UseTable theseof links to rapidly review the document DYNCORP INTERNATIONAL LLC 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: 333-127343

Form 10-K

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

~~Delaware~~x ~~(State~~ANNUAL orREPORT ~~other~~PURSUANT ~~jurisdiction~~TO ofSECTION ~~incorporation~~13 orOR ~~organization) 52-2287126~~ 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~~333-~~known~~127343 ~~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. Yes o No ý~~INTERNATIONAL LLC

~~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

52-2287126

(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 ~~registrant~~registered ~~has~~pursuant ~~one~~to ~~class of member units. As of June~~Section 4,12(b) ~~2007, DynCorp International Inc. held 100%~~ of the ~~member~~Act: ~~units.~~None

~~DynCorp International~~Indicate ~~LLC~~by ~~meets~~check ~~the~~mark ~~conditions~~if ~~set~~the ~~forth~~registrant inis ~~General Instructions (I) (1) (~~a~~) and~~ ~~(b) of Form 10~~well-Kknown ~~and~~seasoned isissuer, ~~therefore~~as ~~filing~~defined ~~this report~~in ~~with~~Rule ~~the~~405 ~~reduced~~of ~~disclosure format~~the Act. Yes ¨ No x

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

~~None~~Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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

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 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. ¨

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 ~~PART~~Rule 12b-2 I of the Exchange Act. (Check one):

Large ~~ITEM 1. BUSINESS.~~ accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x (Do not check if a smaller reporting company) Smaller reporting company ¨

~~Unless~~Indicate ~~the~~by ~~context~~check ~~otherwise~~mark ~~indicates,~~whether ~~references herein to "we," "our," "~~the ~~Company,"~~registrant ~~"us"~~is ora ~~"DynCorp~~shell ~~International"~~company ~~refer~~(as todefined ~~DynCorp International LLC and its wholly owned subsidiaries. All references~~ in ~~this Annual Report to fiscal years made in connection with our financial statements or operating results refer to the fiscal year ended on the Friday closest to March~~Rule ~~31st~~12b-2 of ~~such year~~the Act). Yes ¨ No x ~~For example, "fiscal 2007" refers to our fiscal year ended March 30, 2007.~~

~~Overview~~ The registrant has one class of member units. As of June 15, 2010, DynCorp International Inc. held 100% of the member units.

DynCorp International LLC, ~~through~~meets ~~its~~the ~~wholly~~conditions ~~owned~~set ~~subsidiaries,~~forth ~~provides~~in ~~defense~~General ~~and~~Instructions ~~technical~~(I)(1)(a) ~~services~~ and ~~government outsourced solutions primarily to United States~~ (~~"U.S."~~b) government agencies. Our specific global expertise 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~~Form ~~mergers~~10-K and ~~acquisitions executed by~~is ~~our~~therefore ~~predecessor~~filing ~~companies,~~this asreport ~~described~~with ~~herein. We are incorporated in~~ the ~~state~~reduced ofdisclosure ~~Delaware~~format.

~~Our~~Documents ~~customers~~Incorporated ~~include~~by ~~the~~Reference U.S. Department of Defense ("DoD"), the U.S. Department of State ("DoS"), allied foreign governments, commercial customers and certain other U.S. federal, state and local government agencies. Revenue from the U.S. government accounted for approximately 97%, 97%, and 98% of total revenues in fiscal 2007, 2006, and 2005, respectively.

~~We conduct our operations through two business segments: Government Services ("GS") and Maintenance and Technical Support Services ("MTSS")~~None.

In additionTable toof the information presented below, Note 12 to the consolidated financial statements contains additional information about our business segments and geographic areas in which we have conducted business for fiscal years 2007, 2006 and 2005. Contents

~~Government~~DYNCORP ~~Services~~ INTERNATIONAL LLC

~~GS,~~TABLE ~~with~~OF ~~revenues~~CONTENTS of approximately $1.4 billion, $1.3 billion and $1.2 billion for fiscal years 2007, 2006 and 2005, respectively, provides outsourced technical services to government agencies, and commercial customers worldwide. GS consists of four operating units (i) Law Enforcement and Security, (ii) Contingency and Logistics Operations, (iii) Operations Maintenance and Construction Management, and (iv) Specialty Aviation and Counter-drug Operations.

Law 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.


		Page

	Forward-Looking Statements	3

PART I.

Item 1.	Business	5
Item 1A.	Risk Factors	16
Item 1B.	Unresolved Staff Comments	28
Item 2.	Properties	28
Item 3.	Legal Proceedings	28
Item 4.	Removed and Reserved	28

PART II.

Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	29
Item 6.	Selected Financial Data	29
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 8.	Financial Statements and Supplementary Data	51
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	97
Item 9A.	Controls and Procedures	97
Item 9B.	Other Information	99

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	99
Item 11.	Executive Compensation	99
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters	99
Item 13.	Certain Relationships, Related Transactions, and Director Independence	99
Item 14.	Principal Accountant Fees and Services	99

PART IV.

Item 15.	Exhibits and Financial Statement Schedules	101
EX-12.1
EX-21.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

~~Contingency~~2 and 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.

OperationsTable Maintenanceof and 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. Contents

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

1This Annual Report on Form 10-K contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements, written, oral or otherwise made, represent our expectation or belief concerning future events. Without limiting the foregoing, the words “believes,” “thinks,” “anticipates,” “plans,” “expects” and similar expressions are intended to identify forward-looking statements. Forward-looking statements involve risks and uncertainties. Statements regarding the amount of our backlog, estimated remaining contract values and estimated total contract values are other examples of forward-looking statements. We caution that these statements are further qualified by important economic, competitive, governmental, international and technological factors that could cause our business, strategy or actual results or events to differ materially, or otherwise, from those in the forward-looking statements. These factors, risks and uncertainties include, among others, the following:

~~Key~~• GSthe ~~Contracts~~ 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, Inc., Delta Tucker Holdings, Inc. and Delta 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);

~~Civilian~~• ~~Police~~ the failure to obtain the necessary equity and debt financing pursuant to the applicable commitment letters received in connection with the transactions contemplated by the Merger Agreement or the failure of such financing to be sufficient to complete the Merger and the transactions contemplated thereby;

~~The~~• ~~most~~the ~~significant~~inability ~~contract of our GS operating segment is our Civilian Police contract, awarded~~ to uscomplete by the ~~DoS~~Merger indue ~~February 2004.~~to ~~Our Civilian Police contract has an estimated value of $2.45 billion over~~ the ~~five-year~~failure ~~term~~to ofobtain ~~this~~stockholder ~~program,~~approval ~~through~~or ~~February 2009. Through~~ the ~~Civilian~~failure ~~Police program, we have deployed civilian police officers from the U.S.~~ to 12satisfy ~~countries~~other toconditions ~~train and offer logistics support~~ to ~~the~~complete ~~local police and assist them with infrastructure reconstruction. Our first significant deployment~~ of ~~civilian~~ ~~police personnel began in~~ the ~~Balkans in 1996~~Merger, where our predecessor companies helped train local police and provided support during the height of the conflict. We remained in the region through 2004. In addition, we have been awarded multiple task orders under the Civilian Police program, including ~~assignments~~required inregulatory ~~Iraq and Afghanistan.~~ approvals;

~~International~~• ~~Narcotics~~the ~~Eradication~~failure ~~and~~of ~~Law~~the ~~Enforcement~~ Merger to close for any other reason;

In• ~~May~~risks ofthat ~~2005,~~ the ~~DoS~~proposed ~~awarded~~Merger us(including athe ~~contract~~efforts ~~in support~~ of the ~~International~~Company ~~Narcotics~~ and/or ~~Law~~its ~~Enforcement~~directors, ~~Air-Wing~~officers ~~program~~and employees to ~~aid~~consummate in the ~~eradication of~~proposed ~~illegal~~Merger) ~~drug~~disrupts ~~operations.~~current Weplans ~~are~~and ~~the~~operations ~~sole~~and ~~awardee of this contract, which has an estimated value of $863 million for~~ the ~~first~~potential ~~three~~difficulties ~~years of this ten-year contract through October 2015. This program has been ongoing since 1991~~ in ~~cooperation~~employee ~~with~~retention ~~multiple~~as ~~Latin American countries, and we recently commenced support to~~ a ~~similar~~result ~~program~~of inthe ~~Afghanistan.~~ Merger;

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

~~Through~~• ~~our War Reserve Material program, we provide management of~~ the ~~U.S.~~diversion 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~~our ~~cities~~management’s ~~prior~~attention tofrom ~~the~~our ~~arrival~~ongoing ofbusiness ~~the deployed forces. The War Reserve Material program continues to partner with the U.S. Central Command Air Force in the development of new and innovative approaches to asset management.~~ concerns;

~~The following~~• ~~table~~the ~~sets~~effect ~~forth~~of ~~certain~~the ~~information~~announcement, ~~for~~pendency ~~our~~or ~~principal~~anticipated GSconsummation ~~contracts,~~of ~~including~~the ~~estimated~~Merger ~~total~~on ~~values~~our ofcustomer, ~~the~~vendor ~~current~~and ~~contracts~~other asbusiness ~~of March 30~~relationships, ~~2007:~~operating results and business generally;

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 amount of the costs, fees, expenses and charges incurred by the Company related to the Merger;

2• the future impact of acquisitions, joint ventures or teaming agreements;

~~Maintenance &~~• ~~Technical~~our ~~Support~~substantial ~~Services~~ level of indebtedness and changes in availability of or cost of capital;

~~MTSS,~~• ~~with~~the ~~revenues~~outcome of ~~approximately~~any ~~$720.0 million,~~material ~~$700.0 million and $690.0 million for fiscal years 2007~~litigation, ~~2006~~government ~~and~~investigation ~~2005,~~or ~~respectively, offers~~other ~~the~~regulatory ~~following services:~~ matters;

~~Aviation~~• ~~Services~~policy and/or ~~Operations –~~spending ~~Our~~changes ~~aviation~~implemented ~~services~~by 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~~Obama ofadministration ~~pilots,~~or ~~test pilots and flight crews. Services are provided from both main base locations and forward operating locations.~~ Congress;

~~Aviation~~• ~~Engineering –~~termination ~~Our~~or ~~technicians manufacture and install aircraft~~ modification ~~programs for a broad range~~ of ~~weapons~~ ~~systems~~key ~~and~~United ~~aircraft~~States ~~engines~~(“U. In addition, we provide services such as engineering design, kit manufacturing and installation, field installations, configuration management, avionics upgrades, cockpit and fuselage redesign and technical data, drawings and manual revisionsS.”) government contracts;

~~Aviation~~• ~~Ground~~changes ~~Equipment~~in ~~Support –~~the ~~Our~~demand for services ~~include~~that ~~ground~~we ~~equipment~~provide ~~support,~~or ~~maintenance~~work ~~and~~awarded ~~overhaul, modifications~~under ~~and~~our ~~upgrades~~contracts, ~~corrosion~~including ~~control,~~without ~~engine rebuilding~~limitation, ~~hydraulic~~the ~~and~~Civilian ~~load~~Police, ~~testing~~International ~~and~~Narcotics ~~serviceability inspections. We provide these services worldwide~~ and ~~offer~~Law ~~both short- and long-duration field teams. As of March 30~~Enforcement, ~~2007,~~Worldwide wePersonal ~~employed~~Protection ~~over~~Services ~~850 mechanics, technicians~~ and ~~support~~Logistics ~~personnel~~Civil ~~who~~Augmentation ~~perform~~Program ~~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.~~ contracts;

~~Ground~~• ~~Vehicle~~pursuit ~~Maintenance –~~of ~~Our~~new ~~ground~~commercial ~~vehicle~~business ~~maintenance~~in ~~services include vehicle maintenance, overhaul and corrosion control and scheduling and work flow management. We perform maintenance and overhaul on wheeled and tracked vehicles for~~ the U.S. ~~Army~~ and 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. abroad;

