineering, ~~which~~logistics ~~could~~and ~~result~~maintenance insupport ~~our~~services ~~inability~~primarily to ~~receive~~ government ~~contracts~~agencies worldwide. Additionally, GPSS provides services including drug eradication and ~~could~~host ~~adversely~~nation ~~affect our~~pilot ~~future~~and ~~operating~~crew ~~performance~~training. GPSS includes four service offerings/business areas as described below:

AsAviation aMaintenance & ~~U.S.~~Support ~~government~~— ~~contractor,~~This weservice ~~must~~offering ~~comply~~provides ~~with~~worldwide ~~laws~~maintenance, ~~and~~modification, ~~regulations relating to U.S. government contracts that do not apply to a commercial company. From time to time~~repair, ~~we are investigated by government agencies with respect to our compliance with these laws~~ and logistics ~~regulations.~~support Ifon weaircraft, ~~are~~weapons ~~found to be in violation of the law~~systems, weand ~~may~~related besupport ~~subject~~equipment to ~~civil or criminal penalties or administrative sanctions, including contract termination,~~ the ~~assessment~~DoD ~~of penalties~~ and ~~suspension~~other ~~or debarment from doing business with~~ U.S. government agencies. ~~For example, many of the contracts we perform in the U.S. are subject to the Service~~ Contract ~~Act,~~Field ~~which~~Teams ~~requires~~(“CFT”) ~~hourly~~is ~~employees to be paid certain specified wages and benefits. If~~ the ~~Department~~most ofsignificant ~~Labor determines~~program ~~that~~in weour ~~violated~~Field ~~the~~ Service ~~Contract~~Operations ~~Act~~service or its implementing regulations, we could be suspended from winning new government contracts or renewals of existing contracts for a period of time, which could adversely affect our future operating performanceoffering. We ~~are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal~~ ~~actions~~have ~~and~~provided ~~liabilities~~CFT toservices ~~which~~for ~~companies~~over ~~with solely commercial customers are not subject~~58 years. InThis ~~addition,~~program ifdeploys anhighly ~~audit uncovers improper or illegal activities~~mobile, wequick-response ~~may~~field beteams ~~subject~~ to ~~civil~~customer ~~and~~locations ~~criminal penalties~~to ~~and~~supplement ~~administrative~~a ~~sanctions,~~customer’s ~~including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the U~~workforce.~~S. government.~~

~~Furthermore, our~~Counter-Drug ~~reputation~~and ~~could~~Law ~~suffer~~Enforcement ~~serious~~Aviation ~~harm~~— ifThis ~~allegations~~service ofoffering ~~impropriety~~conducts ~~were~~foreign ~~made~~assistance ~~against~~programs usto reduce the flow of international narcotics. IfThe weassistance ~~were~~helps ~~suspended~~foreign orgovernments ~~prohibited~~improve ~~from~~their ~~contracting~~ability ~~with~~to ~~the~~develop ~~U.S.~~and ~~government,~~implement ~~or any~~national ~~significant~~strategies ~~U.S.~~and ~~government~~programs ~~agency,~~to ifprevent ~~our~~the ~~reputation~~production, ortrafficking, ~~relationship~~and ~~with~~abuse ~~U.S.~~of ~~government~~illicit ~~agencies~~drugs. ~~was~~International ~~impaired~~Narcotics orand ifLaw Enforcement ~~the~~Air-Wing ~~U.S.~~(“INL”) ~~government~~supports ~~otherwise~~governments ~~ceased~~worldwide ~~doing~~in ~~business~~their ~~with~~efforts usto orlocate ~~significantly decreased~~and ~~the~~eradicate ~~amount~~drug ofcrops, ~~business~~interdict itdrug ~~does~~production ~~with~~and ustrafficking activities, itand ~~could~~develop ~~adversely~~their ~~affect~~own ~~our~~institutional ~~operating~~counter-narcotics ~~performance~~aviation ~~and~~programs. Also, ~~may~~this ~~result~~program inprovides ~~additional~~intra-theater ~~expenses~~transportation ~~and~~services ~~possible~~for ~~loss~~a variety of ~~revenue~~customers throughout Iraq.

139

TheTable expiration of our collective bargaining agreements could result in increased operating costs or work disruptions, which could potentially affect our operating performance. Contents

AsFleet ofManagement ~~March 30,~~— ~~2007,~~This weservice ~~had~~offering ~~over~~provides ~~14,600~~aircraft ~~employees~~fleet ~~located~~maintenance inand modification 33services, ~~countries~~ground ~~around~~vehicle ~~the~~maintenance ~~world,~~and ~~approximately~~modification 7services,~~000~~ ofpilot ~~whom~~and ~~are~~maintenance ~~located inside the U.S. Of these employees~~training, ~~approximately~~logistics 1support,~~500~~ ~~are represented~~air bytraffic ~~labor~~control ~~unions. As of March 30~~services, ~~2007,~~base ~~we had approximately 70 collective bargaining agreements. These agreements will expire between July 2007~~ and ~~March 2011.~~depot There can be no assurance that we will not experience labor disruptions associated with the expiration or renegotiation of collective bargaining agreements or otherwise. We could experience a significant disruption of operations ~~and increased operating costs as a result of higher wages or benefits paid to union members~~, ~~which~~program ~~could~~management ~~adversely affect our operating performance~~ and ~~may~~engineering ~~result~~services. inAdditionally, this ~~additional~~service ~~expenses~~offering ~~and~~provides ~~possible~~aerial ~~loss~~firefighting ~~of revenue~~services.

~~Proceedings~~Land ~~against~~Systems us— inThis ~~domestic~~service offering provides maintenance, operations, support, life extension, engineering, marine services and ~~foreign~~program ~~courts~~management ~~could~~services ~~result~~primarily infor ~~legal~~ground ~~costs~~vehicles and ~~adversely~~docked ~~affect~~ships. ~~our~~This ~~operating~~includes ~~performance~~the services we provide under the Mine Resistant Ambush Protected Vehicles Logistics Support (“MRAP”) contract.

AtKey ~~any~~GPSS ~~given~~Contracts time, we are involved in various claims and lawsuits arising in the ordinary course of business. In the event our insurance coverage is inadequate to cover such claims, we will be forced to bear the costs arising from a judgment. We do not have insurance coverage for adverse employment and breach of contract actions, and we bear all costs associated with such litigation and claims.

~~As required~~INL byAir ~~generally~~Wing: ~~accepted~~In ~~accounting~~May 2005, ~~principles~~the ~~("GAAP"),~~DoS weawarded ~~estimate~~us ~~material~~a ~~loss~~contract ~~contingencies~~in ~~and~~support ~~establish~~of ~~reserves~~the ~~when~~INL weprogram ~~assess~~to ~~that~~aid ~~liability~~in isthe ~~deemed~~eradication ~~probable~~of ~~and~~illegal ~~reasonably~~drug ~~estimable~~operations. ~~based~~We onare the ~~facts~~sole ~~and~~awardee ~~circumstances~~of ~~known~~this tocontract, uswhich athas aan ~~particular~~estimated ~~point~~contract value of $1.6 billion for the first five years of the nine-year term. The contract expires in ~~time~~October 2014. This program has been ongoing since 1991, asin ~~adjusted~~cooperation bywith ~~subsequent~~multiple ~~developments~~Latin American countries. A similar program in aAfghanistan ~~particular~~began ~~matter~~in 2006. ~~For~~Also, this program provides intra theater transportation services for a ~~description~~variety of ~~our~~customers ~~current material~~throughout ~~legal~~Iraq. ~~proceedings,~~The ~~see~~majority ~~"Legal~~of ~~Proceedings"~~our contractual ~~below~~services are cost-reimbursement type services.

~~Competition~~Life inCycle ~~our~~Contractor ~~industry~~Support: ~~could~~This ~~limit~~GPSS ~~our~~program ~~ability~~consists of tocontracts ~~attract~~with the U.S. Army and ~~retain~~the ~~customers~~U.S. orNavy. ~~employees~~Under the Life Cycle Contractor Support-Army contracts, ~~which~~we ~~could~~provide ~~result~~aircraft inmaintenance and logistics for C-12/RC-12 and UC-35 aircraft, as well as services for a ~~loss~~major avionics suite upgrade of aircraft ~~revenue~~for Global Air Traffic Management compliance. Under our Life Cycle Contractor Support-Navy contracts, we provide aircraft maintenance and~~/or~~ alogistics for the U.S. Navy’s UC-35 aircraft. We entered into the Life Cycle Contractor ~~reduction~~Support-Army and Life Cycle Contractor Support-Navy contracts in ~~margins~~August 2000 and the Global Air Traffic Management portion of our Army contract in March 2003. The Life Cycle Contractor Support-Army Contract is up for re-competition in July 2010 whereas the Life Cycle Contractor Support-Navy Contract is up for re-competition in October 2010. The estimated total contract value for these programs is $1.37 billion, of which ~~could~~$1.3 ~~adversely~~billion ~~affect~~relates to the Life Cycle Contractor Support-Army Contract. The majority of our ~~operating~~contractual ~~performance~~services are fixed-price with a portion of cost-plus services.

Contract Field Teams: We ~~compete~~have ~~with~~provided ~~various~~this ~~entities~~service ~~across~~for ~~geographic~~over ~~and~~58 ~~business~~consecutive ~~lines~~years. ~~Competitors~~This ofprogram ~~our~~deploys GShighly ~~operating~~mobile, quick-response ~~segment~~field ~~are~~teams ~~various~~to ~~solution~~customer ~~providers~~locations ~~who~~to ~~compete~~supplement ina ~~any one~~customer’s ofworkforce. ~~the~~The ~~service~~services ~~areas~~we ~~provided~~provide byunder the GSCFT ~~business~~program ~~units.~~generally ~~Competitors~~include ofmission ~~our~~support ~~MTSS~~to ~~operating~~aircraft ~~segment~~and ~~are~~weapons ~~typically~~systems ~~large~~and ~~defense~~depot-level ~~services~~repair. ~~contractors,~~The ~~who~~principal customer ~~offer~~for ~~services~~our ~~associated~~CFT ~~with~~program ~~maintenance, training~~is ~~and~~the ~~other~~DoD. ~~activities~~This contract has a $10.1 billion Weceiling ~~compete~~for onmultiple awardees over a ~~number~~seven-year ofterm ~~factors,~~through ~~including~~September 2015. The majority of our ~~broad~~current ~~range~~delivery oforders ~~services~~are time-and-materials, ~~geographic~~but ~~reach,~~we ~~mobility~~also have cost-reimbursement and ~~response~~fixed-priced ~~time~~services.

~~Some of~~Andrews ~~our~~Air ~~competitors~~Force ~~have~~Base: ~~greater~~Under ~~financial~~the ~~and~~Andrews ~~other~~Air ~~resources~~Force ~~than~~Base wecontract, ~~do or are better positioned than~~ we perform ~~are~~aircraft tomaintenance ~~compete~~and ~~for~~base ~~contract~~supply ~~opportunities. For example~~functions, ~~original~~including ~~equipment manufacturers~~full ~~that~~back ~~also~~shop ~~provide aftermarket~~ support, ~~services~~organizational ~~have~~level amaintenance, ~~distinct~~fleet ~~advantage~~fuel inservices ~~obtaining~~and ~~service~~supply, ~~contracts~~launch ~~for~~and ~~aircraft~~recovery ~~that~~and ~~they~~Federal ~~have~~Aviation ~~manufactured,~~Administration as(“FAA”) ~~they~~repair ~~frequently have better access to~~services. ~~replacement~~Our ~~and~~principal ~~service~~customer ~~parts~~under asthis ~~well~~contract asis ~~an existing technical understanding of~~ the ~~platform~~U.S. ~~they~~Air ~~have manufactured~~Force. InWe ~~addition,~~entered weinto ~~are~~this atcontract ain ~~disadvantage~~January 2001. ~~when~~This ~~bidding~~contract ~~for~~has ~~contracts~~a ~~put~~$372 million upestimated ~~for re-competition~~total ~~for~~contract ~~which~~value. weThe ~~are~~majority ~~not~~of ~~the~~our ~~incumbent~~contract ~~provider,~~is ~~because incumbent providers are frequently able to capitalize on customer relationships, technical knowledge and pricing experience gained from their prior service~~fixed-price.

~~In addition~~Columbus toAir ~~the~~Force ~~competition~~Base: weWe ~~face~~provide inaircraft ~~bidding~~and ~~for~~equipment ~~contracts~~maintenance ~~and~~functions ~~task~~for ~~orders~~T-37, weT-38, ~~must~~T-1 ~~also~~and ~~compete~~T-6 totraining ~~attract~~aircraft ~~the~~in support ~~skilled~~of ~~and~~the ~~experienced~~Columbus ~~personnel~~AFB ~~integral~~Specialized toUndergraduate ~~our~~Pilot ~~continued operation.~~Training WeProgram ~~hire~~in ~~from~~Columbus, aMississippi. ~~limited~~Our ~~pool~~customer ofunder ~~potential~~this ~~employees,~~program ~~with~~is ~~military~~the ~~and~~U.S. ~~law~~Air ~~enforcement~~Force ~~experience,~~— ~~specialized~~Air ~~technical~~Education ~~skill~~and ~~sets~~Training Command and ~~security~~specifically ~~clearances~~the as14th ~~prerequisites~~Flying ~~for~~Training ~~many positions~~Wing. This ~~Our~~contract ~~failure~~provides tofor ~~compete~~a ~~effectively~~firm ~~for~~fixed-price ~~employees~~incentive orfee ~~excessive~~with ~~attrition~~an ~~among~~incentive ~~our~~award ~~skilled~~fee. ~~personnel~~Estimated ~~could~~total ~~reduce~~contract ~~our~~value ~~ability~~is to$294 million. ~~satisfy~~The ~~our~~performance ~~customers'~~period ~~needs,~~started October 2005 and ~~increase~~runs ~~the~~through ~~costs~~September 2012. ~~and~~We ~~time~~have completed a ~~required~~transition tofrom ~~perform~~the ~~our~~old ~~contractual~~T-37 ~~obligations.~~primary ~~This~~trainer ~~could~~to ~~adversely~~the ~~affect~~new ~~our~~T-6 ~~operating~~turbo ~~performance~~prop. ~~and~~Additionally, ~~may~~this ~~result~~14th inFlying ~~additional~~Training ~~expenses~~Wing ~~and~~has ~~possible~~one ~~loss~~additional squadron of ~~revenue~~T-38s dedicated to fighter lead-in-training.

1410

LossTable of our skilled personnel, including members of senior management, may have an adverse effect on our operations and/or our operating performance until we find suitable replacements. Contents

~~Our~~Sheppard ~~continued~~Air ~~success~~Force ~~depends~~Base: inUnder ~~large~~the ~~part~~Sheppard onAir ~~our~~Force ~~ability~~Base toProgram, ~~recruit~~we ~~and~~provide aircraft ~~retain~~maintenance services for the ~~skilled~~80th ~~personnel~~Flying ~~necessary~~Training toWing ~~serve~~based ~~our~~at ~~customers~~Sheppard ~~effectively,~~Air ~~including personnel~~Force ~~with~~Base ~~extensive~~in ~~military~~Wichita ~~and~~Falls, ~~law~~Texas. ~~enforcement~~This ~~training~~contract ~~and~~has ~~backgrounds.~~an ~~The~~initial ~~proper~~base ~~execution~~period of ~~our~~eleven ~~contract~~months, ~~objectives~~and ~~depends~~six ~~upon~~option ~~the~~years. ~~availability~~The mission of ~~quality~~the ~~resources,~~Air ~~especially~~Education ~~qualified~~and Training ~~personnel.~~Command’s ~~Given~~80th ~~the~~Flying ~~nature~~Training ofWing ~~our~~is ~~business,~~to weprovide ~~have~~undergraduate ~~substantial~~pilot ~~need~~training for ~~personnel~~the ~~who~~U.S. ~~are~~and ~~willing~~North toAtlantic ~~work~~Treaty ~~overseas,~~Organization ~~frequently~~(“NATO”) allies in ~~locations~~the ~~experiencing~~Euro ~~political~~NATO orJoint ~~civil~~Jet ~~unrest,~~Pilot ~~for~~Training ~~extended periods~~program. Graduates of ~~time~~this ~~and~~prestigious program ~~often~~are onassigned ~~short~~to ~~notice.~~fighter Wepilot ~~may~~positions ~~not~~in betheir ~~able~~respective toair ~~meet~~forces. The ~~the~~majority ~~need~~of ~~for~~our ~~qualified~~contract ~~personnel~~is ~~as such need arises~~fixed-price.

~~In addition,~~Mine weResistant ~~must~~Ambush ~~comply~~Protected ~~with~~Vehicle ~~provisions~~(“MRAP”): inUnder ~~U.S.~~the ~~government~~Mine ~~contracts~~Resistant ~~that~~Ambush ~~require~~Protected ~~employment~~Vehicle ofprogram, ~~persons~~we ~~with~~provide MRAP ~~specified~~Vehicle ~~work~~on-site ~~experience~~liaison and ~~security~~advisory ~~clearances.~~services Anto ~~inability~~the ~~to maintain~~military ~~employees~~users with ~~the~~direct ~~required~~assistance ~~security~~in ~~clearances~~maintenance ~~could~~or ~~have~~repair aoperations. ~~material~~The ~~adverse~~MRAP ~~effect~~vehicles onare ~~our~~required ~~ability~~ to ~~win~~increase ~~new~~survivability ~~business~~ and ~~satisfy~~mobility ~~our~~of ~~existing~~troops ~~contractual~~operating ~~obligations,~~in ~~and~~a ~~could~~hazardous ~~adversely~~fire area ~~affect~~against ~~our~~known ~~operating~~threats ~~performance~~such ~~and~~as ~~may~~small ~~result~~arms infire, ~~additional~~rocket ~~expenses~~propelled grenades, and ~~possible~~improvised ~~loss~~explosive devices. The majority of ~~revenue~~our contract is fixed-price.

~~The loss~~California Department of ~~services~~Forestry: ofWe ~~any~~have ofbeen ~~the~~helping ~~members~~to offight ~~our~~fires ~~senior~~in ~~management~~California ~~could~~since ~~adversely~~December ~~affect~~2001. ~~our~~We ~~business~~maintain ~~until~~aircraft, providing anearly ~~suitable~~all ~~replacement~~types ~~can~~and belevels ~~found.~~of ~~There~~maintenance ~~may~~— bescheduled, aannual, ~~limited~~emergency ~~number~~repairs, ~~of personnel~~and ~~with~~even ~~the~~structural ~~requisite~~depot ~~skills~~level torepair. ~~serve~~McClellan Field in ~~these~~Sacramento ~~positions~~is home base for our program mechanics, ~~and~~data weentry ~~may~~staff, beand ~~unable~~quality tocontrol inspectors. ~~locate~~In oraddition, ~~employ~~we ~~such~~provide ~~qualified~~pilots ~~personnel~~who onoperate ~~acceptable~~the ~~terms~~fixed wing aircraft.

IfC-21 ~~our~~Contractor ~~subcontractors~~Logistics ~~fail~~Support: Under tothe C-21A CLS Program, we perform ~~their~~organizational, ~~contractual~~intermediate ~~obligations~~and depot level maintenance, ~~our~~together ~~prime~~with ~~contract~~supply ~~performance~~chain ~~and~~management ~~our~~for ~~ability~~C-21A to(Lear ~~obtain~~35A) ~~future~~aircraft ~~business~~operated ~~could~~by bethe U.S. Air Force at seven main operating bases and one deployed ~~materially~~location. The contract has time-and-materials ~~adversely~~and ~~impacted~~fixed-priced portions.

~~Many~~Global ofLinguist ~~our~~Solutions ~~contracts~~(“GLS”) ~~involve subcontracts with other companies upon which we rely to perform a portion of the services we must provide to our customers. These~~ subcontractors generally perform niche or specialty services for which they have more direct experience, such as construction, catering services or specialized technical services, or they have local knowledge of the region in which we will be performing and the ability to communicate with local nationals and assist in making arrangements for commencement of performance. Often, we enter into subcontract arrangements in order to meet government requirements to award certain categories of services to small businesses. A failure by one or more of our subcontractors to satisfactorily provide on a timely basis the agreed-upon supplies or perform the agreed-upon services may materially and adversely impact our ability to perform our obligations as the prime contractor. Such subcontractor performance deficiencies could result in a customer terminating our contract for default. A default termination could expose us to liability and adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

~~Environmental~~GLS ~~laws~~is a joint venture between DynCorp International and ~~regulations~~McNeil ~~may~~Technologies, ~~subject~~in uswhich towe ~~significant~~have ~~costs~~a 51% ownership interest. GLS currently and ~~liabilities~~historically ~~that~~has ~~could~~had ~~adversely~~no ~~affect~~other operations outside of performance on the INSCOM contract. The majority of our current INSCOM task orders are cost-reimbursement with an award fee. Our GLS operating ~~performance~~segment is comprised of a single linguist service offering/business area, Linguistics & Translation.

WeLinguistics & ~~are~~Translation: ~~subject~~This service tooffering ~~numerous~~provides ~~environmental,~~rapid ~~legal and regulatory requirements related to our operations worldwide. In the U.S.~~recruitment, ~~these~~deployment ~~laws~~ and ~~regulations~~on-site ~~include those governing the~~ management ~~and disposal~~ of ~~hazardous~~interpreters ~~substances~~ and ~~wastes~~translators ~~and~~in-theatre ~~the~~for ~~maintenance of~~ a ~~safe~~wide ~~workplace,~~range ~~primarily~~of ~~associated~~foreign ~~with~~languages ~~our~~in ~~aviation~~support ~~services~~of ~~activities,~~the ~~including painting aircraft and handling substances that may qualify as hazardous waste, such as used batteries and petroleum products. In addition to~~ U.S. ~~federal laws and regulations~~Army, ~~states~~unified ~~and~~commands ~~other~~attached ~~countries~~forces, ~~where we~~combined ~~do business have numerous environmental~~forces, ~~legal~~ and ~~regulatory~~joint elements ~~requirements~~executing bythe ~~which~~Operation weIraqi ~~must~~Freedom ~~abide.~~(“OIF”) ~~We could incur substantial costs~~mission, ~~including~~and ~~clean-up~~other ~~costs, as a result of violations of, or liabilities under, environmental laws~~U.S. ~~This~~government ~~could~~agencies ~~adversely~~supporting ~~affect~~the ~~our~~OIF ~~operating performance and may result in additional expenses and possible loss of revenue~~mission.

15Estimated Total Contract Value

~~Our~~The ~~ability~~estimated total contract value represents amounts expected to ~~comply~~be ~~with~~realized from the ~~requirements~~current ofaward ~~Section~~date to the current contract end date (i.e., revenue recognized to date plus backlog). For the reasons stated under “Item ~~404~~1.A. ofRisk Factors,” the ~~Sarbanes-Oxley~~estimated ~~Act~~contract ofvalue ~~2002~~or isceiling ~~dependent~~value ~~upon~~specified ~~our~~under ~~implementation~~a ofgovernment ~~effective~~contract or task order is not necessarily indicative of ~~internal~~the ~~controls~~revenue that we will realize under that contract.

We11 will be evaluating our internal controls over financial reporting in order to allow management to report on, and our independent auditors to attest to, our internal controls over financial reporting, as is required by Section 404 of the Sarbanes-Oxley Act of 2002 and rules and regulations of the SEC there under, which we refer to as Section 404. Section 404 requires a reporting company such as ours to, among other things, annually review, evaluate and report on its internal controls over financial reporting, and evaluate and disclose significant changes in its internal controls over financial reporting quarterly. Although we currently evaluate and disclose significant changes in our internal controls over financial reporting quarterly, we are required to review, evaluate and report on our internal controls over financial reporting beginning with our annual report for the fiscal year ending March 28, 2008. We have identified areas of our internal controls requiring improvement and plan to design enhanced processes and controls to address these and any other issues that might be identified through this review. As a result, we expect to incur additional expenses and utilization of management's time. We cannot be certain as to the timing of completion of our evaluation, testing and remediation actions or its impact on our operations and may not be able to ensure that the process is effective or that the internal controls are or will be effective in a timely manner. If we are not able to implement the requirements of Section 404 in a timely manner or with adequate compliance, there could be an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. In addition, we may be required to incur costs in improving our internal control system and the hiring of additional personnel. Any such action could adversely affect our financial results.

OurTable substantialof outstanding indebtedness and the restrictive covenants in the agreements governing our indebtedness limit our operating and financial flexibility. Contents

WeThe ~~are~~following ~~required~~table tosets ~~make~~forth ~~mandatory payments and, under~~ certain ~~circumstances,~~information ~~mandatory~~for ~~prepayments on~~ our ~~outstanding~~principal ~~indebtedness.~~contracts, ~~See Note 8 to our~~including ~~consolidated~~estimated ~~financial~~total ~~statements~~contract ~~for~~values ~~additional information. This may require us to dedicate a substantial portion~~ of ~~our~~the ~~cash~~current ~~flows~~contracts ~~from~~as ~~operations to payments on our indebtedness, thereby reducing the availability~~ of ~~our cash flows to fund working capital~~April 2, ~~capital~~2010: ~~expenditures, and other general corporate purposes and could limit our flexibility in planning for, or reacting to, changes in our business and in the industry.~~

The agreements governing our bank credit facilities impose certain operating and financial restrictions on us and limit management's discretion in operating our businesses. These agreements limit our ability, among other things, to:

Contract

Segment

Principal
Customer

Initial/Current
Award Date

Current
Contract
End
Date

Estimated
Total Contract
Value (1)

Civilian Police Program

GSDS

DoS

Feb 1994/Feb-04

Aug-10

4.02 billion

(2)

INSCOM

GLS

U.S. Army

Dec-06

Apr-13

3.78 billion

(2)(3)

INL Air Wing

GPSS

DoS

Jan-91/May-05

Oct-14

1.59 billion

(2)(4)

Life Cycle Contractor Support

GPSS

U.S. Army and U.S. Navy

Aug-00

Jul-10

1.37 billion

LOGCAP IV

GSDS

U.S. Army

Apr-08

Apr-18

872 million

(2)(5)

WPPS

GSDS

DoS

Mar-00/June-05

Sep-14

453 million

(2)(6)

Contract Field Teams

GPSS

DoD

Oct 1951/Jul-08

Sep-15

438 million

(2)

AFRICAP

GSDS

DoS

May-03/Sept-09

Sep-14

395 million

(2)(7)

War Reserve Materiel

GSDS

U.S. Air Force

May-00/May-08

Sep-16

382 million

Andrews Air Force Base

GPSS

U.S. Air Force

Jan-01

Mar-11

372 million

Columbus Air Force Base

GPSS

U.S. Air Force

Oct 1998/Oct-05

Sep-12

294 million

Sheppard Air Force Base

GPSS

U.S. Air Force

Oct-09

Oct-16

256 million

MRAP

GPSS

DoD

Sep-07

Jan-12

246 million

California Department of Forestry

GPSS

State of California

Dec-01/Jul-08

Dec-14

237 million

C-21 Contractor Logistics Support

GPSS

U.S. Air Force

Sep-06

Sep-11

213 million

~~In addition,~~(1) ~~our~~Estimated ~~bank~~total ~~credit~~contract ~~facilities~~value ~~contain~~has ~~covenants~~the ~~requiring~~meaning usindicated toin ~~deliver~~“— toEstimated ~~lenders~~Total ~~leverage~~Contract ~~and~~Value” ~~interest coverage financial computations~~ and ~~our~~is ~~audited~~not ~~annual~~necessarily ~~and~~representative unaudited quarterly financial statements. Our ability to comply with these covenants may be affected by events beyond our control, and an adverse development affecting our business could require us to seek waivers or amendments of ~~covenants,~~the ~~alternative~~amount ~~or additional sources~~ of ~~financing~~work orwe ~~reductions~~will inactually ~~expenditures. We cannot assure you that such waivers, amendments or alternative or additional financings could~~ be ~~obtained,~~awarded orunder ifthe ~~obtained, would be on terms acceptable to us, which may have a material adverse effect on our financial condition, results of operations and cash flows~~contract.

16(2) This contract is an IDIQ contract. For more information about IDIQ contracts see “— Contract Types”. Also, for a discussion of how we define estimated remaining contract value for IDIQ contracts, see “— Estimated Remaining Contract Value”.

~~Our~~(3) ~~substantial~~Awarded ~~level of indebtedness may make it difficult for us~~ to ~~satisfy our debt obligations and may adversely affect our ability to obtain financing for working capital~~GLS, ~~capitalize~~a onjoint ~~business~~venture ~~opportunities~~of orDynCorp ~~respond~~International to(51% ~~adverse~~majority ~~changes~~interest) inand ~~our~~McNeil ~~industry~~Technologies.

~~As of March 30, 2007, we had $630.9 million of total indebtedness and $81.9 million of additional borrowing capacity under our senior secured credit facility~~ (~~which~~4) ~~gives~~We ~~effect~~are to the ~~$21.1 million~~sole ofawardee ~~outstanding letters~~ of ~~credit).~~this ~~Based on our indebtedness and other obligations as of March 30~~contract, ~~2007,~~which wehas ~~estimate~~an ~~our remaining~~estimated ~~contractual~~value ~~commitments including interest associated with our indebtedness and other obligations (assuming that our revolving credit facility will be undrawn at the close~~ of ~~fiscal 2008) will be~~ $~~608~~1.~~6 million~~59 inbillion ~~the aggregate~~ for the ~~remaining~~first ~~period~~five ~~between~~years ~~March 31, 2007 through the end~~ of ~~fiscal~~this ~~2012.~~nine-year ~~Such~~contract ~~indebtedness~~through ~~could~~October ~~have important consequences for you, including the following:~~ 2014.

~~Servicing~~(5) ~~our~~LOGCAP ~~indebtedness~~IV ~~requires~~has a ~~significant~~$5 ~~amount~~billion ofceiling ~~cash.~~per ~~Our~~year ~~ability~~over to10 generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations, which could adversely affect our financial conditionyears.

~~Our~~(6) ~~ability~~Although tothe ~~make~~base ~~payments~~WPPS oncontract ~~and~~expires toJune ~~refinance~~2010; ~~our~~we ~~indebtedness~~have ~~depends on our ability to generate cash. This, to~~ a ~~certain~~task ~~extent,~~order isout ~~subject~~through toSeptember ~~general economic,~~2014 ~~political,~~if ~~financial,~~all ~~competitive,~~options ~~legislative, regulatory and other factors that~~ are ~~beyond our control~~exercised.

~~We cannot~~(7) ~~assure~~AFRICAP ~~you,~~was ~~however,~~awarded ~~that~~September ~~our~~2009; ~~business~~the ~~will~~predecessor ~~generate~~contract ~~sufficient~~called ~~cash~~Africa ~~flow~~Peacekeeping ~~from~~had operations, or that future borrowings will be available to us under our senior secured facility in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a ~~portion~~total ofcontract ~~our~~value ~~indebtedness. We cannot assure you that we will be able to refinance any~~ of ~~our~~$395 ~~indebtedness, including our senior secured credit facility, on commercially reasonable terms or at all~~million. In addition, the terms of existing or future debt agreements, including our senior secured credit facility and the indenture governing our senior subordinated notes, may restrict us from carrying out any of these alternatives. If we are unable to generate sufficient cash flow or refinance our debt on favorable terms, it could significantly adversely affect our financial condition.

17Competition

~~Despite~~We ~~our~~compete ~~current~~with ~~indebtedness~~various ~~level~~entities across geographic and business lines based on a number of factors, including services offered, experience, price, geographic reach and mobility. Most activities in which we engage are highly competitive and require that we have highly skilled and experienced technical personnel to compete. Some of our ~~subsidiaries~~competitors may ~~still~~possess greater financial and other resources or may be ~~able~~better positioned to ~~incur~~compete ~~substantially~~for ~~more~~certain ~~debt~~contract opportunities. We believe that our principal competitors include Civilian Police International, ~~which~~Science ~~could~~Applications ~~exacerbate~~International ~~the~~Corporation, ~~risks~~ITT Corporation, KBR, ~~associated~~Inc., ~~with~~IAP Worldwide Services, Inc., Xe Inc., Triple Canopy Inc., Fluor Corporation, Lockheed Martin Corporation, United Technologies Corporation, L-3 Holdings, Aerospace Industrial Development Corporation, Al Salam Aircraft Company Ltd., Mission Essential Personnel, Northrop Grumman, Computer Sciences Corporation, Lear Siegler, and Serco Group Plc. We believe that the primary competitive factors for our ~~substantial~~services ~~leverage~~include reputation, technical skills, past contract performance, experience in the industry, cost competitiveness and customer relationships.

As12 of March 30, 2007, we had up to $81.9 million of additional availability under our senior secured credit facility (which gives effect to $21.1 million of outstanding letters of credit). The terms of the senior secured credit facility and our senior subordinated notes do not fully prohibit us or our subsidiaries from incurring additional indebtedness. It is not possible to quantify the specific dollar amount of indebtedness we may incur because our senior secured credit facility does not provide for a specific dollar amount of indebtedness we may incur. Our senior secured credit facility and our senior subordinated notes allow us to incur only certain indebtedness that is expressly enumerated in our senior secured credit facility and the indenture governing our senior subordinated notes. The indebtedness permitted under our senior secured credit facility includes indebtedness that is customary for similar credit facilities. Specific examples of indebtedness permitted under our senior secured credit facility are described further under notes to the consolidated financial statements and include certain intercompany indebtedness, indebtedness under the senior secured credit facility, the senior subordinated notes, certain refinancing indebtedness and certain indebtedness with respect to capital leases in an amount that may not exceed $25.0 million. We believe that the comparable restrictions in the indenture governing our senior subordinated notes have restrictions that are generally no more restrictive in any material respect than the senior secured credit facility. If either we or our subsidiaries were to incur additional indebtedness, the related risks that we now face could increase.

WeTable areof controlled by Veritas Capital, whose interests may not be aligned with yours. Contents

~~Veritas~~Backlog Capital Management II, L.L.C. and its affiliates, The Veritas Capital Fund II, L.P. and Veritas Capital II A, LLC (together "Veritas Capital"), own 86% of the outstanding membership interest in our controlling stockholder, DIV Holding LLC. Veritas Capital indirectly controls approximately 56.1% of our Class A common stock. So long as Veritas Capital continues to beneficially own a significant amount of the outstanding shares of our Class A common stock, it will continue to be able to strongly influence or effectively control our decisions, including the election of our directors, determine our corporate and management policies and determine without the consent of our other shareholders, the outcome of any corporate transaction or other matter submitted to our shareholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. Two of our twelve directors are either employees of, or advisors to, Veritas Capital, as described under "Directors and Executive Officers of the Registrant – Management." Veritas Capital has sufficient voting power to amend our organizational documents. The interests of Veritas Capital may not coincide with the interests of other holders of our Class A common stock. Additionally, Veritas Capital is in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. Veritas Capital may also pursue, for its own benefit, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. In addition, our Bylaws provide that so long as Veritas Capital beneficially owns a majority of our outstanding Class A common stock, the advance notice procedures applicable to stockholder proposals will not apply to Veritas Capital. Amendment of the provisions described in our Amended and Restated Certificate of Incorporation generally will require an affirmative vote of our directors, as well as the affirmative vote of at least a majority of our then outstanding voting stock if Veritas Capital beneficially owns a majority of our outstanding Class A common stock, or the affirmative vote of at least 80% of our then outstanding voting stock if Veritas Capital beneficially owns less than a majority of our then outstanding Class A common stock. Amendments to any other provisions of our Amended and Restated Certificate of Incorporation generally will require the affirmative vote of a majority of our outstanding voting stock. In addition, because we are a controlled company within the meaning of the New York Stock Exchange rules, we will be exempt from the New York Stock Exchange requirements that our board be composed of a majority of independent directors, and that our compensation and corporate governance committees be composed entirely of independent directors.

~~DIV Holding~~We ~~LLC~~track isbacklog ain ~~party~~order to aassess ~~registration~~our ~~rights~~current ~~agreement,~~business ~~which~~development ~~grants~~effectiveness itand ~~rights~~ to ~~require~~assist us toin ~~effect~~forecasting our future business needs and financial performance. Our backlog consists of funded and unfunded amounts under contracts. Funded backlog is equal to the ~~registration~~amounts actually appropriated by a customer for payment of ~~its~~goods ~~shares~~and services less actual revenue recognized as of the ~~common~~measurement ~~stock~~date under that appropriation. InUnfunded ~~addition~~backlog is the actual dollar value of unexercised, ifpriced wecontract ~~propose to~~options ~~register~~and ~~any~~the unfunded portion of exercised contract options. Most of our ~~common~~U.S. ~~stock~~government ~~under~~contracts allow the ~~Securities~~customer ~~Act~~the option ~~whether~~to extend the period of performance of a contract for ~~our~~a ~~own~~period ~~account~~of one or ~~otherwise,~~more ~~DIV~~years. ~~Holding~~These ~~LLC~~priced isoptions ~~entitled~~may toor ~~include~~may ~~its~~not ~~shares~~be exercised at the sole discretion of ~~common~~the ~~stock~~customer. inHistorically, it has been our experience that ~~registration~~the customer has typically exercised contract options.