~~Key~~• ~~MTSS~~activities ~~Contracts~~ of competitors and the outcome of bid protests;

~~Contract~~• ~~Field~~changes ~~Teams~~ in significant operating expenses;

~~Contract~~• ~~Field~~general ~~Teams is the most 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~~political, ~~quick-response~~economic ~~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~~business ~~systems~~conditions in ~~addition to depot-level repair. The principal customer for our Contract Field Teams program is~~ the ~~DoD~~U. ~~Our Contract Field Teams contract is up for re-competition in March 2008~~S. ~~This contract has a $2.48 billion estimated value over a ten and one-half year term through March 2008.~~ ;

~~Life~~• ~~Cycle~~acts ~~Contractor~~of ~~Support~~ war or terrorist activities;

~~This~~• ~~MTSS~~variations 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~~performance ~~and the Global Air Traffic Management portion~~ of ~~our~~financial 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. markets;

~~Andrews~~• ~~Air~~the ~~Force~~inherent ~~Base~~ difficulties of estimating future contract revenue and changes in anticipated revenue from indefinite delivery, indefinite quantity contracts;

~~Under~~• ~~the~~changes ~~Andrews~~in ~~Air~~expected ~~Force~~percentages ~~Base~~of ~~contract,~~future ~~the~~revenue ~~Company~~represented ~~performs~~by ~~aircraft~~fixed-price ~~maintenance~~and time-and-materials ~~base supply functions~~contracts, including ~~full~~increased 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 inwith ~~December 2011.~~respect ~~This~~to ~~contract~~task ~~has~~orders asubject ~~$337 million~~to ~~estimated~~such ~~value.~~contracts; and

The followingTable table sets forth certain information for our principal MTSS contracts, including estimated values of the current contracts as of March 30, 2007: Contents

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

•

statements covering our business strategy, those described in “Item 1A. Risk Factors” and other risks detailed from time to time in our reports filed with the Securities and Exchange Commission.

~~Contract~~Accordingly, ~~Types~~ 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~~Fiscal ~~contracts~~Year 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 revenues 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 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.

~~Contracts between~~We usreport ~~and~~ the ~~U.S.~~results ~~government~~of orour ~~the~~operations ~~government's~~using ~~prime~~a ~~contractor~~52-53 week ~~(to~~basis. ~~the~~Throughout ~~extent~~this ~~that~~report, weeach ~~are~~quarter aof ~~subcontractor)~~the ~~generally~~fiscal ~~contain~~year ~~standard~~contains 13 weeks, ~~unilateral~~except ~~provisions~~for ~~under which~~ the ~~customer may~~infrequent ~~terminate~~fiscal ~~for~~years ~~convenience~~with or53 weeks, ~~for~~in ~~default.~~which ~~Government~~case ~~contracts~~one ~~generally~~quarter ~~also~~will contain ~~provisions that allow the U~~14 weeks.S. ~~government~~The tofiscal ~~unilaterally~~years ~~suspend~~ended usApril 2, ~~from~~2010, ~~receiving~~March 28, ~~new~~2008, ~~contracts~~March 30, ~~pending resolution~~2007, ofand ~~alleged~~March 31, ~~violations~~2006 ofwere ~~procurement~~52-week years ~~laws~~whereas ~~or regulations, reduce~~ the ~~value~~fiscal ofyear ~~existing~~ended ~~contracts~~April 3, ~~issue~~2009 ~~modifications~~was to a ~~contract~~53 ~~and~~week ~~control and potentially prohibit the export of our services and associated materials~~year.

~~Our business~~4 ~~generally is performed under fixed-price, time-and-materials or cost-reimbursement contracts. Each of these is described below.~~

4Table of Contents

~~Any of~~PART ~~these~~I three types discussed above may be executed under an indefinite delivery, indefinite quantity ("IDIQ") contract, which are often awarded to multiple contractors. An IDIQ contract does not represent a firm order for services. Our Civilian Police and Contract Field Teams programs are examples of IDIQ contracts. In fiscal 2007, 2006 and 2005, 56.7%, 58.9% and 56.3% of our revenues, respectively, were attributable to IDIQ contracts. When a customer wishes to order services under an IDIQ contract, the customer issues a task order request for proposal to the contractor awardees. The contract awardees then submit proposals to the customer and task orders are typically awarded under a best-value approach. However, many IDIQ contracts permit the customer to direct work to a particular contractor. In some instances, the contractor may identify specific projects and propose to perform the service for a customer within the scope of the IDIQ contract, although the customer is not obligated to order the services.

~~We believe~~ITEM ~~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~~1. 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 contractsBUSINESS.

~~Our~~Unless the ~~historical~~context ~~contract~~otherwise ~~mix~~indicates, byreferences ~~type~~herein ~~for~~to “we,” “our,” “us,” “the ~~last~~Company” ~~three~~or ~~fiscal~~“DynCorp ~~years,~~International” asrefer to DynCorp International LLC and our consolidated subsidiaries. DynCorp International Inc. is a ~~percentage~~holding company that owns the equity securities of ~~revenue~~DynCorp International LLC, isorganized ~~indicated~~in the state of Delaware. DynCorp International Inc. (“Our Parent”), incorporated in the ~~table~~state ~~below~~of Delaware, has no operations independent of our Company, DynCorp International LLC. Our principal executive offices are located at 3190 Fairview Park Drive, Suite 700, Falls Church, Virginia 22042, telephone number (571) 722-0210.

	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%

Overview

~~Many~~We ofare ~~our~~a ~~contracts~~leading ~~involve~~provider ~~subcontracts~~of ~~with other companies~~specialized, ~~which~~mission-critical weprofessional ~~rely~~and ~~upon~~support toservices ~~perform~~outsourced ~~all~~by ~~or a portion of~~ the ~~services~~U.S. wemilitary, ~~are~~non-military U.S. ~~required~~governmental ~~to provide~~agencies toand ~~our~~foreign ~~customers~~governments. ~~Often~~Our wespecific ~~enter~~global ~~into~~expertise ~~subcontract~~is ~~arrangements~~ in ~~order~~law toenforcement ~~meet~~training ~~government~~and ~~requirements~~support, ~~that~~security ~~certain~~services, ~~categories~~base ofand ~~services~~logistics beoperations, ~~awarded~~intelligence totraining, ~~small~~rule ~~businesses.~~of Welaw ~~use subcontractors~~development, ~~primarily~~construction ~~for~~management, platform ~~specialized~~services ~~technical~~and ~~labor~~operations, and ~~certain~~linguist ~~functions~~services. ~~such~~We asalso ~~construction~~provide ~~and~~logistics ~~catering.~~support ~~For~~for ~~fiscal~~all ~~2007,~~our ~~2006~~services. ~~and~~Through ~~2005~~our predecessor companies, we ~~paid~~have ~~our~~provided ~~subcontractors~~essential ~~approximately $227.0 million,~~services ~~$229~~to numerous U.~~0 million~~S. government departments and ~~$175.0 million,~~agencies ~~respectively.~~since 1951.

~~Competition~~ 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 ~~compete~~fiscal ~~with~~year ~~various~~2008, ~~entities~~we ~~across~~conducted ~~geographic~~our ~~and~~operations ~~business~~through ~~lines~~two ~~based~~reportable onsegments: aGovernment ~~number~~Services of(“GS”) ~~factors,~~and Maintenance ~~including~~and ~~services~~Technical ~~offered,~~Support ~~experience,~~Services ~~price, geographic reach and mobility~~(“MTSS”). ~~Most~~In ~~activities~~fiscal inyear ~~which~~2009, we ~~engage~~divided ~~are~~our ~~very~~GS ~~competitive~~operating ~~and~~segment ~~require~~into ~~that~~two wenew ~~have~~segments, ~~highly~~International ~~skilled~~Security ~~and~~Services ~~experienced~~(“ISS”) ~~technical~~and ~~personnel~~Logistics toand ~~compete~~Construction Management (“LCM”). ~~Some~~On ofApril 6, ~~our~~2009, ~~competitors~~we ~~have~~announced ~~greater financial~~a ~~and~~further ~~other~~reorganization ~~resources~~of ~~than~~our webusiness dostructure orto ~~are~~ better ~~positioned~~align ~~than~~with westrategic ~~are~~markets and to ~~compete~~streamline ~~for~~our ~~certain contract opportunities~~infrastructure. ~~Our~~Under ~~competitors~~the ~~include~~new ~~Civilian~~alignment, ~~Police~~our ~~International,~~three ~~Science~~reportable ~~Applications~~segments were ~~International~~realigned ~~Corporation,~~into ~~ITT~~three ~~Industries,~~new ~~KBR~~segments, ~~IAP~~two ~~Worldwide~~of ~~Services~~which, ~~Inc.,~~ ~~Blackwater,~~Global ~~Triple~~Stabilization ~~Canopy,~~and ~~Lockheed~~Development ~~Martin~~Solutions ~~Corporation,~~(“GSDS”) ~~Sikorsky,~~and ~~United~~Global ~~Technologies~~Platform Support Solutions (“GPSS”), Lare wholly-3owned, ~~Aerospace Industrial~~and ~~Development~~a ~~Corporation~~third segment, AlGlobal ~~Salam~~Linguist ~~Aircraft~~Solutions (“GLS”), ~~Company Ltd.~~which ~~and~~is ~~Serco~~a ~~Group~~51% ~~Plc~~owned joint venture. WeThe ~~believe~~new ~~that~~structure ~~the~~became ~~primary~~effective ~~competitive~~April 4, ~~factors~~2009, ~~for~~the start of our ~~services~~2010 ~~include~~fiscal ~~reputation~~year, ~~technical~~and ~~skills, past~~is ~~contract~~more ~~performance,~~fully ~~experience~~described in ~~the~~Note ~~industry,~~13 ~~cost~~to ~~competitiveness~~our ~~and~~consolidated ~~customer~~financial ~~relationships~~statements.

~~Backlog~~ In 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 restated the corresponding items of segment information during fiscal years 2008 and 2009 to conform to our fiscal year 2010 segment presentation.

WeRecent ~~track~~Developments ~~contracted~~— ~~backlog~~Merger inAgreement 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.

5As discussed in detail in the definitive proxy statement filed by Our Parent with the SEC on May 17, 2010 (the “Definitive Proxy Statement”), on April 11, 2010 Our Parent entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Delta Tucker Holdings, Inc. (“Merger 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 Our Parent, and as a result Our Parent will continue as the surviving corporation and be a wholly owned subsidiary of Merger Parent (the “Merger”). The Merger Agreement was approved by Our Parent’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.

~~Firm funding~~Pursuant ~~for~~to ~~our~~the ~~contracts~~Merger isAgreement, ~~usually made for one year~~ at athe effective time, ~~with~~of the ~~remainder~~Merger, ofeach ~~the~~issued ~~contract~~and ~~period~~outstanding ~~consisting~~share of aOur ~~series~~Parent’s ofClass A ~~one-year~~common ~~options~~stock, par value $0.01 Asper isshare (the ~~case with~~“Class A ~~the~~Common ~~base~~Stock”), ~~period~~other ofthan ~~our~~shares ~~U.S.~~owned ~~government~~by ~~contracts~~Our Parent, ~~option~~Merger ~~periods~~Parent ~~are~~or ~~subject~~Merger Sub, toor ~~the~~by ~~availability~~any ofstockholders ~~funding~~who have perfected and not withdrawn a demand for ~~contract~~appraisal ~~performance.~~rights ~~The~~under ~~U.S.~~Delaware ~~government~~law, iswill ~~legally~~be ~~prohibited~~canceled ~~from~~and ~~ordering~~will ~~work under~~be aautomatically ~~contract~~converted ininto the ~~absence~~right ofto ~~funding~~receive $17.55 ~~Our~~in ~~historical~~cash ~~experience~~(the ~~has~~“Per ~~been~~Share ~~that~~Merger Consideration”), ~~the~~without ~~government~~interest. ~~generally~~Additionally, ~~has~~Our ~~funded~~Parent’s ~~the~~restricted ~~option~~stock ~~periods~~units ofgranted ~~our~~under ~~contracts.~~the

~~The following~~5 ~~table sets forth our 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

~~In December 2006, the Company, through a joint venture named Global Linguist Solutions LLC ("GLS"), was awarded the Intelligence and~~ ~~Security~~DynCorp ~~Command~~International ~~("INSCOM")~~2007 ~~contract~~Omnibus byIncentive ~~the~~Plan 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~~vest at the ~~joint~~effective ~~venture~~time ~~in our financial statements. As~~ of ~~March 30, 2007,~~ the ~~funded~~Merger and ~~unfunded~~ ~~backlog~~will ~~related~~be toconverted ~~this~~into ~~program was $49.0 million and $3.3 billion, respectively, and has been included in~~ the ~~table~~right ~~above. However, the incumbent contractor's protest of the award~~ to ~~GLS~~receive ~~was sustained by~~ the ~~Government~~Per ~~Accountability~~Share ~~Office~~Merger ~~("GAO")~~Consideration. 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~~Consummation ~~Remaining~~of ~~Contract~~the ~~Value~~ Merger is subject to customary conditions, including without limitation (i) approval by the holders of a majority of the outstanding shares of the Our Parent’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.

~~Our~~Concurrently ~~estimated~~with ~~remaining~~the ~~contract~~execution ~~value~~and delivery ~~represents total backlog plus management's estimate~~ of ~~future~~the ~~revenues~~Merger ~~under~~Agreement, ~~IDIQ~~DIV ~~contracts~~Holding ~~that~~LLC ~~have~~(“DIV ~~not been funded~~Holding”), ~~or award~~the ~~term~~largest ~~periods~~stockholder ~~that~~of ~~have~~Our ~~not~~Parent’s ~~yet~~Common ~~been~~Stock, ~~earned.~~and ~~These~~affiliates ~~future~~thereof, ~~revenues~~entered ~~would~~into bea ~~our~~voting ~~estimate~~agreement ~~of revenue that would occur from~~ (the ~~end~~“Voting ofAgreement”) ~~currently~~with ~~funded~~Merger ~~task~~Parent ~~orders until the end of the IDIQ~~and ~~contracts.~~Merger ~~Our~~Sub ~~estimated~~whereby ~~remaining~~DIV ~~contract~~Holding ~~value~~and isits ~~based~~affiliate, ~~on our experience under contracts~~committed, ~~and~~among weother ~~believe our estimates are reasonable. However~~things, ~~there~~subject ~~can~~to bethe noterms ~~assurance~~and ~~that~~conditions ~~our~~of ~~existing contracts~~the ~~will~~Voting ~~result~~Agreement, into ~~actual~~vote ~~revenues in any particular period or at all~~34.9% ~~These~~of ~~amounts~~the ~~could~~outstanding ~~vary~~shares orof ~~even~~Our ~~change~~Parent’s ~~significantly~~Common ~~depending~~Stock ~~upon~~for ~~government policies, government budgets, appropriations and~~ the ~~outcome~~adoption of ~~protested~~the ~~contract awards~~Merger Agreement. The ~~following~~Voting ~~table~~Agreement ~~sets~~automatically ~~forth~~terminates ~~our~~upon ~~estimated~~the ~~remaining~~termination ~~contract value as~~ of the ~~dates~~Merger ~~indicated:~~Agreement.

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

Merger Parent and Merger Sub have obtained equity and debt financing commitments for the transaction contemplated by the Merger Agreement, the aggregate proceeds of which will be sufficient for Merger Parent to pay the aggregate Per Share Merger Consideration and all related fees and expenses. Cerberus Series Four Holdings, LLC, an investment fund affiliated with Cerberus Capital Management, L.P. (“Cerberus”), has committed to purchase equity interests in Merger Parent amounting to $591.6 million in the aggregate on the terms and subject to the conditions set forth in an equity commitment letter dated April 11, 2010 (the “Equity Commitment Letter”), and have provided Our Parent with a limited guarantee in favor of Our Parent dated April 11, 2010 (the “Limited Guarantee”), guaranteeing, subject to the terms and conditions of the Limited Guarantee, the payment of certain monetary obligations that may be owed by Merger Parent pursuant to the Merger Agreement.

~~Regulatory~~Bank ~~Matters~~ of America Securities LLC, Barclays Bank PLC, Citigroup Global Markets Inc., Deutsche Bank Trust Company Americas, and certain of their respective affiliates (the “Debt Commitment Parties”) have committed to provide up to $715 million in senior secured credit facilities (comprised of a term loan facility of up to $565 million and a revolving credit facility of up to $150 million) and senior unsecured term loans of up to $455 million, on the terms and subject to the conditions set forth in a commitment letter dated April 11, 2010 (the “Debt Commitment Letter”). The obligations of the Debt Commitment Parties to provide debt financing under the Debt Commitment Letter are subject to a number of conditions, which we believe are customary for financings of this type or are otherwise consistent with certain conditions in the Merger Agreement. The final 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 Merger Parent in accordance with the terms thereof.

~~Contracts~~The ~~with~~Merger Agreement contains certain termination rights for Our Parent and Merger Parent, including the ~~U.S.~~right ~~government~~of Our ~~are~~Parent ~~subject~~to terminate the Merger Agreement to ~~certain~~accept ~~regulatory~~a ~~requirements~~superior proposal. ~~Under~~Upon ~~U.S.~~termination ~~government~~of ~~regulations,~~the ~~certain~~Merger ~~costs,~~Agreement ~~including~~under ~~certain~~specified ~~financing costs~~circumstances, ~~portions~~Our ofParent ~~research~~will ~~and~~be ~~development~~required ~~costs,~~to ~~lobbying~~pay ~~expenses,~~Merger ~~certain~~Parent ~~types~~a termination fee of ~~legal~~$30 million. ~~expenses~~Our ~~and~~Parent may ~~certain~~also ~~marketing~~be obligated to reimburse transaction expenses ~~related~~incurred by Merger Parent and Merger Sub up to $12 million upon termination of the ~~preparation~~Merger Agreement under specified circumstances. Upon termination of ~~bids~~the ~~and~~Merger ~~proposals~~Agreement under specified circumstances, ~~are~~Merger ~~not~~Parent ~~allowed for~~will ~~pricing~~be ~~purposes~~required ~~and~~to ~~calculation~~ pay Our Parent a reverse termination fee of ~~contract~~$100 million. ~~reimbursement~~In ~~rates~~addition, under ~~cost-reimbursement~~certain ~~contracts.~~circumstances, ~~The~~in ~~U.S.~~the ~~government~~event ~~also~~that ~~regulates~~a party establishes that the ~~methods~~other byparty ~~which~~has ~~allowable~~committed ~~costs~~a ~~may~~“Willful Breach” (as defined in the Merger Agreement) of the Merger Agreement, then the party that has committed the Willful Breach shall be ~~allocated~~required ~~under~~to ~~U.S.~~pay ~~government contracts~~the non-breaching party liquidated damages in the amount of $300 million.

~~Our government~~The ~~contracts~~foregoing ~~are~~descriptions ~~subject~~of ~~to audits at various points in~~ the ~~contracting~~Merger ~~process.~~Agreement, ~~Pre-award~~Limited ~~audits~~Guarantee ~~are~~and ~~performed~~Voting atAgreement ~~the~~do ~~time~~not apurport ~~proposal~~to isbe ~~submitted~~complete toand ~~the U.S.~~are ~~government~~qualified ~~for~~in ~~cost-reimbursement~~their ~~contracts.~~entirety ~~The~~by ~~purpose~~reference ~~of a pre-award audit is~~ to ~~determine~~ the ~~basis~~full text of the ~~bid~~Merger ~~and~~Agreement, ~~provide~~Limited ~~the~~Guarantee ~~information~~and ~~required~~Voting ~~for~~Agreement, ~~the~~as ~~U.S. government to negotiate the contract effectively. In addition~~applicable, ~~the U.S. government may perform~~ a ~~pre-award~~copy ~~audit~~of toeach ~~determine~~of ~~our~~which ~~capability~~was tofiled ~~perform~~as ~~under a contract~~Exhibit 2. ~~During the performance of a contract~~1, ~~the U~~Exhibit 10.S.1 ~~government may have the right to examine our costs incurred in the contract, including any labor charges, material purchases~~ and ~~overhead charges~~Exhibit 9.1, ~~Upon~~as ~~a contract's completion~~applicable, ~~the~~ ~~U.S. government performs an incurred cost audit of all aspects of contract performance for cost-reimbursement contracts~~ to ~~ensure~~Our ~~that~~Parent’s weApril 12, ~~have~~2010 ~~performed~~Form ~~the contract in a manner consistent with our proposal. The government also may perform a post~~8-~~award~~K ~~audit~~and ~~for proposals that are subject to~~ the ~~Truth~~respective interms ~~Negotiations~~of ~~Act,~~ which are ~~proposals~~incorporated inherein ~~excess~~by ~~of $600,000, to determine if the cost proposed and negotiated was accurate, current and complete as of the time of negotiations~~reference.

6Contract Types

~~The Defense~~Our 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 atypically ~~yearly basis. We~~ have ~~DCAA~~a ~~auditors~~term onof ~~site~~three to ~~monitor~~ten ~~our~~years ~~billing~~consisting ~~and back office operations. An adverse finding under a DCAA audit could result in the disallowance~~ of ~~our costs under~~ a ~~U.S. government~~base ~~contract,~~period ~~termination~~ of ~~U.S.~~one ~~government~~year ~~contracts, forfeiture of profits, suspension of payments, fines and suspension and prohibition from doing business~~ with ~~the~~multiple ~~U.S.~~one-year ~~government~~options. ~~In the~~Our ~~event~~contracts ~~that~~typically anare ~~audit~~awarded byfor ~~the~~an ~~DCAA~~estimated ~~recommends~~dollar ~~disallowance~~value ofbased ~~our~~on ~~costs under a contract, we have~~ the ~~right~~forecast ~~to appeal the findings~~ of the ~~audit~~work ~~under applicable dispute resolution provisions. Approval of submitted yearly contract incurred costs can take from one~~ to ~~three~~be ~~years~~performed ~~from~~under the ~~date of submission of the~~ contract ~~costs.~~over ~~All~~its ofmaximum ~~our contract incurred costs for U~~life.S. ~~government~~In ~~contracts~~addition, ~~completed through~~we ~~fiscal year 2003~~ have ~~been~~historically ~~audited~~received byadditional ~~the~~revenue ~~DCAA~~through ~~and~~increases ~~approved by the Defense Contract Management Agency. The audits for such costs during subsequent periods are continuing. See "Risk~~in ~~Factors – A negative audit or other actions by the U.S. government could adversely affect our operating performance."~~

~~At any~~6 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.

SalesTable andof Marketing Contents

We program ~~market~~scope ~~through~~beyond ~~relationships~~that ~~with~~of ~~military~~the ~~and~~original ~~government~~contract. ~~officials,~~These ~~joint~~contract ~~ventures~~modifications ~~and~~typically ~~international~~consist ~~trade~~of ~~shows.~~“over ~~Personnel~~and ~~profiles~~above” ~~range~~requests derived from ~~employees~~changing ~~with marketing~~customer ~~degrees~~requirements toand ~~retired~~are reviewed ~~senior~~by ~~officers~~us ~~from~~for ~~the~~appropriate ~~various~~revenue recognition. The U.S. ~~and~~government ~~foreign~~is ~~military~~not ~~branches~~obligated to exercise options under a contract after the base period. ~~Most~~At ~~senior~~the ~~personnel~~time ~~engaged~~of incompletion ~~sales~~of ~~and~~the ~~marketing~~contract ~~have~~term ~~long~~of a government contract, the contract is re-~~term~~competed to ~~operations~~the ~~experience~~extent that the service is still required.