18Firm funding for our contracts is usually made for one year at a time, with the remainder of the contract period consisting of a series of one-year options. As is the case with the base period of our U.S. government contracts, option periods are subject to the availability of funding for contract performance. The U.S. government is legally prohibited from ordering work under a contract in the absence of funding. Our historical experience has been that the government has typically funded the option periods of our contracts.

~~Even~~The iffollowing ~~Veritas~~table ~~Capital~~sets noforth ~~longer controls us in the future, certain provisions of~~ our ~~charter~~approximate ~~documents~~backlog ~~and agreements,~~ as ~~well~~of asthe ~~Delaware~~dates ~~law,~~indicated: ~~could discourage, delay or prevent a merger or acquisition at a premium price.~~

Our Amended and Restated Certificate of Incorporation and Bylaws contain provisions that:


	April 2, 2010		April 3, 2009		March 28, 2008
	(Amounts in millions)
GSDS:
Funded backlog	$	978	$	590	$	448
Unfunded backlog		510		1,124		442

Total GSDS backlog	$	1,488	$	1,714	$	890


GPSS:
Funded backlog	$	661	$	797	$	699
Unfunded backlog		1,090		720		854

Total GPSS backlog	$	1,751	$	1,517	$	1,553


GLS:
Funded backlog	$	30	$	44	$	17
Unfunded backlog		2,303		3,023		3,501

Total GLS backlog	$	2,333	$	3,067	$	3,518


CONSOLIDATED:
Funded backlog	$	1,669	$	1,431	$	1,164
Unfunded backlog		3,903		4,867		4,797

Total consolidated backlog	$	5,572	$	6,298	$	5,961

~~In addition,~~Estimated weRemaining ~~have~~Contract ~~a rights plan that grants shareholders the right to purchase from us additional shares at preferential prices in the event of a hostile attempt to acquire control of~~Value ~~us.~~

~~All~~ Our estimated remaining contract value represents total backlog plus management’s estimate of ~~the~~future ~~foregoing~~revenue under ~~provisions~~IDIQ ~~may~~contracts ~~impose~~for ~~various~~task ~~impediments~~or delivery orders that have not been awarded. When agreements for such task orders or projects are signed, their value is added to the ~~ability~~backlog. Future revenue represents management’s estimate of aunawarded ~~third~~and unfunded ~~party~~options tothat ~~acquire~~will ~~control~~be recognized from the end of ~~us,~~current ~~even~~task iforders auntil ~~change~~the inend ~~control~~of ~~would~~the beIDIQ ~~beneficial~~contract toterm. It is based on our experience and performance under our existing contracts and management’s judgments and estimates with ~~shareholders~~respect to future task or delivery order awards. Although we believe our estimates are reasonable, there can be no assurance that our existing contracts will result in actual revenue in

13 ~~ITEM 1B. UNRESOLVED STAFF COMMENTS.~~

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any particular period or at all. Our estimated remaining contract value could vary or even change significantly depending upon various factors including government policies, government budgets ~~ITEM 2~~and appropriations, the accuracy of our estimates of work to be performed under time-and-material contracts and whether we successfully compete with any multiple bidders in IDIQ contracts. ~~PROPERTIES.~~

~~Our~~The ~~principal~~following ~~executive~~table ~~office~~sets isforth ~~located in, and a portion of~~ our ~~operations~~estimated ~~are~~remaining ~~conducted~~contract ~~from,~~value ~~leased premises located at 3190 Fairview Park Drive, Suite 700, Falls Church, Virginia 22042. In addition,~~ as of ~~March 30, 2007, we leased 197 commercial facilities in 18 countries used in connection with~~ the ~~various~~dates ~~services~~indicated ~~rendered~~(dollars ~~to our customers. Upon expiration of our leases, we do not anticipate any difficulty~~ in ~~obtaining~~millions): ~~renewals or alternative space. We do not own any real property. Lease expirations range from month-to-month to ten years. Many of the current leases are non-cancelable.~~

We believe that substantially all of our property and equipment is in good condition, subject to normal wear and tear and that our facilities have sufficient capacity to meet the current and projected needs of our business.


	April 2, 2010		April 3, 2009		March 28, 2008
	(Amounts in millions)
GSDS estimated remaining contract value	$	5,994	$	2,268	$	1,350
GPSS estimated remaining contract value		3,907		3,081		2,616
GLS estimated remaining contract value		2,333		3,066		3,517

Total Estimated Remaining Contract Value	$	12,234	$	8,415	$	7,483

~~The~~Regulatory ~~following~~Matters ~~table lists our U.S. leased properties, including the inside square footage of those properties as of March 30, 2007.~~

City, State		Size (sq ft)
Albany, Georgia		298,560
Fort Worth, Texas		119,001
Falls Church, Virginia		71,355
Irving, Texas		52,842
North Highlands, California		18,837
Satellite Beach, Florida		10,773
Herndon, Virginia		6,230
Hampton, Virginia		3,437

Contracts with the U.S. government are subject to a multitude of regulatory requirements, including but not limited to the Federal Acquisition Regulation, which sets forth policies, procedures and requirements for the acquisition of goods and services by the U.S. government. Under U.S. government regulations, certain costs, including certain financing costs, portions of research and development costs, lobbying expenses, certain types of legal expenses and certain marketing expenses related to the preparation of bids and proposals, are not allowed for pricing purposes and calculation of contract reimbursement rates under cost-reimbursement contracts. The U.S. government also regulates the methods by which allowable costs may be allocated under U.S. government contracts.

19Our international operations and investments are subject to U.S. government laws, regulations and policies, including the International Traffic in Arms Regulations, Export Administration Act, the Foreign Corrupt Practices Act and other export laws and regulations. We must also comply with foreign government laws, regulations and procurement policies and practices, which may differ from U.S. government regulation, including import-export control, investments, exchange controls, repatriation of earnings and requirements to expend a portion of program funds in-country. In addition, embargoes, international hostilities and changes in currency values can also impact our international operations.

Our government contracts are subject to audits at various points in the contracting process. Pre-award audits are performed at the time a proposal is submitted to the U.S. government for cost-reimbursement contracts. The purpose of a pre-award audit is to determine the basis of the bid and provide ~~ITEM 3~~the information required for the U. ~~LEGAL~~S. ~~PROCEEDINGS~~government to negotiate the contract effectively. In addition, the U.S. government may perform a pre-award audit to determine our capability to perform under a contract. During the performance of a contract, the U.S. government may have the right to examine our costs incurred on the contract, including any labor charges, material purchases and overhead charges. Upon a contract’s completion, the U.S. government typically performs an incurred cost audit of all aspects of contract performance for cost-reimbursement contracts to ensure that we have performed the contract in a manner consistent with our proposal. The government also may perform a post-award audit for proposals that are subject to the Truth in Negotiations Act, which are proposals in excess of $650,000, to determine if the cost proposed and negotiated was accurate, current and complete as of the time of negotiations.

~~Pending~~The ~~Litigation~~Defense Contract Audit Agency (“DCAA”) performs audits on behalf of the U.S. government. The DCAA also reviews the adequacy of, and ~~Claims~~ our compliance with, our internal control systems and policies, including our labor, billing, accounting, purchasing, property, estimating, budgeting & planning, indirect vs.

~~On April 24, 2007, March~~ 14, 2007, December 29, 2006 and December 4, 2006 four lawsuits were served, seeking unspecified monetary damages against DynCorp International LLC and several of its former affiliates in the U.S. District Court for the Southern District of Florida, concerning the spraying of narcotic plant crops along the Colombian border adjacent to Ecuador. Three of the lawsuits, filed on behalf of the Providences of Esmeraldas, Sucumbíos, and Carchi in Ecuador, allege violations of Ecuadorian law, international law, and the statutes and common law of Florida, including negligence, trespass, and nuisance. The fourth lawsuit, filed on behalf of 1,663 citizens of the Ecuadorian provinces of Esmeraldas and Sucumbíos, alleges personal injury, various counts of negligence, trespass, battery, assault, intentional infliction of emotional distress, violations of the Alien Tort Claims Act, and various violations of international law. The DoS contract under which this work is performed provides indemnification to the Company against third-party liabilities arising out of the contract, subject to available funding.

On May 29,Table 2003, Gloria Longest, a former accounting manager for the Company, filed suit against DynCorp International LLC under the False Claims Act and the Florida Whistleblower Statute, alleging that it submitted false claims to the government under the International Narcotics & Law Enforcement Affairs contract with the DoS. The action, titled U.S. ex rel. Longest v. DynCorp and DynCorp International LLC, was filed in the U.S. District Court for the Middle District of Florida under seal. The case was unsealed in 2005, and the Company learned of its existence on August 15, 2005 when it was served with the complaint. After conducting an investigation of the allegations made by the plaintiff, the U.S. government did not join the action. The complaint does not demand any specific monetary damages; however, a court ruling against the Company in this lawsuit could have a material adverse effect on its operating performance. Contents

On ~~September 11,~~direct ~~2001~~costs, aand ~~class~~compensation ~~action~~and ~~lawsuit~~management ~~seeking~~information ~~$100~~systems.~~0 million~~ The DCAA has the right to perform audits on ~~behalf~~our ofincurred ~~approximately~~costs ~~10,000~~on ~~citizens~~all offlexibly ~~Ecuador~~priced ~~was~~contracts ~~filed~~on ~~against~~an ~~DynCorp~~annual ~~International~~basis. ~~LLC~~We ~~and~~have DCAA ~~several~~auditors ofon-site ~~its~~to ~~former~~monitor ~~affiliates~~our billing and back-office operations. An adverse finding under a DCAA audit could result in the disallowance of our costs under a U.S. ~~District~~government ~~Court~~contract, ~~for~~termination ~~the District~~ of ~~Columbia~~U.S. ~~The~~government ~~action~~contracts, ~~alleges~~forfeiture ~~personal~~of profits, ~~injury~~suspension of payments, ~~property~~fines ~~damage~~and suspension and ~~wrongful~~prohibition ~~death~~from asdoing abusiness ~~consequence~~with ofthe U.S. government. In the ~~spraying~~event ~~of narcotic~~that ~~plant~~an ~~crops~~audit ~~along~~by the ~~Colombian~~ ~~border~~DCAA ~~adjacent~~recommends todisallowance ~~Ecuador.~~of ~~The~~our ~~spraying~~costs ~~operations~~under ~~were~~a ~~and~~contract, ~~continue~~we tohave bethe ~~conducted~~right ~~under~~to aappeal ~~DoS~~the findings ~~contract~~of inthe ~~cooperation~~audit ~~with~~under ~~the~~applicable ~~Colombian~~dispute ~~government~~resolution provisions. ~~The~~Approval ~~terms~~ of ~~the~~submitted ~~DoS~~yearly contract ~~provide that~~incurred ~~the~~costs ~~DoS~~can ~~will~~take ~~indemnify~~from ~~DynCorp~~one ~~International~~to ~~LLC~~three ~~against~~years ~~third-party~~from ~~liabilities~~the ~~arising~~date ~~out~~of submission of the contract, ~~subject~~costs. toAll ~~available~~of ~~funding~~our contract incurred indirect costs for U.S. ~~The~~government ~~Company~~contracts iscompleted ~~also~~through ~~entitled~~fiscal toyear ~~indemnification~~2004 ~~by Computer~~have ~~Sciences~~been ~~Corporation~~audited inby ~~connection~~the ~~with~~DCAA ~~this~~and ~~lawsuit,~~approved ~~subject~~by tothe ~~certain~~Defense ~~limitations~~Contract Management Agency. ~~Additionally,~~The ~~any~~audits ~~damage~~for ~~award~~such ~~would~~costs ~~have~~during tosubsequent beperiods ~~apportioned~~are ~~between~~continuing. ~~the~~See “Item 1.A. Risk Factors — A negative audit or other ~~defendants~~actions ~~and~~by the ~~Company~~U.S. government could adversely affect our operating performance”.

~~General~~At ~~Legal~~any ~~Matters~~ given time, many of our contracts are under review by the DCAA and other government agencies. We cannot predict the outcome of such ongoing audits and what, if any, impact such audits may have on our future operating performance.

~~The~~Over ~~Company~~the ~~and~~last ~~its~~few years, ~~subsidiaries~~U.S. ~~and~~government ~~affiliates~~contractors, ~~are~~including ~~involved~~our inCompany, ~~various~~have ~~lawsuits~~seen ~~and~~a ~~claims~~trend ~~that~~of ~~have~~increased ~~arisen~~scrutiny inby the ~~normal~~DCAA ~~course~~and ofother ~~business~~U.S. Ingovernment ~~most~~agencies. ~~cases,~~If ~~we have~~any ~~denied,~~of orour ~~believe~~internal wecontrol ~~have~~systems aor ~~basis~~policies toare ~~deny,~~found ~~liability.~~non-compliant Weor ~~have recorded~~inadequate, inpayments ~~the~~may be ~~consolidated~~suspended ~~financial~~under ~~statements found elsewhere in this Form 10-K,~~ our ~~best~~contracts ~~estimate~~or ofwe ~~the aggregate~~may ~~liability~~be ~~that~~subjected ~~will~~to ~~result~~increased ~~from~~government ~~these~~scrutiny ~~matters~~ and ~~believe~~approval that ~~these~~could ~~matters~~delay ~~are~~or ~~adequately~~adversely ~~reserved.~~affect ~~While~~our itability ~~is not possible~~ to ~~predict~~invoice ~~with~~and ~~certainty~~receive ~~the~~timely ~~outcome~~payment ofon ~~litigation~~our ~~and other matters discussed above~~contracts, itperform iscontracts ~~the~~or ~~opinion~~compete offor contracts with the ~~Company's~~U.S. ~~management,~~government. ~~based~~These inadverse ~~part~~outcomes ~~upon~~could ~~opinions~~also ofoccur ~~counsel,~~if ~~insurance in force and~~ the ~~facts~~DCAA ~~currently~~cannot ~~known,~~timely ~~that~~complete ~~liabilities~~periodic inreviews ~~excess~~ of ~~those recorded,~~our ifcontrol ~~any,~~systems ~~arising~~which ~~from~~could ~~such~~then ~~matters~~render ~~would not have a material adverse effect on~~ the ~~results~~status of ~~operations,~~these ~~consolidated~~systems ~~financial~~as ~~condition~~“not ~~or liquidity of the Company over the long term~~reviewed”.

~~U.S.~~Sales ~~Government~~and ~~Investigations~~ Marketing

~~The~~We ~~Company~~primarily ismarket ~~occasionally~~our ~~the~~services ~~subject~~to ofU.S. ~~investigations~~and byforeign ~~various~~governments, ~~agencies~~including oftheir ~~the~~military Ubranches.S. ~~government.~~We ~~Such~~also ~~investigations,~~market ~~whether~~our ~~related~~services to ~~its~~other prime contractors who have contracts with the U.S. ~~government contracts~~and orforeign ~~conducted~~governments ~~for~~in ~~other~~certain ~~reasons,~~instances ~~could~~where ~~result~~our incompetencies ~~administrative,~~help ~~civil~~to ordeliver ~~criminal~~effective ~~liabilities,~~solutions. ~~including~~We ~~repayments,~~position ~~fines~~our orsales ~~penalties~~and ~~being~~marketing ~~imposed~~personnel ~~upon~~to cover key accounts such as the ~~Company~~DoS and the DoD, oras ~~could~~well ~~lead~~as ~~to suspension~~market orsegments ~~debarment~~which ~~from~~hold ~~future~~the ~~U.S.~~most ~~government~~promise ~~contracting~~for aggressive growth.

20We participate in national and international tradeshows, particularly as they apply to aviation services, logistics, contingency support, and defense. We are also an active member in several organizations related to services contracting, such as the Professional Services Council.

~~On January 30,~~We ~~2007,~~leverage ~~the~~our ~~Special~~experience ~~Inspector~~and ~~General~~capability ~~for~~in ~~Iraq~~providing ~~Reconstruction~~value ~~("SIGIR")~~added ~~issued~~and acomplementary ~~report~~services on Company contract number S-LMAQM-04-C-0030, Task Order 0338, concerning the Iraqi Police Training Program. Among other items, the report raises questions about the Company's work under Task Order 0338 to ~~establish~~companies ~~a residential camp in Baghdad to house training personnel. Specifically, the SIGIR report recommends~~ that ~~the Director, Office of Acquisition Management, DoS,~~require ~~seek~~support ~~reimbursement~~in ~~from~~remote the Company of $4.2 million paid by the State Department for work that the SIGIR maintains was not contractually authorized. In addition, the SIGIR report recommends that the DoS request the DCAA to review two Company invoices totaling $19.1 million. In management's opinion and ~~based~~hazardous onregions ~~facts~~of ~~currently known,~~ the ~~above described matters raised in the SIGIR report will not have a material adverse effect on the Company's consolidated financial condition, results of operations or liquidity~~globe.

Our sales and marketing personnel help to establish a presence in select market segments that hold the most promise for aggressive growth, whether it is GPSS, GSDS or GLS. These activities support our objective to be the leading global government services provider in support of U.S. ~~Government~~national ~~Audits~~ security and foreign policy objectives.

~~U.S.~~Intellectual ~~Government~~Property Audits – The Company's contracts are regularly audited by the DCAA and other government agencies. These agencies review the Company's contract performance, cost structure and compliance with applicable laws, regulations and standards. The DCAA also reviews the adequacy of, and the Company's compliance with, its internal control systems and policies, including its purchasing, property, estimating, compensation and management information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed. In addition, government contract payments received by the Company for allowable direct and indirect costs are subject to adjustment after audit by government auditors and repayment to the government if the payments exceed allowable costs as defined in the government contracts. In management's opinion, there are no outstanding U.S. government audit issues of this nature as of March 30, 2007 that could have a material adverse effect on the Company's consolidated financial condition, results of operations or liquidity.

~~The Defense~~We ~~Contract~~hold ~~Management~~an ~~Agency~~exclusive, ~~("DCMA") formally notified the Company of non-compliance with Cost Accounting Standard ("CAS") 403~~perpetual, ~~Allocation of Home Office Expenses to Segments~~irrevocable, ~~on April 11~~worldwide, ~~2007.~~royalty-free ~~The~~and ~~Company~~fully ~~issued~~paid alicense ~~response~~ to use the ~~DCMA~~“Dyn onInternational” ~~April 26,~~and “DynCorp ~~2007~~International” ~~with~~names ain ~~proposed~~connection ~~solution~~with toaviation ~~resolve~~services, ~~the~~security ~~non-compliance~~services, ~~which~~technical ~~related~~services ~~to the allocation of corporate general~~ and ~~administrative~~marine ~~costs between the Company's divisions~~services. ~~This~~We ~~issue~~also isown ~~currently~~various ~~pending~~licenses afor ~~DCMA~~names ~~response~~associated towith ~~the~~Phoenix ~~Company's~~Consulting ~~April 26~~Group, ~~2007 letter~~Inc. In(“Phoenix”) ~~management's~~and ~~opinion~~Casals and ~~based~~Associates, onInc. ~~facts~~(“Casals”). ~~currently known~~Additionally, ~~the~~we ~~above~~own ~~described~~various ~~matters~~registered ~~will~~domain ~~not~~names, ~~have~~trademarks aand ~~material~~copyrights. ~~adverse~~We ~~effect~~currently onhave ~~the~~two ~~Company's~~patent ~~consolidated~~applications ~~financial~~pending ~~condition, results of operations or liquidity.~~

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

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21 approval. Because most of our business involves providing services to government entities, our operations generally are not substantially dependent upon obtaining and/or maintaining copyright or trademark protections, although our operations make use of such protections and benefit from them.

Environmental Matters ~~PART II~~

Our operations ~~ITEM 5~~include the use, generation and disposal of petroleum products and other hazardous materials. ~~MARKET~~ We ~~FOR~~are ~~REGISTRANT'~~subject to various U.S. ~~COMMON~~federal, ~~EQUITY~~state, ~~RELATED~~local ~~STOCKHOLDER~~and ~~MATTERS~~foreign ~~AND~~laws ~~ISSUER~~and ~~PURCHASES~~regulations OFrelating ~~EQUITY~~to ~~SECURITIES~~the protection of the environment, including those governing the management and disposal of hazardous substances and wastes, the cleanup of contaminated sites and the maintenance of a safe workplace. We believe we have been and are in substantial compliance with environmental laws and regulations, and we have no liabilities under environmental requirements that would have a material adverse effect on our business, results of operations or financial condition. We have not incurred, nor do we expect to incur, material costs relating to environmental compliance.

~~Market~~Employees ~~Information~~

~~Our~~As ~~Class A~~of ~~common stock is traded on the New York Stock Exchange under the symbol "DCP." At June~~April 42, ~~2007~~2010, ~~there~~we ~~were~~had 12approximately ~~shareholders~~22,300 ofemployees ~~record~~from of our ~~common~~consolidated ~~stock~~entities ~~and~~in ~~approximately~~38 2countries,~~900~~ ~~beneficial~~of ~~owners.~~which ~~The~~approximately 3,000 ~~following~~are ~~table~~represented ~~sets~~by ~~forth~~labor ~~the~~unions. ~~range~~We ofconsider ~~high~~our ~~and~~relationships ~~low~~with ~~prices~~our ~~per~~employees ~~share~~inclusive of our ~~common~~union ~~stock~~employees ~~from~~to ~~the~~be ~~Equity~~generally ~~Offering on May 4, 2006 and for periods as indicated below~~good.

		2007
Period
		High		Low
May 4, 2006 through June 30, 2006		$	15.35	$	10.22
Three months ended:
	September 29, 2006		13.05		8.87
	December 29, 2006		16.83		9.41
	March 30, 2007		17.78		14.50

Availability of Forms Filed With the U.S. Security and Exchange Commission

~~Dividends~~ Our shareholders may obtain, free of charge, copies of the following documents (and any amendments thereto) as filed with, or furnished to, the U.S. Securities and Exchange Commission (“SEC”) as soon as reasonably practical after such material is filed with or furnished to the SEC:

~~Immediately~~• ~~prior~~annual toreports the consummation of our Equity Offering, we declared an initial special Class B distribution of $100.0 million, payable upon the consummation of the offering and an additional special Class B distribution payable upon the exercise of the underwriters' over-allotment option, representing 50% of the aggregate net proceeds that we would have received from the sale of up to 3,750,000 additional shares of our Class A common stock. The initial special Class B distribution was made on ~~May 9,~~ ~~2006;~~Form ~~since the underwriters failed to exercise their over~~10-allotment option, the additional special Class B distribution was not paid. Our Class B common stock automatically converted on a one-for-one basis into Class A common stock once the underwriters' over-allotment option expired on June 2, 2006. K;

~~We do~~• ~~not~~quarterly ~~intend~~reports ~~to pay cash dividends~~ on ~~our~~Form Class A common stock in the foreseeable future. We are a holding company that does not conduct any business operations of our own. As a result, we are dependent upon cash dividends and distributions and other transfers from our subsidiaries to make dividend payments on our Class A common stock. The amounts available to us to pay cash dividends are restricted by our subsidiaries' debt agreements. The declaration and payment of dividends also are subject to the discretion of our board of directors and depend on various factors, including our net income, financial conditions, cash requirements, future prospects and other factors deemed relevant by our board of directors. 10-Q;

~~Recent~~• ~~Sales~~current ofreports ~~Unregistered~~on ~~Securities;~~Form ~~Use of Proceeds from Registered Securities~~ 8-K;

~~The~~• ~~following~~statement ~~is a list~~ of ~~all~~changes ~~securities~~in ~~sold~~beneficial orownership ~~issued~~of bysecurities ~~the~~for ~~Company during the period covered by this Annual Report:~~ insiders;

~~In October 2005,~~• asproxy ~~payment for the working capital adjustment (see Note 2 to the consolidated financial~~ statements); ~~in the amount of $65.5 million, we issued 65,550 shares of our preferred stock to Computer Sciences Corporation. We redeemed all of our preferred stock using proceeds from the Equity Offering.~~ and

22• any amendments thereto.

~~On May 9,~~The ~~2006,~~public ~~the~~may ~~Company~~read ~~consummated~~and ancopy ~~equity~~any ~~offering~~materials ofwe ~~25,000,000~~file ~~shares~~with ofor ~~its~~furnish ~~Class A~~to ~~common~~the ~~stock,~~SEC ~~par~~at ~~value~~the ~~$0.01~~SEC’s ~~per~~Public ~~share,~~Reference Room at a100 ~~price~~F ofStreet, NE, ~~$15~~Washington, DC 20549.00 ~~per~~You ~~share~~may (obtain information on the ~~"Equity~~ ~~Offering"),~~operation ~~less~~of the ~~underwriters'~~Public ~~discount~~Reference ofRoom 6%by ~~per~~calling ~~share.~~the ~~The~~SEC ~~gross~~at ~~proceeds~~1-800-SEC-0330. ~~from~~You ~~the~~can ~~Equity~~also ~~Offering~~request copies of ~~$375 million~~these documents, ~~together~~upon ~~with~~payment ~~cash~~of ona ~~hand~~duplicating fee, ~~were~~by ~~used:~~writing ~~(i)~~ to ~~redeem~~the ~~all~~SEC at its ofprincipal ~~the~~office ~~Company's~~at ~~outstanding~~100 ~~preferred~~F ~~stock~~Street, ofN.E., ~~which~~Washington, D.C. ~~$222~~20549.~~8 million~~ inThe ~~stated~~SEC ~~amount,~~maintains ~~including~~an ~~accrued~~Internet ~~and~~site ~~unpaid~~that ~~dividends~~contains ~~thereon~~reports, ~~was~~proxy ~~outstanding~~and asinformation ~~of May 9~~statements, ~~2006;~~and ~~(ii) to pay~~other ainformation ~~special~~regarding ~~Class B~~issuers ~~distribution~~that infile ~~the~~or ~~amount~~furnish ofsuch ~~$100.0 million,~~information electronically ~~representing~~with athe ~~return~~SEC ofwhich ~~capital~~may ofbe ~~$95.9 million~~obtained toat ~~DIV~~www.sec.gov. ~~Holding~~Our ~~LLC,~~SEC ~~the~~filings ~~holder~~are ofaccessible through the ~~Company's~~Internet ~~common~~at ~~stock; (iii) to~~that ~~redeem $28~~website.~~0 million~~ A copy of ~~the~~these ~~Company's~~filings ~~senior~~may ~~subordinated~~also ~~notes~~be onobtained ~~June 8,~~by ~~2006;~~going ~~(iv)~~ to ~~pay~~our ~~prepayment~~Internet ~~penalties~~website ofat $8www.~~4 million, $5~~dyn-intl.~~7 million~~com ofand selecting ~~which~~“Investor ~~represented~~Relations” ~~prepayment~~and ~~penalties~~selecting on“Financial ~~the~~Information.” ~~Company's~~Copies ~~preferred~~may ~~stock~~also ~~and~~be ~~$2.7 million~~obtained ofby ~~which~~providing ~~represented~~a ~~prepayment~~written ~~penalties~~request onfor ~~the~~such ~~Company's~~copies ~~senior~~or ~~subordinated~~additional ~~notes;~~information ~~and~~regarding ~~(v)~~ our operating or financial performance to Corporate ~~pay~~Secretary, ~~transaction~~DynCorp ~~expenses~~International, of3190 ~~approximately~~Fairview ~~$30.0 million~~Park Drive, ~~including~~Suite an700, ~~underwriters'~~Falls ~~commission~~Church, ofVA ~~$22~~22042.~~5 million~~ Except as otherwise stated in these reports, athe ~~fee~~information ofcontained ~~$5.0 million~~on toour ~~Veritas~~website ~~Capital~~or ~~and~~available ~~approximately~~by hyperlink from our website is not incorporated into ~~$2.5 million~~this ofAnnual ~~miscellaneous~~Report ~~fees~~or ~~and~~other ~~expenses~~documents ~~related~~we file with, or furnish to, the ~~Equity Offering~~SEC.

~~Stock~~16 ~~Performance Graph~~

TheTable chart below compares the cumulative total shareholder return on our common shares from our initial public offering on May 4, 2006 to the end of the fiscal year with the cumulative total return on the Russell 1000 Index for the same period. The comparison assumes the investment of $100.00 on May 4, 2006, and reinvestment of all dividends. The shareholder return is not necessarily indicative of future performance. Contents

23ITEM 1A. RISK FACTORS.

The risks ~~ITEM 6~~described below should be carefully considered, together with all of the other information contained in this Form 10-K. ~~SELECTED~~ ~~FINANCIAL~~Any ~~DATA~~of the following risks could materially and adversely affect our financial condition or results of operations.

~~The~~We ~~selected~~rely ~~consolidated~~on sales ~~financial~~to ~~information~~U.S. ~~for~~government ~~the~~entities. ~~period~~A ~~from~~loss ~~March 30~~of contracts, ~~2002~~a ~~through~~failure ~~March 7,~~to ~~2003~~obtain ~~has~~new ~~been~~contracts ~~derived~~or ~~from~~a ~~our~~reduction ~~consolidated financial~~of ~~statements,~~sales ~~referred~~under toexisting ascontracts with the ~~"original predecessor period~~U."S. Ongovernment ~~March 7,~~could ~~2003,~~adversely ~~DynCorp~~affect ~~and~~our ~~its~~operating ~~subsidiaries,~~performance ~~including~~and our ~~operating~~ability ~~company,~~to ~~were~~generate ~~acquired~~cash flow byto ~~Computer~~fund ~~Sciences Corporation~~our operations.

~~The~~We derive substantially all of our revenue from contracts and subcontracts with the U.S. ~~selected~~government ~~historical~~and ~~consolidated~~its ~~financial~~agencies, ~~data~~primarily ~~for~~the DoD and the ~~period~~DoS. The remainder of our revenue is derived from ~~March 8,~~commercial ~~2003~~contracts ~~through~~and ~~March 28~~contracts with foreign governments. We expect that U.S. government contracts, ~~2003~~particularly with the DoD and the DoS, will ascontinue to be our primary source of ~~and~~revenue for the ~~fiscal~~foreseeable ~~year~~future. ~~ended~~The ~~April 2,~~continuation ~~2004~~and renewal of our existing government contracts and new government contracts are, among other things, contingent upon the availability of adequate funding for various U.S. government agencies, including the ~~period~~DoD ~~from~~and ~~April 3~~the DoS. Changes in U.S. government spending could directly affect our operating performance and lead to an unexpected loss of revenue. The loss or significant reduction in government funding of a large program in which we participate could also result in a material decrease to our future sales, ~~2004~~earnings ~~through~~and ~~February~~cash flows. U.S. government contracts are also conditioned upon the continuing approval by Congress of the amount of necessary spending. Congress usually appropriates funds for a given program on a September 1130 fiscal year basis, ~~2005~~even though contract periods of performance may extend over many years. Consequently, at the ~~period~~beginning of ~~Computer~~a ~~Science~~major program, ~~Corporation's~~the ~~ownership~~contract is usually partially funded, and additional monies are ~~derived~~normally ~~from~~committed ~~our~~to ~~consolidated~~the ~~financial~~contract ~~statements,~~by ~~referred~~the to procuring agency only as appropriations are made by Congress for future fiscal years. Among the ~~"immediate~~factors ~~predecessor~~that ~~period~~could impact U."S. government spending and reduce our federal government contracting business include:

~~On February 11,~~• ~~2005,~~policy ~~our~~and/or ~~operating~~spending ~~company~~changes ~~was~~implemented ~~sold~~ by ~~Computer Sciences Corporation to an entity controlled by Veritas Capital. The selected historical consolidated financial data as of April 1, 2005 and for~~ the ~~period~~Obama from February 12, 2005 through April 1, 2005 and as of and for the fiscal years ended March 31, 2006 and March 30, 2007 are derived from our consolidated financial statements, referred to as the "successor period." administration;

~~We use~~• a ~~52/53-week~~significant ~~fiscal~~decline ~~year ending on the closest Friday to March 31. The period from April 3~~in, ~~2004~~or toreapportioning ~~February 11~~of, ~~2005~~spending ~~was~~by athe ~~45-week period~~U. ~~The fiscal year ended April 2, 2004 was a 53-week year~~S. ~~The period from March 30~~government, ~~2002~~in ~~to March 7~~general, ~~2003~~or ~~included~~by ~~49 weeks. During~~ the ~~original predecessor~~DoD ~~period,~~or ~~DynCorp~~the ~~used a calendar year. Accordingly~~DoS, ~~the~~in ~~financial statements covered by that period were restated to 52/53-week fiscal year ends.~~ particular;

~~This information~~• ~~should~~changes, bedelays ~~read~~or incancellations ~~conjunction with "Management's Discussion and Analysis~~ of ~~Financial~~U.S. ~~Condition~~government ~~and~~programs, ~~Results~~requirements ofor ~~Operations" and the consolidated financial statements and related notes thereto included elsewhere in this Form 10-K.~~ policies;

24• the adoption of new laws or regulations that affect companies that provide services to the U.S. government;

	Successor												Original Predecessor
							Immediate Predecessor
	Fiscal Year Ended
							April 3, 2004 to Feb 11, 2005		Fiscal Year Ended April 2, 2004				March 30, 2002 to March 7, 2003
					49 Days Ended April 1, 2005						21 Days Ended March 28, 2003
(Dollars in thousands)	March 30, 2007		March 31, 2006
Results of operations:
Revenues	$	2,082,274	$	1,966,993	$	266,604	$	1,654,305	$	1,214,289	$	59,240	$	859,112
Cost of services		(1,817,707)		(1,722,089)		(245,406)		(1,496,109)		(1,106,571)		(53,482)		(787,649)
Selling, general and administrative expenses		(107,681)		(97,520)		(8,408)		(57,755)		(48,350)		(3,414)		(40,316)
Depreciation and amortization		(43,401)		(46,147)		(5,605)		(5,922)		(8,148)		(265)		(351)
Operating income		113,485		101,237		7,185		94,519		51,220		2,079		30,796
Interest expense		(58,412)		(56,686)		(8,054)		–		–		–		–
Interest on mandatory redeemable shares		(3,002)		(21,142)		(2,182)		–		–		–		–
Loss on early extinguishment of debt and preferred stock		(9,201)		–		–		–		–		–		–
Net earnings from affiliates		2,913		–		–		–		–		–		–
Interest income		1,789		461		7		170		64		2		43
Provision for income taxes		(20,549)		(16,627)		(60)		(34,956)		(19,924)		(852)		(11,973)
Net income (loss)		27,023		7,243		(3,104)		59,733		31,360		1,229		18,866
Cash flows provided (used) by operating activities		86,836		55,111		(31,240)		(2,092)		(6,756)		12,542		(10,331)
Balance sheet data (end of period):
Cash and cash equivalents	$	102,455	$	20,573	$	13,474		NA	$	6,510	$	4,541		NA
Working capital(1)		282,929		251,329		200,367		NA		104,335		58,295		NA
Total assets		1,362,901		1,239,089		1,148,193		NA		579,829		481,097		NA
Total debt (including current portion)		630,994		881,372		826,990		NA		–		–		NA
Shareholders' equity		379,674		106,338		96,918		NA		396,573		354,198		NA
Other financial data:
EBITDA(2)	$	163,438	$	148,718	$	12,896	$	101,326	$	60,072	$	2,382	$	31,781
Backlog(3)	$	6,132,011	$	2,641,000	$	2,040,000		NA	$	2,164,000	$	2,028,000		NA
Capital expenditures	$	9,317	$	6,180	$	244	$	8,473	$	2,047	$	11	$	1,011

•

U.S. government shutdowns or other delays in the government appropriations process;

~~The~~• ~~following~~curtailment ~~table~~of ~~presents~~the aU.S. ~~reconciliation~~government’s outsourcing of ~~income~~services to ~~Earnings~~private ~~before~~contractors ~~Interest,~~including ~~Taxes, Depreciation and Amortization ("EBITDA") for~~ the ~~periods~~ ~~included~~expansion ~~below.~~of insourcing;

	Successor Period												Original Predecessor
							Immediate Predecessor Period
	Fiscal Year Ended
							April 3, 2004 to Feb 11, 2005		Fiscal Year Ended April 2, 2004				March 30, 2002 to March 7, 2003
					49 Days Ended April 1, 2005						21 Days Ended March 28, 2003
(Dollars in thousands)	March 30, 2007		March 31, 2006
RECONCILIATION OF NET INCOME (LOSS) TO EBITDA:
Net income (loss)	$	27,023	$	7,243	$	(3,104)	$	59,733	$	31,360	$	1,229	$	18,866
Income taxes		20,549		16,627		60		34,956		19,924		852		11,973
Interest expense and loss on early extinguishment of debt and preferred stock(1)		70,615		77,828		10,236		–		–		–		–
Depreciation and amortization		45,251		47,020		5,704		6,637		8,788		301		942
EBITDA	$	163,438	$	148,718	$	12,896	$	101,326	$	60,072	$	2,382	$	31,781

•

changes in the political climate, including with regard to the funding or operation of the services we provide; and

25• general economic conditions, including a slowdown in the economy or unstable economic conditions in the United States or in the countries in which we operate.