Our ~~approach~~ iscontracts towith ~~establish marketing activities in~~ the ~~area~~U.S. government or ~~region that we believe presents~~ the ~~greatest~~government’s ~~opportunity~~prime contractor (to ~~grow~~the ~~and~~extent ~~develop~~that ~~our~~we ~~business.~~are Wea ~~have~~subcontractor) angenerally ~~organization~~contain ~~and presence~~standard, inunilateral ~~Dubai,~~provisions ~~UAE~~under which ~~we believe, together with our Company and its predecessors' long-standing presence in~~ the ~~Middle~~customer ~~East,~~may ~~enables~~terminate usfor toconvenience ~~continually~~or ~~pursue~~default. ~~opportunities in that region~~U.S. Wegovernment ~~have~~contracts angenerally ~~office~~also incontain ~~Germany~~provisions tothat ~~develop~~allow ~~business with~~ the U.KS. ~~Ministry~~government ofto ~~Defense,~~unilaterally ~~United~~suspend ~~States,~~us ~~national~~from ~~and~~obtaining ~~NATO~~new ~~military~~contracts ~~commands.~~pending Weresolution ~~have~~of ~~frontline~~alleged ~~sales~~violations ~~and~~of ~~marketing~~procurement ~~personnel~~laws inor ~~the United States~~regulations, ~~Europe,~~reduce ~~Africa~~the ~~and~~value ~~Asia-Pacific.~~of Inexisting ~~each office~~contracts, toissue ~~assist~~modifications usto ina ~~the~~contract ~~regions we serve, we employ personnel who are fluent in both English~~ and ~~the~~control ~~local language~~ and ~~familiar~~ ~~with~~potentially ~~local~~prohibit ~~culture.~~the Weexport ~~also~~of ~~utilize focus groups to target~~ our services ~~to geographic markets~~ and ~~provide~~associated ~~local training to our sales force~~materials.

~~Intellectual~~Most ~~Property~~ 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.

WeOur ~~hold~~capital anstructure ~~exclusive,~~also ~~perpetual,~~provides ~~irrevocable,~~us ~~worldwide,~~flexibility ~~royalty-free~~as ~~and~~our ~~fully~~primary ~~paid~~capital ~~license~~requirements toare ~~use~~working ~~the~~capital ~~"Dyn~~related, ~~International"~~which ~~and~~are ~~"DynCorp~~variable ~~International"~~with ~~names~~our inoverall ~~connection~~revenue ~~with~~stream. ~~aviation~~The ~~services,~~nature ~~security~~of ~~services,~~our ~~technical~~contracts ~~services~~does ~~and~~not ~~marine~~typically ~~services.~~require Weinvestments in fixed assets and we do not ~~own~~have ~~any~~significant ~~trademarks~~fixed asset investments or ~~patents~~significant ~~and~~agreements dotied ~~not~~to ~~believe~~a single contract upon which our business is ~~dependent~~materially depends. Additionally, our contract mix gives us a degree of flexibility to utilize assets purchased for certain programs to be deployed on ~~trademarks~~other orprograms ~~patents~~in cases where the scope of our deliverables changes.

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

~~Our~~• ~~operations~~Fixed-Price ~~include~~Type ~~the~~Contracts: ~~use,~~In ~~generation~~a ~~and~~fixed-price ~~disposal~~contract, ofthe ~~petroleum~~price ~~products~~is ~~and~~not ~~other hazardous materials. We are~~ subject to ~~various~~adjustment ~~U.S.~~based ~~federal,~~on ~~state,~~costs ~~local and foreign laws and regulations relating to the protection of the environment~~incurred, ~~including~~which ~~those~~can ~~governing~~favorably ~~the~~or ~~management~~adversely ~~and~~impact ~~disposal~~our ofprofitability ~~hazardous~~depending ~~substances~~upon ~~and~~our ~~wastes,~~execution ~~the~~in ~~cleanup~~performing ~~of contaminated sites and~~ the ~~maintenance~~contracted ~~of a safe workplace~~service. WeOur ~~believe~~fixed-price wecontracts ~~have~~include ~~been~~firm ~~and~~fixed-price, ~~are~~fixed-price ~~in substantial compliance~~ with ~~environmental~~economic ~~laws and regulations~~adjustment, and wefixed-price ~~have no liabilities under environmental requirements that would have a material adverse effect on our business, results of operations or financial condition~~incentive. ~~We have not incurred, nor do we expect to incur, material costs relating to environmental compliance.~~

~~Employees~~ • 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.

We• ~~currently~~Cost-Reimbursement ~~employ~~Type ~~approximately~~Contracts: 14Cost-reimbursement type contracts provide for payment of allowable incurred costs,~~600~~ ~~employees~~to the extent prescribed in 33the ~~countries~~contract, ofplus ~~which~~a ~~approximately 1~~fixed-fee,~~500~~ award-fee or incentive-fee. Award-fees or incentive-fees are ~~represented~~generally bybased ~~labor~~upon ~~unions.~~various objective and subjective criteria, such as aircraft mission capability rates and meeting cost targets.

7Any of these three types of contracts discussed above may be executed under an IDIQ contract, which are often awarded to multiple contractors. An IDIQ contract does not represent a firm order for services. Our Civilian Police and Contract Field Teams programs are two examples of IDIQ contracts. In fiscal years 2010, 2009, and 2008, 76%, 73%, and 70% of our revenue, respectively, were attributable to IDIQ contracts. When a customer wishes to order services under an IDIQ contract, the customer issues a task order request for proposal to the contractor awardees. The contract awardees then submit proposals to the customer and task orders are typically awarded under a best-value approach. However, many IDIQ contracts permit the customer to direct work to a particular contractor. In some instances, the contractor may identify specific projects and propose to perform the service for a customer within the scope of the IDIQ contract, although the customer is not obligated to order the services.

~~Company~~Our ~~History~~historical ~~and~~contract ~~Certain~~mix ~~Relationships~~ by type for the last three fiscal years, as a percentage of revenue, is indicated in the table below.

Our predecessor companies have provided essential services to numerous U.S. government departments and agencies since 1951. We operated as a separate subsidiary of DynCorp from December 2000 to March 2003 and Computer Sciences Corporation from March 2003 until February 2005. On February 11, 2005, Computer Sciences Corporation and DynCorp, the Company's former parent, sold our Company to DynCorp International Inc., a newly formed entity controlled by The Veritas Capital Fund II, L.P. and its affiliates ("Veritas Capital"). DynCorp International Inc., our direct parent (the "Parent"), has no operations independent of our Company, DynCorp International LLC.


	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	%

~~Equity~~7 ~~Offering~~

OnTable May 9, 2006, our Parent consummated an equity offering of 25,000,000 shares of its Class A common stock, par value $0.01 per share, at a price of $15.00 per share (the "Equity Offering"), less the underwriters' discount of 6% per share. The gross proceeds from the Equity Offering of $375 million, together with cash on hand, were used: (i) to redeem all of our Parent's outstanding preferred stock, of which $222.8 million in stated amount, including accrued and unpaid dividends thereon, was outstanding as of May 9, 2006; (ii) to pay a special Class B distribution in the amount of $100.0 million, representing a return of capital of $95.9 million to DIV Holding LLC, the holder of our Parent's common stock; (iii) to redeem $28.0 million of the Company's senior subordinated notes on June 8, 2006; (iv) to pay prepayment penalties of $8.4 million, $5.7 million of which represented prepayment penalties on our Parent's preferred stock and $2.7 million of which represented prepayment penalties on the Company's senior subordinated notes; and (v) to pay transaction expenses of approximately $30.0 million, including an underwriters' commission of $22.5 million, a fee of $5.0 million to Veritas Capital and approximately $2.5 million of miscellaneous fees and expenses related to the Equity Offering. Contents

~~Availability~~The oftask ~~Forms~~orders ~~Filed~~under ~~With~~ the ~~U.S.~~Logistics Civil Augmentation Program (“LOGCAP IV”) and Intelligence and Security Command (“INSCOM”) contracts, which are described below under “Strategic Business Areas and ~~Exchange~~Service ~~Commission~~ Offerings — Global Stabilization and Development Solutions (“GSDS”)” and “— Global Linguist Solutions (“GLS”),” are predominantly cost-reimbursement type task orders. We anticipate that revenue from cost-reimbursement type contracts will continue to increase in fiscal year 2011 primarily due to the full year impact of the southern Afghanistan LOGCAP IV task order. Cost-reimbursement type contracts typically carry lower margins than other contract types, but also carry lower risk of loss.

~~Our~~Under ~~shareholders~~many ~~may~~of ~~obtain~~our contracts, ~~free~~we ofrely ~~charge,~~on ~~copies~~subcontractors to perform all or a portion of the ~~following~~services ~~documents~~we ~~(and~~are ~~any~~obligated ~~amendments~~to ~~thereto)~~provide asto ~~filed~~our customers. ~~with,~~We oroften ~~furnished~~enter into subcontract arrangements in order to, ~~the~~meet ~~U.S.~~government ~~Security~~requirements ~~and Exchange~~that ~~Commission~~certain ~~("SEC")~~categories asof ~~soon~~services asbe ~~reasonably~~awarded ~~practical~~to ~~after~~small ~~such~~businesses. ~~material~~We isuse ~~filed~~subcontractors ~~with~~primarily orfor ~~furnished~~specialized, totechnical ~~the~~labor ~~SEC:~~and certain functions such as construction and catering.

~~A copy~~Strategic ofBusiness ~~these~~Areas ~~filings may be obtained by going to our Internet website at www.dyn-intl.com~~ and ~~selecting~~Service ~~"Investor~~Offerings Relations" and selecting "Financial Information." Copies may also be obtained by providing a written request for such copies or additional information regarding our operating or financial performance to Cindy Roberts, Director of Investor Relations, DynCorp International, 8445 Freeport Parkway, Suite 400, Irving, Texas 75063. Except as otherwise stated in these reports, the information contained on our website or available by hyperlink from our website is not incorporated into this Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC.

8We 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:

~~Forward-Looking~~Global ~~Statements~~ Stabilization and Development Solutions (“GSDS”)

~~This~~GSDS ~~Annual~~provides ~~Report~~a ondiverse ~~Form 10-K~~collection ~~contains various forward-looking statements within the meaning~~ of ~~Section 27A~~outsourced ofservices ~~the~~primarily Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of 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~~government ~~forward-looking~~agencies ~~statements~~worldwide. ~~The~~GSDS ~~Company~~includes ~~cautions~~four ~~that these statements are further qualified by important economic,~~service ~~competitive, governmental and technological factors that could cause our~~ offerings/business, ~~strategy~~areas oras 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 inbelow: "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.

9Training & Mentoring — This service offering provides international policing and police training, judicial support, immigration support and base operations. Under this service offering, we also provide senior advisors and mentors to foreign governmental agencies. In addition, we provide security and personal protection for diplomats and senior governmental officials.

Logistics — This service offering supports ~~ITEM~~U.S. ~~1A RISK~~military ~~FACTORS~~operations and maintenance support, including but not limited to: construction services, facilities management, electrical power, water, sewage and waste management, laundry operations, food services and transportation motor pool operations.

~~You should carefully consider the risks described below, together with all of the other information contained in this Form~~Operations ~~10-K.~~& ~~Any~~Development of— ~~the~~This ~~following~~service ~~risks~~offering ~~could~~provides: ~~materially and adversely affect our financial condition or results of operations.~~

We• ~~rely~~peacekeeping onlogistics 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 ability to generate cash flow to fund our operations. support;

We• ~~derive~~humanitarian substantially all of our revenues 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. Changes in U.S. government spending could directly affect our operating performance and lead to an unexpected loss of revenue. Among the factors that could impact U.S. government spending and that would reduce our federal government contracting business include: relief;

~~These or~~• ~~other~~weapons ~~factors~~removal could cause U.S. government agencies to reduce their purchases under our contracts, to 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.~~ abatement;

~~Our~~• ~~U.S.~~worldwide ~~government~~contingency ~~contracts~~planning ~~may be terminated by the U.S. government at any time prior to their completion~~ and ~~contain~~ other ~~unfavorable~~rapid ~~provisions, which~~response ~~could lead to unexpected loss of revenues and reduction in backlog.~~ services;

~~Under~~• ~~the~~inventory ~~terms~~procurement ofand ~~our~~tracking ~~contracts, the U.S. government may unilaterally:~~ services;

10• property control;

~~The U.S.~~• ~~government~~mobile ~~can~~repair 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. services;

~~Our government~~• ~~contracts~~facility ~~typically~~and ~~have~~equipment anmaintenance 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. control;

~~If the~~• ~~U.S.~~custodial ~~government terminates~~ and~~/or~~ ~~materially~~administrative modifies any 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. government contracts are subject to competitive bidding~~civil, ~~both upon initial issuance and re-competition. If we are unable to successfully compete in the bidding process or if we fail to receive renewal~~electrical, itenvironmental ~~could adversely affect our operating performance~~ and ~~lead~~mechanical toengineering; ~~an unexpected loss of revenue.~~ and

~~Substantially~~• ~~all~~construction ofmanagement ~~our U~~services.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:

~~The government~~This ~~contracts~~service ~~for~~offering ~~which~~also weincludes ~~compete~~new ~~typically~~activities ~~have~~as ~~multiple~~a ~~option~~result ~~periods,~~of ~~and~~the ifacquisition weof ~~fail~~Casals toand ~~win a contract or a task order~~Associates, weInc. ~~generally will be unable to compete again for~~(“Casals”) ~~that~~such ~~contract~~as ~~for~~supporting ~~several years~~U.S. Ifforeign wepolicy ~~fail~~and tointernational ~~win~~development ~~new~~priorities ~~contracts~~by orassisting toin ~~receive~~the ~~renewal~~development ~~contracts~~of ~~upon~~stable ~~re-competition, it may result in additional costs~~ and ~~expenses~~democratic ~~and~~governments, ~~possible~~implementing ~~loss~~anti-corruption ~~of revenue~~initiatives, and weaiding ~~will~~the ~~not~~growth ~~have~~of andemocratic ~~opportunity~~public toand ~~compete for these opportunities again until the current task orders expire~~civil institutions.

~~Our~~Intelligence ~~operations~~Training ~~involve considerable risks~~ and ~~hazards.~~Solutions An— ~~accident~~This orservice ~~incident~~offering ~~involving~~provides ~~our~~proprietary ~~employees~~training ~~or third parties could harm our reputation~~courses, ~~affect~~management ~~our~~consulting ~~ability to compete for business,~~ and ifaugmentation ~~not~~services ~~adequately~~to ~~insured~~the orintelligence ~~indemnified~~community ~~against,~~and ~~could~~expands ~~adversely~~our ~~affect~~services ~~our~~to ~~results~~the ofintelligence ~~operations~~community and ~~financial~~national ~~condition~~security clients.

WeKey ~~are~~GSDS ~~exposed~~Contracts 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 third parties and claims relating to loss of or damage to government or third-party property.

~~We maintain~~Civilian ~~insurance~~Police ~~policies~~(“CivPol”). ~~that~~The ~~mitigate~~CivPol ~~against~~program ~~risk~~was ~~and~~awarded ~~potential liabilities related~~ to ~~our~~us ~~operations.~~by ~~This~~the ~~insurance~~DoS ~~is maintained~~ in ~~amounts that we believe is reasonable~~February 2004. Our ~~insurance~~ ~~coverage~~CivPol ~~may~~program ~~not be adequate to cover those claims or liabilities and we may be forced to bear substantial costs from~~ has an ~~accident~~estimated ortotal ~~incident.~~contract ~~Substantial~~value ~~claims in excess~~ of ~~our~~$4.0 billion ~~related insurance~~over ~~coverage~~the ~~could~~six ~~adversely affect our operating performance~~ and ~~may~~one-half ~~result~~year interm ~~additional~~of ~~expenses~~this ~~and~~program ~~possible~~through ~~loss of revenue~~August 2010.

118

Furthermore, anyTable accident or incident for which we are liable, even if fully insured, may result in negative publicity which could adversely affect our reputation among our customers, including our government customers, and the public, which could result in us losing existing and future contracts or make it more difficult for us to compete effectively. This could adversely affect our operating performance and may result in additional expenses and possible loss of revenue. Contents

~~Political~~ Through ~~destabilization~~this orprogram, ~~insurgency~~we have deployed civilian police officers from the 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 ~~regions~~Balkans in ~~which~~1996, where we ~~operate~~helped ~~may~~train local police and provided support during the conflict. Our security trainers and mentors remained in the region through 2004. In addition, we have abeen ~~material~~awarded ~~adverse~~multiple ~~effect~~task onorders ~~our~~under ~~operating~~the ~~performance~~Civilian Police program, including assignments in Iraq and Afghanistan. Our current task orders are primarily time-and-materials and cost-reimbursement.

~~Certain~~Logistics ~~regions~~Civil inAugmentation ~~which~~Program we(“LOGCAP ~~operate are highly unstable~~IV”). ~~Insurgent~~On ~~activities~~April 17, in2008, ~~the areas in which~~ we ~~operate~~were ~~may~~selected ~~cause~~as ~~further~~one ~~destabilization~~of inthree ~~these regions.~~prime ~~There~~contractors ~~can~~to beprovide nologistics ~~assurance~~support ~~that~~under the ~~regions~~LOGCAP inIV ~~which we operate will continue to be stable enough to allow us to operate profitably or at all~~contract. ~~For~~LOGCAP ~~fiscal~~IV ~~2007~~is ~~and 2006, respectively, revenues generated from our operations in~~ the ~~Middle~~Army ~~East~~component ~~contributed 46% and 48%~~ of ~~our~~the ~~revenues.~~DoD’s ~~Insurgents~~initiative into ~~Iraq~~award ~~and~~contracts ~~Afghanistan have targeted installations where we have personnel and have contributed~~ to ~~instability~~ ~~in these countries~~U.S. ~~This~~companies ~~could~~with ~~impair~~a ~~our~~broad ~~ability~~range toof ~~attract~~logistics ~~and~~capabilities ~~deploy personnel~~ to ~~perform~~support ~~services in either or both locations~~U.S. Inand ~~addition,~~allied ~~we have been required to increase~~forces ~~compensation~~during ~~to our personnel as an incentive to deploy them to these regions. To date~~combat, ~~we have been able to recover this added cost under the contracts~~peacekeeping, ~~but~~humanitarian ~~there~~and istraining nooperations. ~~guarantee~~The ~~that~~contract ~~future increases,~~has ifa ~~required,~~term ~~will~~of beup ~~able~~ to beten ~~passed~~years, ~~onto~~a ~~our~~ceiling ~~customers~~value ~~through~~of ~~our~~$50 billion ~~contracts.~~and Toan ~~the~~annual ~~extent~~ceiling ~~that~~value ~~we are unable~~ to ~~pass~~us ~~through~~and ~~such increased compensation costs to~~ our ~~customers,~~subcontractors ~~our operating~~of ~~margins~~$5 billion ~~would~~per beyear ~~adversely~~per ~~impacted, which could adversely affect our operating performance~~contractor. Under InLOGCAP ~~addition,~~IV ~~increased~~the ~~insurgent~~Army ~~activities~~contracts orto ~~destabilization,~~perform ~~including~~selected ~~civil~~services ~~unrest~~in or a ~~civil war~~theater inof ~~Iraq~~operations ~~or Afghanistan, may lead~~ to aaugment ~~determination by the~~ U.S. ~~government~~Army toforces ~~halt our operations in a particular location, country or region~~ and torelease ~~perform the services using~~ military ~~personnel. Furthermore,~~units infor ~~extreme~~other ~~circumstances,~~missions ~~the~~or ~~U.S. government may decide~~ to ~~terminate~~fill ~~all~~ U.S. ~~government~~Army ~~activities~~resource ~~including our operations under U~~shortfalls.S. ~~government~~Our ~~contracts~~current intask aorders ~~particular~~are ~~location,~~primarily ~~country or region and to withdraw all military personnel~~cost-reimbursement. ~~This could adversely affect our operating performance and may result in additional costs and expenses and loss of revenue.~~

~~Our~~Worldwide ~~IDIQ~~Personal ~~contracts~~Protection ~~are~~Service ~~not~~(“WPPS”). ~~firm~~We ~~orders~~provide ~~for~~protective ~~services,~~service details to protect U.S. and weforeign ~~may~~government ~~never~~senior ~~receive~~officials ~~revenues~~in ~~from~~Iraq ~~these~~and ~~contracts,~~Pakistan. ~~which~~We ~~could~~have ~~adversely~~provided ~~affect~~personal ~~our~~protective ~~operating~~services for the DoS since the WPPS program inception in 1996. Our current task orders are primarily time-and-materials and ~~performance~~cost-reimbursement.

~~Many~~Africa ofPeacekeeping ~~our government contracts are IDIQ contracts, which are often awarded to multiple contractors~~(“AFRICAP”). ~~Award~~We ofhave anassumed ~~IDIQ~~increasing ~~contract~~responsibilities ~~does~~in ~~not represent firm orders for~~Africa ~~services.~~through ~~Generally,~~our ~~under~~Africa anPeacekeeping ~~IDIQ~~ contract, ~~the government is not obligated to order a minimum of services or supplies from its contractor~~operations, ~~irrespective~~supporting of the ~~total~~DoS ~~estimated~~in ~~contract~~Ethiopia, ~~value. Furthermore~~Liberia, ~~under an IDIQ contract~~Senegal, ~~the customer develops requirements for task orders that are competitively bid against all of the contract awardees~~Somalia, ~~usually~~and ~~under a best-value approach~~Sudan. ~~However,~~We ~~many~~believe ~~contracts~~our ~~also~~experience ~~permit~~in ~~the~~logistics ~~government~~and ~~customer~~contingency tooperations ~~direct~~is ~~work to~~ a ~~specific~~valuable ~~contractor.~~asset ~~Our~~to ~~Civilian~~many ~~Police~~efforts ~~and~~such ~~Contract~~as ~~Field~~peacekeeping, ~~Team~~humanitarian ~~programs~~aid, ~~are~~and ~~two~~national ~~of our contracts performed under IDIQ contracts~~reconstruction. We ~~may~~arrange ~~not win new task orders under these contracts for various reasons such as failing to rapidly deploy personnel or high prices~~transportation, ~~which~~manage ~~would~~construction ~~have~~and anprovide ~~adverse~~security ~~effect on our operating performance~~ and ~~may~~equipment ~~result~~training. inWe ~~additional~~also ~~expenses~~provide advisors and ~~loss~~serve ofas ~~revenue.~~a Inliaison ~~fiscal~~with ~~2007~~the ~~and 2006, 56~~DoS.7% ~~and~~Our ~~58.9%~~current oftask ~~our~~orders ~~revenues~~are fixed-price, ~~respectively~~time-and-materials, ~~were~~and ~~attributable to IDIQ contracts~~cost-reimbursement.

12War Reserve Materiel. Through our War Reserve Materiel program, we provide management of the U.S. Air Force Southwest Asia War Reserve Materiel 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 of the deployed forces. The War Reserve Materiel program continues to partner with the U.S. Central Command Air Force in the development of new and innovative approaches to asset management. Our contract is primarily cost-reimbursement with a smaller portion of fixed-price services.