These or ~~ITEM 7~~other factors could cause U. ~~MANAGEMENT'~~S. ~~DISCUSSION~~government ~~AND~~agencies ~~ANALYSIS~~to OFreduce ~~FINANCIAL~~their ~~CONDITION~~purchases ~~AND~~under ~~RESULTS~~our contracts, OFto ~~OPERATIONS~~exercise their right to terminate our contracts in whole or in part, to issue temporary stop-work orders, or decline to exercise options to renew our contracts. The loss or significant curtailment of our material government contracts, or our failure to renew existing contracts or enter into new contracts could adversely affect our operating performance and lead to an unexpected loss of revenue.

~~The~~17 following discussion and analysis is provided to increase the understanding of, and should be read in conjunction with, the accompanying consolidated financial statements and notes. Please see "Risk Factors" and "Forward-Looking Statements" for a discussion of the risks, uncertainties and assumptions associated with these statements. Unless otherwise noted, all amounts discussed herein are consolidated.

BusinessTable Overview of Contents

WeOur ~~are~~U.S. agovernment ~~leading~~contracts ~~provider~~may ofbe ~~specialized~~terminated ~~mission-critical~~by ~~outsourced~~the ~~technical~~U.S. ~~services to civilian and military~~ government ~~agencies.~~at ~~Our~~any ~~specific global~~time ~~expertise~~prior isto intheir ~~law~~completion ~~enforcement training~~ and ~~support,~~contain ~~security~~other ~~services~~unfavorable provisions, ~~base~~which ~~operations~~could ~~and~~lead ~~aviation~~to ~~services~~an ~~and~~unexpected ~~operations.~~loss ~~We also provide logistics support for all~~ of ~~our~~revenue ~~services. Our current customers include the DoS; the Army, Air Force, Navy~~ and ~~Marine~~a ~~Corps~~reduction ~~(collectively, the DoD); and commercial customers and foreign governments. As of March 30, 2007, we had over 14,600 employees~~ in ~~33 countries, 45 active contracts ranging in duration from three to ten years and over 100 task orders~~backlog.

~~Our business~~Under ~~strategy~~the isterms to further increase our revenues and earnings by expanding current business opportunities, capitalizing on industry trends, pursuing commercial and foreign government opportunities and expanding our domestic service offerings. We have a long-standing record of ~~providing services in support of a broad array of highly complex platforms and systems that are vital to~~ our ~~customers' operations and~~contracts, ~~together with our predecessors, have provided support services to~~ the U.S. government ~~for~~may ~~55 years.~~unilaterally: We believe that the longevity and depth of our customer relationships have positioned us as a contractor of choice for our customers, creating a unique advantage and opportunity to cross-sell our capabilities to capture additional contract opportunities. The U.S. government is increasing its reliance on outsourcing and has increased spending in our target markets.

~~Operating~~• ~~Environment~~ terminate or modify existing contracts;

We• ~~are~~reduce primarily a U.S. government contractor providing a broad range of critical technical services to civilian and military government agencies and to a lesser extent, commercial customers. As a result, our operating performance for any time period is impacted primarily by trends in U.S. government outsourcing, spending and the ~~awarding~~value of existing contracts ~~and related~~through ~~payment~~partial ~~terms which can have a significant effect on our business. The trends we monitor and the impact we believe they have on our business are discussed below.~~ termination;

~~Increased~~• ~~Outsourcing~~delay ~~by U.S. and Foreign Governments – We have seen and benefited from a continued trend toward outsourcing of services by~~ the ~~U.S.~~payment ~~government, particularly within the DoD and the DoS. These outsourcing trends are seen both domestically and internationally and support the increased deployment~~ of ~~U.S.~~ ~~resources overseas. The increase in overseas deployment has been in both frequency and magnitude, and across multiple U.S. government agencies. For example,~~ our GSinvoices ~~segment~~by ~~has witnessed strong growth as a result of the U.S.~~ government's ~~trend~~payment toward outsourcing critical functions. Outside of the U.S. government, we are seeing other countries, particularly the United Kingdom and United Arab Emirates, follow the U.S. government trend to outsource services. We believe that this provides additional markets for our existing services. Our GS reporting segment primarily provides outsourced law enforcement training, drug eradication, global logistics and personal physical security services to government and commercial customers in foreign jurisdictions. GS has grown revenues from $631.7 million for fiscal 2004 to $1.4 billion for fiscal 2007, or 65% of our total revenues. Although we expect to continue to see increases in government outsourcing for the foreseeable future, particularly in government technical support services and other non-combat related functions, the adoption of new laws or regulations that affect companies that provide services to the federal government or curtailment of the federal government's outsourcing of services to private contractors would significantly alter this positive trend. offices;

26• audit our contract-related costs and fees; and

~~Increased~~• ~~Spending~~suspend byus ~~Our~~from ~~Customers –~~receiving ~~The~~new ~~DoD budget for fiscal 2008~~contracts, ~~excluding~~pending supplemental funding relating to operations in Iraq and Afghanistan, has been proposed to Congress at $481.4 billion, representing a 62% increase over fiscal 2001. The U.S. government budget for international development and humanitarian and international security assistance coordinated by the ~~DoS~~resolution ~~has grown from approximately $15.0 billion in fiscal 2000 to a projected $25.0 billion in fiscal 2009 (a compound annual growth rate~~ of ~~5.2%).~~alleged Asviolations ~~a result~~ of ~~the~~procurement ~~U.S.~~laws military's presence in the Middle East and abroad, we believe that this trend will continue for the foreseeable future and that we are well-positioned to benefit from this trend. Among the factors that could impact U.S. government spending and that would reduce our U.S. government contracting business are: a significant decline in, or ~~reapportioning of, spending by the U~~regulations.~~S. government, in general, or by the DoD or the DoS, specifically.~~

~~Shift to More Multiple Awards in IDIQ Contracts –~~ The ~~trend in the service segment of the~~ U.S. government ~~has~~can ~~been~~terminate ~~to award~~or ~~more~~modify ~~multiple~~any ~~award~~of ~~IDIQ~~its contracts. ~~We expect these trends to continue. Strong customer relationships combined~~ with ~~strong~~us ~~past~~either ~~performance~~for ~~will~~its ~~increase~~convenience ~~the~~or ~~probability~~if ofwe ~~obtaining~~default ~~a customer's~~by ~~business~~failing ~~under multiple award IDIQ contracts, as well as winning new procurements. In fiscal 2007 and 2006, 56.7% and 58.9% of our revenues were attributable~~ to ~~IDIQ contracts,~~ ~~respectively.~~perform ~~Traditional~~under ~~government contracts typically have a base year award plus four to nine option years, limiting~~ the ~~competition~~terms toof the ~~5-10 year~~applicable contract ~~cycle~~. ~~Under multiple~~A ~~award~~termination ~~IDIQ~~arising ~~contracts,~~out ~~the~~of ~~customer~~our ~~has~~default ~~the~~could ~~ability~~expose tous ~~compete for the work more frequently among the contract holders, or even move the work on a sole source basis~~ to ~~one~~liability ofand ~~the~~adversely ~~other providers.~~affect ~~This trend toward multiple award IDIQ contracts could increase the volatility in~~ our ~~revenue~~operating ~~but~~performance ~~also~~and ~~potentially~~lead ~~allows us~~ to ~~compete~~an ~~more~~unexpected ~~frequently~~loss ~~for~~of ~~work not previously secured~~revenue.

~~Shift from Cost-Reimbursement Contracts to Time-and-Materials or Fixed-Price Contracts –~~ Our U.S. government ~~contract~~contracts ~~services~~typically have ~~three~~an ~~distinct~~initial ~~pricing~~term ~~structures: fixed-price, time-and-materials and cost-reimbursement, representing approximately~~ of ~~43%,~~one ~~36%~~year ~~and~~with ~~21%~~multiple ~~our~~option ~~revenues~~periods, ~~respectively,~~exercisable ~~for~~at ~~fiscal~~the ~~2007,~~discretion ~~and approximately 34%, 38% and 28%~~ of the ~~our~~government ~~revenues,~~at ~~respectively,~~previously ~~for~~negotiated ~~fiscal 2006~~prices. WeThe ~~believe~~government ~~that~~is ~~our profitability~~not ~~will~~obligated ~~continue~~ to ~~improve~~exercise asany weoption ~~anticipate~~under ~~that~~a ~~our customers will continue to shift away from cost-reimbursement to time-and-materials contracts and fixed-price contracts~~contract. ~~We base our belief on recent trends in our revenues~~Furthermore, the ~~nature~~government ofis ~~the~~typically ~~contracts~~required onto ~~which~~compete weall ~~are~~programs ~~bidding~~ and, ~~the~~therefore, ~~favorable~~may ~~pricing~~not ~~structure~~automatically ~~that~~renew ~~exists within fixed-price and~~a ~~time-and-materials contracts~~contract. WeIn ~~assume financial risk on time-and-materials and fixed-price contracts~~addition, ~~because~~at ~~we assume~~ the ~~risk~~time of ~~performing~~completion ~~those contracts~~of atany ~~the~~of ~~stipulated~~our ~~prices~~government orcontracts, ~~negotiated hourly rates. If we do not accurately estimate ultimate costs and control costs during performance of~~ the ~~work, we could lose money on a particular~~ contract oris ~~have~~frequently ~~lower~~required ~~than anticipated margins. The movement from cost type contracts~~ to ~~time-and-materials~~be ~~or fixed~~re-~~price~~competed ~~contracts,~~if ~~while~~the ~~increasing~~government ~~our~~still ~~risks,~~requires ~~allows us~~ the ~~opportunity~~ toservices ~~earn~~covered ~~higher~~by ~~margins~~the contract.

~~Increased~~If ~~Maintenance,~~the ~~Overhaul~~U.S. ~~and~~government ~~Upgrades~~terminates ~~("O&M")~~and/or ~~needed~~materially tomodifies ~~Support~~any ~~Aging~~of ~~Military Platforms – Another trend we monitor to determine~~ our ~~future~~contracts ~~strategy~~or isif ~~the~~option ~~age~~periods ~~and~~are ~~use~~not ofexercised, ~~weapon~~our ~~systems.~~failure ~~The high-visibility/high-cost weapons systems tend~~ to ~~be the target of budget reductions, while~~ ~~the~~replace ~~O&M~~revenue ~~budget~~generated ~~continues~~from tosuch ~~grow~~contracts aswould aresult ~~percentage~~in oflower ~~the~~revenue ~~total~~and ~~budget.~~would ~~The~~likely ~~O&M~~adversely ~~portion~~affect ofour ~~the DoD budget~~earnings, which ~~includes~~could ~~the~~have ~~majority~~a ofmaterial ~~the~~effect ~~services~~on weour ~~provide,~~financial iscondition ~~the largest~~ and ~~fastest~~results ~~growing segment~~ of ~~DoD military spending~~operations. Also, as the purchase of new weapons systems is delayed or cancelled, the current weapons systems continue to age and require increased maintenance. This aging, combined with the increased use of the equipment, often in harsh environments, provides opportunities for the services we offer.

~~Competition –~~Our ~~We believe that the favorable industry trends that we anticipate may also attract additional competition by certain existing and potential competitors~~U. ~~We compete with various entities across geographic and business lines~~S. ~~Some~~government ofcontracts ~~our competitors have greater financial and other resources than we do or~~ are ~~better~~subject ~~positioned~~to ~~than~~competitive webidding, ~~are~~both toupon ~~compete~~initial ~~for~~issuance ~~contract~~and ~~opportunities~~re-competition. InIf ~~addition,~~ we are atunable to asuccessfully ~~disadvantage~~compete ~~when~~in the bidding ~~for~~process ~~contracts~~or ~~put~~if ~~up for re-competition for which~~ we ~~are~~fail ~~not~~to ~~the incumbent~~win ~~provider~~re-competitions, ~~because~~it ~~incumbent~~could ~~providers~~adversely ~~are~~affect ~~frequently~~our ~~able~~operating toperformance ~~capitalize on customer relationships, technical knowledge~~ and ~~pricing~~lead ~~experience~~to ~~gained~~an ~~from~~unexpected ~~their~~loss ~~prior~~of ~~service~~revenue.

~~We have~~Substantially ~~aligned~~all ~~and~~of ~~report~~ our ~~business~~U.S. ~~operations~~government contracts are awarded through ~~two~~a ~~reporting~~competitive ~~segments:~~bidding GSprocess upon initial award and ~~MTSS~~renewal, and we expect that this will continue to be the case. There is often significant competition and pricing pressure as a result of this process. The competitive bidding process presents a number of risks, including the following:

27• we may expend substantial funds and time to prepare bids and proposals for contracts that may ultimately be awarded to one of our competitors;

GS• ~~Segment~~we ~~Activity~~ may be unable to accurately estimate the resources and costs that will be required to perform any contract we are awarded, which could result in substantial cost overruns; and

~~GS,~~• ~~with~~we ~~revenues~~may ofencounter ~~approximately~~expense ~~$1.4 billion,~~and ~~$1.3 billion~~delay ~~and~~if ~~$1.2 billion~~our ~~for~~competitors ~~fiscal~~protest ~~years~~or ~~2007,~~challenge ~~2006~~awards ~~and~~of ~~2005~~contracts, ~~respectively,~~and ~~provides outsourced~~any ~~technical~~such ~~services~~protest or challenge could result in a requirement to ~~government~~resubmit ~~agencies,~~bids ~~and~~on ~~commercial~~modified ~~customers~~specifications ~~worldwide.~~or GSin ~~consists~~the termination, reduction or modification of the ~~four~~awarded ~~operating~~contract. ~~units~~Additionally, ~~(i) Law~~the ~~Enforcement~~protest ~~and~~of ~~Security,~~contracts ~~(ii) Contingency~~awarded ~~and Logistics~~to ~~Operations,~~us ~~(iii) Operations~~may ~~Maintenance~~result ~~and~~in ~~Construction~~the ~~Management,~~delay ~~and~~of ~~(iv) Specialty~~program ~~Aviation~~performance and ~~Counter-drug~~the ~~Operations.~~generation of revenue while the protest is pending.

~~Law~~18 Enforcement and Security – This operating unit provides international policing and police training, judicial support, immigration support and base operations. In addition, it provides security and personal protection for diplomats, designs, installs and operates security systems and develops security software, smart cards and biometrics for use by government agencies and commercial customers.

ContingencyTable andof Logistics Operations – This operating unit provides peace-keeping support, humanitarian relief, de-mining, worldwide contingency planning and other rapid response services. In addition, it offers inventory procurement and tracking services, equipment maintenance, property control, data entry and mobile repair services. Contents

~~Operations~~The ~~Maintenance~~government ~~and~~contracts ~~Construction~~for ~~Management –~~which ~~This~~we ~~operating~~compete ~~unit~~typically ~~provides~~have ~~facility~~multiple ~~and~~option ~~equipment~~periods, ~~maintenance~~ and ~~control~~if we ~~and~~fail ~~custodial~~to ~~and~~win ~~administrative~~a ~~services~~contract or a task order, we generally will be unable to compete again for that contract for several years. InIf ~~addition~~we fail to win new contracts or to receive renewal contracts upon re-competition, it ~~provides~~may ~~civil,~~result ~~electrical,~~in ~~infrastructure,~~additional ~~environmental~~costs and expenses ~~mechanical~~and ~~engineering~~possible loss of revenue, and ~~construction~~we ~~management~~will ~~services~~not have an opportunity to compete for these contract opportunities again until such contracts expire.

~~Specialty~~Because ~~Aviation~~of ~~and~~the ~~Counter-drug~~nature ~~Operations –~~of ~~This~~our ~~operating~~business, ~~unit~~it ~~provides~~is ~~services~~not ~~including~~unusual ~~drug eradication~~for ~~and~~us ~~host~~to ~~nation~~lose ~~pilot~~contracts ~~and~~to ~~crew~~competitors ~~training~~or to gain contracts once held by competitors during re-compete periods.

~~MTSS~~Additionally, ~~Segment~~some ~~Activity~~ contracts simply end as projects are completed or funding is terminated. We have included our most significant contracts by reportable segment in our contract tables in “Item 1. Business”. Contract end dates are included within the tables to better inform investors regarding the potential impact for our most significant contracts for this risk.

~~MTSS,~~Current ~~with~~or ~~revenues~~worsening ofeconomic ~~approximately~~conditions ~~$720.0 million,~~could ~~$700.0 million~~impact ~~and $690~~our business.~~0 million~~ ~~for fiscal years 2007, 2006 and 2005, respectively, offers the following services:~~

~~Aviation~~Our ~~Services~~business ~~and~~may ~~Operations –~~be ~~Our~~adversely ~~aviation~~affected ~~services~~by factors in the U.S. and ~~operations~~other ~~include~~countries ~~aircraft~~that ~~fleet~~are ~~maintenance,~~beyond ~~depot~~our ~~augmentation~~control, ~~aftermarket~~such ~~logistics~~as ~~support~~disruptions in financial markets or downturns in economic activity in specific countries or regions, ~~aircrew~~or ~~services~~in ~~and~~the ~~training~~various industries in which we operate, ~~ground~~adverse ~~equipment~~changes ~~maintenance~~in the availability and ~~modifications~~cost of capital, ~~quality~~interest ~~control~~rates, ~~FAA~~tax rates, ~~certification~~or regulations in the jurisdictions in which we operate. If for any reason we lose access to our currently available lines of credit, ~~facilities~~or ~~and~~if ~~operations~~we ~~support~~are required to raise additional capital, ~~aircraft~~ ~~scheduling~~we ~~and~~may ~~flight~~be ~~planning~~unable ~~and~~to do so in the ~~provisioning~~current ofcredit ~~pilots~~and stock market environment, ~~test~~or ~~pilots~~we ~~and~~may ~~flight~~be ~~crews~~able to do so only on unfavorable terms. ~~Services~~Adverse ~~are~~changes ~~provided~~to ~~from~~financial ~~both~~conditions ~~main~~could ~~base~~jeopardize ~~locations~~certain ~~and~~counterparty ~~forward~~obligations, ~~operating~~including ~~locations~~those of our insurers and financial institutions.

~~Aviation~~In ~~Engineering –~~particular, ~~Our~~if ~~technicians~~the ~~manufacture~~Federal ~~and~~government, ~~install~~due ~~aircraft~~to ~~modification~~budgetary ~~programs~~considerations, ~~for~~accelerates athe ~~broad~~expected ~~range~~reduction ofin combat troops from Iraq, ~~weapons~~fails ~~systems~~to ~~and~~sustain ~~aircraft~~the ~~engines.~~troop Inincreases ~~addition~~in Afghanistan, wereduces ~~provide~~the ~~services~~DoD ~~such~~Operations asand ~~engineering~~Maintenance ~~design,~~budget ~~kit~~or ~~manufacturing~~reduces ~~and~~funding ~~installation,~~for ~~field~~DoS ~~installations,~~initiatives ~~configuration~~in ~~management,~~which ~~avionics~~we ~~upgrades~~participate, ~~cockpit~~ ~~and~~our ~~fuselage~~business, ~~redesign~~financial condition and ~~technical~~results ~~data,~~of ~~drawings~~operations ~~and~~could ~~manual~~be ~~revisions~~adversely affected.

~~Aviation~~Furthermore, ~~Ground~~although ~~Equipment~~we ~~Support –~~believe ~~Our~~that ~~services~~our ~~include~~current ~~ground~~sources ~~equipment~~of ~~support,~~liquidity ~~maintenance~~will ~~and~~enable ~~overhaul,~~us to continue to perform under ~~modifications~~our existing contracts and ~~upgrades,~~further ~~corrosion~~grow ~~control~~our business, ~~engine~~we ~~rebuilding,~~cannot ~~hydraulic~~assure ~~and~~you ~~load~~that ~~testing~~will ~~and~~be ~~serviceability~~the ~~inspections~~case. WeA ~~provide~~longer ~~these~~term ~~services~~credit ~~worldwide~~crisis ~~and~~could ~~offer~~adversely ~~both~~affect ~~short~~our ~~and~~ability ~~long~~to ~~duration field~~obtain ~~teams.~~additional Asliquidity ofor ~~March 30,~~refinance ~~2007,~~existing weindebtedness ~~employed~~on ~~over~~acceptable ~~850~~terms ~~mechanics~~or at all, ~~technicians~~which ~~and~~could ~~support~~adversely ~~personnel~~affect ~~who~~our ~~perform~~business, ~~depot~~financial ~~level~~condition ~~overhaul~~and results of ~~ground~~operations. ~~support~~See ~~equipment~~“Item ~~for U~~7.S. ~~Navy~~Management’s Discussion and ~~U.S.~~Analysis ~~Coast Guard~~of ~~programs~~Financial Condition and ~~provide~~Results ~~depot~~of ~~level~~Operations ~~ground~~— ~~support~~Liquidity ~~equipment~~and atCapital Resources” 20for ~~worldwide~~additional ~~locations~~discussion regarding liquidity.

~~Ground Vehicle Maintenance –~~ Our ~~ground~~operations ~~vehicle~~involve ~~maintenance~~considerable ~~services~~risks ~~include vehicle maintenance, overhaul~~ and hazards. ~~corrosion~~An ~~control~~accident ~~and~~or ~~scheduling~~incident ~~and~~involving ~~work~~our ~~flow~~employees ~~management.~~or Wethird ~~perform~~parties ~~maintenance~~could ~~and~~harm ~~overhaul~~our onreputation, ~~wheeled~~affect ~~and~~our ~~tracked~~ability ~~vehicles~~to compete for ~~the~~business, ~~U.S. Army~~ and ~~U.S.~~if ~~Marine~~not ~~Corps,~~adequately ininsured ~~support~~or ~~of their pre-positioning programs. We also provide overall program management~~indemnified, ~~logistics~~could ~~support,~~adversely ~~tear~~affect ~~down~~our ~~and~~results ~~inspection~~ of ~~equipment~~operations ~~cycled~~and ~~off of pre-positioned ships~~financial condition.

28We are exposed to liabilities that arise from the services we provide. Such liabilities may relate to an accident or incident involving our employees or third parties, particularly where we are deployed on-site at active military installations or in locations experiencing political or civil unrest, or they may relate to an accident or incident involving aircraft or other equipment we have serviced or used in the course of our business. Any of these types of accidents or incidents could involve significant potential claims of injured employees and other third parties and claims relating to loss of or damage to government or third-party property.

~~Explanation~~We ofmaintain ~~Reporting~~insurance ~~Periods~~policies that mitigate risk and ~~Basis~~potential liabilities ofrelated ~~Presentation~~ to our operations. Our insurance coverage may not be adequate to cover those claims or liabilities, and we may be forced to bear

~~The~~19 2005 Acquisition – On December 12, 2004, Veritas Capital and its subsidiary, DynCorp International (formerly known as DI Acquisition Corp.), entered into a purchase agreement with Computer Sciences Corporation and DynCorp whereby DynCorp International agreed to acquire our operating company, a wholly owned subsidiary of DynCorp (the "2005 Acquisition"). DynCorp International assigned its rights to acquire our operating company to DI Finance LLC, or DI Finance, its wholly owned subsidiary. Immediately after the consummation of the 2005 Acquisition on February 11, 2005, DI Finance was merged with and into our operating company. Our operating company survived the merger and is now a wholly owned subsidiary of DynCorp International.

The purchaseTable price for the 2005 Acquisition was $937.0 million after giving effect to a net working capital adjustment in favor of Computer Sciences Corporation in the amount of $65.6 million and $6.1 million of accumulated dividends in connection with the preferred stock issued for satisfaction of the working capital adjustment. Of the $937.0 million purchase price, $775.0 million was paid in cash, $140.6 million was paid to Computer Sciences Corporation in the form of our preferred equity, $6.1 million represents accumulated dividends on the preferred stock issued in connection with the working capital adjustment and the remaining amounts were transaction expenses. Contents

In ~~addition~~substantial tocosts ~~the~~from ~~issuance~~an ofaccident ~~preferred~~or ~~stock~~incident. toSubstantial ~~Computer~~claims ~~Sciences~~in ~~Corporation~~excess ~~and~~of ~~the~~our ~~additional~~related ~~preferred~~insurance ~~stock~~coverage ~~equity~~could ~~investment~~adversely asaffect ~~discussed~~our ~~above,~~operating ~~the~~performance ~~2005~~and ~~Acquisition~~may ~~was~~result ~~funded~~in additional ~~by:~~expenses and possible loss of revenue.

~~Additional~~Furthermore, any accident or incident for which we are liable, even if fully insured, ~~discussion~~may ofresult in negative publicity which could adversely affect our ~~senior~~reputation ~~credit~~among ~~facilities~~our customers, including our government customers, and ~~subordinated~~the ~~notes~~public, iswhich ~~included~~could result in ~~Note 8~~the loss of existing and future contracts or make it more difficult to compete effectively for future contracts. This could adversely affect our ~~consolidated~~operating ~~financial~~performance ~~statements~~and may result in additional expenses and possible loss of revenue.

~~As a~~Political ~~result~~destabilization ofor insurgency in the ~~2005~~regions ~~Acquisition,~~in ~~our~~which ~~assets~~we ~~and~~operate ~~liabilities~~may have ~~been~~a ~~adjusted~~material toadverse ~~their~~effect ~~estimated~~on ~~fair value. The excess of the total purchase price over the fair value of~~ our ~~assets~~operating ~~has been allocated to goodwill and other intangible assets~~performance.

~~Reporting~~Certain ~~period~~regions ~~explanation –~~in Aswhich ~~discussed~~we ~~above~~operate are highly unstable. Insurgent activities in the areas in which we operate may cause further destabilization in these regions. There can be no assurance that the regions in which we operate will continue to be stable enough to allow us to operate profitably or at all. During fiscal years 2010, on2009 ~~February 11~~and 2008, revenue ~~2005~~generated from our operations in the Middle East contributed 73%, 64%, and 52% of our ~~operating~~revenue, ~~company~~respectively. ~~was~~Insurgents ~~sold~~in byIraq and Afghanistan have targeted installations where we have personnel, and these insurgents have contributed to ~~Computer~~instability ~~Sciences~~in ~~Corporation~~these countries. This could impair our ability to anattract ~~entity~~and ~~controlled~~deploy bypersonnel ~~Veritas~~to ~~Capital~~perform services in either or both locations. ~~The~~In ~~financial~~addition, ~~statements~~we ~~from~~have ~~March 8~~been required to increase compensation to our personnel as an incentive to deploy them to these regions. To date, ~~2003~~we have been able to ~~February 11~~recover this added cost under the contracts, ~~2005~~but there is no guarantee that future increases, if required, will be able to be transferred to our customers through our contracts. To the ~~period~~extent ofthat we ~~Computer~~are ~~Sciences~~unable ~~Corporation~~to transfer such increased compensation costs to our customers, our operating margins would be adversely impacted, which could adversely affect our operating performance. In addition, increased insurgent activities or destabilization, ~~ownership~~including civil unrest or a civil war in Iraq or Afghanistan, ~~are~~may ~~referred~~lead to asa determination by the ~~"immediate~~U.S. ~~predecessor~~government ~~period"~~to ~~statements~~halt our operations in a particular location, country or region and to perform the services using military personnel. WeFurthermore, ~~refer~~in extreme circumstances, the U.S. government may decide to ~~financial~~terminate ~~statements~~all ~~from~~U.S. government activities, including our operations under U.S. government contracts in a particular location, country or region and ~~after~~to ~~February 12~~withdraw all military personnel. The Obama administration has made policy changes with respect to U.S. government activities in Iraq or Afghanistan. Congressional pressure to reduce, ~~2005~~if asnot eliminate, the ~~"successor~~number ~~period"~~of ~~statements~~U.S. troops in Iraq or Afghanistan may also lead to U.S. government procurement actions that reduce or terminate the services and support we provide in that theater of conflict. Any of the foregoing could adversely affect our operating performance and may result in additional costs and expenses and loss of revenue.

~~Pro forma financial information –~~ We are ~~providing~~exposed the following supplemental comparative financial information on a pro forma and combined basis for the immediate predecessor and successor for the full fiscal year ended April 1, 2005 as if the acquisition was effective at the beginning of the fiscal year. The information is derived from the application of pro forma adjustments to ~~the~~risks ~~historical~~associated ~~statement~~with ofoperating ~~operations of the immediate predecessor for the period from April 3, 2004 to February 11, 2005 as if the 2005 Acquisition occurred on April 3, 2004~~internationally. ~~The statement of operations for the 49 days ended April 1, 2005 represents the historical results of the successor company.~~

~~The pro~~A ~~forma~~large ~~adjustments~~portion ~~are described in the notes to the pro forma statement~~ of ~~operations~~our ~~and~~business ~~are based on available information and assumptions that management believes are reasonable. The pro forma statement of operations~~ is ~~not~~conducted necessarily indicative of the future results of operations of the successor company or results of operations of the successor company that would have actually occurred had the 2005 Acquisition been consummated as of April 3, 2004internationally. ~~Unless otherwise indicated~~Consequently, ~~references~~we inare ~~this~~subject ~~section~~ to ~~results~~a ~~for~~variety ~~the~~of ~~full~~risks ~~year~~that ofare ~~fiscal~~specific ~~2005~~to ~~reflect~~international ~~pro~~operations, ~~forma~~including ~~and combined results of~~ the ~~immediate~~following: predecessor and successor periods. These pro forma results should be read in conjunction with the consolidated financial statements, related notes and other consolidated financial information included elsewhere in this Form 10-K.

29• export regulations that could erode profit margins or restrict exports;

• compliance ~~Pro~~with ~~Forma~~the ~~Financial~~U.S. ~~Information~~ Foreign Corrupt Practices Act;

	Immediate Predecessor
			Successor					Pro Forma Combined Fiscal Year Ended April 1, 2005
(Dollars in thousands)	April 3, 2004 to February 11, 2005		49 Days Ended April 1, 2005		Adjustments
Revenues	$	1,654,305	$	266,604	$	–		$	1,920,909
Cost of services		(1,496,109)		(245,406)		–			(1,741,515)
Selling, general and administrative expenses		(57,755)		(8,408)		775	(1)		(65,388)
Depreciation and amortization expense		(5,922)		(5,605)		(34,009)	(2)		(45,536)
Total costs and expenses		(1,559,786)		(259,419)		(33,234)			(1,852,439)
Operating income		94,519		7,185		(33,234)			68,470
Interest expense		–		(8,054)		(47,414)	(3)		(55,468)
Interest on mandatory redeemable shares		–		(2,182)		(18,960)	(4)		(21,142)
Interest income		170		7		–			177
Income (loss) before income taxes		94,689		(3,044)		(99,608)			(7,963)
Provision for income taxes		(34,956)		(60)		30,153	(5)		(4,863)
Net income (loss)	$	59,733	$	(3,104)	$	(69,455)		$	(12,826)
Segment Information
Revenues:
Government Services	$	1,059,713	$	173,007	$	–		$	1,232,720
Maintenance and Technical Support Services		594,480		93,674		–			688,154
Other		112		(77)		–			35
Consolidated	$	1,654,305	$	266,604	$	–		$	1,920,909
Operating income:
Government Services	$	68,198	$	3,447	$	(24,821)		$	46,824
Maintenance and Technical Support Services		27,755		3,662		(8,106)			23,311
Other		(1,434)		76		(307)			(1,665)
Consolidated	$	94,519	$	7,185	$	(33,234)		$	68,470
Cash flow data:
Net cash used in operating activities	$	(2,092)	$	(31,240)	$	–		$	(33,332)
Net cash used in investing activities		(10,707)		(869,394)		–			(880,101)
Net cash provided by financing activities		14,325		906,072		–			920,397

•

the burden and cost of compliance with foreign laws, treaties and technical standards and changes in those regulations;

		Year Ended April 1, 2005
Interest on Term Loan		$	21,735
Interest on Senior Subordinated Notes			30,400
Senior Administrative Agent Fee			100
Undrawn Facility Fee			375
Amortization of Deferred Financing Fees			2,858
	Total Expense	$	55,468

•

contract award and funding delays;

30• potential restrictions on transfers of funds;

~~Results~~• offoreign ~~Operations~~ currency fluctuations;

~~Fiscal~~• ~~Year~~import ~~Ended~~and ~~March 30,~~export ~~2007~~duties ~~Compared~~and tovalue ~~Fiscal~~added ~~Year Ended March 31, 2006~~ taxes;

~~The~~20 ~~following tables set forth, for the periods indicated, our consolidated results of operations, both in dollars and as a percentage of revenues:~~

	Successor
	Fiscal Year Ended
(Dollars in thousands)	March 30, 2007			March 31, 2006
Revenues	$	2,082,274	100.0%	$	1,966,993	100.0%
Cost of services		(1,817,707)	(87.3%)		(1,722,089)	(87.5%)
Selling, general and administrative expenses		(107,681)	(5.2%)		(97,520)	(5.0%)
Depreciation and amortization expense		(43,401)	(2.1%)		(46,147)	(2.4%)
Operating income		113,485	5.4%		101,237	5.1%
Interest expense		(58,412)	(2.8%)		(56,686)	(2.9%)
Interest on mandatory redeemable shares		(3,002)	(0.1%)		(21,142)	(1.1%)
Loss on early extinguishment of debt and preferred stock		(9,201)	(0.4%)		–	0.0%
Net earnings from affiliates		2,913	0.1%		–	0.0%
Interest income		1,789	0.1%		461	0.0%
Income before taxes		47,572	2.3%		23,870	1.1%
Provision for income taxes		(20,549)	(1.0%)		(16,627)	(0.8%)
Net income	$	27,023	1.3%	$	7,243	0.3%

~~Consolidated~~ • transportation delays and interruptions;

~~Revenues –~~• ~~Revenues~~uncertainties inarising ~~the~~from ~~fiscal~~foreign ~~year~~local ~~ended~~business ~~March 30,~~practices 2007 increased by $115.3 million, or 5.9%, as compared with the fiscal year ended March 31, 2006. 82% of the increase is attributable to the GS segment, with the remaining 18% attributable to the MTSS segment. The increase, as more fully described in the results by segment, is primarily a result of additional services provided by the GS segment under the African Peacekeeping and ~~Air-Wing~~ ~~drug~~cultural eradication contracts. In addition, a higher number of international police liaison officers were deployed in the Middle East under the Civilian Police program and increased aviation maintenance services were provided by the MTSS segment. considerations;

~~Costs~~• ofrequirements services – Costs of services are comprised of direct labor, direct material, subcontractor costs, other direct costs and overhead. Other direct costs include travel, supplies and other miscellaneous costs. Costs of services in the fiscal year ended March 30, 2007 increased by ~~$95.6 million,~~foreign ~~or 5.6%,~~governments ~~compared~~that ~~with~~we ~~the~~locally ~~fiscal~~invest ~~year ended March 31, 2006. As~~ a ~~percentage~~minimum oflevel ~~revenue, costs of services decreased to 87.3% for fiscal year ended March 30, 2007 from 87.5% for fiscal year ended March 31, 2006. The factors contributing to the decrease in cost of services~~ as apart ~~percentage~~ of ~~revenue~~our were (i) continued strong performance of fixed-price task orders under the Civilian Police and Air-Wing programs; (ii) improved contract mix resulting from a larger proportion of higher-margin fixed-price and time-and-materials contracts; ~~(iii) contract~~with ~~modifications~~them, ~~for~~which ~~construction~~may ~~efforts~~not inyield ~~Afghanistan~~any ~~completed in earlier periods~~return; and (iv) wage pass-through claims within the MTSS segment. These factors were offset by: (i) operating costs in excess of contract funding to complete a base camp in Iraq in the second quarter of fiscal 2007; and (ii) the suspension of a security contract with a customer in Saudi Arabia.

31• potential military conflicts, civil strife and political risks.

~~Selling,~~While ~~general~~we have and ~~administrative~~will ~~expenses~~continue ~~("SG&A") – SG&A primarily relates~~ to ~~functions~~adopt ~~such~~measures as management, legal, financial accounting, contracts and administration, human resources, management information systems, purchasing and business development. SG&A is impacted by growth in our underlying business, various initiatives to ~~improve~~reduce ~~organizational capability, compliance and systems improvements. SG&A in~~ the ~~fiscal~~potential ~~year~~impact ~~ended March 30, 2007 increased $10.2 million, or 10.4%, compared with the fiscal year ended March 31, 2006. In addition, as a percentage~~ of ~~revenue,~~losses ~~SG&A~~resulting ~~increased slightly to 5.2% for the fiscal year ended March 30, 2007~~ from ~~5.0% for~~ the ~~fiscal~~risks ~~year~~of ~~ended March 31,~~our ~~2006. Factors contributing to the increase for the fiscal year~~foreign ~~ended March 30, 2007 include an increase in~~ business ~~development costs and an increase in corporate administrative costs~~, ~~primarily~~we ~~the~~cannot ~~result~~ensure ofthat ~~developing~~such ~~these~~measures ~~functions~~will asbe ~~an independent company~~adequate. In addition, fiscal 2007 SG&A includes $6.5 million related to severance expenses for certain former executives and bonus compensation associated with the Company's Equity Offering. Offsetting these increases was a $7.0 million reduction in bad debt expense compared to fiscal 2006.