~~Our~~Global ~~cost~~Platform ~~of performing under time-and-materials and fixed-price contracts may exceed our revenues which would result in a~~Support ~~recorded~~Solutions ~~loss~~(“GPSS”) ~~on the contracts.~~

~~Our~~GPSS ~~government~~provides ~~contract~~a ~~services~~wide ~~have~~range ~~three~~of ~~distinct pricing structures: cost-reimbursement~~technical, ~~time-and-materials and fixed-price. With cost-reimbursement contracts~~engineering, sologistics ~~long as actual costs incurred are within the contract funding~~ and ~~allowable~~maintenance ~~under~~support services ~~the~~primarily ~~terms of the contract, we are entitled~~ to ~~reimbursement~~ ofgovernment ~~the~~agencies ~~costs plus a stipulated fixed fee and, in some cases, an incentive-based award fee~~worldwide. ~~We assume additional financial risk on time-and-materials and fixed-price contracts~~Additionally, ~~because~~GPSS weprovides ~~assume~~services ~~the~~including ~~risk~~drug oferadication ~~performing those contracts at the stipulated prices or negotiated hourly/daily rates. If we do not accurately estimate ultimate costs~~ and ~~control costs~~host ~~during~~nation ~~performance~~pilot ~~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 wecrew ~~are responsible for third-party claims under fixed-price contracts~~training. ~~The~~GPSS ~~failure~~includes tofour ~~meet~~service ~~contractually~~offerings/business ~~defined~~areas ~~performance~~as ~~standards~~described ~~may~~below: result in a loss of a particular contract 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.

AAviation ~~negative~~Maintenance & ~~audit~~Support or— ~~other~~This ~~actions~~service byoffering provides worldwide maintenance, modification, repair, and logistics support on aircraft, weapons systems, and related support equipment to the DoD and other U.S. government ~~could~~agencies. ~~adversely~~Contract ~~affect~~Field ~~our~~Teams ~~operating~~(“CFT”) ~~performance~~is the most significant program in this service offering. We have provided CFT services for over 58 years. This program deploys highly mobile, quick-response field teams to customer locations to supplement a customer’s workforce.

AtCounter-Drug ~~any~~and ~~given~~Law ~~time,~~Enforcement ~~many~~Aviation of— ~~our~~This ~~contracts~~service ~~are~~offering ~~under~~conducts ~~review~~foreign byassistance ~~the~~programs ~~DCAA~~to ~~and~~reduce ~~other~~the ~~government~~flow ~~agencies. These agencies review our contract performance, cost~~of ~~structure~~international ~~and compliance with applicable laws, regulations and standards~~narcotics. ~~Such~~The ~~DCAA~~assistance ~~audits~~helps ~~may~~foreign ~~include~~governments ~~contracts~~improve ~~under~~their ~~which~~ability weto ~~have~~develop ~~performed~~and ~~services~~implement innational ~~Iraq~~strategies and ~~Afghanistan~~programs ~~under~~to ~~especially demanding~~prevent ~~circumstances. The DCAA also reviews~~ the ~~adequacy of~~production, ~~and our compliance with~~trafficking, ~~our internal control systems~~ and ~~policies,~~abuse ~~including~~of ~~our~~illicit ~~purchasing,~~drugs. ~~property,~~International ~~estimating,~~Narcotics ~~compensation~~ and Law ~~management~~Enforcement ~~information~~Air-Wing ~~systems.~~(“INL”) ~~Any~~supports ~~costs~~governments ~~found~~worldwide toin betheir ~~improperly~~efforts ~~allocated~~ to alocate ~~specific~~and ~~contract~~eradicate ~~will~~drug ~~not be reimbursed. In addition~~crops, ~~government~~interdict ~~contract~~drug ~~payments~~production ~~received~~and bytrafficking usactivities, ~~for allowable direct~~ and ~~indirect~~develop ~~costs~~their ~~are~~own ~~subject~~institutional tocounter-narcotics ~~adjustment~~aviation ~~after~~programs. Also, ~~audit~~this byprogram ~~government~~provides ~~auditors~~intra-theater ~~and~~transportation ~~repayment~~services tofor ~~the~~a ~~government~~variety ifof ~~the~~customers ~~payments~~throughout ~~exceed allowable costs as defined in the government contracts~~Iraq.

~~Audits~~Fleet ~~have~~Management ~~been~~— ~~completed~~This onservice ~~our~~offering ~~incurred~~provides ~~contract~~aircraft ~~costs~~fleet ~~through~~maintenance ~~fiscal year 2005~~ and ~~the~~modification ~~Defense~~services, ~~Contract~~ground ~~Management~~vehicle ~~Agency~~maintenance ~~has~~and ~~approved~~modification ~~these~~services, ~~costs~~pilot ~~through fiscal year 2003. Audits~~ and ~~approvals~~maintenance ~~are~~training, ~~continuing~~logistics ~~for~~support, ~~subsequent~~air ~~periods.~~traffic Wecontrol ~~cannot~~services, ~~predict~~base and ~~the~~depot ~~outcome~~operations, ofprogram ~~such~~management ~~audits~~ and ~~what,~~engineering ifservices. ~~any~~Additionally, ~~impact~~this ~~such~~service ~~audits~~offering ~~may~~provides ~~have~~aerial onfirefighting ~~our future operating performance~~services. ~~For further discussion, see "Legal Proceedings" below.~~

We9 ~~are subject to investigation by the U.S. government, which could result in our inability to receive government contracts and could adversely affect our future operating performance.~~

AsTable a U.S. government contractor, we must comply with laws and regulations relating to U.S. government contracts that do not apply to a 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 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, which requires hourly employees to be paid certain specified wages and benefits. If the Department of Labor determines that we violated the Service Contract Act 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 performance. We are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which companies with solely commercial customers are not subject. 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. Contents

~~Furthermore, our~~Land ~~reputation~~Systems ~~could~~— ~~suffer~~This ~~serious~~service ~~harm~~offering ifprovides ~~allegations~~maintenance, ~~of impropriety were made against us. If we were suspended or prohibited from contracting with the U.S. government~~operations, orsupport, ~~any~~life ~~significant~~extension, ~~U.S. government agency~~engineering, ifmarine ~~our~~services ~~reputation~~and orprogram ~~relationship~~management ~~with~~services ~~U.S.~~primarily ~~government~~for ~~agencies~~ground ~~was~~vehicles ~~impaired~~and ordocked ~~if the U~~ships.S. ~~government~~This ~~otherwise~~includes ~~ceased~~the ~~doing~~services ~~business~~we ~~with~~provide usunder ~~or significantly decreased~~ the ~~amount~~Mine ofResistant ~~business~~Ambush itProtected ~~does~~Vehicles ~~with~~Logistics ~~us,~~Support (“MRAP”) ~~it could adversely affect our operating performance and may result in additional expenses and possible loss of revenue~~contract.

13Key GPSS Contracts

~~The~~INL ~~expiration~~Air ofWing: ~~our~~In ~~collective~~May 2005, ~~bargaining~~the ~~agreements~~DoS ~~could~~awarded ~~result~~us a contract in ~~increased~~support ~~operating~~of ~~costs~~the orINL ~~work~~program ~~disruptions~~to aid in the eradication of illegal drug operations. We are the sole awardee of this contract, which ~~could~~has ~~potentially~~an ~~affect~~estimated contract value of $1.6 billion for the first five years of the nine-year term. The contract expires in October 2014. This program has been ongoing since 1991, in cooperation with multiple Latin American countries. A similar program in Afghanistan began in 2006. Also, this program provides intra theater transportation services for a variety of customers throughout Iraq. The majority of our ~~operating~~contractual ~~performance~~services are cost-reimbursement type services.

AsLife ofCycle ~~March 30,~~Contractor ~~2007,~~Support: weThis ~~had~~GPSS ~~over~~program ~~14,600~~consists of ~~employees~~contracts ~~located~~with inthe 33U.S. ~~countries~~Army ~~around~~and the ~~world,~~U.S. ~~approximately~~Navy. 7Under the Life Cycle Contractor Support-Army contracts,~~000~~ ofwe ~~whom~~provide ~~are~~aircraft ~~located~~maintenance ~~inside~~and ~~the~~logistics ~~U.S.~~for ~~Of these~~C-12/RC-12 ~~employees,~~and ~~approximately~~UC-35 1aircraft,~~500~~ ~~are~~as well as services for a major avionics suite upgrade of ~~represented~~aircraft byfor ~~labor~~Global ~~unions~~Air Traffic Management compliance. AsUnder ofour ~~March 30,~~Life ~~2007~~Cycle Contractor Support-Navy contracts, we ~~had~~provide ~~approximately~~aircraft 70maintenance ~~collective~~and ~~bargaining~~logistics ~~agreements.~~for ~~These~~the ~~agreements~~U.S. ~~will~~Navy’s ~~expire~~UC-35 ~~between~~aircraft. ~~July 2007~~We ~~and~~entered ~~March 2011.~~into ~~There can~~the beLife noCycle ~~assurance~~Contractor Support-Army ~~that~~and weLife ~~will~~Cycle ~~not~~Contractor ~~experience~~Support-Navy ~~labor~~contracts ~~disruptions~~in ~~associated~~August 2000 ~~with~~and the ~~expiration~~Global orAir ~~renegotiation~~Traffic Management portion of ~~collective~~our ~~bargaining~~Army ~~agreements~~contract orin ~~otherwise~~March 2003. WeThe ~~could~~Life ~~experience~~Cycle aContractor ~~significant~~Support-Army Contract is up for re-competition in July ~~disruption~~2010 ofwhereas ~~operations~~the ~~and~~Life ~~increased~~Cycle ~~operating~~Contractor ~~costs~~Support-Navy asContract ais ~~result~~up offor ~~higher~~re-competition ~~wages~~in orOctober 2010. ~~benefits~~The ~~paid~~estimated tototal ~~union~~contract ~~members~~value for these programs is $1.37 billion, of which ~~could~~$1.3 ~~adversely~~billion ~~affect~~relates ~~our~~to ~~operating~~the ~~performance~~Life ~~and~~Cycle ~~may~~Contractor Support-Army ~~result~~Contract. ~~in additional~~The ~~expenses~~majority ~~and~~of ~~possible~~our ~~loss~~contractual services are fixed-price with a portion of ~~revenue~~cost-plus services.

~~Proceedings~~Contract ~~against~~Field usTeams: inWe ~~domestic~~have ~~and~~provided ~~foreign~~this ~~courts~~service ~~could~~for ~~result~~over in58 ~~legal~~consecutive ~~costs~~years. This program deploys highly mobile, quick-response field teams to customer locations to supplement a customer’s workforce. The services we provide under the CFT program generally include mission support to aircraft and ~~adversely~~weapons ~~affect~~systems and depot-level repair. The principal customer for our ~~operating~~CFT ~~performance~~program is the DoD. This contract has a $10.1 billion ceiling for multiple awardees over a seven-year term through September 2015. The majority of our current delivery orders are time-and-materials, but we also have cost-reimbursement and fixed-priced services.

AtAndrews ~~any~~Air ~~given~~Force ~~time~~Base: Under the Andrews Air Force Base contract, we perform ~~are~~aircraft ~~involved~~maintenance inand ~~various~~base ~~claims~~supply ~~and~~functions, ~~lawsuits~~including ~~arising~~full inback ~~the~~shop ~~ordinary~~support, ~~course~~organizational oflevel ~~business.~~maintenance, Infleet ~~the~~fuel ~~event~~services ~~our~~and ~~insurance~~supply, ~~coverage~~launch isand ~~inadequate~~recovery ~~to cover~~and ~~such~~Federal ~~claims,~~Aviation weAdministration ~~will~~(“FAA”) berepair ~~forced~~services. Our toprincipal ~~bear~~customer ~~the~~under ~~costs~~this ~~arising~~contract ~~from~~is athe ~~judgment~~U.S. WeAir doForce. ~~not~~We ~~have~~entered ~~insurance~~into ~~coverage~~this ~~for~~contract ~~adverse~~in ~~employment~~January 2001. ~~and~~This ~~breach~~contract ofhas ~~contract~~a ~~actions,~~$372 million ~~and~~estimated wetotal ~~bear~~contract ~~all~~value. ~~costs associated~~The ~~with~~majority ~~such~~of ~~litigation~~our ~~and~~contract ~~claims~~is fixed-price.

~~As required~~Columbus byAir ~~generally~~Force ~~accepted~~Base: ~~accounting~~We ~~principles~~provide ~~("GAAP"),~~aircraft weand ~~estimate~~equipment ~~material~~maintenance ~~loss~~functions ~~contingencies~~for T-37, T-38, T-1 and ~~establish~~T-6 ~~reserves~~training ~~when~~aircraft wein support ~~assess~~of ~~that~~the ~~liability~~Columbus AFB Specialized Undergraduate Pilot Training Program in Columbus, Mississippi. Our customer under this program is ~~deemed~~the ~~probable~~U.S. Air Force — Air Education and ~~reasonably~~ ~~estimable~~Training ~~based~~Command onand specifically the ~~facts~~14th ~~and~~Flying ~~circumstances~~Training ~~known~~Wing. This tocontract usprovides atfor a ~~particular~~firm ~~point~~fixed-price inincentive ~~time,~~fee aswith ~~adjusted~~an byincentive ~~subsequent~~award ~~developments~~fee. inEstimated atotal ~~particular~~contract ~~matter~~value is $294 million. ~~For~~The aperformance ~~description~~period ofstarted ~~our~~October 2005 ~~current~~and runs through September 2012. We have completed a ~~material~~transition ~~legal~~from ~~proceedings~~the old T-37 primary trainer to the new T-6 turbo prop. Additionally, ~~see~~this ~~"Legal~~14th ~~Proceedings"~~Flying ~~below~~Training Wing has one additional squadron of T-38s dedicated to fighter lead-in-training.

~~Competition~~Sheppard Air Force Base: Under the Sheppard Air Force Base Program, we provide aircraft maintenance services for the 80th Flying Training Wing based at Sheppard Air Force Base in ~~our~~Wichita ~~industry~~Falls, ~~could~~Texas. ~~limit~~This ~~our~~contract ~~ability~~has toan ~~attract~~initial ~~and~~base ~~retain~~period ~~customers~~of oreleven ~~employees~~months, ~~which~~and ~~could~~six ~~result~~option inyears. aThe ~~loss~~mission of ~~revenue~~the Air Education and~~/or~~ aTraining Command’s 80th Flying Training Wing is to ~~reduction~~provide undergraduate pilot training for the U.S. and North Atlantic Treaty Organization (“NATO”) allies in ~~margins,~~the ~~which~~Euro ~~could~~NATO ~~adversely~~Joint ~~affect~~Jet Pilot Training program. Graduates of this prestigious program are assigned to fighter pilot positions in their respective air forces. The majority of our ~~operating~~contract ~~performance~~is fixed-price.

WeMine ~~compete~~Resistant ~~with~~Ambush ~~various~~Protected ~~entities~~Vehicle (“MRAP”): ~~across~~Under ~~geographic~~the ~~and~~Mine ~~business~~Resistant ~~lines.~~Ambush ~~Competitors~~Protected ofVehicle ~~our~~program, GSwe ~~operating~~provide ~~segment~~MRAP ~~are~~Vehicle ~~various~~on-site ~~solution~~liaison ~~providers~~and ~~who~~advisory ~~compete~~services into ~~any one~~the ofmilitary ~~the~~users ~~service~~with ~~areas~~direct ~~provided~~assistance byin ~~the~~maintenance GSor ~~business~~repair ~~units~~operations. ~~Competitors~~The ofMRAP ~~our~~vehicles ~~MTSS~~are required ~~operating~~to ~~segment~~increase ~~are~~survivability ~~typically~~and ~~large~~mobility ~~defense~~of ~~services~~troops ~~contractors,~~operating ~~who~~in ~~offer~~a ~~services~~hazardous ~~associated~~fire ~~with~~area ~~maintenance, training~~against ~~and~~known ~~other~~threats ~~activities.~~such Weas ~~compete~~small onarms afire, ~~number~~rocket ofpropelled ~~factors~~grenades, ~~including~~and ~~our~~improvised ~~broad~~explosive ~~range~~devices. ofThe ~~services,~~majority ~~geographic~~of ~~reach,~~our ~~mobility~~contract ~~and~~is ~~response time~~fixed-price.

~~Some~~ California Department of ~~our~~Forestry: ~~competitors~~We have ~~greater~~been ~~financial~~helping ~~and~~to ~~other~~fight ~~resources~~fires ~~than~~in weCalifornia dosince orDecember ~~are better positioned than we are to compete for contract opportunities~~2001. ~~For~~We ~~example, original equipment~~maintain ~~manufacturers that also provide aftermarket support services have a distinct advantage in obtaining service contracts for~~ aircraft ~~that they have manufactured~~, asproviding ~~they~~nearly ~~frequently~~all ~~have~~types ~~better access to replacement~~ and ~~service~~levels ~~parts as well as an existing technical understanding~~ of ~~the~~maintenance ~~platform~~— ~~they have manufactured. In addition~~scheduled, ~~we are at a disadvantage when bidding for contracts put up for re-competition for which we are not the incumbent provider~~annual, ~~because~~emergency ~~incumbent providers are frequently able to capitalize on customer relationships~~repairs, ~~technical knowledge~~ and ~~pricing experience~~even ~~gained from their prior service.~~

~~In addition~~10 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 operation. We hire from a limited pool of potential employees, with military and law enforcement experience, specialized technical skill sets and security clearances as 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.

14Table of Contents

~~Loss~~ structural ofdepot ~~our~~level ~~skilled~~repair. ~~personnel,~~McClellan ~~including~~Field ~~members~~in ofSacramento ~~senior~~is ~~management,~~home ~~may~~base ~~have~~for anour ~~adverse~~program ~~effect~~mechanics, ondata ~~our~~entry ~~operations~~staff, and~~/or~~ ~~our~~quality ~~operating~~control ~~performance until~~inspectors. In addition, we ~~find~~provide ~~suitable~~pilots ~~replacements~~who operate the fixed wing aircraft.

~~Our~~C-21 ~~continued~~Contractor ~~success~~Logistics ~~depends~~Support: inUnder ~~large part on our ability to recruit and retain~~ the ~~skilled~~C-21A ~~personnel~~CLS ~~necessary~~Program, towe ~~serve~~perform ~~our customers effectively~~organizational, ~~including~~ ~~personnel~~intermediate ~~with extensive military~~ and ~~law~~depot ~~enforcement~~level ~~training and backgrounds. The proper execution of our contract objectives depends upon the availability of quality resources~~maintenance, ~~especially~~together ~~qualified personnel.~~with ~~Given~~supply ~~the~~chain ~~nature~~management ~~of our business, we have substantial need~~ for ~~personnel~~C-21A ~~who~~(Lear ~~are~~35A) ~~willing~~aircraft tooperated ~~work~~by ~~overseas,~~the ~~frequently~~U.S. inAir ~~locations~~Force ~~experiencing~~at ~~political~~seven ormain ~~civil~~operating ~~unrest,~~bases ~~for extended periods of time~~ and ~~often~~one ondeployed ~~short notice~~location. WeThe ~~may~~contract ~~not~~has betime-and-materials ~~able~~and fixed-priced ~~to meet the need for qualified personnel as such need arises~~portions.

~~In addition,~~Global weLinguist ~~must~~Solutions ~~comply~~(“GLS”) with provisions in U.S. government contracts that require employment of persons with specified work experience and security clearances. An inability to maintain employees with the required security clearances could have a material adverse effect on our ability to win new business and satisfy our existing contractual obligations, and could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

~~The loss~~GLS ofis ~~services~~a ofjoint ~~any~~venture ofbetween ~~the~~DynCorp ~~members~~International ofand ~~our~~McNeil ~~senior~~Technologies, ~~management~~in ~~could~~which ~~adversely~~we ~~affect~~have ~~our~~a ~~business~~51% ~~until~~ownership ainterest. ~~suitable~~GLS ~~replacement~~currently ~~can~~and historically behas ~~found.~~had ~~There~~no ~~may~~other beoperations aoutside ~~limited~~of ~~number~~performance on the INSCOM contract. The majority of ~~personnel~~ ~~with~~our ~~the~~current ~~requisite~~INSCOM ~~skills~~task toorders ~~serve~~are incost-reimbursement ~~these~~with ~~positions,~~an ~~and~~award wefee. ~~may~~Our beGLS ~~unable~~operating tosegment ~~locate~~is orcomprised ~~employ~~of ~~such~~a ~~qualified~~single ~~personnel~~linguist onservice offering/business ~~acceptable~~area, ~~terms~~Linguistics & Translation.

IfLinguistics & ~~our~~Translation: ~~subcontractors~~This ~~fail~~service tooffering provides ~~perform~~rapid ~~their~~recruitment, ~~contractual~~deployment ~~obligations,~~and ~~our~~on-site ~~prime~~management ~~contract~~of ~~performance~~interpreters and ~~our~~translators ~~ability~~in-theatre tofor ~~obtain~~a ~~future~~wide ~~business~~range ~~could~~of beforeign languages in support of the U.S. Army, unified commands attached forces, combined forces, and joint elements ~~materially~~executing the Operation Iraqi Freedom (“OIF”) mission, and ~~adversely~~other ~~impacted~~U. S. government agencies supporting the OIF mission.

~~Many~~Estimated ofTotal ~~our~~Contract ~~contracts~~Value 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~~The ~~laws~~estimated ~~and~~total ~~regulations~~contract ~~may~~value ~~subject~~represents usamounts expected to ~~significant~~be ~~costs~~realized ~~and~~from ~~liabilities~~the current award date to the current contract end date (i.e., revenue recognized to date plus backlog). For the reasons stated under “Item 1.A. Risk Factors,” the estimated contract value or ceiling value specified under a government contract or task order is not necessarily indicative of the revenue that ~~could~~we ~~adversely~~will ~~affect~~realize ~~our~~under ~~operating~~that ~~performance~~contract.

WeThe ~~are~~following ~~subject~~table tosets ~~numerous~~forth ~~environmental,~~certain ~~legal~~information ~~and~~for ~~regulatory requirements related to~~ our ~~operations worldwide. In the U.S.~~principal contracts, ~~these~~including ~~laws~~estimated ~~and~~total ~~regulations~~contract ~~include those~~values ~~governing the management and disposal~~ of ~~hazardous substances and wastes and~~ the ~~maintenance~~current ofcontracts ~~a safe workplace, primarily associated with our aviation services activities, 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, states and other countries where we do business have numerous environmental, legal and regulatory requirements by which we must abide. We could incur substantial costs, including clean-up costs, as a result of ~~violations of~~April 2, or2010: ~~liabilities under, environmental laws. This could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.~~

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

~~Our~~(1) ~~ability~~Estimated tototal ~~comply~~contract ~~with~~value has the ~~requirements~~meaning ofindicated ~~Section 404~~in of“— ~~the~~Estimated ~~Sarbanes-Oxley~~Total ~~Act~~Contract ofValue” ~~2002~~and is ~~dependent~~not ~~upon~~necessarily ~~our~~representative ~~implementation~~of the amount of ~~effective internal~~work ~~controls~~we will actually be awarded under the contract.