~~Depreciation~~Our ~~and~~IDIQ ~~amortization –~~contracts ~~Depreciation~~are ~~and~~not ~~amortization~~firm inorders ~~the~~for ~~fiscal~~services, and ~~year~~we ~~ended~~may ~~March 30,~~never ~~2007~~receive ~~decreased $2.7 million,~~revenue orfrom 6%these contracts, aswhich ~~compared~~could ~~with~~adversely ~~the~~affect ~~fiscal~~our ~~year~~operating ~~ended March 31, 2006~~performance.

~~Interest~~Many ~~expense –~~of our ~~Interest~~government ~~expense~~contracts inare ~~the~~IDIQ ~~fiscal~~contracts, ~~year~~which ~~ended~~are ~~March 30,~~often ~~2007~~awarded ~~increased~~to bymultiple $1contractors.~~7 million,~~ ~~or 3~~The award of an IDIQ contract does not represent a firm order for services.0% Generally, asunder ~~compared~~an ~~with~~IDIQ contract, the ~~fiscal~~government ~~year~~is ~~ended~~not ~~March 31,~~obligated ~~2006.~~to ~~The~~order ~~interest~~a minimum ~~expense~~of ~~incurred~~services ~~relates~~or tosupplies ~~our~~from ~~Senior~~its ~~Secured~~contractor, ~~Credit~~irrespective ~~Facility~~of the total estimated contract value. Furthermore, ~~revolving~~under ~~credit~~an ~~facility~~IDIQ contract, ~~senior~~the ~~subordinated~~customer ~~notes and~~develops ~~amortization~~requirements for task orders that are competitively bid against all of ~~deferred~~the ~~financing~~contract awardees, ~~fees~~usually under a best-value approach. ~~The~~However, ~~increase~~many iscontracts ~~due~~also topermit the ~~higher~~government ~~interest~~customer ~~expense~~to ~~related~~direct work to ~~the~~a ~~Senior~~specific ~~Secured~~contractor. ~~Credit~~Our ~~Facility~~Civilian ~~from~~Police, ~~increasing~~Contract ~~variable~~Field ~~interest~~Team ~~rates~~and ~~during~~LOGCAP ~~the~~IV ~~fiscal year~~programs ~~ended~~are ~~March 30,~~three ~~2007~~of our contracts performed under IDIQ contracts. ~~Partially~~We ~~offsetting~~may ~~the~~not ~~higher~~win ~~variable~~new ~~rate~~task ~~interest~~orders ~~expense~~under ~~was~~these ~~lower~~contracts ~~interest~~for ~~incurred~~various onreasons, ~~the~~such ~~senior~~as ~~subordinated~~failing ~~notes~~to rapidly deploy personnel or high prices, which would have aan ~~fixed~~adverse ~~interest~~effect ~~rate~~on our operating performance and may result in additional expenses and loss of 9revenue.5 There can be no assurance that our existing IDIQ contracts will result in actual revenue during any particular period or at all. In fiscal years 2010, 2009 and 2008, 76%, ~~due~~ to73% ~~the~~and ~~partial~~70% ~~redemption~~of inour ~~connection~~revenue, ~~with~~respectively, ~~the~~was attributable ~~Equity~~to ~~Offering~~IDIQ contracts.

~~Interest~~Our oncost ~~mandatory~~of ~~redeemable~~performing ~~shares –~~under ~~Interest~~time-and-materials onand ~~the~~fixed-price ~~mandatory~~contracts ~~redeemable~~may ~~shares, or preferred stock, was~~exceed ~~$3.0 million~~our ~~for the fiscal year ended March 30~~revenue, ~~2007,~~which ~~compared~~would toresult ~~$21.1 million for the fiscal year ended March 31, 2006. All of our outstanding preferred stock was redeemed~~ in ~~connection with our Equity Offering in May 2006, resulting in~~ a ~~shorter~~recorded ~~time~~loss ~~outstanding,~~on ~~compared to~~ the ~~fiscal year ended March 31, 2006~~contracts.

~~Loss~~Our ongovernment ~~debt~~contract ~~extinguishment~~services have three distinct pricing structures: cost-reimbursement, time-and-materials ~~preferred~~and ~~stock –~~fixed-price. InWith ~~conjunction~~cost-reimbursement ~~with~~contracts, ~~our~~so ~~Equity~~long ~~Offering~~as inactual ~~May 2006~~costs incurred are within the contract funding and allowable under the terms of the contract, we are entitled ~~incurred:~~to ~~(i)~~ reimbursement of the costs plus a ~~premium~~stipulated offixed-fee $5and, in some cases, an incentive-based award fee.~~7 million~~ ~~associated~~We ~~with~~assume additional financial risk on time-and-materials and fixed-price contracts, however, because we assume the ~~redemption~~risk of ~~all~~performing ofthose contracts ~~our~~at ~~outstanding~~the ~~preferred~~stipulated ~~stock;~~prices ~~(ii) a~~or ~~premium~~negotiated ofhourly/daily $2rates.~~7 million~~ ~~related~~If towe ~~the~~do ~~redemption~~ not accurately estimate ultimate costs and control costs during performance of the work, we could lose money on a ~~portion~~particular contract or have lower than anticipated margins. Also, we assume the risk of ~~our~~damage ~~senior~~or ~~subordinated~~loss ~~notes;~~to government property, and ~~(iii) the~~we ~~write~~are responsible for third-~~off~~party ofclaims $0under fixed-price contracts.~~8 million~~ inThe ~~deferred~~failure ~~financing~~to ~~costs~~meet ~~associated~~contractually ~~with~~defined ~~the~~performance ~~early~~standards ~~retirement~~may ofresult in a ~~portion~~loss of ~~our~~a ~~senior~~particular ~~subordinated~~contract ~~notes~~or lower-than-anticipated margins. This could adversely affect our operating performance and may result in additional costs and expenses and possible loss of revenue.

~~Tax~~A ~~expense~~negative ~~and~~audit ~~tax~~or ~~rate –~~other Weactions ~~had~~by ~~an effective tax rate of 43.2% for~~ the ~~fiscal year ended March 30, 2007~~U. ~~In connection with our Equity Offering, we redeemed, at a premium, all of our mandatory redeemable shares, or preferred stock, outstanding~~S. ~~This~~government ~~premium~~could isadversely ~~considered~~affect ~~a discreet item for tax purposes and is not deductible. In addition, we incurred interest expense on~~ our ~~mandatory~~operating ~~redeemable shares that is not deductible~~performance. ~~Our effective tax rate before consideration of the discreet item and the interest on mandatory redeemable shares was 36.5%.~~

32At any given time, many of our contracts are under review by the DCAA and other government agencies. These agencies review our contract performance, cost structure and compliance with applicable laws, regulations and standards. Such DCAA audits may include contracts under which we have performed services in Iraq and Afghanistan under especially demanding circumstances.

~~Results~~The byDCAA ~~Segment~~ also reviews the adequacy of, and our compliance with, our internal control systems and policies, including our labor, billing, accounting, purchasing, property, estimating, billing, compensation and

~~The~~21 following table sets forth the revenues and operating income for our GS and MTSS operating segments, both in dollars and as a percentage of our consolidated revenues for segment revenue and as a percentage of segment specific revenue for operating income, for the fiscal year ended March 30, 2007 as compared to the fiscal year ended March 31, 2006.

		Successor
		For the Fiscal Year Ended
(Dollars in thousands)		March 30, 2007			March 31, 2006
Revenues
	Government Services	$	1,359,556	65.3%	$	1,264,586	64.3%
	Maintenance & Technical Support Services		722,718	34.7%		702,407	35.7%
Consolidated		$	2,082,274	100.0%	$	1,966,993	100.0%
Operating Income
	Government Services		97,515	7.2%		93,637	7.4%
	Maintenance & Technical Support Services		18,323	2.5%		10,017	1.4%
	Other(1)		(2,353)	NA		(2,417)	NA
Consolidated		$	113,485	5.5%	$	101,237	5.1%

~~Government~~ management ~~Services~~ information systems. Any costs found to be improperly allocated to a specific contract will not be reimbursed. In addition, government contract payments received by us for allowable direct and indirect costs are subject to adjustment after audit by government auditors and repayment to the government if the payments exceed allowable costs as defined in the government contracts.

~~Revenue~~ Audits have been completed on our incurred contract costs through fiscal year 2005 and the Defense Contract Management Agency has approved these costs through fiscal year 2004. Audits and approvals are continuing for subsequent periods. We cannot predict the outcome of such audits and what, if any, impact such audits may have on our future operating performance. For further discussion, see “Item 3. Legal Proceedings” below.

~~Revenues~~We ~~for~~are ~~the~~subject ~~fiscal~~to ~~year~~investigation ~~ended~~by ~~March 30,~~the ~~2007 increased $95~~U.~~0 million~~S. government, orwhich ~~7.5%,~~could asresult ~~compared~~in ~~with~~our ~~the~~inability ~~fiscal~~to ~~year~~receive ~~ended~~government ~~March 31,~~contracts ~~2006. The~~and ~~increase~~could ~~primarily~~adversely ~~reflected~~affect ~~the~~our ~~following:~~future operating performance.

~~partially~~As a U.S. government contractor, we must comply with laws and regulations relating to U.S. government contracts that do not apply to a ~~offset~~commercial company. From time to time we are investigated by: government agencies with respect to our compliance with these laws and regulations. If we are found to be in violation of the law, we may be subject to civil or criminal penalties or administrative sanctions, including contract termination, the assessment of penalties and suspension or prohibition from doing business with U.S. government agencies. For example, many of the contracts we perform in the U.S. are subject to the Service Contract Act, which requires hourly employees to be paid certain specified wages and benefits. If the U.S. Department of Labor determines that we violated the Service Contract Act or its implementing regulations, we could be suspended from being awarded new government contracts or renewals of existing contracts for a period of time, which could adversely affect our future operating performance. We are subject to a greater risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities than companies with solely commercial customers. In addition, if an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeiture of profits, suspension of payments, fines and suspension or prohibition from doing business with the U.S. government.

33Furthermore, our reputation could suffer serious harm if allegations of impropriety were made against us. If we were suspended or prohibited from contracting with the U.S. government, or any significant U.S. government agency, if our reputation or relationship with U.S. government agencies was impaired or if the U.S. government otherwise ceased doing business with us or significantly decreased the amount of business it does with us, it could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

~~Operating~~U.S. ~~income~~ government contractors like us that provide support services in theaters of conflict such as Iraq and Afghanistan have come under increased scrutiny by agency inspector generals, government auditors and congressional committees. Investigations pursued by any or all of these groups may result in adverse publicity for us and consequent reputational harm, regardless of the underlying merit of the allegations being investigated. As a matter of general policy, we have cooperated and expect to continue to cooperate with government inquiries of this nature.

~~Operating~~The ~~income~~expiration ~~for~~of ~~the~~our ~~fiscal~~collective ~~year~~bargaining ~~ended~~agreements ~~March 30,~~could ~~2007~~result in increased ~~$3.9 million,~~operating costs or ~~4.1%~~work disruptions, aswhich ~~compared~~could potentially ~~with~~affect ~~the~~our ~~fiscal~~operating ~~year ended March 31, 2006~~performance. ~~The increase primarily reflected the following:~~

~~partially~~As of April 2, 2010, we had approximately 22,300 employees located ~~offset~~in 38 countries around the world. Of these employees, approximately 3,000 are represented by: labor unions. As of April 2, 2010, we had approximately 76 collective bargaining agreements with these unions. The length of these agreements varies, with the longest expiring in September 2012. There can be no assurance that we will not experience labor disruptions associated with the expiration or renegotiation of collective bargaining agreements or otherwise. We

~~Maintenance &~~22 ~~Technical Support Services~~

Revenues Table of Contents

~~Revenues~~ could ~~for~~experience ~~the~~a ~~fiscal~~significant ~~year~~disruption ~~ended~~of ~~March 30,~~operations ~~2007~~and increased ~~$20.3 million,~~operating orcosts ~~2.9%,~~as ~~compared~~a ~~with~~result ~~the~~of ~~fiscal~~higher ~~year~~wages ~~ended~~or ~~March 31~~benefits paid to union members, ~~2006.~~which ~~The~~could adversely affect our operating ~~increase~~performance ~~primarily~~and ~~reflected~~may ~~the~~result ~~following:~~in additional expenses and possible loss of revenue.

~~partially~~Proceedings against us in domestic and ~~offset~~foreign ~~by:~~courts could result in legal costs and adverse monetary judgments, adversely affecting our operating performance and causing harm to our reputation.

34We are involved in various claims and lawsuits from time to time. For example, we are a defendant in two consolidated lawsuits seeking unspecified damages brought by citizens and certain provinces of Ecuador. The basis for the actions, both pending in the U.S. District Court for the District of Columbia, arises from our performance of a DoS contract for the eradication of narcotic plant crops in Colombia. The lawsuits allege personal injury, property damage and wrongful death as a consequence of the spraying of narcotic crops along the Colombian border adjacent to Ecuador. In the event that a court decides against us in these lawsuits, and we are unable to obtain indemnification from the government, Computer Sciences Corporation in one of the cases, or contributions from the other defendants, we may incur substantial costs, which could have a material adverse effect on our results. An adverse ruling in these cases could also adversely affect our reputation and have a material adverse effect on our ability to win future government contracts.

~~Operating~~Other ~~income~~ litigation in which we are involved includes wrongful termination and other adverse employment actions, breach of contract, personal injury and property damage actions filed by third parties. Actions involving third-party liability claims generally are covered by insurance; however, in the event our insurance coverage is inadequate to cover such claims, we will be forced to bear the costs arising from a judgment. We do not have insurance coverage for adverse employment and breach of contract actions, and we bear all costs associated with such litigation and claims.

~~Operating~~We ~~income~~are ~~for~~subject ~~the~~to ~~fiscal~~certain ~~year~~U.S. ~~ended~~laws ~~March 30~~and regulations, ~~2007~~which ~~increased~~are ~~$8.3 million,~~the orsubject ~~83%,~~of ~~compared~~rigorous ~~with~~enforcement by the ~~fiscal~~U.S. ~~year~~government; ~~ended~~our noncompliance ~~March 31,~~with ~~2006. The~~such ~~increase~~laws ~~primarily~~and ~~reflected~~regulations ~~the~~could ~~following:~~adversely affect our future operating performance.

~~partially~~We may be ~~offset~~subject to qui tam litigation brought by: private individuals on behalf of the government under the Federal Civil False Claims Act, which could include claims for treble damages. Government contract violations could result in the imposition of civil and criminal penalties or sanctions, contract termination, forfeiture of profit, and/or suspension of payment, any of which could make us lose our status as an eligible government contractor. We could also suffer serious harm to our reputation. Any interruption or termination of our government contractor status could significantly reduce our future revenue and profits.

35To the extent that we export products, technical data and services outside the United States, we are subject to U.S. laws and regulations governing international trade and exports, including but not limited to, the International Traffic in Arms Regulations, the Export Administration Regulations and trade sanctions against embargoed countries, which are administered by the Office of Foreign Assets Control within the Department of the Treasury. Failure to comply with these laws and regulations could result in civil and/or criminal sanctions, including the imposition of fines upon us as well as the denial of export privileges and debarment from participation in U.S. government contracts.

~~Fiscal~~We ~~Year~~do ~~Ended~~business ~~March 31~~in certain parts of the world that have experienced, ~~2006~~or ~~Compared~~may be susceptible to, ~~Fiscal~~governmental ~~Year~~corruption. ~~Ended~~Our ~~April 1~~corporate policy requires strict compliance with the U.S. Foreign Corrupt Practices Act and with local laws prohibiting payments to government officials for the purpose of obtaining or keeping business or otherwise obtaining favorable treatment. Improper actions by our employees or agents could subject us to civil or criminal penalties, ~~2005~~including ~~Pro~~substantial ~~Forma~~ monetary fines, as well as disgorgement, and could damage our reputation and, therefore, our ability to do business.

~~The~~23 ~~following tables set forth, for the periods indicated, our historical and pro forma combined results of operations, both in dollars and as a percentage of revenues:~~

	Successor
(Dollars in thousands)	Fiscal Year Ended March 31, 2006			Pro Forma Combined Fiscal Year Ended April 1, 2005(1)
Revenues	$	1,966,993	100.0%	$	1,920,909	100.0%
Cost of services		(1,722,089)	(87.5%)		(1,741,515)	(90.7%)
Selling, general and administrative expenses		(97,520)	(5.0%)		(65,388)	(3.4%)
Depreciation and amortization expense		(46,147)	(2.4%)		(45,536)	(2.4%)
Operating income		101,237	5.1%		68,470	3.5%
Interest expense		(56,686)	(2.9%)		(55,468)	(2.9%)
Interest on mandatory redeemable shares		(21,142)	(1.1%)		(21,142)	(1.1%)
Interest income		461	0.0%		177	0.0%
Income before taxes		23,870	1.1%		(7,963)	(0.5%)
Provision for income taxes		(16,627)	(0.8%)		(4,863)	(0.3%)
Net income (loss)	$	7,243	0.3%	$	(12,826)	(0.8%)

~~The~~Competition ~~following~~in ~~discussion~~our ~~provides~~industry acould ~~comparison~~limit ofour ~~the~~ability ~~results~~to ofattract ~~operations~~and ~~for~~retain ~~the~~customers ~~successor company for the fiscal year ended March 31,~~or ~~2006 with the pro forma combined results of operations for the Company for the fiscal year ended April 1~~employees, ~~2005.~~which ~~The~~could ~~discussion~~result isin ~~provided~~a ~~for~~loss ~~comparative purposes only, but the value~~ of ~~such~~revenue and/or a ~~comparison~~ ~~may~~reduction ~~be limited. The information~~ in ~~this~~margins, ~~section~~which ~~should~~could ~~be read~~adversely inaffect ~~conjunction~~our ~~with~~operating ~~the consolidated financial statements and the related notes contained elsewhere in this Form 10-K~~performance.

~~Consolidated~~ We compete with various entities across geographic and business lines. Competitors of our GSDS operating segment are typically various solution providers that compete in any one of the service areas provided by those business units. Competitors of our GPSS operating segment are typically large defense services contractors that offer services associated with maintenance, training and other activities. Competitors of our GLS operating segment are typically contractors that provide services in Iraq and Afghanistan or companies that provide language interpretation and translation services both domestically and internationally.

~~Revenues –~~We ~~Total~~compete ~~revenues~~on ~~for~~a ~~the~~number ~~fiscal~~of ~~year ended March 31~~factors, ~~2006~~including ~~were $1,967.0 million,~~our anbroad ~~increase~~range of ~~$46.1 million~~services, orgeographic ~~2.4%~~reach, ~~from~~mobility ~~$1,920~~and response time.~~9 million~~ Foreign ~~for~~competitors ~~the~~may ~~fiscal~~obtain ~~year~~an ~~ended~~advantage ~~April 1,~~over ~~2005~~us ~~pro~~in ~~forma~~competing for U.S. ~~For~~government contracts and attracting employees to the ~~twelve~~extent ~~months~~we ~~ended March 31,~~are ~~2006~~required by U.S. laws and ~~April 1,~~regulations ~~2005,~~to ~~approximately~~remit ~~34%,~~to ~~38%~~the ~~and~~U.S. ~~28%~~government ~~and~~statutory ~~approximately~~payroll ~~27%,~~withholding ~~39%~~amounts for ~~and~~U.S. ~~34%~~nationals ofworking ~~our~~on ~~revenues~~U.S. ~~were~~government ~~derived~~contracts ~~from~~while ~~fixed-price, time-and-materials,~~employed ~~and~~by ~~cost~~our majority-~~reimbursement~~owned ~~contracts~~foreign subsidiaries, ~~respectively~~since foreign competitors may not be similarly obligated by their governments.

~~Revenues from~~Some of our GScompetitors ~~segment~~may ~~for~~have ~~the~~greater ~~fiscal~~resources ~~year~~or ~~ended~~are ~~March 31,~~otherwise ~~2006~~better ~~were~~positioned ~~$1,264.6 million,~~to ancompete ~~increase~~for ofcontract ~~$31~~opportunities.~~9 million,~~ orFor ~~2.6%~~example, ~~from $1,232.7 million for~~ ~~the~~original ~~fiscal~~equipment ~~year~~manufacturers ~~ended April 1, 2005 pro forma. Increases in this segment include $79.0 million of revenue under the International Narcotics and Law Enforcement Air-Wing program as a result of a new contract~~ that ~~went~~also ~~into effect on November 1, 2005 for operations, and added work to~~ provide ~~helicopter~~aftermarket support ~~for~~services ~~ground~~have eradication efforts in Afghanistan, $27.1 million of new work providing hurricane relief efforts along the Gulf Coast, $26.0 million due to added work under our Africa Peacekeeping contract with the DoS and $12.8 million of additional construction work under the Worldwide Personal Protective Services program. These increases were partially offset by a ~~reduction~~distinct ofadvantage ~~$16.6 million~~in ~~under~~obtaining ~~the Civilian~~service ~~Police~~contracts ~~program~~for ~~due~~aircraft tothey ~~the~~have ~~timing of various construction efforts in the Middle East~~manufactured, ~~and~~as ~~$67.5 million~~they ~~from~~frequently ahave ~~series~~better ofaccess ~~contracts~~ to ~~provide~~replacement ~~security~~ and ~~logistics~~service ~~support~~parts, ~~to various~~as ~~U.S.~~well ~~government construction efforts in the Middle East~~ as aan ~~subcontractor.~~existing ~~This~~technical ~~type~~understanding of ~~subcontract~~the ~~effort~~platform ~~was~~they ~~typically~~have ~~short~~manufactured. ~~term~~In ~~with delayed payments~~addition, ~~and therefore~~ we ~~decided~~are toat ~~exit~~a ~~this~~disadvantage ~~line of~~when ~~business~~bidding ~~until~~for itcontracts ~~can~~up befor ~~performed~~re-competition infor awhich ~~more~~we ~~stable~~are ~~environment~~not ~~with improved financial terms. Further offsetting~~ the ~~increases~~incumbent ~~described~~provider, ~~above~~because ~~was~~incumbent aproviders ~~reduction in our DynMarine Services of Virginia~~are ~~LLC~~frequently ~~business~~able ofto ~~$32.0 million~~capitalize ~~due~~on tocustomer ~~the~~relationships, ~~discontinuance~~technical ofknowledge ~~our~~and ~~work~~pricing ~~under~~experience ~~the~~gained ~~Oceanographics~~from ~~Ships~~their ~~contract~~prior service.

36In addition to the competition we face in bidding for contracts and task orders, we must also compete to attract the skilled and experienced personnel integral to our continued operations. We hire from a limited pool of potential employees, as military and law enforcement experience, specialized technical skill sets and security clearances are prerequisites for many positions. Our failure to compete effectively for employees, or excessive attrition among our skilled personnel, could reduce our ability to satisfy our customers’ needs and increase the costs and time required to perform our contractual obligations. This could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

~~Revenues from~~Loss of our ~~MTSS~~skilled ~~segment for the fiscal year ended March 31~~personnel, ~~2006~~including ~~were~~members ~~$702.4 million, an increase~~ of ~~$14.2 million,~~senior ~~or 2.1%~~management, ~~from~~may ~~$688.2 million~~have for the fiscal year ended April 1, 2005 pro forma. The MTSS increase of $14.2 million was primarily driven by the Life Cycle Contractor Support program increase of $8.5 million due to the addition of the Global Air Traffic Management avionics modification to the contract, an ~~increase~~adverse ineffect ~~the~~on ~~Army~~our ~~Pre-Positioned~~operations ~~Stocks program of $7.8 million~~ and ~~the ramp-up of the AH-1~~/~~UH-1~~or ~~program, which increased $16.9 million since the initial contract award during the first quarter of fiscal 2005. Partially~~our ~~offsetting~~operating ~~this increase was the Contract Field Teams program, which decreased by $10~~performance.~~2 million~~ mainly as a result of reduced workload for maintenance, repair and refurbishment of weapons systems, and the end of the Al Salam program, which reduced revenue by $12.4 million. We withdrew from the Al Salam program due to unfavorable contract terms offered by the customer. Consequently, the customer decided to self perform the maintenance we had been providing. In addition, the Holloman contract decreased by $5.1 million due to the removal of the German F-4s from the contract.

~~Costs~~Our ofcontinued ~~services –~~success ~~Costs~~depends ofin ~~services~~large ~~are~~part ~~comprised~~on ofour ~~direct~~ability ~~labor,~~to ~~direct~~recruit ~~material,~~and ~~subcontractor~~retain ~~costs,~~the ~~other direct~~skilled ~~costs~~personnel ~~and~~necessary ~~overhead.~~to ~~Other~~serve ~~direct~~our ~~costs~~customers ~~include travel~~effectively, ~~supplies~~including ~~and~~personnel ~~other~~with ~~miscellaneous~~extensive ~~costs.~~military ~~Costs~~and oflaw ~~services~~enforcement ~~for~~training ~~the~~and ~~fiscal~~backgrounds. ~~year~~The ~~ended~~proper ~~March 31,~~execution ~~2006 were $1,722.1 million, a decrease~~ of ~~$19.4 million,~~our orcontract ~~1.1%,~~objectives ~~from~~depends ~~$1,741.5 million~~upon ~~for~~ the ~~fiscal~~availability ~~year~~of ~~ended~~quality ~~April 1~~resources, especially ~~2005~~qualified ~~pro forma~~personnel. AsGiven athe ~~percentage~~nature of ~~revenue~~our business, ~~costs~~we ofhave ~~services~~substantial inneed ~~the~~for ~~fiscal~~personnel ~~year~~who ~~ended March 31,~~are ~~2006~~willing ~~was~~to ~~87.5%~~work overseas, afrequently ~~decrease from 90.7%~~ in ~~the~~locations ~~fiscal~~experiencing ~~year~~political ~~ended~~or ~~April 1~~civil unrest, ~~2005~~for ~~pro~~extended ~~forma.~~periods ~~This reduction as a percentage~~ of ~~revenue~~time ~~was~~and ~~due~~often ~~to the following: (i) strong~~on ~~performance~~short onnotice. ~~fixed-price~~We ~~construction~~may ~~projects~~not ~~and~~be onable ~~fixed-price~~to ~~task~~meet ~~orders under~~ the ~~Civilian~~need ~~Police~~for ~~program;~~qualified ~~and~~personnel ~~(ii) improved contract mix resulting from a larger proportion of higher-margin fixed-price and time-and-materials contracts~~ as ~~opposed~~such toneed ~~lower-margin cost reimbursable contracts~~arises.

~~Selling,~~In ~~general and administrative expenses – Selling~~addition, ~~general~~we ~~and~~must ~~administrative expenses primarily relate to~~comply ~~functions~~with ~~such~~provisions asin ~~management,~~U.S. ~~legal,~~government ~~financial accounting,~~ contracts ~~and~~that ~~administration,~~require ~~human~~employment ~~resources,~~of ~~management~~persons ~~information~~with ~~systems,~~specified ~~purchasing~~work ~~and~~experience ~~business development. Selling, general~~ and ~~administrative~~ ~~expenses~~security ~~for the fiscal year ended March 31, 2006 were $97~~clearances.~~5 million,~~ anAn ~~increase~~inability ofto ~~$32.1 million,~~maintain oremployees ~~49.1%,~~with ~~from $65.4 million for~~ the ~~fiscal~~required ~~year~~security ~~ended April 1,~~clearances ~~2005~~could ~~pro~~have ~~forma. In addition, as~~ a ~~percentage~~material ofadverse ~~revenue,~~effect ~~selling, general and administrative expenses were 5.0% for the fiscal year ended March 31, 2006, an increase from 3.4%~~on ~~for the fiscal year ended April 1, 2005 pro forma. This increase was primarily the result of developing~~ our ~~administrative~~ability ~~functions as an independent company, which contributed approximately $15.0 million~~ to ~~the~~win ~~fiscal~~new ~~2006~~business ~~increase.~~and ~~Prior~~satisfy toour ~~the~~existing ~~2005~~contractual ~~Acquisition~~obligations, ~~these~~and ~~services~~could ~~were~~adversely ~~provided~~affect by our ~~predecessor~~operating ~~parent,~~performance ~~Computer~~and ~~Sciences~~may ~~Corporation.~~result Inin ~~addition~~additional ~~to the development of administrative functions, we incurred a higher business development cost of approximately $10.0 million during fiscal 2006. Business development~~ expenses ~~represented~~and ~~$32.0 million~~possible ~~or 33%~~loss of ~~total selling, general and administrative expense~~revenue. ~~Other factors contributing to higher selling, general and administrative expenses in fiscal 2006 include:~~

~~Depreciation~~24 and amortization – Depreciation and amortization for the fiscal year ended March 31, 2006 was $46.1 million, an increase of $0.6 million from $45.5 million for the fiscal year ended April 1, 2005 pro forma. This increase was primarily due to higher depreciation expense. Amortization in the fiscal year ended April 1, 2005 pro forma was based on an estimate of current year amortization. The amortization for the fiscal year ended March 31, 2006 was based on the 2005 Acquisition, which included a step-up in basis of our customer-related intangibles resulting in increased amortization. An independent valuation study was done to allocate the purchase price between goodwill and intangibles.

InterestTable Expense – Interest expense for the fiscal year ended March 31, 2006 was $56.7 million, an increase from $55.5 million for the fiscal year ended April 1, 2005 pro forma. The interest expense incurred related to our Senior Secured Credit Facility, the revolving credit facility and our senior subordinated notes. This interest expense includes interest costs applicable to the fiscal year as well as amortization of deferred financing fees. The increase was primarily due to the increasing interest rates during fiscal 2006. Contents

37The loss of services of any of the members of our senior management could adversely affect our business until a suitable replacement can be found. There may be a limited number of personnel with the requisite skills to serve in these positions, and we may be unable to locate and employ such qualified personnel on acceptable terms.

~~Interest~~If onour ~~mandatory~~subcontractors ~~redeemable shares – Interest on the mandatory redeemable shares,~~ or ~~preferred~~joint ~~stock,~~venture ~~for~~partners ~~the fiscal~~fail ~~year~~to ~~ended~~perform ~~March 31,~~their ~~2006~~contractual ~~was $21.1 million~~obligations, asthen ~~compared~~our toperformance ~~$21.1 million for~~ as the ~~fiscal~~prime ~~year~~contractor ~~ended~~and ~~April 1,~~our ~~2005~~ability ~~pro forma, which gives effect~~ to ~~the~~obtain ~~net~~future ~~working capital~~business ~~settlement.~~could ~~The~~be ~~interest~~materially isand ~~accrued,~~adversely ~~but unpaid~~impacted.

~~Income~~Many ~~tax~~of ~~expense –~~our contracts Weinvolve ~~had~~subcontracts ~~income~~with ~~tax~~other ~~expense~~companies ~~for~~upon ~~the~~which ~~fiscal~~we ~~year~~rely ~~ended~~to ~~March 31,~~perform ~~2006~~a portion of ~~$16~~the services we must provide to our customers.~~6 million,~~ These subcontractors generally perform niche or specialty services for which they have more direct anexperience, ~~increase~~such ofas ~~$11.7 million~~construction, catering services or ~~238.8%~~specialized technical services, ~~from~~or ~~income~~they ~~tax~~have ~~expense~~local knowledge of ~~$4.9 million~~the ~~for~~region in which we will be performing and the ~~fiscal~~ability ~~year~~to ~~ended~~communicate ~~April 1~~with local nationals and assist in making arrangements for commencement of performance. Often, ~~2005~~we ~~pro~~enter ~~forma~~into subcontract arrangements in order to meet government requirements to award certain categories of services to small businesses. ~~The~~A ~~interest~~failure ~~expense~~by ~~related~~one or more of our subcontractors to satisfactorily provide on a timely basis the ~~preferred shares~~agreed-upon issupplies ~~non~~or perform the agreed-~~deductible~~upon ~~for~~services ~~tax~~may ~~purposes~~materially ~~resulting~~and inadversely impact our ability to perform our obligations as the ~~taxable~~prime ~~position~~contractor. Such subcontractor performance deficiencies could result in a customer terminating our contract for ~~the~~default. ~~fiscal~~A ~~year~~default ~~ended~~termination ~~March 31,~~could ~~2006~~expose us to liability and adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

~~Results~~We often enter into joint ventures so that we can jointly bid and perform on a particular project. The success of these and other joint ventures depends, in large part, on the satisfactory performance of the contractual obligations by ~~Segment~~ our joint venture partners. If our partners do not meet their obligations, the joint ventures may be unable to adequately perform and deliver their contracted services. Under these circumstances, we may be required to make additional investments and provide additional services to ensure the adequate performance and delivery of the contracted services. These additional obligations could result in reduced profits or, in some cases, significant losses for us with respect to the joint venture, which could also affect our reputation in the industries we serve.

WeEnvironmental ~~have~~laws ~~aligned~~ and ~~report~~regulations ~~our~~may ~~business~~subject ~~operations~~us ~~through~~to ~~two~~significant ~~operating~~costs ~~segments:~~and GSliabilities ~~and~~that ~~MTSS~~could adversely affect our operating performance.

~~The following~~We ~~table~~are ~~sets~~subject ~~forth~~to ~~the~~numerous ~~revenues~~environmental, legal and ~~operating~~regulatory ~~income~~requirements ~~for~~related to our GSoperations worldwide. In the U.S., these laws and ~~MTSS~~regulations ~~operating~~include ~~segments,~~those ~~both~~governing inthe ~~dollars~~management and asdisposal aof ~~percentage~~hazardous substances and wastes and the maintenance of a safe workplace, primarily associated with our ~~consolidated~~aviation ~~revenues~~services ~~for~~activities, ~~segment~~including ~~revenue~~painting aircraft and handling substances that may qualify as ahazardous ~~percentage~~waste, ofsuch ~~segment~~as ~~specific~~used ~~revenue~~batteries ~~for~~and ~~operating~~petroleum ~~income~~products. In addition to U.S. federal laws and regulations, ~~for~~states ~~the~~and ~~fiscal~~other ~~year~~countries ~~ended~~where ~~March 31~~we do business have numerous environmental, ~~2006~~legal and regulatory requirements by which we must abide. We could incur substantial costs, including clean-up costs, as ~~compared~~a toresult ~~the~~of ~~fiscal~~violations ~~year~~of, ~~ended~~or ~~April 1~~liabilities under, ~~2005~~environmental ~~pro~~laws. ~~forma~~This could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

		Successor			Immediate Predecessor
(Dollars in thousands)		Fiscal Year Ended March 31, 2006			Pro Forma for the Year Ended April 1, 2005
Revenues
	Government Services	$	1,264,586	64.3%	$	1,232,720	64.2%
	Maintenance & Technical Support Services		702,407	35.7%		688,154	35.8%
	Other		–	–		35	0.0%
Consolidated		$	1,966,993	100.0%	$	1,920,909	100.0%
Operating Income
	Government Services		93,637	7.4%		46,824	3.8%
	Maintenance & Technical Support Services		10,017	1.4%		23,311	3.4%
	Other(1)		(2,417)	NA		(1,665)	NA
Consolidated		$	101,237	5.1%	$	68,470	3.6%

Our substantial level of indebtedness may make it difficult for us to satisfy our debt obligations and may adversely affect our ability to obtain financing for working capital, capitalize on business opportunities or respond to adverse changes in our industry.

~~Government~~As ~~Services~~ of April 2, 2010, we had $552.9 million of total indebtedness excluding $170.0 million of additional borrowing capacity under our senior secured credit facility (which gives effect to $30.0 million of outstanding letters of credit). Based on our indebtedness and other obligations as of April 2, 2010, without considering any refinancing (or new financing) in connection with the Merger, we estimate our remaining contractual commitments, including interest associated with our indebtedness and other obligations, will be $800.4 million in

~~Revenues –~~25 Revenues for the fiscal year ended March 31, 2006 were $1,264.6 million, an increase of $31.9 million, or 2.6%, from $1,232.7 million for the fiscal year ended April 1, 2005 pro forma. The revenue increase was due to additional revenue under the International Narcotics and Law Enforcement Air-Wing program as a result of a new contract that went into effect on November 1, 2005 for operation, added work to provide helicopter support for ground eradication efforts in Afghanistan, new work providing hurricane relief efforts along the Gulf Coast, added work under our Africa Peacekeeping contract with the DoS and additional construction work under the Worldwide Personal Protective Services program. These increases were partially offset by a reduction of revenue under the Civilian Police program due to the timing of various construction efforts in the Middle East, and from a series of contracts to provide security and logistics support to various U.S. government construction efforts in the Middle East as a subcontractor. This type of subcontract effort was typically short term with delayed payments, and therefore we decided to exit this line of business until it can be performed in a more stable environment with improved financial terms. Further offsetting the increases described above was a reduction in our DynMarine Services of Virginia LLC business due to the discontinuance of our work under the Oceanographics Ships contract.

38Table of Contents

~~Operating~~ the ~~income –~~aggregate ~~Operating income~~ for the ~~fiscal~~remaining ~~year~~period ~~ended March 31, 2006 was $93.6 million, an increase of $46.8 million, or 100.0%,~~ from ~~$46.8 million for the fiscal year ended~~ April 12, ~~2005~~2010 ~~pro~~through ~~forma.~~fiscal ~~Operating~~the ~~income~~end ~~as a percentage~~ of ~~revenue for the fiscal~~ year ~~ended March 31,~~2015 ~~2006~~ and ~~April 1,~~thereafter ~~2005~~(see ~~pro forma was~~ Item 7.4% ~~and~~Management’s ~~3.8%,~~Discussion ~~respectively.~~and ~~The~~Analysis ~~increase~~of ~~is due to the following:~~Financial ~~(i) strong~~Condition ~~performance on fixed-price construction projects~~ and onResults ~~fixed-price task orders under the Civilian Police program; and (ii) improved contract mix resulting from a larger proportion~~ of ~~higher-margin~~Operations ~~fixed-price~~— ~~and~~Contractual ~~time-and-materials contracts as opposed to lower-margin cost reimbursable contracts~~Commitments). ~~The~~Such ~~Civilian~~indebtedness ~~Police~~could ~~contract~~have ~~changed~~material ~~from cost-reimbursement~~consequences tofor aour ~~combination~~business, ofoperations ~~fixed-price~~ and ~~time-and-materials~~liquidity ~~in February 2004~~position, ~~and~~including the ~~International~~following: Narcotics and Law Enforcement Air-Wing contract had a similar change effective November 2005. Fiscal 2006 also includes the recognition of an equitable adjustment related to our Civilian Police program. The equitable adjustment resulted in earnings of $5.5 million during fiscal 2006.

~~Maintenance &~~• ~~Technical~~our ~~Support~~ability ~~Services~~ to obtain additional financing for working capital, debt service requirements, acquisitions, general corporate or other purposes may be impaired;

~~Revenues –~~• ~~Revenues~~we ~~for~~must ~~the~~use ~~fiscal~~a ~~year~~substantial ~~ended~~portion ~~March 31, 2006 was $702.4 million, an increase~~ of ~~$14.2 million,~~our orcash ~~2.0%,~~flow ~~from~~to ~~$688.2 million~~pay ~~for~~interest ~~the~~and ~~fiscal~~principal ~~year ended April 1, 2005 pro forma. This revenue increase was primarily from the Global Air Traffic Management avionics modification under the Life Cycle Contractor Support program, increases~~ on ~~Army~~our ~~Pre-positioned Stocks Afloat program workload and ramp-up of the AH-1/UH-1 program. These increases were partially offset by reduced workload under Contract Field Teams~~indebtedness, ~~and~~which ~~the~~will ~~withdrawal~~reduce ~~from~~ the Alfunds ~~Salam~~available ~~contract~~for ~~due~~other ~~to unfavorable contract terms offered by the customer. Consequently, the customer decided to self perform the F-15 maintenance we had been providing.~~ purposes;

~~Operating~~• ~~income –~~our ~~Operating~~substantial ~~income~~interest ~~for~~expense ~~the~~may ~~fiscal~~make ~~year~~us ~~ended~~less ~~March 31,~~competitive ~~2006~~on ~~was~~bidding ~~$10.0 million,~~on a decrease of $13.3 million, or 57.1%, from $23.3 million for the fiscal year ended April 1, 2005 pro forma. Operating income as a percentage of revenue for the fiscal year ended March 31, 2006 was 1.4% compared to 3.4% for the fiscal year ended April 1, 2005 pro forma. The primary factors contributing to the decrease were as follows: (i) higher indirect allocations not recoverable under our fixed-price and time-and-materials contracts ofthan ~~$9.5 million; (ii) incurred operating losses of $3.2 million in delivering services to the U.S. Army under~~ our ~~Life Cycle Contractor Support program. We have experienced operational issues in executing to the cost structure outlined in the original proposal.~~ competitors;

~~Liquidity~~• we are more vulnerable to economic downturns and ~~Capital~~adverse ~~Resources~~ industry conditions;

~~Cash~~• ~~generated by operations and borrowings available under~~ our ~~senior~~ability ~~credit~~to ~~facility~~capitalize ~~are~~on ~~our~~business ~~primary~~opportunities ~~sources~~and ofto ~~short-term~~react ~~liquidity.~~to ~~Our~~competitive ~~sources~~pressures ~~of operating cash generally include revenues~~ and ~~the~~adverse ~~reduction~~changes ~~of our working capital, particularly accounts receivable. In addition, we completed our Equity Offering~~ in ~~May 2006 and used the net proceeds, together with cash on hand, to repay a portion of~~ our ~~term~~industry ~~loan.~~as ~~Based~~compared ~~on our ability~~ to ~~generate cash flows from operations and~~ our ~~borrowing~~competitors ~~capacity~~may ~~under~~be ~~the~~compromised ~~senior~~due ~~credit facility, we believe we will have sufficient capital~~ to ~~meet our anticipated short-term needs, including debt obligations for~~ the ~~foreseeable~~high ~~future.~~level of indebtedness;

~~Consolidated~~• ~~Cash~~our ~~Flows~~ subordinated notes cannot be prepaid without a penalty which may limit our ability to proactively reduce our debt levels; and

~~The~~• ~~following~~our ~~table~~ability ~~sets~~to ~~forth~~refinance ~~cash~~indebtedness ~~flow~~may ~~data~~be ~~for the periods indicated therein:~~ limited.

	Fiscal Year Ended
(Dollars in thousands)	March 30, 2007		March 31, 2006		Pro Forma Combined Fiscal Year Ended April 1, 2005
Net Cash provided by (used by) operating activities	$	86,836	$	55,111	$	(33,332)
Net Cash used by investing activities		(7,595)		(6,231)		(880,101)
Net Cash provided by (used by) financing activities		2,641		(41,781)		920,397

The indenture governing our senior subordinated notes and our senior secured credit facility contain various covenants limiting the discretion of our management in operating our business.

39Our indenture governing our senior subordinated notes (the “Notes”) and the agreements governing our senior secured credit facility contain various restrictive covenants that limit our management’s discretion in operating our business. These instruments limit our ability to engage in, among other things, the following activities, except as permitted by those instruments:

~~Operating~~• ~~cash~~incur ~~flow,~~additional aindebtedness ~~key source of the Company's liquidity, was $86.8 million for fiscal year 2007, an increase of $31.7 million,~~ or ~~58%,~~guarantee as compared to the fiscal year 2006. The increase in operating cash flow is primarily attributable to earnings growth of $19.8 million and cash flows provided by working capital of $12.3 million, particularly, accounts payable and accrued liability activities related to the timing of payroll processing, interest payments and customer advances. The timing for payroll processing, interest payments and customer advances can vary from quarter to quarter. Partially offsetting the increased operating cash flow was the payment of special cash bonuses subsequent to the Equity Offering of $3.1 million in the aggregate to our executive officers and certain other members of management. These bonuses rewarded management for their efforts in connection with the successful consummation of our Equity Offering. obligations;

~~Cash flows~~• ~~provided~~repay byindebtedness ~~operating~~prior ~~activities for the fiscal year ended March 31, 2006 was $55.1 million compared~~ to astated use of cash of $33.3 million for the fiscal year ended April 1, 2005 pro forma. Cash provided by operating activities for fiscal year 2006 consisted of $147.4 million of operating income before considering depreciation and amortization, less $77.7 million of cash paid for interest and normal short-term payment timing of trade receivables and payables. Cash flows used in operating activities for the period ended April 1, 2005 pro forma was $33.3 million. This cash use was primarily the result of an increase in accounts receivable and prepaid and other current assets, partially offset by increases in accounts payable and accruals. The primary driver behind the increase in accounts receivable was the timing of collections before and after the 2005 Acquisition. maturities;

~~Cash flows~~• ~~related~~make tointerest ~~investing~~payments ~~consists~~on ~~primarily of cash used for capital expenditures. Net cash used by investing activities was $7.6 million in fiscal year 2007 compared to $6.2 million for~~ the ~~fiscal~~Notes ~~year 2006. Capital spending related to the purchase of property~~ and ~~equipment~~other ~~increased~~indebtedness ~~$4.7 million~~that inis ~~2007~~subordinate ~~from 2006 levels~~ to ~~$7.0 million, primarily due to purchase of vehicles, equipment and for certain leasehold improvements. Capital expenditures are made primarily due to contractual requirements. We customarily lease~~ our ~~vehicles~~indebtedness ~~and equipment~~under ~~and intend to continue our practice of leasing our vehicles and equipment in~~ the ~~future.~~senior ~~Our~~secured ~~Senior~~credit Secured Credit Facility limits our annual capital expenditures related to the purchase of property and equipment to $8.0 million. We do not expect this limitation to have a material effect on our business. facility;

~~Net cash~~• ~~used~~pay bydividends ~~investing~~or ~~activities~~make ~~was~~certain ~~$6.2 million~~other inrestricted fiscal 2006 compared to $880.1 million in fiscal year ended April 1, 2005 pro forma. For fiscal year ended 2006, the primary use of cash was to purchase property and equipment. For fiscal year ended April 1, 2005 pro forma, the primary use of cash was the 2005 Acquisition. payments;

~~Cash flows~~• ~~provided~~make ~~by financing activities were $2.6 million for the fiscal year ended March 30~~investments, ~~2007,~~contribute ~~compared~~capital to cash flows used of $41.8 million for the fiscal year March 31, 2006. Financing activities during the fiscal year 2007 included: (i) gross proceeds received from the Equity Offering of $375.0 million; (ii) payment of Equity Offering costs of approximately $30.0 million; (iii) partial redemption of senior subordinated notes of $28.8 million, including accrued interest; (iv) redemption of all outstanding preferred stock and related accrued and unpaid interest of $216.1 million; and (v) payment of special Class B distribution of $100.0 million. The cash used in financing activities during the fiscal year 2006 was due to the $35.0 million repayment of borrowings under our ~~revolving~~unconsolidated ~~credit~~partnerships ~~facility,~~or ~~the~~execute $3.4 million scheduled repayment of our bank note borrowings, the $1.9 million payment of offering expenses and the $0.5 million purchase of an interest rate cap that limits our exposure to upward movements in variable rate debt. acquisitions;

~~Cash flows~~• ~~used~~create byliens ~~financing~~or ~~activities~~other was $41.8 million for the fiscal year ended March 31, 2006, compared to cash flows provided of $920.4 million fiscal year ended April 1, 2005. The cash used in financing activities during the fiscal year ended March 31, 2006 is due to the repayment of borrowings under our revolving credit facility in the amount of $35.0 million, scheduled repayment of our bank note borrowings in the amount of $3.4 million, payment for equity offering expenses of $1.9 million, payment of debt issuance cost of $0.9 million and the purchase of an interest rate cap for $0.5 million, which limits our exposure to upward movements in variable rate debt. The net cash provided for fiscal year ended April 1, 2005 pro forma is primarily due to the issuance of debt and capital contributions to fund the 2005 Acquisition. encumbrances;

~~Based on~~• ~~our~~repurchase ~~current level of operations, we believe~~ our ~~cash~~outstanding ~~flow~~shares from operations and our available borrowings under our Senior Secured Credit Facility will be adequate to meet our liquidity needs for at least the next twelve months. However, servicing our indebtedness will require a significant amount of cash. Our ability to generate sufficient cash depends on numerous factors beyond our control, and we cannot be assured that our business will generate sufficient cash flow from operations, or ~~that future borrowings will be available to us under~~ our ~~Senior~~public ~~Secured Credit Facility in an amount sufficient to enable us to repay our indebtedness, including the senior subordinated notes, or to fund our other liquidity needs.~~ debt;

40• transfer or sell certain assets or merge or consolidate with another entity;

~~Financing~~ • maintain debt in excess of a percentage of our Accounts Receivable; and

~~Equity~~• ~~Offering~~ allow no more than 50% of our debt to be floating rate.

OnIn ~~May 9~~addition, ~~2006,~~our wesenior ~~consummated~~secured ancredit ~~Equity~~facility ~~Offering~~also ofrequires ~~25,000,000 million~~us ~~shares~~to ofmaintain ~~our~~certain ~~Class A~~financial ~~common~~ratios ~~stock,~~and ~~par~~limits ~~value~~our ~~$0.01~~ability ~~per~~to ~~share, at a~~make ~~price~~capital ~~of $15~~expenditures.00 ~~per~~These ~~share.~~financial ~~The~~ratios ~~gross~~include ~~proceeds~~a ~~from~~minimum ~~the~~interest ~~Equity~~coverage ~~Offering~~ratio ofand ~~$375.0 million,~~a ~~together~~leverage ~~with~~ratio. ~~cash~~The oninterest ~~hand,~~coverage ~~were~~ratio ~~used:~~is ~~(i) to~~the ~~redeem~~ratio ~~all~~ of ~~our~~consolidated ~~outstanding~~EBITDA ~~preferred~~(as ~~stock,~~defined ~~of which $222.8 million~~ in ~~stated~~our ~~amount,~~senior ~~including~~secured ~~accrued~~credit ~~and unpaid dividends thereon, was outstanding as of May 9, 2006; (ii~~facility) to ~~pay~~interest aexpense ~~special Class B distribution in the~~for ~~amount~~the ofpreceding ~~$100.0 million,~~four ~~representing a return of capital of $95~~quarters.~~9 million~~ toThe ~~DIV~~leverage ~~Holding~~ratio ~~LLC,~~is ~~the~~a ~~holder~~ratio of our ~~common~~indebtedness ~~stock;~~ (~~iii) to~~as ~~redeem~~defined ~~$28.0 million~~in of our senior ~~subordinated~~ ~~notes~~secured oncredit ~~June 8, 2006; (iv~~facility) to ~~pay~~consolidated ~~prepayment~~EBITDA ~~penalties~~for ofthe ~~$8.4 million,~~preceding $5four quarters.~~7 million~~ ofThe ~~which~~senior ~~represented~~secured ~~prepayment~~credit ~~penalties~~facility onalso ~~our~~restricts ~~preferred~~the ~~stock and~~maximum ~~$2.7 million~~amount of ~~which represented prepayment penalties on~~ our ~~senior~~capital ~~subordinated~~expenditures ~~notes;~~during ~~and~~each ~~(v) to~~year ~~pay transaction expenses~~ of ~~approximately~~the ~~$30.0 million,~~term ~~including an underwriters' commission~~ of ~~$22.5 million,~~the asenior ~~fee~~secured ofcredit $5facility.~~0 million~~ Subject to ~~Veritas~~certain ~~Capital~~exceptions, ~~and~~our ~~$2.5 million~~capital ofexpenditures ~~miscellaneous~~may ~~fees~~not ~~and expenses related to the Equity Offering.~~

~~Debt~~26 ~~and Other Obligations~~

Long-termTable debt consisted of the following: Contents

	Successor
(Dollars in thousands)	March 30, 2007		March 31, 2006
Term loans	$	338,962	$	341,551
9.5% Senior subordinated notes		292,032		320,000
		630,994		661,551
Less current portion of long-term debt		(37,850)		(2,588)
Total long-term debt	$	593,144	$	658,963

exceed, in any fiscal year, the greater of $15 million or 5% of our consolidated EBITDA for the preceding fiscal year during the term of our senior secured credit facility. Capital expenditures are expenditures that are required by generally accepted accounting principles to be classified as capital expenditures in a statement of cash flows.

~~Future~~If ~~maturities~~we fail to comply with the restrictions in the indenture or our senior secured credit facility or any other subsequent financing agreements, a default may allow the creditors under the relevant instruments, in certain circumstances, to accelerate the related debt and to exercise their remedies there under, which will typically include the right to declare the principal amount of ~~long-term~~such debt, ~~for~~together ~~each~~with accrued and unpaid interest and other related amounts immediately due and payable, to exercise any remedies such creditors may have to foreclose on any of ~~the~~our ~~fiscal~~assets ~~years~~that ~~subsequent~~are subject to ~~March 30~~liens securing such debt and to terminate any commitments they had made to supply us with further funds. Moreover, ~~2007~~any ~~were~~of asour ~~follows:~~other debt that has a cross-default or cross-acceleration provision that would be triggered by such default or acceleration would also be subject to acceleration upon the occurrence of such default or acceleration.

(Dollars in thousands)
2008	$	37,850
2009		3,871
2010		3,096
2011		294,145
2012		–
Thereafter		292,032
Total long-term debt (including current portion)	$	630,994

Our ability to comply with these covenants may be affected by events beyond our control, and an adverse development affecting our business could require us to seek waivers or amendments of covenants, alternative or additional sources of financing or reductions in expenditures. We cannot assure you that such waivers, amendments or alternative or additional financings could be obtained, or if obtained, would be on terms acceptable to us. In addition, the holders of Notes have no control over any waivers or amendments with respect to any debt outstanding other than the debt outstanding under the indenture.

~~Senior~~Servicing ~~Secured~~our ~~Credit~~indebtedness ~~Facility~~ requires a significant amount of cash. Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations, which could adversely affect our financial condition.

OnOur ~~February 11,~~ability ~~2005,~~to wemake ~~entered~~payments ~~into~~on aand ~~senior~~to ~~secured~~refinance ~~credit~~our ~~facility~~indebtedness ~~(the~~depends ~~"Senior~~on ~~Secured~~our ~~Credit~~ability ~~Facility")~~to ~~with~~generate ~~a syndicate of banks~~cash. ~~The~~This, ~~Senior Secured Credit Facility was initially comprised of a senior secured term loan of up~~ to ~~$345.0 million, and~~ a ~~senior~~certain ~~secured revolving credit facility of up to $75.0 million~~extent, ~~subsequently amended~~is tosubject ~~$103.0 million in November 2006. The full amount of the term loans was drawn at the closing~~ to ~~fund~~general ~~the~~economic, ~~2005~~political, ~~Acquisition (see Note 2 to the consolidated~~ financial, ~~statements) and~~competitive, ~~pay~~legislative, ~~related~~regulatory ~~fees~~ and ~~expenses.~~other ~~The~~factors ~~term~~that ~~loans~~ are ~~due~~beyond inour ~~quarterly payments of $0~~control.~~7 million~~ ~~through April 1~~Additionally, ~~2010, and $73.4 million thereafter, with final payment due February 11, 2011. Borrowings under~~ the ~~Senior~~floating ~~Secured~~interest ~~Credit~~rates ~~Facility~~associated ~~are~~with ~~secured by substantially all of~~ our ~~assets~~senior ~~and~~secured ~~the~~credit ~~capital~~facility ~~stock~~became ofunhedged ~~our~~as ~~subsidiaries. The Senior Secured Credit Facility also provides for a commitment guarantee~~ of ~~a maximum of $60.0~~ May ~~million~~24, as2010 ~~amended,~~and ~~for~~float ~~letters~~with ofeither ~~credit.~~the ~~The~~London ~~Senior~~Interbank ~~Secured~~Offered ~~Credit~~Rate ~~Facility~~(“LIBOR”) ~~requires~~or ~~letter of credit fees up to 2.5%, payable quarterly in arrears on~~ the ~~amount~~Prime ~~available for drawing under all letters of credit~~rate.

41We cannot assure you, however, that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior secured credit facility in an amount sufficient to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness, including our senior secured credit facility, on commercially reasonable terms or at all. In addition, the terms of existing or future debt agreements, including our senior secured credit facility and the indenture governing our Notes may restrict us from carrying out any of these alternatives. If we are unable to generate sufficient cash flow or refinance our debt on favorable terms, it could significantly, adversely affect our financial condition.

~~Borrowings under~~Despite ~~the~~our ~~term~~current ~~loan~~indebtedness ~~bear~~level, ~~interest~~our atcompany, aincluding ~~rate~~our ~~per annum equal to~~subsidiaries, ~~at the Company's option~~may, ~~either~~subject ~~(1) the~~to ~~Prime~~conditions ~~Rate~~in ~~or (2)~~ the ~~London Interbank Offered Rate~~Merger ~~("LIBOR")~~Agreement, ~~plus~~incur ansubstantially ~~applicable~~more ~~margin determined by reference to the leverage ratio~~debt, aswhich ~~set~~could ~~forth~~exacerbate in the ~~debt~~risks ~~agreement.~~associated ~~The~~with ~~applicable~~our ~~margins~~substantial ~~for the Prime Rate and LIBOR as of March 30, 2007 were 1~~leverage.~~25%~~ ~~and 2.25%, respectively.~~

~~Borrowings under~~As ~~the~~of ~~revolving~~April 2, ~~facility~~2010, ~~bear~~we ~~interest~~had atup ato ~~rate~~$170.0 million ~~per~~of ~~annum~~additional ~~equal~~availability ~~to,~~under at our ~~option,~~senior ~~either~~secured credit facility (1)which gives effect to $30.0 million of outstanding letters of credit). The terms of the ~~Prime~~senior ~~Rate~~secured credit facility and the Notes do not fully prohibit us or ~~(2) LIBOR~~our ~~plus~~subsidiaries anfrom ~~applicable~~incurring ~~margin determined~~additional byindebtedness. ~~reference~~It is not possible to quantify the ~~leverage~~specific ~~ratio,~~dollar asamount ~~set~~of ~~forth~~indebtedness inwe ~~the~~may ~~debt~~incur ~~agreement~~because our senior secured credit facility does not provide for a specific dollar amount of indebtedness we may incur. The ~~applicable~~Merger ~~margins~~Agreement, ~~for~~our ~~the~~senior ~~Prime~~secured ~~Rate~~credit facility and ~~LIBOR~~the asNotes allow ofus ~~March 30~~to incur only certain indebtedness that is expressly enumerated in the Merger Agreement, ~~2007~~our ~~were~~senior ~~1.0%~~secured credit facility and 2the indenture governing the Notes, as applicable.0% If either we or our subsidiaries were to incur additional indebtedness, ~~respectively~~the related risks that we now face could increase.

~~We are~~27 required, under certain circumstances as defined in the Senior Secured Credit Facility, to use a percentage of excess cash generated from operations to reduce the outstanding principal of the term loans in the following year. Under this provision, additional principal payments of approximately $34.7 million are due to be paid in the first quarter of fiscal 2008 and are reflected in current portion of long-term debt.

On May 2,Table 2005, we entered into an interest rate cap, which has the effect of placing a ceiling on the interest expense we could incur on $172.5 million of variable debt indexed to LIBOR at 6.5% plus the applicable floating margin (2.25% at March 30, 2007) as defined by the Senior Secured Credit Facility agreement. See Note 11 to the consolidated financial statements for further discussion of interest rate derivatives. Contents

~~On January 9,~~We ~~2006,~~have werecently ~~entered~~acquired ~~into~~two acomplementary ~~first amendment and waiver of our Senior Secured Credit Facility~~businesses. ~~The~~Acquisition ~~first amendment and waiver increased the revolving commitment under our~~transactions ~~Senior~~require ~~Secured~~substantial ~~Credit~~management ~~Facility~~resources ~~$15.0 million to $90.0 million, which includes an increase in the sub-limit for letters of credit equal to the same amount. The first amendment~~ and ~~waiver~~may ~~also~~disrupt ~~permitted us to: (i) pay a transaction fee to Veritas Capital related to the Equity Offering of up to $10.0 million; (ii) pay a distribution to the holders of~~ our ~~Class B~~ ~~common~~business ~~stock in an amount equal to the sum of (x) $100.0 million plus (y) the proceeds, if any, of the underwriters' over-allotment option, net of discount~~ and ~~estimated~~divert ~~offering expenses; (iii) redeem all of~~ our ~~then~~management ~~currently~~from ~~outstanding~~other ~~preferred stock; and (iv) redeem up to $65~~responsibilities.~~0 million~~ ofAcquisitions ~~the~~are ~~$320.0 million aggregate~~accompanied ~~principal~~by ~~amount~~other ofrisks, ~~the~~including: senior subordinated notes. The first amendment and waiver waived the requirement in the Senior Secured Credit Facility that we use 50% of the net cash proceeds from the Equity Offering to prepay loans under the Senior Secured Credit Facility and/or permanently reduce the revolving commitments.

~~On June 28,~~• ~~2006,~~ the ~~Company~~difficulty ~~and its operating company entered into a second amendment and waiver~~ of ~~our~~integrating ~~Senior Secured Credit Facility. The second amendment and waiver provided for a new term loan in~~ the ~~amount~~operations ~~of $431.6 million, which was the outstanding balance of the existing term loan under our Senior Secured Credit Facility on the date of the second amendment~~ and ~~waiver.~~ ~~The~~personnel ~~maturity date~~ of the ~~new~~acquired term loan is unchanged from the maturity date of the existing term loan. The proceeds from the new term loan were used to repay the existing term loan. The second amendment and waiver also, among other things, (i) decreases the interest rate margin applicable to the term loan under our Senior Secured Credit Facilitycompanies; (ii) permits us to request an increase in our revolving credit facility by an aggregate amount of up to $30.0 million provided that none of the existing lenders or any other lender is committed to provide such increase; (iii) increases the amount of capital expenditures permitted under our Senior Secured Credit Facility from $4.0 million per fiscal year to $8.0 million per fiscal year; (iv) increases the amount of capitalized leases permitted under our Senior Secured Credit Facility; (v) allows for the payment of dividends and the repurchase of our capital stock in the amount of $10.0 million plus, if our leverage ratio (as defined in our Senior Secured Credit Facility) is below 3.25:1.00, 25% of our excess cash flow (as defined in our Senior Secured Credit Facility) for each fiscal year; and (vi) postpones the first prepayment of the Senior Secured Credit Facility based on our excess cash flow until 90 days following our fiscal year which ended on March 30, 2007.

~~In November 2006,~~• the ~~Company~~inability ~~obtained~~of ~~additional~~our ~~commitments~~management ~~from~~to ~~two~~maximize ~~new~~our ~~lenders~~financial ~~which~~and ~~increased~~strategic position by the ~~revolving~~successful ~~credit~~incorporation ~~facility~~of toacquired ~~$103.0 million.~~personnel into our service offerings;

~~At March 30,~~• ~~2007,~~we ~~availability~~may ~~under~~not ~~the~~realize ~~revolving~~anticipated ~~credit~~synergies ~~line~~or ~~for~~financial additional borrowings was approximately $81.9 million (which gives effect to approximately $21.1 million of outstanding letters of credit, which reduced our availability by that amount). The Senior Secured Credit Facility requires an unused line fee equal to 0.5% per annum, payable quarterly in arrears, of the unused portion of the revolving credit facility. growth;

42• we may assume material liabilities that were not identified during due diligence, including potential regulatory penalties resulting from the acquisition target’s previous activities;

~~The Senior~~• ~~Secured~~difficulty ~~Credit~~maintaining ~~Facility~~uniform ~~contain various financial covenants~~standards, ~~including minimum levels of EBITDA~~controls, ~~minimum~~procedures ~~interest~~ and ~~fixed charge coverage ratios~~policies, ~~and~~with ~~maximum~~respect ~~capital expenditures and total leverage ratio. Non-financial covenants restrict the ability of us and our subsidiaries~~ to ~~dispose~~accounting ofmatters ~~assets; incur additional indebtedness; prepay other indebtedness or amend certain debt instruments; pay dividends; create liens on assets; enter into sale~~ and leaseback transactions; make investments, loans or advances; issue certain equity instruments; make acquisitions; engage in mergers or consolidations or engage in certain transactions with affiliates; and otherwise ~~restrict certain corporate activities.~~ ;

~~The carrying~~• ~~amount of our borrowings under~~ the ~~Senior~~potential ~~Secured~~loss ~~Credit~~of ~~Facility~~key ~~approximates~~employees ~~fair value based on the variable interest rate~~ of ~~this~~acquired ~~debt.~~ companies;

~~9.5%~~• ~~Senior~~the ~~Subordinated~~impairment ~~Notes~~ of relationships with employees and customers as a result of changes in management and operational structure; and

In• ~~February 2005,~~acquisitions wemay ~~completed~~require anus ~~offering~~to ofinvest ~~$320.0 million~~significant inamounts ~~aggregate principal amount~~ of ~~our~~cash ~~9.5%~~resulting ~~senior~~in ~~subordinated~~dilution ~~notes due 2013. Proceeds from the original issuance~~ of ~~the~~stockholder ~~senior subordinated notes, net of fees, were $310~~value.0 million and were used to pay the consideration for, and fees and expenses relating to, the 2005 Acquisition (see Note 2). Interest on the senior subordinated notes is due semi-annually. The senior subordinated notes are general unsecured obligations of our subsidiary, DynCorp International LLC, and certain guarantor subsidiaries.

~~Prior to~~Any ~~February 15,~~inability ~~2009, we may redeem the senior subordinated notes, in whole or in part, at a price equal~~ to ~~100%~~successfully ofintegrate the ~~principal~~operations ~~amount~~and ofpersonnel ~~the~~associated ~~senior~~with ~~subordinated~~an ~~notes plus~~acquired abusiness ~~defined make-whole premium, plus accrued interest to the redemption date. After February 15, 2009, we can redeem the senior subordinated notes, in whole~~ and/or inservice ~~part,~~line ~~at defined~~may ~~redemption prices, plus accrued interest to the redemption date. We can also redeem up to 35% of the original aggregate principal amount of the senior subordinated notes at any time before~~harm ~~February 15,~~our ~~2008,~~business ~~with~~and ~~the~~results ~~net cash proceeds~~ of ~~certain~~operation. ~~equity~~The ~~offerings~~Merger atAgreement arestricts ~~price equal to 109.5% of~~ the ~~principal~~ability ~~amount~~ of the ~~senior~~Company ~~subordinated notes, plus accrued interest~~ to ~~the redemption~~enter ~~date.~~into ~~The~~acquisition ~~holders~~transactions ofsubject ~~the senior subordinated notes may require us~~ to ~~repurchase the senior subordinated notes at defined prices in the event of~~ certain ~~asset sales or change-of-control events~~exceptions.

~~On June 9, 2006, in connection with the Equity Offering, we redeemed approximately $28.0 million of the $320.0 million aggregate principal amount of the senior subordinated notes.~~ We ~~also~~may ~~paid~~not ~~$0.8 million~~be inable ~~accrued interest through the redemption date and a prepayment penalty of $2.7 million, and we recognized a $0.8 million loss related~~ to ~~the~~profitably ~~write-off~~deploy ofall ~~a portion~~ of ~~the~~our ~~previously~~helicopter ~~capitalized loan cost for the senior subordinated notes~~assets. ~~See Note 10 for further discussion of this Equity Offering.~~

~~The~~We have approximately $39.7 million in helicopter assets. These were originally purchased to support our new WPPS air services task order. ~~fair~~Given ~~value~~the availability of customer assets to support this program, the ~~senior~~parties ~~subordinated~~mutually ~~notes~~agreed isto ~~based~~a ontask ~~their~~order ~~quoted~~modification ~~market~~under ~~value~~which the customer will now supply its own helicopters. As ofa ~~March 30~~result, ~~2007,~~we plan to utilize most of the ~~quoted~~purchased helicopter ~~market~~assets ~~value~~on another program. Due to the past military history of these helicopters and their associated restricted certification status with the ~~senior~~FAA, ~~subordinated~~the ~~notes~~helicopters ~~was~~are ~~106~~limited to Public Use applications (Police, Fire, trash hauling) or movement of our people and supplies on programs like LOGCAP IV.1% The 13 Huey helicopters are being remanufactured under a contract with a vendor. To date, this vendor is behind schedule on delivery of the helicopters. Even though the first seven ~~stated~~helicopters ~~value~~are substantially complete, this vendor continues to be plagued by material shortages and challenging communication with the FAA in completing helicopter production, conformance and certification. We sold one helicopter and plan to sell the remaining two “small bird” helicopters (i.e., MD 530FF) that we do not intend to use in other programs. Thus, the main risks related to the helicopters are as follows:

43• we may not be able to profitably utilize all of these assets on our contracts;

~~Contractual~~• ~~Commitments~~ the inability to deploy some of these helicopter assets could lead to a material impairment charge; and

~~The~~• ~~following~~delays ~~table~~in ~~represents~~deploying ~~our~~the ~~contractual~~helicopters ~~commitments~~could ~~associated~~extend ~~with~~the ~~our~~period ~~debt~~that ~~and~~it ~~other~~takes ~~obligations~~to asrecoup ofour ~~March 30~~investment, ~~2007:~~which would negatively affect liquidity.

	Fiscal
(Dollars in millions)	2008		2009		2010		2011		2012		Thereafter		Total
Contractual Obligations:
Senior Secured Credit Facility Term Loan(1)	$	37.9	$	3.9	$	3.1	$	294.1	$	–	$	–	$	339.0
Senior Subordinated Notes		–		–		–		–		–		292.0		292.0
Operating Leases(2)		25.5		8.3		4.9		4.5		4.5		13.1		60.8
Interest on Indebtedness(3)		50.7		50.0		49.7		38.6		27.7		24.2		240.9
Contractual Indemnity(4)		–		–		3.7		–		–		–		3.7
Management Fee(5)		0.3		0.3		0.3		0.3		0.3		0.3		1.8
Total Contractual Obligations	$	114.4	$	62.5	$	61.7	$	337.5	$	32.5	$	329.6	$	938.2

We are subject to the Internal Control Evaluation and Attestation Requirements of Section 404 of the Sarbanes-Oxley Act of 2002.

~~Backlog~~ Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to include in our annual report our assessment of the effectiveness of our internal control over financial reporting and our audited financial statements as of the end of each fiscal year. Furthermore, Deloitte & Touche, LLP, our independent registered public accounting firm (the “Independent Registered Public Accounting Firm”) is required to report on whether it

We28 track contracted backlog in order to assess our current business development effectiveness and to assist us in forecasting our future business needs and financial performance. Backlog consists of orders and priced options under our contracts. We define contracted backlog as the estimated value of contract modifications received from customers that have not been recognized as revenue. Our backlog consists of funded and unfunded amounts. Funded backlog is based upon amounts actually appropriated by a customer for payment of goods and services less actual revenue recorded as of the measurement date under that appropriation. Unfunded backlog is the actual dollar value of unexercised contract options. Most of our U.S. government contracts allow the customer the option to extend the period of performance of a contract for a period of one or more years. These options may be exercised at the sole discretion of the customer. Historically, it has been our experience that the customer has exercised contract options.

Firm fundingTable for our contracts is usually made for one year at a time, with the remainder of the contract period consisting of a series of one-year options. As is the case with the base period of our U.S. government contracts, option periods are subject to the availability of funding for contract performance. The U.S. government is legally prohibited from ordering work under a contract in the absence of funding. Our historical experience has been that the government generally has exercised and funded the option periods of our contracts. Contents

~~The~~ ~~following~~believes ~~table~~we ~~sets~~maintained, ~~forth~~in ~~our~~all ~~approximate~~material ~~contracted~~respects, ~~backlog~~effective internal control over financial reporting as of the ~~dates~~end ~~indicated:~~of each fiscal year. In future years, if we fail to timely complete this assessment, or if our Independent Registered Public Accounting Firm cannot timely attest to the effectiveness of our internal control over financial reporting, we could be subject to regulatory sanctions and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to timely meet our regulatory reporting obligations.

(Dollars in millions)	March 30, 2007		March 31, 2006		April 1, 2005
Funded Backlog	$	1,402	$	1,024	$	1,140
Unfunded Backlog		4,730		1,617		900
Total Backlog	$	6,132	$	2,641	$	2,040

We are significantly influenced by Veritas Capital, whose interests may not be aligned with yours

44As of June 1, 2010, Veritas Capital owned a majority of the outstanding membership interest in our controlling stockholder, DIV Holding LLC (“DIV”). Veritas Capital indirectly controls approximately 37.1% of our Class A common stock. As long as Veritas Capital continues to beneficially own a significant amount of the outstanding shares of our Class A common stock, it will continue to be able to strongly influence or effectively control our decisions, including the election of our directors, determine our corporate and management policies and determine, without the consent of our other stockholders, the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. Two of our thirteen directors are employees of Veritas Capital. Concurrently with the execution of the Merger Agreement, DIV Holding entered into the Voting Agreement with Parent and Merger Sub whereby DIV Holding and its affiliates, committed, among other things, subject to the terms and conditions of the Voting Agreement, to vote 34.9% of the outstanding shares of Common Stock for the adoption of the Merger Agreement. DIV Holding and certain of its affiliates also agreed not to transfer, sell or encumber any of their shares, and to notify Parent of any additional shares or rights to acquire additional shares acquired after the execution of the Voting Agreement. The Voting Agreement automatically terminates upon the termination of the Merger Agreement.

InEven ~~December 2006,~~if ~~the~~Veritas ~~Company,~~Capital ~~through~~no alonger ~~joint~~significantly ~~venture~~influences ~~named~~us ~~Global~~in ~~Linguist~~the ~~Solutions LLC ("GLS")~~future, ~~was awarded the Intelligence~~ and ~~Security~~ ~~Command~~if ~~("INSCOM") contract by~~ the ~~U.S.~~Merger ~~Army~~is ~~for~~not consummated ~~management~~certain ofprovisions ~~translation and interpretation services in support~~ of ~~Operation~~our ~~Iraqi~~charter ~~Freedom.~~documents ~~The five-year contract has a maximum value of approximately $4.6 billion. We have a 51% ownership interest in GLS~~ and ~~will consolidate the joint venture in our financial statements. As of March 30~~agreements, ~~2007,~~as ~~the~~well ~~funded~~as ~~and unfunded~~Delaware ~~backlog related to this program was $49.0 million and $3.3 billion~~law, ~~respectively,~~could ~~and has been included in the table above. However~~discourage, ~~the~~delay ~~incumbent~~or ~~contractor's~~prevent ~~protest~~a ofmerger ~~the award~~or toacquisition ~~GLS~~at ~~was~~a ~~sustained~~premium ~~by the Government Accountability Office ("GAO")~~price. Our backlog and estimated remaining contract value metrics may require future adjustment depending on the outcome of future procurement actions taken by the Army in implementing the GAO's recommendation.

~~Estimated~~Our ~~Remaining~~Amended ~~Contract~~and ~~Value~~ Restated Certificate of Incorporation and Bylaws contain provisions that:

~~Our~~• ~~estimated~~permit ~~remaining~~us ~~contract~~to ~~value~~issue, ~~represents~~without ~~total~~any ~~backlog~~further ~~plus~~vote ~~management's~~or ~~estimate~~action ofby ~~future~~our ~~revenues~~shareholders, ~~under~~50 ~~IDIQ~~million ~~contracts~~shares ~~that~~of ~~have~~preferred ~~not~~stock ~~been~~in ~~funded,~~one or ~~award~~ ~~term~~more ~~periods~~series ~~that~~and, ~~have~~with ~~not~~respect ~~yet~~to ~~been~~each ~~earned.~~series, ~~These~~to ~~future~~fix ~~revenues~~the ~~represent~~number ~~our estimate~~ of ~~revenue~~shares ~~that~~constituting ~~would occur from~~ the ~~end of~~series ~~currently~~and ~~funded task orders until~~ the ~~end~~designation of the ~~IDIQ contracts. Our estimated remaining contract value is based on our experience under contracts~~series, ~~and~~the wevoting ~~believe~~powers ~~our~~(if ~~estimates are reasonable. However, there can be no assurance that our existing contracts will result in actual revenues in~~ any) ~~particular period or at all. These amounts could vary or even change significantly depending upon government policies, government budgets, appropriations and the outcome~~ of ~~protested contract awards. The following table sets forth our estimated remaining contract value as of~~ the ~~dates indicated:~~ shares;

(Dollars in millions)		March 30, 2007			March 31, 2006			April 1, 2005
Estimated remaining contract value		$	8,991		$	5,727		$	4,413

•

provide for a classified board of directors serving staggered three-year terms; and

~~Off-Balance~~• ~~Sheet~~limit ~~Arrangements~~ our shareholders’ ability to call special meetings.

~~The~~In ~~Company's~~addition, ~~off-balance~~we ~~sheet~~have ~~arrangements~~a ~~relate~~plan that grants shareholders the right to ~~operating~~purchase ~~lease~~from ~~obligations~~us additional shares at preferential prices in the event of a hostile attempt to acquire control of us. All of the foregoing provisions may impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing shareholders. Notwithstanding the foregoing, as a result of our execution of the Merger Agreement and ~~letters~~until the earlier of ~~credit~~receipt of requisite stockholder approval and the termination of the Merger Agreement, ~~which~~Delaware ~~are~~corporate ~~excluded~~law ~~from~~requires our Board to exercise certain fiduciary duties that could, in certain circumstances involving the ~~balance~~receipt ~~sheet~~of an acquisition proposal that constitutes or would reasonably be expected to result in a superior proposal (as defined in the Merger Agreement), require the Board ~~accordance~~to ~~with~~take ~~generally~~certain ~~accepted~~actions ~~accounting~~to ~~principles~~facilitate such acquisition proposal.

~~Effects~~The Merger is subject to satisfaction or waiver of certain ~~Inflation~~ customary conditions, including the approval of the Merger by our stockholders.

WeCompletion ~~have~~of ~~generally~~the ~~been~~Merger ~~able~~is subject to ~~anticipate~~the ~~increases~~satisfaction inor ~~costs~~waiver ~~when~~of ~~pricing~~certain ~~our~~customary ~~contracts.~~conditions, ~~Bids~~including ~~for~~the ~~longer-term~~adoption ~~fixed-price~~of ~~and time-and-materials~~the ~~type~~Merger ~~contracts~~Agreement ~~typically~~by ~~include~~our ~~sufficient~~stockholders, ~~labor~~receipt ~~and~~of ~~other~~required ~~cost~~antitrust ~~escalations~~approvals in(or ~~amounts~~termination ~~expected~~or toexpiration ~~cover~~of ~~cost~~applicable ~~increases~~waiting ~~over~~periods), the accuracy ~~period~~ of ~~performance. Consequently,~~the ~~because~~representations ~~costs~~ and ~~revenues~~warranties ~~include~~of ~~an inflationary increase commensurate with~~ the ~~general~~parties ~~economy~~and ~~in which we operate, net income as a percentage of revenues has not been significantly impacted by inflation.~~

~~Critical~~29 ~~Accounting Policies~~

OurTable discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which are prepared in accordance with GAAP. The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Management evaluates these estimates and assumptions on an ongoing basis, including those relating to revenue recognition and cost estimation on long-term contracts, allowance for doubtful accounts, determination of goodwill and customer-related intangible assets, goodwill impairment, accounting for contingencies and litigation and accounting for income taxes. Our estimates and assumptions have been prepared on the basis of the most current available information. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could materially differ from these estimates under different assumptions and conditions. Contents

45 compliance by the parties with their respective obligations under the Merger Agreement and no court or other governmental entity of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law (including any injunction) that restrains, enjoins or otherwise prohibits consummation of the Merger or otherwise makes the consummation of the Merger illegal. The transaction is expected to close in the third or fourth quarter of calendar year 2010, but could close as early as late June. However, no assurances can be given that the transaction contemplated by the Merger Agreement will be consummated or, if not consummated, that we will enter into a comparable or superior transaction with another party.

~~We have~~The ~~several~~Merger ~~critical~~may ~~accounting~~not ~~policies~~be ~~that~~completed ~~are~~if ~~both~~sufficient ~~important~~financing tois ~~the~~not ~~portrayal of our financial condition and results of operations and require management's most difficult, subjective and complex judgments~~funded. ~~Typically, the circumstances that make these judgments complex and difficult relate to making estimates about the effect of matters that are inherently uncertain. Our~~ ~~critical accounting estimates are as follows:~~

~~Revenue~~Parent ~~Recognition~~has obtained equity and ~~Cost~~debt ~~Estimation~~financing commitments. The funding under those commitments is subject to conditions, including conditions that do not relate directly to the Merger Agreement. We believe the committed amounts will be sufficient to complete the Merger, but we cannot assure you of that. Those amounts might be insufficient if, among other things, we have substantially less cash on ~~Long-Term~~hand ~~Contracts~~ or Parent has substantially less net proceeds from the equity and debt financings than we currently expect. Although obtaining the equity or debt financing is not a condition to the completion of the Merger, the failure of Parent and Merger Sub to obtain sufficient financing is likely to result in the failure of the Merger to be completed. We believe the committed amounts will be sufficient to complete the transaction, but cannot provide any assurance to that effect.

~~General –~~Although ~~Revenues~~the ~~are~~debt ~~recognized~~financing described herein is not subject to due diligence or a typical “market out” provision, which allows lenders not to fund their commitments if certain conditions in the financial markets prevail, there is still a risk that such financing may not be funded when ~~persuasive~~required. ~~evidence~~As of anthe ~~arrangement~~date ~~exists,~~of ~~services~~this Annual Report on Form 10-K, no alternative financing arrangements or ~~products~~alternative financing plans have been ~~provided~~made toin the ~~client,~~event the ~~sales~~debt ~~price~~financing described herein is ~~fixed~~not available as anticipated. Even though obtaining the equity or ~~determinable~~debt financing is not a condition to the completion of the Merger, the failure of Parent and ~~collectibility~~Merger Sub to obtain sufficient financing is ~~reasonably~~likely ~~assured~~to result in the failure of the Merger to be completed. ~~Revenues~~In bythat ~~contract~~case, ~~type~~Parent inmay ~~fiscal~~be ~~2007~~obligated ~~and~~to ~~2006~~pay us a termination fee, which ~~and~~obligation ~~for~~is guaranteed under the ~~combined~~ ~~periods~~Limited inGuarantee ~~fiscal~~by ~~2005~~an ~~were~~affiliate asof ~~follows:~~Cerberus.

	Fiscal Year
Contract Type	2007	2006	2005
Fixed-Price	43%	34%	27%
Time-and-Materials	36%	38%	39%
Cost-Reimbursement	21%	28%	34%
	100%	100%	100%

Our future business and financial position may be adversely affected if the Merger is not completed.

~~The~~If ~~Company~~the ~~expenses~~Merger ~~pre-contract~~Agreement ~~costs~~is asterminated ~~incurred~~and the ~~for~~Merger anis ~~anticipated~~not ~~contract~~consummated, ~~until~~we ~~the~~will ~~contract~~have isincurred ~~awarded.~~substantial ~~Throughout~~expenses ~~the~~without ~~life~~realizing of the ~~contract,~~expected ~~indirect~~benefits ~~costs,~~of ~~including~~the ~~general~~Merger. ~~and~~In ~~administrative costs~~addition, ~~are~~we ~~expensed~~may asalso ~~incurred~~be ~~and~~subject ~~are~~to ~~based~~additional onrisks ~~DCAA-approved~~including, ~~indirect~~without ~~rates.~~limitation:

~~When revenue~~• ~~recognition~~upon istermination ~~deferred~~of ~~relative to~~ the ~~timing~~Merger ofAgreement ~~cost~~under ~~incurred~~specified circumstances, ~~costs~~the ~~that~~Company ~~are~~may ~~direct~~be ~~and~~required ~~incremental~~ to pay Parent a ~~specific~~termination fee of $30 million or to reimburse transaction ~~are~~expenses ~~deferred~~incurred by Parent and ~~charged~~Merger Sub up to ~~expense~~$12 million. In addition, under certain circumstances involving Parent’s termination of the Merger Agreement where we have committed a “Willful Breach” (as defined in ~~proportion~~ the Merger Agreement) of the Merger Agreement, we will be required to pay Parent liquidated damages in the ~~revenue~~amount ~~recognized.~~of $300 million;

~~Customer acceptance~~• ~~provisions~~substantial ~~generally~~costs ~~allow~~related ~~the customer~~ to ~~cancel~~the anMerger, ~~arrangement~~such ~~when~~as ~~products~~legal, ~~delivered~~accounting orand ~~services~~financial ~~rendered~~advisory ~~do not meet benefits expected from the arrangement. Acceptance generally occurs before revenue recognition. However~~fees, ifmust ~~it can~~ be ~~shown~~paid ~~objectively~~regardless ~~that the acceptance criteria have been satisfied for separable units~~ of ~~accounting~~whether orthe ~~profit~~Merger ~~centers, as applicable within an arrangement, revenue~~ is ~~recognized~~completed; ~~before formal acceptance.~~ and

~~Management regularly~~• ~~reviews~~potential ~~project~~disruption ~~profitability and underlying estimates. Revisions~~ to the ~~estimates~~current ~~are~~plan, ~~reflected in results of~~ operations, asbusinesses aand ~~change~~distraction inof ~~accounting~~our ~~estimate~~workforce inand ~~the period in which the facts that give rise to the revision become known by~~ management. team.

~~Major factors~~Since ~~the~~announcing ~~Company considers in determining total estimated revenue and cost include~~ the ~~basic~~proposed ~~contract price~~Merger, ~~contract~~two ~~options,~~class ~~change~~action ~~orders~~lawsuits ~~(modifications~~have ofbeen ~~the~~filed ~~original contract),~~against ~~back~~the ~~charges~~Company and ~~claims,~~its ~~and~~directors. ~~contract~~The ~~provisions~~outcome or ~~for~~settlement ~~penalties, award fees and performance incentives. All~~ of these ~~factors~~claims ~~and~~may ~~other~~have ~~special~~an ~~contract~~adverse ~~provisions~~effect ~~must~~upon ~~be evaluated throughout~~ the ~~life of the~~ Company'’s ~~contracts~~results ~~when estimating total contract revenue to recognize in the periods in which they are earned under the percentage-~~of~~-completion~~ ~~or proportional methods of accounting~~operation.

~~Federal~~Since ~~Government Contracts – Projects under~~ the ~~Company's U.S. federal government contracts~~ ~~typically~~announcement ~~have~~of ~~different~~the ~~pricing~~proposed ~~mechanisms~~Merger, ~~that~~two ~~influence~~putative ~~how~~class ~~revenue~~action islawsuits ~~earned~~seeking ~~and~~to ~~recognized.~~enjoin ~~These~~the ~~pricing~~Merger, ~~mechanisms~~among ~~are~~other ~~classified as cost plus fixed-fee~~things, ~~fixed-price,~~have ~~cost reimbursement,~~been ~~cost~~filed ~~plus~~on ~~award~~behalf ~~fee,~~of ~~time-and-materials~~stockholders ~~(including Unit-Price/level-~~of~~-effort~~ ~~contracts),~~DynCorp orInternational ~~IDIQ.~~in ~~The~~federal ~~exact timing~~ and ~~quantity~~ ofstate ~~delivery~~court. ~~for~~Descriptions ~~IDIQ profit centers are not known at the time~~ of ~~contract~~these ~~award~~lawsuits, are ~~but~~set ~~they~~forth ~~can~~in ~~contain~~Note ~~any~~8 ~~type~~to ofthe ~~pricing~~consolidated ~~mechanism;~~financial ~~fixed-price~~statements, ~~time~~in ~~and materials, cost reimbursable or cost plus fixed fee.~~

~~Revenue on~~30 fixed-price projects is generally recognized ratably over the contract period measured by either output or input methods appropriate to the services or products provided. For example, "output measures" can include period of service, such as for aircraft fleet maintenance; and units delivered or produced, such as aircraft for which modification has been completed. "Input measures" can include a cost-to-cost method, such as for procurement-related services.

46Table of Contents

~~Revenue~~ on“Item 8. ~~fixed-price~~Financial ~~construction~~Statements orand ~~production-type~~Supplementary ~~contracts~~Data” ~~is recognized on the basis~~ of ~~the~~this ~~estimated~~Form ~~percentage~~10-K ofand ~~completion. Progress towards completion~~ is ~~typically~~ ~~measured~~incorporated ~~based~~herein onby ~~achievement~~reference. ofThe ~~specified~~cost ~~contract milestones, when available, or based on costs incurred as a proportion~~ of ~~estimated~~defending ~~total~~such ~~costs.~~law ~~Cost~~suits ofand ~~sales~~paying isany ~~based~~judgment ~~on actual costs~~or ~~incurred~~settlement toin ~~date,~~connection ~~and~~therewith ~~revenues~~could ~~are~~have ~~recorded in~~ an ~~amount~~adverse ~~equal~~impact ~~to costs incurred plus the estimated gross profit based~~ on ~~the~~our ~~percentage-of-completion.~~financial Gross profit for any period equals total expected revenues less total expected costs, multiplied by the percentage-complete at the end of the period in question, less gross profit recognized in prior periodsresults.

~~Cost-reimbursement type~~The ~~contracts~~Merger ~~can~~creates ~~be cost plus fixed fee, or cost plus award fee. Revenue recognition for these two contract types is very similar. In both cases, revenue~~unique isrisks ~~based~~in ~~on actual direct cost plus DCAA-approved indirect rates. In~~ the ~~case~~time ofleading ~~cost~~up ~~plus fixed fee, the fixed fee is recognized based on the ratio of the fixed fee for the contract~~ to ~~the total estimated cost of the contract. In the case of cost plus award fee contracts~~closing, ~~the fee is made up of two components, base fee~~ and ~~award~~there ~~fee. Base fee is recognized in the same manner as the fee on cost plus fixed fee contracts. Award fees for new contracts that lack specific experience~~ are ~~included~~also inrisks ~~total expected revenues based on an average~~ of completing the ~~last~~conditions ~~two~~to ~~award fee periods or award experience for similar contracts~~closing.

The Merger ~~completed~~Agreement ~~contract~~generally ~~method~~requires isus ~~sometimes~~to ~~used~~operate ~~for~~our ~~short~~business ~~duration~~in ~~projects~~the ~~when~~ordinary ~~the~~course ~~results~~pending consummation of ~~operations~~the ~~would~~proposed ~~not~~combination, ~~vary~~but ~~materially~~restricts ~~from~~us, ~~those~~without ~~resulting~~Parent’s consent, from ~~use~~taking ofcertain specified actions until the ~~percentage-of-completion~~ ~~method~~Merger is complete or the ~~when~~Merger ~~reliable~~Agreement ~~estimates~~is ~~cannot~~terminated. beFurther, ~~supported~~the ~~for~~pending ~~percentage-of-completion~~Merger ~~method~~increases ~~recognition.~~the ~~Until~~Company’s ~~complete,~~risk ~~project costs~~of ~~are~~loss ~~maintained~~of inkey ~~work~~employees indue ~~progress~~to, aamong ~~component~~other things, uncertainty concerning the post-Merger operation of ~~inventory~~the Company.

~~Contract~~Until all conditions to the Merger are satisfied and the related debt financing is ready to be funded, we cannot be certain that the ~~costs~~Merger onwill Uclose.S. ~~government~~We ~~contracts,~~will ~~including~~incur ~~indirect~~significant transaction costs, ~~are~~relating ~~subject~~ to ~~audit~~the ~~and~~proposed ~~adjustment~~Merger, bywhether ~~negotiations~~or ~~between~~not the ~~Company~~proposed ~~and~~Merger ~~government~~is ~~representatives~~completed. ~~Substantially~~ ~~all~~Additionally, ofmatters ~~the~~relating ~~Company's~~to ~~indirect~~the ~~contract~~Merger ~~costs~~(including ~~have~~integration ~~been~~planning) ~~agreed~~may ~~upon~~require ~~through~~substantial commitments ~~2004.~~of ~~Contract~~time ~~revenues~~and onresources, ~~U.S.~~which ~~government~~could ~~contracts~~otherwise have been ~~recorded~~devoted into ~~amounts~~other ~~that~~beneficial ~~are~~opportunities ~~expected~~and tothere may be ~~realized~~ ~~upon~~potential ~~final~~difficulties ~~settlement~~in employee retention as a result of the Merger.

~~Other~~Any ~~Contracts –~~loss ~~The~~of ~~Company's~~business ~~contracts~~opportunities ~~with~~or ~~non-federal~~key ~~government~~personnel ~~customers~~could ~~are~~have ~~predominantly multiple-element.~~an ~~Multiple-element~~adverse ~~arrangements~~impact ~~involve~~on ~~multiple~~future ~~obligations in various combinations to deliver products~~business, ~~perform services~~and, ~~grant~~as ~~licenses~~a ~~or other rights~~result, orresult ~~take~~in ~~certain actions. The~~lower ~~Company~~future ~~evaluates~~sales ~~these elements to establish whether they represent separable units of accounting~~ and ~~allocate revenue to the identifiable units of accounting based on relative fair values~~earnings. ~~The timing of revenue recognition for a given unit of accounting will depend on the nature of the deliverable(s) whether recognition criteria have been met.~~

~~Other contracts~~If ~~may~~we ~~include~~are ~~software~~unable ~~and~~to ~~software~~complete ~~related~~our ~~deliverables,~~proposed ~~construction~~Merger ~~contracts, and services~~ with ~~related~~affiliates ~~equipment~~of ~~and~~Cerberus ~~materials.~~our ~~The~~stock ~~same pricing mechanisms found in~~price ~~federal~~could ~~government contracts are found in other contracts~~suffer.

The ~~Company~~ ~~applies~~termination ~~the guidance in FASB Statement~~ of ~~Position~~the ~~("SOP") 97-2,~~Merger ~~"Software~~Agreement ~~Revenue~~would ~~Recognition,"~~likely toresult ~~its software~~in ~~and~~a ~~software~~decline ~~related~~in ~~deliverables,~~our ~~SOP 81-1~~stock ~~"Accounting~~price ~~for~~to ~~Performance of Construction-Type and Certain Production-Type~~the ~~Contracts"~~extent tothat our ~~construction~~stock ~~contracts,~~price ~~and~~reflects ~~U.S.~~a ~~Securities~~market ~~and~~assumption ~~Exchange~~that ~~Commission~~we ~~("SEC")~~will ~~Staff~~complete ~~Accounting~~the ~~Bulletin~~Merger ~~("SAB") No. 104, "Revenue Recognition in Financial Statements" ("SAB No. 104"),~~ and ~~other~~our ~~transaction-specific~~stockholders ~~accounting~~will ~~literature~~receive tothe ~~deliverables~~Per ~~related~~Share toMerger ~~non-federal~~Consideration ~~government services,~~specified ~~equipment~~in ~~and~~the ~~materials~~Merger Agreement.

~~Use~~31 ~~of Estimates~~

TheTable preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Management evaluates these estimates and assumptions on an ongoing basis, including but not limited to, those relating to allowances for doubtful accounts, fair value and impairment of intangible assets and goodwill, income taxes, profitability on contracts, anticipated contract modifications, contingencies and litigation. Actual results could differ from those estimates. Contents

47ITEM 1B. UNRESOLVED STAFF COMMENTS.

~~Allowance~~None. ~~for Doubtful Accounts~~

~~The~~ITEM ~~Company establishes an allowance for doubtful accounts against specific billed receivables based upon the latest information available to determine whether invoices are ultimately collectible~~2. Such information includes the historical trends of write-offs and recovery of previously written-off accounts, the financial strength of the respective customer and projected economic and market conditionsPROPERTIES. The evaluation of these factors involves subjective judgments and changes in these factors may cause an increase to the Company's estimated allowance for doubtful accounts, which could significantly impact the Company's consolidated financial statements by incurring bad debt expense. Given that the Company primarily serves the U.S. government, management believes the risk to be relatively low that changes in its allowance for doubtful accounts would have a material impact on its financial results.

~~Property~~We ~~and~~are ~~Equipment~~ headquartered in Falls Church, Virginia with major administrative offices in Fort Worth, Texas. As of April 2, 2010, we leased 31 commercial facilities in 6 countries used in connection with the various services rendered to our customers. Lease expirations range from month-to-month to ten years. Upon expiration of our leases, we do not anticipate any difficulty in obtaining renewals or alternative space. Many of our current leases are non-cancelable. We do not own any real property.

The ~~cost of property and equipment, less applicable residual values, is depreciated using the straight-line method. Depreciation commences when the~~following ~~specific~~locations ~~asset~~represent isour ~~complete,~~primary ~~installed~~leased ~~and~~properties ~~ready~~as ~~for normal use. As part~~ of ~~the purchase accounting, which resulted from the acquisition, all fixed assets were adjusted to fair value on February~~April 112, ~~2005, thus resetting accumulated depreciation to $0 at the acquisition date~~2010. ~~See Note 2 to the consolidated financial statements for further discussion of the acquisition. The Company's depreciation and amortization policies are as follows:~~

Computer and related equipment	3 to 5 years
Location	Description	Business Segment	Size (sq ft)
Furniture and other equipment	2 to 10 years
Fort Worth, TX	Executive offices — finance and administration	Corporate	194,335
Leasehold improvements	Shorter of lease term or useful life
Salalah Port, Oman	Warehouse and storage — WRM contract	GSDS	125,000
Falls Church, VA	Executive offices — headquarters	Corporate	105,814
Alexandria, VA	Executive offices — ITS Business Area	GSDS	54,712
Kabul, Afghanistan	Offices and residence	GSDS	42,008
McClellan, CA	Warehouse — California Fire Program	GPSS	18,800
Dubai, UAE	Executive offices — finance and administration	Corporate	18,021
Alexandria, VA	Executive offices — Casals division	GSDS	14,174
Muscat, Oman	Offices and residence — supports WRM contract	GSDS	13,778
Herndon, VA	Offices — GLS recruiting center	GLS	11,400
San Diego, CA	Offices — GLS recruiting center	GLS	9,400

~~Impairment~~We believe that substantially all of ~~Long-Lived~~our ~~Assets~~property and equipment is in good condition, ~~including~~subject ~~Amortized~~to ~~Intangibles~~ normal use and that our facilities have sufficient capacity to meet the current and projected needs of our business.

~~Values~~ITEM of3. ~~customer-related~~LEGAL intangibles and internally developed technology were determined based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and sales, less a cost-of-capital charge, all of which was discounted to present valuePROCEEDINGS.

~~The Company~~Information ~~evaluates~~required ~~the~~with ~~carrying~~respect ~~value of long-lived assets~~ to bethis ~~held~~item ~~and~~is ~~used,~~set ~~other~~forth ~~than~~in ~~goodwill~~Note ~~and~~8 ~~intangible~~to ~~assets~~the ~~with~~consolidated ~~indefinite~~financial ~~lives~~statements, ~~when~~in ~~events and~~“Item 8. ~~circumstances~~Financial ~~indicate~~Statements aand ~~potential~~Supplementary ~~impairment.~~Data” ~~The carrying value~~ of ~~long-lived~~this ~~assets~~Form ~~and customer~~10-~~related~~K ~~intangibles is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable~~ and is ~~less~~incorporated ~~than~~herein ~~its carrying value. In that case, a loss is recognized based on the amount~~ by ~~which the carrying value exceeds the fair value~~reference. Fair value is determined primarily using the estimated cash flows associated with the asset under review, discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal. Changes in estimates of future cash flows could result in a write-down of the asset in a future period.

~~During 2007,~~ITEM ~~the Company recognized an impairment of approximately $0~~4.~~6 million~~ ~~associated~~[REMOVED ~~with~~AND a customer-related intangible due to the loss of a contract in Saudi Arabia. As of March 30, 2007, management believes there have been no other events or circumstances that would indicate an impairment of long-lived assets. RESERVED]

~~Indefinite~~32 ~~Lived Assets~~

Indefinite-livedTable assets, including goodwill and tradename, are not amortized but are subject to an annual impairment test. The first step of the impairment test, used to identify potential impairment, compares the fair value of each of the Company's reporting units with its carrying amount, including indefinite-lived assets. If the fair value of a reporting unit exceeds its carrying amount, indefinite-lived assets of the reporting unit are not considered impaired, and the second step of the impairment test is unnecessary. If the carrying amount of a reporting unit exceeds its fair value, the second step of the impairment test shall be performed to measure the amount of the impairment loss, if any. The Company performs the annual test for impairment as of the end of February of each fiscal year. Based on the results of these tests, no impairment losses were identified. Contents

48PART II

~~Income~~ITEM ~~Taxes~~ 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~The~~Market ~~Company~~Information determines the provision for income taxes using the asset and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences of temporary differences between the carrying amounts and tax basis of assets and liabilities. The Company records a valuation allowance to reduce deferred tax assets when uncertainty regarding their reliability exists.

~~Equity~~Our Class A Common Stock is traded on the NYSE under the symbol “DCP”. The table below sets forth the high and low sales prices of our common stock based on intra-~~Based~~day ~~Compensation~~high ~~Expense~~ and low prices for the periods indicated:

The Company has adopted the provisions of, and accounted for equity-based compensation in accordance with, FASB No. 123 (revised 2004), "Share-Based Payment" (Statement of Financial Accounting Standards ("SFAS") No. 123R"). Under the fair value recognition provisions, equity-based compensation expense is measured at the grant date based on the fair value of the award and is recognized ratably over the requisite service period adjusted for forfeitures. See Note 12 for further discussion on equity-based compensation.


Fiscal year 2010	High		Low
Fiscal quarter ended:
April 2, 2010	$	14.70	$	10.10
January 1, 2010	$	18.39	$	12.86
October 2, 2009	$	22.03	$	15.74
July 3, 2009	$	17.75	$	12.73

Fair Values of Financial Instruments


Fiscal year 2009	High		Low
Fiscal quarter ended:
April 3, 2009	$	16.26	$	10.61
January 2, 2009	$	16.07	$	9.95
October 3, 2008	$	18.75	$	14.05
July 4, 2008	$	18.28	$	14.00

~~Fair~~At ~~values~~June 1, ~~of financial instruments are estimated by~~ 2010, the ~~Company~~closing ~~using~~price ~~available~~of ~~market~~our ~~information~~common ~~and~~stock ~~other~~was ~~valuation methods~~$16.90 ~~Values~~per ~~are~~share. ~~based~~There onwere ~~available market~~56,307,871 ~~quotes~~shares orof ~~estimates~~our ~~using~~common astock ~~discounted~~outstanding ~~cash~~and ~~flow~~there ~~approach~~were ~~based~~approximately on68 ~~the~~holders ~~interest~~of ~~rates~~record ~~currently available for similar instruments. The fair values~~ of ~~financial~~our ~~instruments~~common ~~for which estimated fair value amounts are not specifically presented are estimated to approximate the related recorded values~~stock.

~~Currency~~Dividends ~~Translation~~

~~The~~We ~~assets~~are ~~and~~a ~~liabilities~~holding ofcompany ~~the~~that ~~Company's~~does ~~subsidiaries~~not ~~outside~~conduct ~~the~~any Ubusiness operations of our own.S. As a result, we are ~~translated~~dependent ~~into~~upon ~~U.S.~~cash ~~dollars~~dividends, distributions atand ~~the~~other ~~rates~~transfers offrom ~~exchange~~our insubsidiaries ~~effect~~to atmake ~~the~~dividend ~~balance~~payments ~~sheet dates~~on our Class A Common Stock. ~~Income~~However, we have never paid, and ~~expense~~do ~~items~~not ~~are~~intend ~~translated~~to atpay in the ~~average~~foreseeable ~~exchange~~future, ~~rates~~cash ~~prevailing~~dividends ~~during~~on ~~the~~our ~~period~~Class A Common Stock. ~~Gains~~The amounts ~~and~~available ~~losses~~to ~~resulting~~us ~~from~~to ~~currency~~pay ~~transactions~~cash dividends are ~~recognized~~restricted ~~currently~~by inour ~~income~~subsidiaries’ debt agreements. The declaration and ~~those~~ ~~resulting~~payment ~~from~~of ~~translation~~dividends are also subject to the discretion of our board of directors and depend on various factors, including our net income attributable to DynCorp International Inc., financial ~~statements~~condition, ~~are~~cash ~~included~~requirements, infuture ~~accumulated~~prospects and other ~~comprehensive~~factors ~~income~~deemed relevant by our board of directors.

~~Recent~~Issuer ~~Accounting~~Repurchases ~~Pronouncements~~ of Equity Securities

InOur ~~February 2007,~~board ~~the~~of ~~FASB~~directors ~~issued~~authorized ~~SFAS~~us ~~No. 159,~~to ~~("SFAS~~repurchase ~~No. 159"),~~up ~~"The Fair Value Option for Financial Assets and Financial Liabilities", which permits an entity~~ to ~~measure certain financial assets and financial liabilities at fair value~~$25. ~~Under SFAS No.~~0 ~~159,~~million ~~entities~~per ~~that~~fiscal ~~elect~~year ~~the fair~~of ~~value~~our ~~option~~outstanding ~~will~~Class A ~~report~~Common ~~unrealized gains~~ Stock and/or ~~losses~~senior insubordinated ~~earnings~~notes atduring ~~each~~fiscal ~~subsequent~~years ~~reporting~~2009 ~~date~~and 2010. The ~~fair~~Class A ~~value~~Common ~~option~~Stock ~~may~~portion bewas ~~elected~~repurchased onperiodically anin ~~instrument-by-instrument basis, with a few exceptions, as long as it is applied to~~ the ~~instrument~~open inmarket ~~its~~or ~~entirety.~~through ~~The~~privately ~~fair~~negotiated ~~value~~transactions ~~option~~at ~~election~~our ~~is irrevocable~~discretion, ~~unless~~subject ato ~~new~~market ~~election date occurs. SFAS No. 159~~conditions, ~~establishes presentation~~ and ~~disclosure~~in ~~requirements~~accordance towith ~~help~~applicable ~~financial~~federal ~~statement~~and ~~users~~state ~~understand~~securities ~~the~~laws ~~effect~~and ofregulations. ~~the~~Shares ~~entity's election on its earnings but does not eliminate disclosure requirements~~ of ~~other~~ ~~accounting~~common ~~standards.~~stock ~~Assets~~repurchased ~~and~~under ~~liabilities~~this ~~that~~authorization are ~~measured~~held atas ~~fair~~treasury ~~value must be displayed on the face of the balance sheet~~shares. ~~SFAS~~Some ~~No. 159 is effective as~~ of ~~the~~these ~~beginning~~treasury ofshares ~~the~~were ~~first fiscal~~issued ~~year~~to ~~that~~settle ~~begins~~vested ~~after November 15, 2007~~restricted stock. ~~SFAS~~There ~~No. 159~~were ~~requires~~no ~~prospective~~stock ~~application.~~repurchases ~~The~~in ~~Company does not expect to elect~~ the ~~fair~~fourth ~~value~~quarter ~~option for any~~ of ~~its~~fiscal ~~assets~~year ~~and financial liabilities not already measured at fair value under other accounting literature~~2010.

~~In September 2006,~~33 the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Post-retirement Plans". Among other items, SFAS No. 158 requires recognition of the over-funded or under-funded status of an entity's defined benefit postretirement plan as an asset or liability in the financial statements, the measurement of defined benefit post-retirement plan assets and obligations as of the end of the employer's fiscal year and recognition of the funded status of defined benefit post-retirement plans in other comprehensive income ("OCI"). The standard was effective for the Company as of March 30, 2007. The adoption of SFAS No. 158 did not have an impact on the Company's consolidated financial position, results of operations and cash flows.

49Table of Contents

~~In September 2006,~~Equity ~~the~~Compensation ~~FASB~~Plan ~~issued~~Information SFAS No. 157, "Fair Value Measurements." SFAS No. 157 defines fair value, establishes a framework for measuring fair value under GAAP and expands disclosures about fair value measurements. This statement does not require any new fair value measurements; rather, it applies under other accounting pronouncements that require or permit fair value measurements. The provisions of this statement are to be applied prospectively as of the beginning of the fiscal year in which this statement is initially applied, with any transition adjustment recognized as a cumulative-effect adjustment to the opening balance of retained earnings. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company is currently evaluating the impact of adopting SFAS No. 157 on its consolidated financial statements.

~~In September 2006,~~The ~~the~~following ~~SEC~~table ~~issued~~provides ~~SAB~~information ~~No. 108~~as ~~"Considering the Effects~~ of ~~Prior~~April 2, ~~Year~~2010 ~~Misstatements~~with ~~when~~respect ~~Quantifying Misstatements in Current Year Financial Statements,"~~ to ~~address~~the ~~diversity in practice in quantifying financial statement misstatements. SAB No.~~Class ~~108~~A ~~requires~~Common ~~the~~Stock ~~Company~~that tomay ~~quantify~~be ~~misstatements based~~issued ~~on their impact on each of its consolidated financial statements and related disclosures. SAB No. 108 is effective as of~~ under the ~~end~~DynCorp ofInternational ~~fiscal~~ 2007, ~~allowing~~Omnibus aIncentive ~~one-time transitional~~Plan ~~cumulative~~(“OIP”), ~~effect~~approved ~~adjustment~~by toour ~~retained~~stockholders ~~earnings~~on ~~as of April~~August 18, ~~2006~~2007. ~~for~~See ~~errors~~further ~~that~~information ~~were~~regarding ~~not~~our ~~previously~~equity ~~deemed~~stock ~~material,~~plans ~~but are material under the guidance~~ in ~~SAB No. 108.~~Note ~~The~~11 ~~adoption~~to ofour ~~SAB No. 108 did not have a material impact on the Company's~~ consolidated financial ~~position, results of operations and cash flows~~statements.

In June 2006, the FASB issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109" ("FIN 48"). FIN 48 clarifies the accounting and reporting for income taxes recognized in accordance with SFAS No. 109, "Accounting for Income Taxes." This interpretation prescribes a comprehensive model for the financial statement recognition, measurement, presentation and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. The requirements of FIN 48 are effective for fiscal periods beginning after December 15, 2006. The Company is currently evaluating the interpretation and will adopt FIN 48 in the first quarter of fiscal year 2008. The cumulative effect of adopting FIN 48 will be recorded in retained earnings. The Company does not expect the adoption of FIN 48 to have a material impact on its consolidated financial position, results of operations and cash flows.


Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options Warrants and Rights	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plan (1)
Equity compensation plans approved by security holders	782,398	N/A	(2)	1,433,306
Equity compensation plans not approved by security holders	None	N/A	(2)	None
Total	782,398	N/A	(2)	1,433,306

~~On May 18,~~(1) ~~2006,~~Excluding ~~the~~securities ~~State~~to ofbe ~~Texas~~issued ~~enacted~~upon aexercise ~~law~~of ~~replacing~~outstanding ~~the current franchise tax with a new margin tax that will go into effect on January 1~~options, ~~2008.~~warrants ~~The Company estimates that the new margin tax will not have a significant impact on tax expense or deferred tax assets~~ and ~~liabilities~~rights.

~~In May 2005~~(2) Currently, ~~the~~we ~~FASB~~have issued ~~SFAS~~both ~~No. 154,~~service ~~"Accounting~~based ~~Changes~~ and ~~Error~~performance ~~Corrections –~~based arestricted ~~replacement~~stock ofunits ~~APB~~awards ~~Opinion~~within ~~No. 20 and~~our ~~FASB Statement No. 3." SFAS No. 154 provides guidance on the accounting for~~OIP, ~~and~~which ~~reporting~~do of, accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS No. 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting such a change when retrospective application is impracticable. The provisions of SFAS No. 154 are effective for accounting changes and corrections of errors made in fiscal periods beginning after December 15, 2005. The adoption of SFAS No. 154 did not have aan ~~material~~exercise ~~impact on the Company's consolidated financial position, results of operations and cash flows~~price.

5034

Table of ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. Contents

~~The~~Stock ~~inherent~~Performance ~~risk~~Graph in market risk sensitive instruments and positions primarily relates to potential losses arising from adverse changes in interest rates and foreign currency exchange rates. For further discussion of market risks we may encounter, see "Risk Factors."

~~Interest~~The ~~Rate~~chart ~~Risk~~ below compares the cumulative total shareholder return on our Class A Common Stock from our initial public offering on May 4, 2006 to the end of the fiscal year 2010 with the cumulative total return on the Russell 1000 Growth Index and our peer group, indicated below the table, for the same period. The comparison assumes the investment of $100.00 on May 4, 2006, and reinvestment of all dividends where applicable. Each company in our peer group is equally weighted. The shareholder return is not necessarily indicative of future performance.

WeFigure have interest rate risk relating to changes in interest rates on our variable rate debt. Our policy is to manage interest rate exposure through the use of a combination of fixed and floating rate debt instruments. Borrowings under the Senior Secured Credit Facility bear interest at a rate per annum equal to, at our option, either (1~~) the~~ Prime Rate or (2) LIBOR, plus an applicable margin determined by reference to the leverage ratio, as set forth in the debt agreement. The applicable margins for the Prime Rate and LIBOR as of March 30, 2007 were 1.25% and 2.25%, respectively. As of March 30, 2007, we had $631.0 million of indebtedness, including the senior subordinated notes and excluding interest thereon, of which $339.0 million was secured. On the same date, we had approximately $81.9 million available under our Senior Secured Credit Facility (which gives effect to $21.1 million of outstanding letters of credit). Each quarter point change in interest rates results in approximately $0.8 million change in annual interest expense on the term loan and, assuming the entire revolving loan was drawn, an approximately $0.3 million change in annual interest expense on the revolving loan.

LOGO

~~The table~~(1) ~~below~~Our ~~provides~~peer ~~information~~group ~~about~~is ~~our~~composed ~~fixed~~of ~~rate~~the following U.S. Federal Government service providers with whom we compete and/or ~~variable~~have ~~rate~~common ~~long~~business characteristics: AECOM Technology Corp. (ACM), CACI International Inc. (CAI), ITT Corporation (ITT), KBR Inc. (KBR), L-~~term~~3 ~~debt~~Communications ~~agreements~~Holdings Inc. (LLL), asManTech ofInternational ~~March 30~~Corp. (MANT), ~~2007~~SAIC Inc. (SAI), SRA International Inc. (SRX), and Stanley, Inc. (SXE).

	Expected Maturity as of March 30, 2007 Fiscal Year
															Average Interest Rate
(Dollars in millions)	2008		2009		2010		2011		2012		Thereafter		Total
Fixed Rate	$	–	$	–	$	–	$	–	$	–	$	292.0	$	292.0	9.50%
Variable Rate		37.9		3.9		3.1		294.1		–		–		339.0	7.39%
Total debt	$	37.9	$	3.9	$	3.1	$	294.1	$	–	$	292.0	$	631.0

TheTable carrying amount of our borrowings under the Senior Secured Credit Facility approximates fair value based on the variable interest rates of this debt. The fair value of senior subordinated notes is based on their quoted market value. The above table does not give effect to $21.1 million of outstanding letters of credit as of March 30, 2007. Contents

~~In April 2007,~~ITEM ~~in order to mitigate interest rate risk related to the term loans, the Company entered into interest rate hedge agreements with notional amounts totaling $200~~6.~~0 million,~~ ~~whereby~~SELECTED ~~the~~FINANCIAL ~~Company effectively fixed the interest rate at 4~~DATA.975%, plus an applicable margin (2.25% at March 30, 2007) on the first $200.0 million of its debt indexed to LIBOR through May 22, 2010. The Company concluded that the interest rate swaps qualify as cash flow hedges under the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities."

~~Foreign~~The ~~Currency~~selected ~~Exchange~~historical ~~Rate~~consolidated ~~Risk~~ financial data the fiscal years ended April 2, 2010, April 3, 2009, March 28, 2008, March 30, 2007, and March 31, 2006 is presented the table below.

WeThis ~~are~~information ~~exposed~~should tobe ~~changes~~read in ~~foreign~~conjunction with ~~currency rates~~“Item 7. AtManagement’s ~~present,~~Discussion weand doAnalysis ~~not~~of ~~utilize~~Financial ~~any~~Condition ~~derivative~~and ~~instruments~~Results ~~to manage risk associated with currency exchange rate fluctuations. The functional currency~~ of ~~certain~~Operations” ~~foreign~~and ~~operations is~~ the ~~local~~consolidated ~~currency.~~financial ~~Accordingly,~~statements ~~these foreign entities translate assets~~ and ~~liabilities~~related ~~from~~notes ~~their~~thereto ~~local~~included ~~currencies~~elsewhere ~~to U.S. dollars using year-end exchange rates while income and expense accounts are translated at the average rates~~ in ~~effect~~this ~~during~~Annual ~~the year~~Report. ~~The resulting translation adjustment is recorded as accumulated other comprehensive (loss) income.~~


	Fiscal Years Ended
	April 2, 2010			April 3, 2009			March 28, 2008			March 30, 2007			March 31, 2006
	(Amounts in thousands)
Results of operations:
Revenue	$	3,585,262		$	3,101,093		$	2,139,761		$	2,082,274		$	1,966,993
Cost of services		(3,225,593	)		(2,768,962	)		(1,859,666	)		(1,817,707	)		(1,722,089	)
Selling, general and administrative expenses		(106,401	)		(103,583	)		(117,919	)		(107,681	)		(97,520	)
Depreciation and amortization		(41,639	)		(40,557	)		(42,173	)		(43,401	)		(46,147	)
Operating income		211,629			187,991			120,003			113,485			101,237
Interest expense		(55,650	)		(58,782	)		(55,374	)		(58,412	)		(56,686	)
Interest on mandatory redeemable shares		—			—			—			(3,002	)		(21,142	)
Loss on early extinguishment of debt, net		(146	)		(4,131	)		—			(3,484	)		—
Loss on early extinguishment of preferred stock		—			—			—			(5,717	)		—
Earnings from affiliates		5,202			5,223			4,758			2,913			—
Interest income		542			2,195			3,062			1,789			461
Other income, net		1,035			145			199			—			—
Provision for income taxes		(51,893	)		(41,995	)		(27,999	)		(20,549	)		(16,627	)
Net income		110,719			90,646			44,649			27,023			7,243
Noncontrolling interests		(24,631	)		(20,876	)		3,306			—			—
Net income attributable to DynCorp International Inc.		86,088			69,770			47,955			27,023			7,243
Basic earnings per share		1.53			1.22			0.84			0.49			0.23
Diluted earnings per share		1.52			1.22			0.84			0.49			0.23
Cash flows provided by operating activities		90,473			140,871			42,361			86,836			55,111
Cash flows used by investing activities		(88,875	)		(9,148	)		(11,306	)		(7,595	)		(6,231	)
Cash flows used in financing activities		(79,387	)		(16,880	)		(48,131	)		2,641			(41,781	)
Balance sheet data (end of period):
Cash and cash equivalents		122,433			200,222			85,379			102,455			20,573
Working capital (1)		426,118			439,997			361,813			282,929			251,329
Total assets		1,782,617			1,539,214			1,402,709			1,362,901			1,239,089
Total debt (including Series A Preferred Stock)		552,147			599,912			593,162			630,994			881,372
Total shareholders’ equity attributable to DynCorp International Inc.		587,456			497,521			424,285			379,674			106,338
Total equity		593,278			508,257			420,979			379,674			106,338
Other financial data:
EBITDA (2)		236,857			217,557			174,820			163,438			148,718
Backlog (3)		5,571,636			6,297,903			5,961,000			6,132,011			2,641,000
Purchases of PP&E and software		46,046			7,280			7,738			9,317			6,180

36 ~~ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.~~

Table INDEXof TO CONSOLIDATED FINANCIAL STATEMENTS Contents

Report of Independent Registered Public Accounting Firm
Consolidated Statements of Operations for the fiscal year ended March 30, 2007, for the fiscal year ended March 31, 2006, for the 49 Days ended April 1, 2005 (Successor), and from April 3, 2004 to February 11, 2005 (Immediate Predecessor)
Consolidated Balance Sheets as of March 30, 2007 and March 31, 2006 (Successor)
Consolidated Statements of Cash Flows for the fiscal year ended March 30, 2007, for the fiscal year ended March 31, 2006, for the 49 Days ended April 1, 2005 (Successor), and from April 3, 2004 to February 11, 2005 (Immediate Predecessor)
Consolidated Statements of Shareholders' Equity for the fiscal year ended March 30, 2007, for the fiscal year ended March 31, 2006, for the 49 Days ended April 1, 2005 (Successor), and for the period from April 3, 2004 to February 11, 2005 (Immediate predecessor)
Notes to Consolidated Financial Statements
Financial Statement Schedule:
	Schedule I - Condensed Financial Information of Registrant
	Schedule II - Valuation and Qualifying Accounts for the fiscal year ended March 30, 2007, for the fiscal year ended March 31, 2006, for the 49 Days ended April 1, 2005 (Successor), and from April 3, 2004 to February 11, 2005 (Immediate Predecessor)

(1)	Working capital is defined as current assets, net of current liabilities.

52(2) We define Earnings before Interest, Taxes and Depreciation & Amortization (“EBITDA”) as Generally Accepted Accounting Principles (“GAAP’) net income attributable to DynCorp International Inc. adjusted for interest, taxes, depreciation and amortization, loss on extinguishment of debt, and a portion of other expense related to interest rate swap losses. We use EBITDA as a supplemental measure in the evaluation of our business and believe that EBITDA provides a meaningful measure of operational performance on a consolidated basis because it eliminates the effects of period to period changes in taxes, costs associated with capital investments and interest expense and is consistent with one of the measures we use to evaluate management’s performance for incentive compensation. EBITDA is not a financial measure calculated in accordance with GAAP. Accordingly, it should not be considered in isolation or as a substitute for net income attributable to DynCorp International Inc. or other financial measures prepared in accordance with GAAP. When evaluating EBITDA, investors should consider, among other factors, (i) increasing or decreasing trends in EBITDA, (ii) whether EBITDA has remained at positive levels historically, and (iii) how EBITDA compares to our debt outstanding. The non-GAAP measure of EBITDA does have certain limitations. It does not include interest expense, which is a necessary and ongoing part of our cost structure resulting from debt incurred to expand operations. EBITDA also excludes tax, depreciation and amortization expenses. Because these are material and recurring items, any measure, including EBITDA, which excludes them has a material limitation. To mitigate these limitations, we have policies and procedures in place to identify expenses that qualify as interest, taxes, loss on debt extinguishments, a portion of other expense related to interest rate swap losses, and depreciation and amortization and to approve and segregate these expenses from other expenses to ensure that EBITDA is consistently reflected from period to period. However, the calculation of EBITDA may vary among companies. Therefore, our EBITDA presented may not be comparable to similarly titled measures of other companies. EBITDA does not give effect to the cash we must use to service our debt or pay income taxes and thus does not reflect the funds generated from operations or actually available for capital investments.

(3) Backlog ~~REPORT~~data OFis ~~INDEPENDENT~~as ~~REGISTERED~~of ~~PUBLIC~~the ~~ACCOUNTING~~end ~~FIRM~~ of the applicable period. See “Item 1. Business” for further details concerning backlog.

~~To the~~The ~~Board~~following oftable ~~Directors~~presents ~~and~~a ~~Shareholders~~reconciliation of net income attributable to DynCorp International Inc. ~~Falls~~ to ~~Church,~~EBITDA ~~Virginia~~for the periods included below.

We have audited the accompanying consolidated balance sheets of DynCorp International Inc. and subsidiaries (the "Company") as of March 30, 2007 and March 31, 2006 (Successor), and the related consolidated statements of operations, shareholders' equity, and cash flows for the fiscal year ended March 30, 2007, the fiscal year ended March 31, 2006, the 49 days ended April 1, 2005 (Successor), and the period from April 3, 2004 to February 11, 2005 (Immediate Predecessor). Our audits also included the financial statement schedules listed in the Index at Item 15. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits.


	Fiscal Years Ended
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO DYNCORP INTERNATIONAL INC. TO EBITDA:	April 2, 2010		April 3, 2009		March 28, 2008		March 30, 2007		March 31, 2006
	(Amounts in thousands)
Net income attributable to DynCorp International Inc.	$	86,088	$	69,770	$	47,955	$	27,023	$	7,243
Income taxes		51,893		41,995		27,999		20,549		16,627
Interest expense, loss on early extinguishment of debt and preferred stock, and interest rate swap losses recorded in other income/expense (1)(2)		56,298		64,158		55,374		70,615		77,828
Depreciation and amortization		42,578		41,634		43,492		45,251		47,020

EBITDA	$	236,857	$	217,557	$	174,820	$	163,438	$	148,718

~~We conducted~~(1) ~~our~~Fiscal ~~audits~~year in2009 ~~accordance~~includes ~~with standards of~~ the ~~Public~~costs ~~Company~~associated ~~Accounting~~with ~~Oversight~~replacing ~~Board~~our ~~(United~~senior ~~States).~~secured ~~Those~~credit ~~standards~~facility, ~~require~~as ~~that~~defined ~~we plan~~ and ~~perform~~further ~~the~~discussed ~~audit~~in to“Item ~~obtain~~7. ~~reasonable assurance~~Management’s ~~about~~Discussion ~~whether~~and ~~the~~Analysis ~~financial statements are free~~ of ~~material~~Financial ~~misstatement.~~Conditions ~~The~~and ~~Company~~Results isof ~~not required to have~~Operations”, ~~nor~~including ~~were~~the wewrite-off ~~engaged to perform, an audit~~ of ~~its~~deferred ~~internal~~financing ~~control over financial reporting~~fees. ~~Our~~Also ~~audits~~ included ~~consideration~~is ofthe ~~internal~~premium ~~control~~on ~~over~~the ~~financial~~redemption ~~reporting~~of as a ~~basis~~portion ~~for~~of ~~designing~~the ~~audit~~senior ~~procedures~~subordinated ~~that~~notes ~~are~~and ~~appropriate~~write-off inof ~~the~~deferred ~~circumstances,~~financing ~~but~~costs ~~not~~associated ~~for~~with the ~~purpose of~~early ~~expressing~~retirement anof ~~opinion~~a onportion ~~the effectiveness~~ of the ~~Company's~~senior ~~internal~~subordinated ~~control~~notes. ~~over~~These ~~financial~~premiums ~~reporting.~~and ~~Accordingly,~~write-off werepresent ~~express~~additional nocosts ~~such~~of ~~opinion~~financing. AnIn ~~audit also includes examining~~addition, onwe aadded ~~test~~back ~~basis, evidence supporting the~~ amounts ~~and~~associated ~~disclosures~~with inhedge ~~the financial statements, assessing the~~ accounting ~~principles~~recorded ~~used~~in ~~and~~other ~~significant estimates made by management, as well as evaluating the overall financial statement presentation~~income/expense. ~~We believe that our audits provide a reasonable basis for our opinion.~~

~~As discussed~~(2) inFiscal ~~Note 2~~year to2007 includes the ~~financial~~premium ~~statements,~~associated ~~DynCorp~~with ~~International~~the ~~LLC~~redemption ~~was~~of aall ~~wholly~~of ~~owned~~the ~~subsidiary~~previously ofoutstanding ~~DynCorp~~preferred stock, ~~which~~premium ~~was~~on ~~acquired~~the byredemption of a ~~newly~~portion ~~formed~~of ~~entity,~~the ~~DynCorp International Inc.,~~senior onsubordinated ~~February 11,~~notes ~~2005.~~and Aswrite-off aof ~~result,~~deferred financing costs associated with the ~~periods~~early ~~presented~~retirement inof a portion of the ~~accompanying~~senior ~~financial~~subordinated ~~statements~~notes. ~~reflect~~These apremiums ~~new~~and ~~basis~~write-off represent additional costs of ~~accounting~~financing ~~beginning~~and ~~February 12, 2005.~~our capital structure.

~~In our~~37 opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of March 30, 2007 and March 31, 2006, and the results of their operations and their cash flows for the fiscal year ended March 30, 2007, the fiscal year ended March 31, 2006, the 49 days ended April 1, 2005, (Successor), and the period from April 3, 2004 to February 11, 2005 (Immediate Predecessor), in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, such financial statement schedules, when considered in relation to the basic consolidated financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/ DeloitteTable &of Touche LLP Contents

~~Fort Worth,~~ITEM ~~Texas~~7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

~~June 18~~The following discussion and analysis of our consolidated financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements, the notes thereto, and other data contained elsewhere in this Annual Report. Please see “Item 1A. Risk Factors” and “Forward-Looking Statements” for a discussion of the risks, ~~2007~~uncertainties and assumptions associated with these statements. Unless otherwise noted, all amounts discussed herein are consolidated. All references in this Annual Report to fiscal years of the U.S. government pertain to the fiscal year, which ends on September 30th of each year.

53Company Overview

We are a global government services provider in support of U.S. national security and foreign policy objectives, delivering support solutions for defense, diplomacy, and international development. We are a leading provider of specialized mission-critical professional and support services outsourced by the U.S. military, non-military U.S. governmental agencies and foreign ~~DYNCORP~~governments. ~~INTERNATIONAL INC~~Our specific global expertise is in intelligence and law enforcement training and support, security services, base and logistics operations, rule of law development and construction management, platform services and operations, and linguist services. ~~CONSOLIDATED~~ ~~STATEMENTS~~We OFalso ~~OPERATIONS (Dollars~~provide logistics support for all our services. As of April 2, 2010, we had approximately 22,300 employees, including employees from our consolidated subsidiaries, in ~~thousands~~38 countries, ~~except~~approximately ~~per~~60 ~~share~~active ~~data)~~ contracts ranging in duration from three to ten years and approximately 127 active task orders. We have provided essential services to numerous U.S. government departments and agencies since 1951.

		Successor						Immediate Predecessor
		Fiscal Year Ended
								Period from April 3, 2004 to Feb 11, 2005
						49 Days Ended April 1, 2005
		March 30, 2007		March 31, 2006
Revenues		$	2,082,274	$	1,966,993	$	266,604	$	1,654,305
Cost of services			(1,817,707)		(1,722,089)		(245,406)		(1,496,109)
Selling, general and administrative expenses			(107,681)		(97,520)		(8,408)		(57,755)
Depreciation and amortization expense			(43,401)		(46,147)		(5,605)		(5,922)
Operating income			113,485		101,237		7,185		94,519
	Interest expense		(58,412)		(56,686)		(8,054)		–
	Interest expense on mandatory redeemable shares		(3,002)		(21,142)		(2,182)		–
	Loss on early extinguishment of debt and preferred stock		(9,201)		–		–		–
	Net earnings from affiliates		2,913		–		–		–
	Interest income		1,789		461		7		170
Income (loss) before income taxes			47,572		23,870		(3,044)		94,689
Provision for income taxes			(20,549)		(16,627)		(60)		(34,956)
Net income (loss)		$	27,023	$	7,243	$	(3,104)	$	59,733
Basic and diluted income (loss) per share		$	0.49	$	0.23	$	(0.10)		N/A

During fiscal years 2006 through 2008, we conducted our operations through two reportable segments: GS and MTSS. On March 29, 2008, we divided our GS operating segment into two new segments, ISS and LCM, to enable us to better capitalize on business development opportunities and enhance our ongoing service. Our ISS operating segment consisted of our Law Enforcement and Security strategic business unit, our Specialty Aviation and Counter-Drug Operations strategic business unit and GLS, our joint venture for the INSCOM contract. Our LCM operating segment consisted of our Contingency and Logistics Operations strategic business unit and our Operations Maintenance and Construction Management strategic business unit and includes any work awarded under the LOGCAP IV. Our third segment was MTSS, which did not significantly change.

~~See~~On ~~notes~~April 6, 2009, we announced a further reorganization of our business structure to ~~consolidated~~better ~~financial~~align ~~statements~~with strategic markets and streamline our infrastructure. Under the new alignment, our three reportable segments were realigned into three new segments, two of which, GSDS and GPSS, are wholly-owned, and a third segment GLS, which is a 51% owned joint venture. The new structure became effective April 4, 2009, the start of our 2010 fiscal year.

54In addition to the information presented below, Note 13 to our consolidated financial statements contains additional information about our operating segments and geographic areas in which we have conducted business during fiscal years 2010, 2009, and 2008. We have recast the corresponding items of segment information during fiscal years 2009 and 2008 to conform to our fiscal year 2010 segment presentation.

As discussed in detail in the Definitive Proxy Statement, we entered into the Merger Agreement, pursuant to which, at the effective time of the Merger, Merger Sub will be merged with and into the Company, and as a result the Company will continue as ~~DYNCORP~~the ~~INTERNATIONAL INC~~surviving corporation and be a wholly owned subsidiary of Parent. ~~CONSOLIDATED~~ ~~BALANCE~~The ~~SHEETS (Amounts~~Merger inAgreement ~~thousands,~~was ~~except~~approved ~~share~~by ~~data)~~ the Board.

			Successor
			March 30, 2007		March 31, 2006
ASSETS
Current assets:
	Cash and cash equivalents		$	102,455	$	20,573
	Restricted cash			20,224		–
	Accounts receivable, net of allowances of $3,428 and $8,479			461,950		440,195
	Prepaid expenses and other current assets			69,487		43,733
	Deferred income taxes			12,864		795
		Total current assets		666,980		505,296
Property and equipment, net				12,646		8,769
Goodwill				420,180		420,180
Tradename				18,318		18,318
Other intangibles, net				214,364		254,363
Deferred income taxes				13,459		11,518
Other assets, net				16,954		20,645
Total assets			$	1,362,901	$	1,239,089
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Current portion of long-term debt		$	37,850	$	2,588
	Accounts payable			127,282		132,396
	Accrued payroll and employee costs			88,929		65,586
	Other accrued liabilities			116,308		45,117
	Income taxes payable			13,682		8,280
		Total current liabilities		384,051		253,967
Long-term debt, less current portion				593,144		658,963
Other long-term liabilities				6,032		–
Shares subject to mandatory redemption Series A preferred stock, stated value $0 and $195,550; 50,000,000 and 350,000 shares authorized; 0 and 190,550 shares issued and outstanding; redemption value of $0 and $219,821 at March 30, 2007 and March 31, 2006, respectively				–		219,821
Commitments and contingencies
Shareholders' equity:
	Common stock, $0.01 par value – 57,000,000 and 32,000,000 shares issued and outstanding			570		320
	Additional paid-in capital			352,245		102,097
	Retained earnings			27,023		4,139
	Accumulated other comprehensive loss			(164)		(218)
		Total shareholders' equity		379,674		106,338
Total liabilities and shareholders' equity			$	1,362,901	$	1,239,089

Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of the Company’s Class A Common Stock, other than shares owned by the Company, Parent or Merger Sub, or by any stockholders who have perfected and not withdrawn a demand for appraisal rights under Delaware law, will be canceled and will be automatically converted into the right to receive the $17.55 Per Share Merger

~~See~~38 ~~notes to consolidated financial statements.~~

55Table of Contents

Consideration, ~~DYNCORP~~without ~~INTERNATIONAL INC~~interest. ~~CONSOLIDATED~~ ~~STATEMENTS~~Additionally, OFthe ~~CASH~~Company’s ~~FLOWS (Dollars~~restricted instock ~~thousands)~~ units granted under the DynCorp International 2007 OIP will vest at the effective time of the Merger and will be converted into the right to receive the Per Share Merger Consideration.

				Successor						Immediate Predecessor
				Fiscal Year Ended
										Period From April 3, 2004 to Feb 11, 2005
								49 Days Ended April 1, 2005
				March 30, 2007		March 31, 2006
Cash flows from operating activities
Net income (loss)				$	27,023	$	7,243	$	(3,104)	$	59,733
Adjustments to reconcile net income (loss) to net cash provided by (used by) operating activities:
		Depreciation and amortization			45,251		47,020		5,704		6,637
		Loss on early extinguishment of debt			2,657		–		–		–
		Loss on early extinguishment of preferred stock			5,717		–		–		–
		Excess tax benefits from equity-based compensation			(495)		–		–		–
		Non-cash interest expense on redeemable preferred stock dividends			–		21,142		2,182		–
		Amortization of deferred loan costs			3,744		2,878		383		–
		Net loss on sale of assets			–		–		–		21
		(Recovery) provision for losses on accounts receivable			(2,500)		4,204		–		4,338
		Net earnings from affiliates			(2,913)		(214)		(4)		(65)
		Deferred income taxes			(14,010)		(9,407)		–		225
		Equity-based compensation			2,353		2,417		–		–
Changes in assets and liabilities:
		Restricted cash			(20,224)		–		–		–
		Accounts receivable			(19,255)		(21,885)		(58,344)		(133,185)
		Prepaid expenses and other current assets			(25,165)		(17,485)		9,866		(20,672)
		Accounts payable and accrued liabilities			82,427		10,828		12,017		80,658
		Redeemable preferred stock dividend			(3,695)		–		–		–
		Income taxes payable			5,921		8,370		60		218
			Net cash provided by (used by) operating activities		86,836		55,111		(31,240)		(2,092)
Cash flows from investing activities
	Acquisition, net of cash received				–		–		(865,053)		–
	Purchase of property and equipment				(7,037)		(2,271)		(244)		(8,473)
	Purchase of computer software				(2,280)		(3,909)		–		–
	Other assets				1,722		(51)		(4,097)		(2,234)
			Net cash used by investing activities		(7,595)		(6,231)		(869,394)		(10,707)
Cash flows from financing activities
	Net proceeds from initial public offering				346,483		–		–		–
	Redemption of preferred stock				(216,126)		–		–		–
	Payment of special Class B distribution				(100,000)		–		–		–
	Payments on long-term debt				(30,556)		(3,449)		–		–
	Premium paid on redemption of senior subordinated notes				(2,657)		–		–		–
	Premium paid on redemption of preferred stock				(5,717)		–		–		–
	Payment of deferred financing costs				(640)		–		–		–
	Borrowings under other financing arrangements				11,359		–		–		–
	Excess tax benefits from equity-based compensation				495		–		–		–
	(Payments) proceeds under revolving credit facilities				–		(35,000)		35,000		–
	Net transfers from parent company				–		–		–		14,325
	Capital contributions				–		–		224,825		–
	Proceeds from the issuance of long-term debt				–		–		665,000		–
	Payment of initial public offering costs				–		(1,940)		–		–
	Payment of debt issuance costs				–		(909)		(18,753)		–
	Purchase of interest rate cap				–		(483)		–		–
			Net cash provided by (used by) financing activities		2,641		(41,781)		906,072		14,325
Net increase in cash and cash equivalents					81,882		7,099		5,438		1,526
Cash and cash equivalents, beginning of period					20,573		13,474		8,036		6,510
Cash and cash equivalents, end of period				$	102,455	$	20,573	$	13,474	$	8,036
Income taxes paid (net of refunds)				$	26,183	$	19,025	$	2	$	(10)
Interest paid				$	55,486	$	57,464	$	322	$	–
Non-cash investing activities				$	–	$	1,194	$	–	$	–

Current Operating Environment and Outlook

~~See~~External ~~notes~~Factors ~~to consolidated financial statements.~~

56Over most of the last two decades, the U.S. government has increased its reliance on the private sector for a wide range of professional and support services. This increased use of outsourcing by the U.S. government has been driven by a variety of factors including: lean-government initiatives launched in the 1990s, surges in demand during times of national crisis, the increased complexity of missions conducted by the U.S. military and the DoS, increased focus of the U.S. military on war-fighting efforts and the loss of skills within the government caused by workforce reductions and retirements.

The overall level of U.S. defense spending has increased in recent years for numerous reasons, including increases in funding of operations in Iraq and Afghanistan and the DoD’s modernization initiatives. However, the funding of our programs is subject to the overall U.S. government budget and appropriation decisions and processes which are driven by numerous factors, ~~DYNCORP~~including ~~INTERNATIONAL INC~~geo-political events and macroeconomic conditions, and are beyond our control. ~~CONSOLIDATED~~ ~~STATEMENTS~~While OFthese ~~SHAREHOLDERS'~~dynamics ~~EQUITY~~ could place pressure on defense spending, we believe that, within the defense budget, weapon system acquisitions will be the most likely initial target for budget reductions, and operations and maintenance budgets will remain robust, driven by (~~Dollars~~i) the need to reset equipment coming out of Iraq, (ii) the logistics and ~~shares~~support chain associated with repositioning of forces and eventual drawdown in ~~thousands~~Iraq and (iii) deployments into Afghanistan.

			Common Stock							Accumulated Other Comprehensive Income (Loss)
Immediate Predecessor						Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings				Total Shareholders' Equity
			Shares	Amount
Balance at April 3, 2004								$	396,566	$	7	$	396,573
	Comprehensive income:
		Net income							59,733				59,733
		Foreign currency translation									60		60
	Comprehensive income								59,733		60		59,793
Net transfers to Computer Sciences Corporation									14,325		–		14,325
Balance at February 11, 2005								$	470,624	$	67	$	470,691
Successor
Initial Capitalization – February 12, 2005			32,000	$	320	$	99,680	$	–	$	–	$	100,000
	Comprehensive loss:
		Net loss							(3,104)		–		(3,104)
		Foreign currency translation							–		22		22
	Comprehensive loss								(3,104)		22		(3,082)
Balance at April 1, 2005			32,000	$	320	$	99,680	$	(3,104)	$	22	$	96,918
	Comprehensive income:
		Net income					–		7,243		–		7,243
		Change in fair value of interest rate cap					–		–		(260)		(260)
		Foreign currency translation					–		–		20		20
	Comprehensive income						–		7,243		(240)		7,003
		Equity-based compensation					2,417		–		–		2,417
Balance at March 31, 2006			32,000	$	320	$	102,097	$	4,139	$	(218)	$	106,338
	Comprehensive income:
		Net income					–		27,023		–		27,023
		Change in fair value of interest rate cap					–		–		(16)		(16)
		Foreign currency translation					–		–		70		70
	Comprehensive income						–		27,023		54		27,077
		Initial public offering of common stock	25,000		250		343,161		–		–		343,411
		Dividend on Class B equity					(95,861)		(4,139)		–		(100,000)
		Tax benefit associated with equity-based compensation					495		–		–		495
		Equity-based compensation					2,353		–		–		2,353
Balance at March 30, 2007			57,000	$	570	$	352,245	$	27,023	$	(164)	$	379,674

Although the ultimate size of future defense budgets remains uncertain, current indications are that overall defense spending will continue to increase over the next few years, albeit at lower rates of growth relative to those of the last decade. We believe the following industry trends will result in continued strong demand in our target markets for the types of outsourced services we provide:

~~See~~• ~~notes~~the continued transformation of military forces, leading to ~~consolidated~~increased ~~financial~~outsourcing ~~statements.~~of non-combat functions, including life-cycle asset management functions ranging from organizational to depot level maintenance;

57• an increased level and frequency of overseas deployment and peacekeeping operations for the DoS and DoD;

• increased ~~DYNCORP~~maintenance, ~~INTERNATIONAL INC. NOTES~~overhaul TOand ~~CONSOLIDATED~~upgrade ~~FINANCIAL~~needs ~~STATEMENTS~~ to support aging military platforms;

• increased ~~For~~outsourcing ~~the~~by ~~Fiscal~~foreign ~~Year~~governments ~~Ended~~of ~~March 30~~maintenance, ~~2007,~~supply ~~Fiscal Year Ended March 31~~support, ~~2006,~~facilities 49management ~~Days Ended April 1, 2005,~~ and ~~the~~construction ~~Period~~management-related ~~from~~services; ~~April 3, 2004 to February 11, 2005~~ and

~~Note 1—Summary~~• ofa ~~Significant~~shift ~~Accounting~~by ~~Policies~~ the U.S. government from single award to more multiple award IDIQ contracts, which may offer us an opportunity to increase revenue under these contracts by competing for task orders with the other contract awardees.

~~DynCorp~~During ~~International Inc~~the last year, the U.S. ~~through~~began ~~its~~to ~~subsidiaries~~drawdown ~~(together,~~troops in Iraq. Although the ~~"Company"),~~timeframe ~~provides~~to ~~defense~~complete ~~and~~the ~~technical~~drawdown ~~services~~is ~~and~~uncertain, ~~government~~we ~~outsourced~~believe ~~solutions primarily~~that tothe U.S. ~~government~~will ~~agencies~~have ~~throughout~~a ~~the~~sizeable ~~U.S.~~military and ~~internationally.~~contractor ~~Key~~presence ~~offerings~~in ~~include~~Iraq ~~aviation~~for ~~services,~~at ~~such~~least asthe ~~maintenance~~next ~~and~~four ~~related~~to ~~support,~~six asyears. ~~well~~As asa ~~base~~result, ~~maintenance/operations~~we ~~and~~expect ~~personal~~our ~~and~~level ~~physical~~of ~~security~~existing ~~services.~~business ~~Primary~~involving ~~customers~~Iraq ~~include~~to gradually diminish over the Unext four to six years.S. ~~Departments~~Nevertheless, ofwe ~~Defense~~believe ~~("DoD")~~that ~~and~~we ~~U.S.~~still ~~Department~~have ofopportunities ~~State~~to ~~("DoS")~~win new Iraq based business with demand remaining strong over the next four to six years for logistics, ~~but~~equipment ~~also~~reset, ~~include~~training ~~other~~and mentoring of Iraqi forces and government agencies, ~~foreign governments~~and translation services to support security and ~~commercial~~peacekeeping ~~customers~~activities.

~~Principles~~39 ~~of Consolidation~~

TheTable consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Generally, investments in which the Company owns a 20% to 50% ownership interest are accounted for by the equity method. These investments are in business entities in which the Company does not have control, but has the ability to exercise significant influence over operating and financial policies and is not the primary beneficiary as defined in Financial Accounting Standards Board (the "FASB") Interpretation No. 46R (Revised 2003), "Consolidation of Variable Interest Entities" ("FIN 46R"). The Company has no investments in business entities of less than 20%. Contents

~~The following~~On ~~table~~the ~~sets~~other ~~forth~~hand, ~~the~~President ~~Company's~~Obama ~~ownership~~ordered increases in ~~joint~~troop ~~ventures~~levels ~~and~~in ~~companies~~Afghanistan. ~~that~~We believe we are ~~not~~well ~~consolidated~~positioned ~~into~~in ~~the~~Afghanistan ~~Company's~~to ~~financial~~capitalize ~~statements~~on asincreased U.S. government focus through many of ~~March 30~~our service offerings, ~~2007~~including police training and mentoring, aircraft logistics and operations, infrastructure development, mine ~~are~~resistant ~~accounted~~and ~~for~~ambush byprotected ~~the~~or ~~equity~~“MRAP” ~~method~~services, and logistics services under LOGCAP IV. ~~For~~Additionally, ~~all~~although ofsome ~~the~~specific ~~entities~~initiatives ~~listed~~and ~~below~~priorities may change from year to year, the ~~Company~~investments ~~has~~and ~~the~~acquisitions ~~right~~we made have been focused on aligning our business to ~~elect~~address ~~half~~areas that have high growth potential, including intelligence training and rule of law development. However, the ~~board~~possibility ofremains ~~directors~~that one or ~~other~~more ~~management~~of ~~body.~~our ~~Economic~~programs ~~rights~~could ~~are~~be ~~indicated~~reduced, postponed, or byterminated as a result of the ~~ownership~~administration’s ~~percentages~~assessment ~~listed~~of ~~below~~priorities.

DynCorp-Hibernia Ltd.		50.0%
DynEgypt LLC		50.0%
Dyn Puerto Rico Corporation		49.9%
Contingency Response Services LLC		45.0%
Babcock DynCorp Limited		44.0%
Partnership for Temporary Housing LLC		40.0%
DCP Contingency Services LLC		40.0%

Current Economic Conditions

~~The~~We ~~following~~believe ~~table~~that ~~sets~~our ~~forth~~industry ~~the~~and ~~Company's~~customer ~~ownership~~base inare ~~joint~~less ~~ventures~~likely ~~that~~to ~~are~~be ~~consolidated~~affected ~~into~~by many of the ~~Company's~~factors ~~financial~~generally ~~statements~~affecting asbusiness ofand ~~March 30,~~consumer ~~2007~~spending. ~~For~~Our contract awards typically last one to five years and we have a strong history of being awarded a majority of the ~~entities~~contract ~~listed~~options. ~~below~~Additionally, ~~the~~since ~~Company~~our ~~has~~primary customer is the ~~right~~federal togovernment, ~~elect~~we ~~half~~have ofnot ~~the~~historically had ~~Board~~significant ofissues ~~Directors~~with bad debt. However, we cannot be certain that the economic environment or other ~~management~~factors ~~body~~will ~~and~~not isadversely ~~the~~impact ~~primary~~our ~~beneficiary~~business, asfinancial ~~defined~~condition or results of operations in ~~FIN 46R~~ the future.

Global Linguist Solutions LLC		51.0%
Global Nation Building LLC		51.0%

Furthermore, we believe that our primary sources of liquidity such as customer collections and the remaining capacity under our senior secured credit facility will enable us to continue to perform under our existing contracts and further grow our business. However, a longer term credit crisis could adversely affect our ability to obtain additional liquidity or refinance existing indebtedness on acceptable terms or at all, which could adversely affect our business, financial condition and results of operations.

58See “Item 1A. Risk Factors — Current or worsening economic conditions could adversely impact our business” for a discussion of the risks associated with the current economic condition.

~~Revenue~~Internal ~~Recognition~~Factors ~~and Cost Estimation on Long-Term Contracts~~

~~General –~~Our ~~Revenues~~internal ~~are~~focus recognized when persuasive evidence of an arrangement exists, services or products have been provided to the client, the sales price is fixed or determinable, and collectibility is reasonably assured. Revenues by contract type in fiscal 2007 and 2006, and for ~~the combined~~success ~~periods~~centers inaround ~~fiscal~~five ~~2005~~key ~~were as follows~~principles:

	Fiscal Year
Contract Type	2007	2006	2005
Fixed-Price	43%	34%	27%
Time-and-Materials	36%	38%	39%
Cost-Reimbursement	21%	28%	34%
	100%	100%	100%

•

Relentless Performance — Through a relentless mindset in meeting our commitments to our customers every day and in operating with absolute integrity and in accordance with our Code of Ethics and Business Conduct in all that we do.

~~The~~• ~~Company~~Lean ~~expenses~~Enterprise ~~pre-contract~~— ~~costs~~In asorder ~~incurred~~to ~~for~~further anfuel ~~anticipated~~our ~~contract~~growth ~~until~~and ~~the~~invest ~~contract~~in isour ~~awarded.~~people, ~~Throughout~~we ~~the~~must ~~life~~generate ~~of the~~additional ~~contract,~~investment ~~indirect~~capacity ~~costs,~~by ~~including~~ensuring ~~general~~that ~~and~~our ~~administrative~~infrastructure ~~costs,~~is ~~are~~as ~~expensed~~efficient as ~~incurred~~possible ~~and~~without ~~are~~jeopardizing ~~based~~our onability ~~Defense~~to ~~Contract Audit Agency ("DCAA") approved indirect rates~~perform.

~~When revenue~~• ~~recognition~~Clear isStrategic ~~deferred~~Investment ~~relative~~— toWe ~~the~~must ~~timing~~have ofclarity ~~cost~~in ~~incurred~~our strategic priorities, ~~costs~~and ~~that~~we ~~are~~must ~~direct~~properly ~~and~~focus ~~incremental~~our toinvestments ain ~~specific~~people, ~~transaction~~new ~~are~~program ~~deferred~~pursuits and ~~charged~~efforts to ~~expense~~penetrate ~~in proportion~~new tosegments of the ~~revenue recognized~~market.

~~Customer acceptance~~• ~~provisions~~New ~~generally~~Business ~~allow~~— ~~the~~Growing ~~customer~~our tobusiness ~~cancel~~profitably anstarts ~~arrangement~~with ~~when~~winning ~~products~~new ~~delivered~~business. orThis ~~services~~involves ~~rendered~~having doa ~~not~~winning ~~meet~~attitude ~~benefits~~across ~~expected~~our ~~from the arrangement. Acceptance generally occurs before revenue recognition. However~~enterprise, ifparticularly itin ~~can~~satisfying beour ~~shown~~current ~~objectively~~customers ~~that~~and ~~the~~competing ~~acceptance criteria have been satisfied~~ for ~~separable~~new ~~units of accounting or profit centers, as applicable within an arrangement, revenue is recognized before formal acceptance~~business.

~~Management regularly~~• ~~reviews~~People ~~project~~— ~~profitability~~We ~~and~~must ~~underlying~~be ~~estimates.~~the ~~Revisions~~employer toof ~~the~~choice ~~estimates~~with ~~are~~strong, ~~reflected~~trusted inleadership, ~~results~~an ofemployee-focused ~~operations~~environment asand a ~~change~~culture inof ~~accounting~~mutual ~~estimate~~respect in ~~the period~~which inour ~~which~~employees ~~the~~are ~~facts~~empowered ~~that~~and ~~give~~rewarded ~~rise~~for toserving ~~the~~our ~~revision~~customers ~~become~~and ~~known~~ensuring bytheir ~~management~~success.

~~Major~~We ~~factors~~apply ~~the~~these ~~Company~~key ~~considers~~principles incontinuously ~~determining~~as ~~total~~we ~~estimated~~assess ~~revenue~~our ~~and~~operational ~~cost include the basic contract price, contract options, change orders (modifications of the original contract), back charges~~ and ~~claims,~~administrative ~~and contract provisions for penalties, award fees and~~ performance ~~incentives~~. All of these factors and other special contract provisions must be evaluated throughout the life of the Company's contracts when estimating total contract revenue to recognize in the periods in which they are earned under the percentage-of-completion or proportional methods of accounting.

~~Federal~~40 Government Contracts – Projects under the Company's U.S. federal government contracts typically have different pricing mechanisms that influence how revenue is earned and recognized. These pricing mechanisms are classified as cost plus fixed-fee, fixed-price, cost reimbursement, cost plus award fee, time-and-materials (including Unit-Price/level-of-effort contracts), or indefinite delivery, indefinite quantity ("IDIQ"). The exact timing and quantity of delivery for IDIQ profit centers are not known at the time of contract award, but they can contain any type of pricing mechanism; fixed-price, time and materials, cost reimbursable or cost plus fixed fee.

Revenue onTable fixed-price projects is generally recognized ratably over the contract period measured by either output or input methods appropriate to the services or products provided. For example, "output measures" can include period of service, such as for aircraft fleet maintenance; and units delivered or produced, such as aircraft for which modification has been completed. "Input measures" can include a cost-to-cost method, such as for procurement-related services. Contents

~~Revenue on~~Notable ~~fixed-price~~Fiscal ~~construction~~Year or2010 ~~production-type~~Developments contracts is recognized on the basis of the estimated percentage of completion. Progress towards completion is typically measured based on achievement of specified contract milestones, when available, or based on costs incurred as a proportion of estimated total costs. Cost of sales is based on actual costs incurred to date, and revenues are recorded in an amount equal to costs incurred plus the estimated gross profit based on the percentage-of-completion. Gross profit for any period equals total expected revenues less total expected costs, multiplied by the percentage-complete at the end of the period in question, less gross profit recognized in prior periods.

59• In July 2009, we were awarded the LOGCAP IV task order in southern Afghanistan, with an estimated annual value of approximately $600 million. Ramp up activities began in September 2009.

~~Cost-reimbursement type~~• ~~contracts~~In ~~can~~September ~~be cost plus fixed fee~~2009, orwe ~~cost~~were ~~plus~~awarded ~~award~~a ~~fee. Revenue recognition for these two~~ contract ~~types~~by isthe ~~very similar~~U.S. InAir ~~both~~Force ~~cases,~~to ~~revenue is~~provide ~~based~~aircraft onmaintenance ~~actual~~support ~~direct~~at ~~cost~~Sheppard ~~plus~~Air ~~DCAA-approved~~Force ~~indirect rates~~Base. InThe ~~the~~value ~~case~~ of ~~cost plus fixed fee,~~ the ~~fixed~~contract ~~fee~~ is ~~recognized~~$31.2 ~~based~~million ~~on the ratio of the fixed fee~~ for the ~~contract~~base ~~to the~~period, ~~total~~and ~~estimated~~a ~~cost~~potential ofmaximum ~~the~~value ~~contract. In the case~~ of ~~cost~~$256 ~~plus~~million ~~award~~over ~~fee~~seven ~~contracts~~years, ~~the~~if ~~fee~~all isoptions ~~made~~are ~~up of two components, base fee and award fee~~exercised. ~~Base~~Operations ~~fee~~began ~~is recognized~~ in ~~the~~October ~~same manner as the fee on cost plus fixed fee contracts~~2009. ~~Award fees for new contracts that lack specific experience are included in total expected revenues based on an average of the last two award fee periods or award experience for similar contracts.~~

~~The completed~~• ~~contract~~During ~~method~~the issecond ~~sometimes~~quarter ~~used~~of ~~for~~fiscal ~~short~~year ~~duration~~2010, ~~projects~~we ~~when~~purchased ~~the~~helicopters ~~results~~in support of ~~operations~~our ~~would~~new ~~not~~WPPS ~~vary~~air ~~materially~~services ~~from~~task ~~those~~order. ~~resulting~~Given ~~from~~the ~~use~~availability of ~~the percentage-of-completion~~customer ~~method~~assets orto ~~when~~support ~~reliable~~this ~~estimates~~program, ~~cannot~~we bemutually ~~supported~~agreed ~~for~~to ~~percentage-of-completion~~a ~~method~~task ~~recognition.~~order ~~Until~~modification ~~complete,~~under ~~project costs~~which ~~are~~the ~~maintained~~customer inhas ~~work~~supplied inits ~~progress,~~own helicopters. As a ~~component~~result, we plan to utilize all but three of ~~inventory~~the purchased helicopter assets on another program. We have sold one and plan to sell the remaining two helicopters that we do not intend to use in other programs.

~~Contract costs~~• onWe ~~U.S.~~were ~~government~~awarded ~~contracts,~~a ~~including~~WPPS ~~indirect~~task ~~costs,~~order ~~are~~that ~~subject~~was originally expected to ~~audit~~ramp ~~and~~up ~~adjustment~~in bythe ~~negotiations~~second ~~between~~quarter ~~the~~of ~~Company~~fiscal ~~and~~year ~~government~~2010, ~~representatives. Substantially~~but ~~all~~was ofdelayed ~~the~~due ~~Company's~~to ~~indirect~~changes ~~contract~~in ~~costs~~customer ~~have~~requirements. ~~been~~Most ~~agreed~~of ~~upon~~the ~~through~~services ~~2004.~~are ~~Contract~~now ~~revenues~~being ondelivered ~~U.S.~~under ~~government~~the ~~contracts~~INL ~~have~~Air ~~been~~Wing ~~recorded~~program, inwhich ~~amounts~~commenced ~~that~~in ~~are~~the ~~expected~~third toquarter ~~be realized~~of ~~upon~~fiscal ~~final~~year ~~settlement~~2010.

~~Other~~• ~~Contracts –~~On ~~The~~the ~~Company's~~GLS ~~contracts~~program, ~~with~~we ~~non-federal~~completed ~~government~~negotiations ~~customers~~with ~~are~~the ~~predominantly multiple-element.~~customer ~~Multiple-element~~to ~~arrangements~~modify ~~involve~~our ~~multiple obligations~~largest intask ~~various~~order ~~combinations~~ to ~~deliver~~include ~~products,~~a ~~perform~~ceiling ~~services,~~for ~~grant~~recoverable ~~licenses~~cost orof ~~other~~$752 ~~rights,~~million orfor ~~take~~Option ~~certain~~Year ~~actions~~1. ~~The~~While ~~Company~~this ~~evaluates~~resulted ~~these~~in ~~elements~~a tocumulative ~~establish~~reduction ~~whether~~in ~~they represent separable units of accounting and allocate~~ revenue, to the ~~identifiable~~impact, ~~units~~net of ~~accounting~~award ~~based~~fee, onwas ~~relative~~not ~~fair~~material ~~values.~~to ~~The~~our ~~timing~~financial ofresults. ~~revenue~~In ~~recognition~~connection ~~for~~with athese ~~given~~negotiations, ~~unit~~our ofcustomer ~~accounting will~~exercised ~~depend~~another onoption under the ~~nature~~task oforder ~~the~~covering ~~deliverable(s)~~a ~~whether~~period ~~recognition~~from ~~criteria~~December ~~have~~2009 ~~been~~to ~~met.~~June 2010.

~~Other contracts~~• ~~may~~We ~~include~~purchased ~~software~~Phoenix ~~and~~on ~~software~~October ~~related deliverables~~19, ~~construction~~2009 ~~contracts,~~ and ~~services~~Casals ~~with~~on ~~related~~January ~~equipment~~22, ~~and materials~~2010. ~~The~~See ~~same~~Note ~~pricing~~16 ~~mechanisms~~to ~~found~~our ~~in federal~~consolidated ~~government~~financial ~~contracts~~statements ~~are~~for ~~found~~additional ~~in other contracts~~discussion.

~~The Company~~• ~~applies~~On ~~the~~December ~~guidance~~16, in2009, ~~FASB~~we ~~Statement~~filed ofa ~~Position~~pre-award protest with the Government Accountability Office (~~"SOP"~~“GAO”) ~~97-2,~~ ~~"Software~~concerning ~~Revenue~~the ~~Recognition,"~~planned toprocurement ~~its software~~of training and ~~software~~mentoring ~~related~~of ~~deliverables,~~police ~~SOP 81-1~~and ~~"Accounting~~government ~~for~~personnel ~~Performance~~in ofAfghanistan ~~Construction-Type~~by ~~and~~the ~~Certain~~DoD ~~Production-Type Contracts"~~through totask ~~its~~orders ~~construction~~issued ~~contracts,~~by ~~and~~the U.S. ~~Securities~~Army Space and ~~Exchange~~Missile ~~Commission~~Defense ~~("SEC")~~Command ~~Staff~~Counter-Narcoterrorism ~~Accounting~~Technology ~~Bulletin~~Program Office (~~"SAB"~~“CNTPO”) No. ~~104~~ On March 15, ~~"Revenue Recognition~~2010 the GAO announced its ruling in ~~Financial~~favor ~~Statements"~~of ~~("SAB~~our ~~No. 104"),~~protest of the issuance of task order request for proposals by the Department of the Army for training and ~~other~~facilities ~~transaction-specific~~support ~~accounting~~for ~~literature~~the toMinistry ~~deliverables~~of ~~related~~Interior and Afghan National Police. The DoD is expected to ~~non-federal~~issue ~~government services,~~the ~~equipment~~request for proposal for the contract during the second quarter of our fiscal year 2011, and ~~materials.~~the Company intends to propose on the contract.

~~Cash~~• We have historically participated in a collaborative arrangement with two other partners on LOGCAP IV. In November 2009, a U.S. grand jury indicted one of our collaborative partners, Agility, on charges of fraud and ~~cash~~conspiracy, ~~equivalents~~ alleging that it overcharged the U.S. Army on $8.5 billion worth of contracts to provide food to soldiers in Iraq, Kuwait and Jordan. Although Agility was associated with our LOGCAP IV collaborative arrangement, these allegations were in no way related to the work performed under LOGCAP IV. Effective December 16, 2009, we removed Agility as a collaborative partner on the LOGCAP IV contract and terminated the work under existing task orders. We have transitioned Agility’s responsibilities on our current task orders with no adverse affect to us. In April 2010, Agility filed an arbitration demand, asserting claims for breach of contract, and fiduciary duty and unjust enrichment. Agility is seeking a declaration that it is entitled to a 30% share of the LOGCAP IV fees over the life of the contract. We have filed a request to dismiss the arbitration demand as we believe our right to remove Agility as a collaborative partner was justified and permissible. We intend to vigorously defend against Agility’s claims.

~~For~~• ~~purposes~~In ofFebruary ~~reporting~~2010, ~~cash~~we ~~and~~were ~~cash~~awarded ~~equivalents,~~a contract from the ~~Company~~U.S. ~~considers~~Army ~~all~~Research, ~~investments~~Development ~~purchased~~and ~~with~~Engineering anCommand ~~original~~(“RDECOM”) ~~maturity~~to ofassist ~~three~~the ~~months~~Combined orSecurity ~~less~~Transition toCommand-Afghanistan be(“CSTC-A”) ~~cash equivalents.~~and NATO Training Mission (“NTM”) by providing mentors and trainers to

~~Restricted~~41 ~~cash~~

RestrictedTable cashof represents cash restricted by a certain contract in which advance payments are not available for use except to pay specified costs and vendors for work performed on the specific contract. Contents

~~Use~~develop the Afghanistan Ministry of ~~Estimates~~ Defense (“MOD”). This cost-plus-fixed-fee contract has a two-year base period valued at $157.8 million, including a 60-day phase-in period. The total potential contract value is $232.4 million if the one-year option period is exercised. This award is currently under protest but we expect the award to be upheld and operations to begin in July 2010.

~~The~~• ~~preparation~~During offiscal ~~financial~~year ~~statements~~2010, inwe ~~conformity~~continued ~~with~~to ~~generally~~encounter ~~accepted~~cost ~~accounting~~overruns ~~principles~~in ~~("GAAP")~~our ~~requires~~Afghanistan ~~management~~construction toprojects, ~~make~~within ~~estimates~~our ~~and~~infrastructure ~~assumptions that~~service ~~affect~~offering, ~~the~~due ~~amounts~~to ~~reported~~significant inchallenges including the ~~financial~~deteriorating ~~statements~~security environment and ~~accompanying~~issues ~~notes~~with passing equipment through customs in Afghanistan. ~~Management~~Our ~~evaluates~~fiscal ~~these~~year ~~estimates~~2010 ~~and~~results ~~assumptions~~included a loss on anAfghanistan ~~ongoing~~construction ~~basis~~of $16.5 million, including ~~but~~$6.5 ~~not~~million ~~limited~~related to, ~~those relating~~the fourth fiscal quarter. We expect to ~~allowances~~complete ~~for~~our ~~doubtful~~remaining ~~accounts,~~construction ~~fair~~projects ~~value~~in fiscal year 2011 and ~~impairment~~expect ofto ~~intangible~~earn ~~assets~~approximately $11 million in revenue and ~~goodwill,~~incur ~~income~~approximately ~~taxes,~~$11 ~~profitability~~million onin ~~contracts~~costs, ~~anticipated~~net ~~contract~~of ~~modifications~~reserve releases, ~~contingencies and~~in ~~litigation~~fiscal year 2011. ~~Actual~~Subsequently, ~~results~~this ~~could~~strategic ~~differ~~business ~~from~~area ~~those~~is ~~estimates.~~expected to become idle as we do not expect to bid on any similar firm fixed-price contracts without revised terms and conditions.

60• On March 29, 2010, we received a favorable appellate court decision related to the Worldwide Network Services (“WWNS”) case. The appellate court vacated the jury’s award of punitive damages, which allowed us to reverse a $10 million dollar legal reserve in the fourth quarter of fiscal year 2010. See the Consolidated Results of Operations discussion for more detail.

~~Allowance~~• Subsequent to the end of fiscal year 2010, on April 11, 2010, we entered into an agreement to be acquired by an affiliate of Cerberus Capital Management, L.P. See “Item 1. Business — Recent Developments — Merger Agreement” for ~~Doubtful~~additional ~~Accounts~~ detail.

~~The~~Fiscal ~~Company~~Year ~~establishes~~Ended an allowance for doubtful accounts against specific billed receivables based upon the latest information available to determine whether invoices are ultimately collectible. Such information includes the historical trends of write-offs and recovery of previously written-off accountsApril 2, ~~the~~2010 ~~financial~~Compared ~~strength of the respective customer and projected economic and market conditions. The evaluation of these factors involves subjective judgments and changes in these factors may cause an increase~~ to ~~the~~Fiscal ~~Company's estimated~~Year ~~allowance~~Ended ~~for doubtful accounts~~April 3, ~~which~~2009 could significantly impact the Company's consolidated financial statements by incurring bad debt expense. Given that the Company primarily serves the U.S. government, management believes the risk to be relatively low that changes in its allowance for doubtful accounts would have a material impact on its financial results.

~~Property~~Consolidated ~~and~~Results ~~Equipment~~ of Operations

The ~~cost~~following oftable ~~property~~sets ~~and equipment~~forth, ~~less~~for ~~applicable residual values, is depreciated using~~ the ~~straight-line~~periods ~~method. Depreciation commences when the specific asset is complete~~indicated, ~~installed~~our ~~and~~consolidated ~~ready~~results ~~for normal use. As part~~ of ~~the purchase accounting~~operations, ~~which~~both ~~resulted~~in ~~from~~dollars ~~the~~and ~~acquisition,~~as ~~all~~a ~~fixed~~percentage ~~assets were adjusted to fair value on February 11, 2005, thus resetting accumulated depreciation to $0 at the acquisition date. See Note 2 for further discussion~~ of ~~the acquisition. The Company's depreciation and~~ ~~amortization policies are as follows~~revenue:

Computer and related equipment	3 to 5 years
	Fiscal Years Ended
Furniture and other equipment	2 to 10 years
	April 2, 2010					April 3, 2009
Leasehold improvements	Shorter of lease term or useful life
	(Amounts in thousands)
Revenue	$	3,585,262		100.0	%	$	3,101,093		100.0	%
Cost of services		(3,225,593	)	(90.0	)%		(2,768,962	)	(89.3	)%
Selling, general and administrative expenses		(106,401	)	(3.0	)%		(103,583	)	(3.3	)%
Depreciation and amortization expense		(41,639	)	(1.2	)%		(40,557	)	(1.3	)%
Operating income		211,629		5.9	%		187,991		6.1	%
Interest expense		(55,650	)	(1.6	)%		(58,782	)	(1.9	)%
Loss on early extinguishment of debt, net		(146	)	(0.0	)%		(4,131	)	(0.1	)%
Earnings from affiliates		5,202		0.1	%		5,223		0.2	%
Interest income		542		0.0	%		2,195		0.1	%
Other income, net		1,035		0.0	%		145		0.0	%
Income before taxes		162,612		4.5	%		132,641		4.3	%
Provision for income taxes		(51,893	)	(1.4	)%		(41,995	)	(1.4	)%
Net income		110,719		3.1	%		90,646		2.9	%
Noncontrolling interests		(24,631	)	(0.7	)%		(20,876	)	(0.7	)%
Net income attributable to DynCorp International Inc.	$	86,088		2.4	%	$	69,770		2.2	%

~~Impairment~~Revenue of— ~~Long-Lived~~Revenue ~~Assets~~for fiscal year 2010 increased $484.2 million, ~~including~~or ~~Amortized~~15.6%, ~~Intangibles~~ as compared to fiscal year 2009, reflecting increases in our GSDS and GLS operating segments which were partially offset by a decline in

~~Values~~42 of customer-related intangibles and internally developed technology were determined based on estimates and judgments regarding expectations for the estimated future after-tax cash flows from those assets over their lives, including the probability of expected future contract renewals and sales, less a cost-of-capital charge, all of which was discounted to present value.

The CompanyTable evaluates the carrying value of long-lived assets to be held and used, other than goodwill and intangible assets with indefinite lives, when events and circumstances indicate a potential impairment. The carrying value of long-lived assets and customer-related intangibles is considered impaired when the anticipated undiscounted cash flow from such asset is separately identifiable and is less than its carrying value. In that case, a loss is recognized based on the amount by which the carrying value exceeds the fair value. Fair value is determined primarily using the estimated cash flows associated with the asset under review, discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost of disposal. Changes in estimates of future cash flows could result in a write-down of the asset in a future period. Contents

~~During~~ ~~2007,~~our ~~the~~GPSS ~~Company~~operating ~~recognized~~segment. anThe ~~impairment~~increase ofwas ~~approximately~~primarily ~~$0.6 million~~driven ~~associated~~by ~~with~~the aramp ~~customer-related~~up ~~intangible~~of ~~due~~the toLOGCAP IV program and the ~~loss~~benefit of a ~~contract~~full intwelve ~~Saudi~~months ~~Arabia.~~of Asrevenue ofincluding award fees from the Intelligence ~~March 30,~~and ~~2007~~Security Command (“INSCOM”) contract, ~~management~~as ~~believes~~compared ~~there~~to ~~have~~the ~~been~~INSCOM noramp ~~other~~up ~~events~~period, orwhich ~~circumstances~~occurred ~~that~~during ~~would~~the ~~indicate~~first anquarter ~~impairment~~of fiscal year 2009. Our acquisitions of ~~long-lived~~Phoenix ~~assets~~and Casals also contributed to our revenue growth.

~~Indefinite~~Cost ~~Lived~~of ~~Assets~~ services — Cost of services is comprised of direct labor, direct material, subcontractor costs, other direct costs and overhead. Other direct costs include travel, supplies and other miscellaneous costs. Cost of services for fiscal year 2010 increased $456.6 million as compared to fiscal year 2009, primarily due to revenue growth. As a percentage of revenue, cost of services increased to 90.0% of revenue in fiscal year 2010 from 89.3% of revenue in fiscal year 2009. This increase was primarily driven by lower fiscal year 2010 margins on our CFT and CivPol programs, including a higher percentage of CivPol revenue coming from cost-reimbursable type task orders and the impact of the fee sharing arrangement with our collaborative partners on the LOGCAP IV program. Partially offsetting this cost increase was effective cost management efforts on certain programs in our GPSS segment, higher award fees on the INSCOM contract that had no corresponding costs, and lower losses associated with our Afghanistan construction programs.

~~Indefinite-lived~~Selling, ~~assets~~general and administrative expenses (“SG&A”) — SG&A primarily relates to functions such as corporate management, ~~including~~legal, ~~goodwill~~finance, accounting, contracts and ~~tradename~~administration, ~~are~~human ~~not~~resources, ~~amortized~~management ~~but~~information ~~are~~systems, ~~subject~~purchasing toand anbusiness ~~annual~~development. ~~impairment~~SG&A ~~test.~~for ~~The~~fiscal ~~first~~year ~~step~~2010 ofincreased ~~the~~$2.8 million, ~~impairment~~or ~~test~~2.7%, ~~used~~ compared to fiscal ~~identify~~year ~~potential~~2009. ~~impairment,~~As ~~compares~~a ~~the~~percentage ~~fair~~of ~~value~~revenue, ofSG&A ~~each~~decreased ofby ~~the~~0.3%. ~~Company's~~This ~~reporting~~decrease ~~units~~was ~~with~~primarily ~~its~~attributable ~~carrying~~to ~~amount,~~the ~~including~~reversal ~~indefinite-lived~~of ~~assets~~a $10.0 Ifmillion legal reserve in the ~~fair~~fourth ~~value~~quarter of fiscal year 2010 related to a ~~reporting~~favorable appellate court ~~unit~~decision ~~exceeds~~on ~~its~~the ~~carrying~~WWNS ~~amount,~~case ~~indefinite-lived~~as ~~assets~~described ofin the ~~reporting~~“Notable ~~unit~~Fiscal ~~are~~Year ~~not~~2010 ~~considered~~Developments” ~~impaired,~~section ~~and~~above. Also contributing to the ~~second~~comparative ~~step~~decrease ofwas the ~~impairment~~fiscal ~~test~~year is2009 ~~unnecessary~~severance charges related to our former Chief Executive Officer (“CEO”) and former GPSS president. IfPartially ~~the~~offsetting ~~carrying~~this ~~amount~~was an increase in SG&A costs associated with higher business development costs incurred in support of ~~a reporting~~our ~~unit~~growth ~~exceeds~~and ~~its~~severance ~~fair~~costs ~~value,~~associated with the ~~second~~termination ~~step~~without cause of ~~the~~our ~~impairment~~former ~~test~~Senior ~~shall~~Vice bePresident ~~performed~~and toChief ~~measure~~Compliance ~~the~~Officer, ~~amount~~approximately $0.6 million of ~~the~~which ~~impairment~~was ~~loss~~unrecoverable. Additionally, ifwe ~~any~~incurred approximately $3.2 ~~The~~million ~~Company~~in ~~performs~~costs ~~the~~associated ~~annual~~with ~~test~~our ~~for impairment~~two asacquisitions ofand the ~~end~~proposed merger, of$2.9 ~~February~~million of ~~each~~costs ~~fiscal~~associated ~~year~~with retention related compensation expenses connected to our acquisitions and $0.4 ~~Based~~million onin ~~the~~costs ~~results~~associated ofwith ~~these~~the ~~tests,~~filing noof ~~impairment~~a ~~losses~~Form ~~were~~S-3 ~~identified~~registration statement.

61Depreciation and amortization — Depreciation and amortization for fiscal year 2010 of $41.6 million increased $1.1 million, or 2.7%. This increase was primarily due to incremental depreciation and amortization associated with our technology transformation initiative, which began to ramp up during the second quarter of fiscal year 2010. This investment to modernize and upgrade our IT systems will enable more efficient and effective utilization of IT applications, provide better redundancy and reliability, integrate systems that were previously disconnected and support future growth. Also impacting the increase was the amortization of the intangible assets acquired in our purchase of Phoenix and Casals.

~~Income~~Interest ~~Taxes~~ expense — Interest expense for fiscal year 2010 decreased by $3.1 million, or 5.3%, as compared to fiscal year 2009. The decrease in interest expense was primarily due to a lower principal balance stemming from the excess cash flow principal payment on our senior credit facility and repurchases of senior subordinated notes that occurred in fiscal year 2010, as further discussed in the “Liquidity and Capital Resources” section and Note 7 to our consolidated financial statements. Also impacting the decrease was one less week of interest expense during fiscal year 2010, as compared to fiscal year 2009. In addition to the change in interest expense, Loss on early extinguishment of debt of $0.1 million was lower in fiscal year 2010 than the $4.1 million incurred in fiscal year 2009, primarily due to the fiscal year 2009 write-off of deferred financing fees associated with our extinguished senior secured credit facility, as further discussed in Note 7 to our consolidated financial statements.

~~The~~Income ~~Company~~tax ~~determines~~expense ~~the~~— ~~provision~~Our ~~for~~effective ~~income~~tax ~~taxes~~rate ~~using~~of ~~the~~31.9% ~~asset~~for ~~and~~fiscal ~~liability~~year ~~approach.~~2010 ~~Under~~increased ~~this~~from 31.7% ~~approach,~~for ~~deferred~~fiscal ~~income~~year ~~taxes~~2009. ~~represent~~Our ~~the~~effective ~~expected future~~ tax ~~consequences~~rate ofwas ~~temporary~~impacted ~~differences~~by ~~between~~ the ~~carrying amounts and~~ tax ~~basis~~treatment of ~~assets~~our GLS and ~~liabilities.~~DynCorp ~~The~~International ~~Company~~FZ-LLC ~~records~~(“DIFZ”) ajoint ~~valuation~~ventures, ~~allowance~~which toare ~~reduce~~consolidated ~~deferred~~for ~~tax~~financial ~~assets~~reporting ~~when uncertainty~~purposes ~~regarding~~but ~~their~~are ~~reliability~~not ~~exists~~consolidated for tax purposes.

~~Equity-Based~~43 ~~Compensation Expense~~

TheTable Company has adopted the provisions of, and accounted for equity-based compensation in accordance with FASB No. 123 (revised 2004), "Share-Based Payment" ("SFAS No. 123R"). Under the fair value recognition provisions, equity-based compensation expense is measured at the grant date based on the fair value of the award and is recognized ratably over the requisite service period adjusted for forfeitures. See Note 12 for further discussion on equity-based compensation. Contents

~~Fair~~Noncontrolling ~~Values~~interests — Noncontrolling interests reflect the impact of ~~Financial~~our joint ~~Instruments~~ venture partners’ interest in our consolidated joint ventures, GLS and DIFZ. For fiscal year 2010, noncontrolling interests for GLS and DIFZ were $21.5 million and $3.1 million, respectively, as compared to $18.5 million and $2.4 million, respectively, for fiscal year 2009.

~~Fair~~Results ~~values of financial instruments are estimated~~ by ~~the~~Segment Company using available market information and other valuation methods. Values are based on available market quotes or estimates using a discounted cash flow approach based on the interest rates currently available for similar instruments. The fair values of financial instruments for which estimated fair value amounts are not specifically presented are estimated to approximate the related recorded values.

~~Currency~~The ~~Translation~~ following table sets forth the revenue and operating income for the GSDS operating segments, for fiscal year 2010, as compared to fiscal year 2009.

~~The~~Global ~~assets~~Stabilization & ~~and~~Development ~~liabilities~~Solutions of the Company's subsidiaries outside the U.S. are translated into U.S. dollars at the rates of exchange in effect at the balance sheet dates. Income and expense items are translated at the average exchange rates prevailing during the period. Gains and losses resulting from currency transactions are recognized currently in income and those resulting from translation of financial statements are included in accumulated other comprehensive income.

Industry Segments


	Fiscal Years Ended				Change
	April 2, 2010		April 3, 2009		Change
	(Amounts in thousands)
Revenue	$	1,636,242	$	1,085,229	551,013
Operating income	$	74,409	$	49,560	24,849

~~The~~Revenue — ~~Company's~~Revenue ~~operations~~for ~~are~~fiscal ~~aligned~~year ~~into~~2010 ~~two~~increased ~~divisions~~$551.0 million, ~~each~~or of50.8%, ~~which~~as ~~constitutes~~compared ato ~~reporting~~fiscal ~~segment:~~year ~~Government~~2009. ~~Services~~The ~~("GS")~~increase ~~and~~primarily ~~Maintenance~~resulted ~~and~~from ~~Technical Support~~the ~~Services~~following: ~~("MTSS").~~

~~Reclassifications~~ Training & Mentoring: Revenue of $713.7 million decreased $18.6 million, or 2.5%, primarily due to declines in our CivPol program due to lower rates in both Iraq and Afghanistan stemming from changes in the contract type from firm fixed-price to cost-reimbursement and reductions in services in Iraq due to the U.S. troop drawdown. Partially offsetting this was a scope increase in our WPPS security services task order in Iraq and a new WPPS security services task order in Pakistan. Also offsetting the decrease was our new MNSTC-I program, which launched in the third quarter of fiscal year 2009. We expect Training & Mentoring revenue to increase in fiscal year 2011, primarily due a recent contract award to support the Afghanistan Ministry of Defense and increases on our WPPS programs, which are expected to be partially offset by reductions to our CivPol program. Future revenue may also be impacted by the outcome of the proposed operational transition of the CivPol Afghanistan program to the DoD from the DoS and any associated re-compete which we expect could occur in the summer or fall of 2010. See our discussion above in “Notable Fiscal Year 2010 Developments” for further details regarding the re-competition of this contract.

~~Certain~~Logistics: ~~prior~~Revenue ~~year~~of ~~amounts~~$586.8 million ~~have~~increased ~~been~~$582.1 million, ~~reclassified~~primarily due to ~~conform~~increases from the ramp-up of our task orders on our LOGCAP IV program. We expect significant revenue growth in fiscal year 2011, primarily due to a full year of operations on the current ~~year~~task ~~presentation~~orders on the LOGCAP IV program.

~~Recent~~Operations & ~~Accounting~~Development: ~~Pronouncements~~ Revenue of $322.8 million decreased $24.7 million, primarily due to the termination of an airport construction contract in Africa, which occurred in the first quarter of fiscal year 2009, offset by increased service levels in our AFRICAP/Africa Peacekeeping program. Revenue related to our Afghanistan construction was flat. We expect fiscal year 2011 revenue related to our Afghanistan construction to decline as the remaining projects are expected to be completed in the first half of fiscal year 2011. We do not expect to bid on any similar fixed-price contracts in Afghanistan without revised terms and conditions, which may impact future revenue in this service offering by limiting the construction opportunities available to us.

InIntelligence ~~February 2007,~~Training ~~the~~and ~~FASB~~Solutions: ~~issued~~Revenue ~~SFAS~~of No$13.0 ~~159,~~million ~~"The~~represents ~~Fair~~Phoenix ~~Value~~revenue

Filing Compare · DYNCORP INTERNATIONAL INC.