We(2) ~~will~~This becontract ~~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~~an byIDIQ ~~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~~contract. ~~Section 404~~For ~~requires~~more ainformation ~~reporting~~about ~~company~~IDIQ ~~such~~contracts assee ~~ours~~“— ~~to, among~~Contract 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 quarterlyTypes”. ~~Although we currently evaluate and disclose significant changes in our internal controls over financial reporting quarterly~~Also, ~~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,~~discussion ~~we expect to incur additional expenses and utilization~~ of ~~management's~~how 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~~define ~~not~~estimated ~~able~~remaining tocontract ~~implement~~value ~~the~~for ~~requirements~~IDIQ ~~of Section 404 in a timely manner or with adequate compliance~~contracts, ~~there~~see ~~could~~“— beEstimated anRemaining ~~adverse~~Contract ~~reaction in the financial markets due to a loss of confidence in the reliability of our financial statements~~Value”. ~~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.~~

~~Our~~(3) ~~substantial~~Awarded ~~outstanding~~to ~~indebtedness~~GLS, ~~and~~a ~~the~~joint ~~restrictive~~venture ~~covenants~~of inDynCorp ~~the~~International ~~agreements~~(51% ~~governing~~majority ~~our~~interest) ~~indebtedness limit our operating~~ and ~~financial flexibility~~McNeil Technologies.

(4) We are ~~required~~the tosole ~~make~~awardee ~~mandatory~~of ~~payments~~this ~~and~~contract, ~~under~~which ~~certain~~has ~~circumstances,~~an ~~mandatory~~estimated ~~prepayments~~value onof ~~our outstanding indebtedness~~$1.59 ~~See~~billion ~~Note 7 to our consolidated financial statements~~ for ~~additional~~the ~~information.~~first ~~This~~five ~~may~~years ~~require us to dedicate a substantial portion~~ of ~~our~~this ~~cash~~nine-year ~~flows~~contract ~~from~~through ~~operations~~October to payments on our indebtedness, thereby reducing the availability of our cash flows to fund working capital, capital expenditures, and other general corporate purposes and could limit our flexibility in planning for, or reacting to, changes in our business and in the industry2014.

~~The agreements~~11 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:

In addition,Table our bank credit facilities contain covenants requiring us to deliver to lenders leverage and interest coverage financial computations and our audited annual and 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, 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, which may have a material adverse effect on our financial condition, results of operations and cash flows. Contents

16(5) LOGCAP IV has a $5 billion ceiling per year over 10 years.

~~Our~~(6) ~~substantial~~Although ~~level~~the ofbase ~~indebtedness~~WPPS ~~may~~contract ~~make~~expires itJune ~~difficult~~2010; ~~for~~we ushave toa ~~satisfy~~task ~~our~~order ~~debt~~out ~~obligations~~through ~~and~~September ~~may~~2014 ~~adversely~~if ~~affect~~all ~~our~~options ~~ability~~are ~~to obtain financing for working capital, capitalize on business opportunities or respond to adverse changes in our industry~~exercised.

~~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 gives effect to the $21.1 million of outstanding letters of credit~~7). ~~Based~~AFRICAP onwas ~~our~~awarded ~~indebtedness~~September ~~and~~2009; ~~other~~the ~~obligations~~predecessor ascontract ofcalled ~~March 30,~~Africa ~~2007,~~Peacekeeping wehad ~~estimate~~a ~~our remaining~~total ~~contractual~~contract ~~commitments~~value ~~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~~ $~~608.6 million~~395 ~~in the aggregate for the remaining period between March 31, 2007 through the end of fiscal 2012~~million. ~~Such indebtedness could have important consequences for you, including the following:~~

~~Servicing~~Competition our indebtedness 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.

~~Our~~We ~~ability~~compete towith ~~make~~various ~~payments~~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 ~~refinance~~compete. Some of our ~~indebtedness~~competitors ~~depends~~may onpossess ~~our~~greater ~~ability~~financial and toother ~~generate~~resources ~~cash.~~or ~~This,~~may be better positioned to acompete for certain ~~extent~~contract opportunities. We believe that our principal competitors include Civilian Police International, isScience ~~subject~~Applications toInternational ~~general~~Corporation, ITT Corporation, KBR, ~~economic~~Inc., ~~political~~IAP Worldwide Services, ~~financial~~Inc., ~~competitive~~Xe Inc., ~~legislative~~Triple Canopy Inc., ~~regulatory~~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 ~~other~~Serco ~~factors~~Group Plc. We believe that ~~are~~the ~~beyond~~primary competitive factors for our ~~control~~services include reputation, technical skills, past contract performance, experience in the industry, cost competitiveness and customer relationships.

~~We cannot~~Backlog 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 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 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 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.

~~Despite~~We track backlog in order to assess our current ~~indebtedness~~business ~~level,~~development weeffectiveness and to assist us in forecasting our ~~subsidiaries~~future ~~may~~business needs ~~still~~and befinancial ~~able~~performance. Our backlog consists of funded and unfunded amounts under contracts. Funded backlog is equal to ~~incur~~the ~~substantially~~amounts ~~more~~actually ~~debt~~appropriated by a customer for payment of goods and services less actual revenue recognized as of the measurement date under that appropriation. Unfunded backlog is the actual dollar value of unexercised, ~~which~~priced ~~could~~contract ~~exacerbate~~options and the ~~risks~~unfunded portion of exercised contract options. Most of our U.S. government contracts allow the customer the ~~associated~~option ~~with~~to extend the period of performance of a contract for a period of one or more years. These priced options may or may not be exercised at the sole discretion of the customer. Historically, it has been our ~~substantial~~experience ~~leverage~~that the customer has typically exercised contract options.

AsFirm offunding ~~March 30,~~for ~~2007, we had up to $81.9 million of additional availability under~~ our ~~senior~~contracts ~~secured~~is ~~credit~~usually ~~facility~~made ~~(which~~for ~~gives~~one ~~effect~~year ~~to $21.1 million~~at ofa ~~outstanding~~time, ~~letters~~with ~~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~~remainder ~~indebtedness.~~of ~~It is not possible to quantify~~ the ~~specific~~contract ~~dollar~~period ~~amount~~consisting of ~~indebtedness we may incur because our senior secured credit facility does not provide for~~ a ~~specific~~series ~~dollar amount~~ of ~~indebtedness~~one-year ~~we may incur~~options. ~~Our~~As ~~senior secured credit facility and our senior subordinated notes allow us to incur only certain indebtedness that~~ is ~~expressly~~the ~~enumerated~~case inwith ~~our senior secured credit facility and~~ the ~~indenture~~base ~~governing~~period ~~our~~of ~~senior subordinated notes. The indebtedness permitted under~~ our ~~senior secured credit facility includes indebtedness that is customary for similar credit facilities~~U.S. ~~Specific~~government ~~examples~~contracts, ofoption ~~indebtedness~~periods ~~permitted under our senior secured credit facility~~ are ~~described~~subject ~~further under notes~~ to the ~~consolidated~~availability ~~financial~~of ~~statements~~funding ~~and~~for ~~include~~contract ~~certain intercompany~~performance. ~~indebtedness,~~The ~~indebtedness under the senior secured credit facility, the senior subordinated notes, certain refinancing indebtedness and certain indebtedness with respect to capital~~U.S. ~~leases~~government inis anlegally ~~amount~~prohibited ~~that~~from ~~may~~ordering ~~not~~work ~~exceed~~under ~~$25.0 million.~~a Wecontract ~~believe that the comparable restrictions~~ in the ~~indenture~~absence ~~governing~~of ~~our~~funding. ~~senior~~Our ~~subordinated~~historical ~~notes~~experience ~~have~~has ~~restrictions~~been that ~~are~~the ~~generally no~~government ~~more~~has ~~restrictive~~typically infunded ~~any material respect than~~ the ~~senior~~option ~~secured~~periods ~~credit~~of ~~facility. If either we or~~ our ~~subsidiaries were to incur additional indebtedness, the related risks that we now face could increase~~contracts.

1712

OurTable abilityof to make payments under the notes and to service our other debt may depend on cash flow from our subsidiaries. Contents

~~Although~~The wefollowing ~~are~~table ansets ~~operating~~forth ~~company,~~ our ~~subsidiaries~~approximate ~~hold~~backlog ~~material~~as ~~assets.~~of ~~Consequently, we may depend on distributions or other intercompany transfers from our subsidiaries to make payments under~~ the ~~exchange~~dates ~~notes and our other debt. In addition, distributions and intercompany transfers to us from our subsidiaries will depend on~~indicated:

The operating results of our subsidiaries at any given time may not be sufficient to make distributions or other payments to us or to ensure that any distributions and/or payments will be adequate to pay any amounts due under the notes or our other indebtedness.


	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

WeEstimated ~~are~~Remaining ~~controlled~~Contract ~~by affiliates of Veritas Capital, whose interests may not be aligned with yours.~~ Value

WeOur ~~are~~estimated aremaining ~~direct~~contract ~~wholly~~value ~~owned~~represents ~~subsidiary~~total ofbacklog ~~DynCorp~~plus ~~International Inc., our Parent, and an indirect subsidiary of DIV Holding LLC. DIV Holding LLC is our Parent'~~management’s ~~controlling~~estimate ~~stockholder. Veritas Capital Management II, L.L.C. and its affiliates, The Veritas Capital Fund II, L.P. and Veritas Capital II A, LLC, in turn, own 86%~~ of ~~the~~future ~~outstanding~~revenue ~~membership~~under ~~interest~~IDIQ incontracts ~~our~~for ~~Parent's~~task ~~controlling~~or ~~stockholder,~~delivery ~~DIV~~orders ~~Holding~~that ~~LLC.~~have ~~Veritas~~not ~~Capital~~been ~~indirectly controls approximately 56~~awarded.1% ofWhen ~~our~~agreements ~~Parent's~~for ~~Class A~~such ~~common~~task ~~stock.~~orders ~~So long as Veritas Capital continues to own a significant amount of the outstanding shares of our Parent's Class A common stock, it will continue to be able to strongly influence~~ or ~~effectively~~projects ~~control~~are ~~our decisions~~signed, ~~including~~their ~~potential~~value ~~mergers or acquisitions, asset sales and other significant corporate transactions. As a result, Veritas Capital~~ is ~~able~~added to ~~control~~ the ~~election~~backlog. ofFuture ~~our~~revenue ~~Parent's directors,~~represents ~~determine our and our Parent's corporate and~~ management ~~policies and determine without the consent of our Parent'~~’s ~~other~~estimate ~~stockholders, the outcome~~ of ~~any~~unawarded ~~corporate transaction or other matter submitted to our Parent's stockholders for approval, including potential mergers or acquisitions, asset sales~~ and ~~other significant corporate transactions. Two of our Parent's twelve directors~~ ~~are~~unfunded ~~either~~options ~~employees~~that ~~of,~~will orbe ~~advisors~~recognized ~~to,~~from ~~Veritas Capital, as described under "Directors and Executive Officers of~~ the ~~Registrant –~~end ~~Management." Veritas Capital has sufficient voting power to amend our and our Parent's organizational documents. The interests~~ of ~~Veritas~~current ~~Capital may~~task ~~not~~orders ~~coincide~~until ~~with~~ the ~~interests~~end of ~~other~~the ~~holders~~IDIQ ofcontract ~~our Parent's Class A common stock~~term. ~~Additionally,~~It ~~Veritas Capital~~ is inbased ~~the~~on ~~business~~our ofexperience ~~making investments in companies~~ and ~~may,~~performance ~~from~~under ~~time to~~our ~~time,~~existing ~~acquire~~contracts and ~~hold~~management’s ~~interests~~judgments inand ~~businesses~~estimates ~~that~~with respect ~~compete~~to ~~directly~~future task or ~~indirectly~~delivery ~~with~~order usawards. ~~Veritas~~Although ~~Capital~~we ~~may~~believe ~~also pursue, for its own account, acquisition opportunities that may be complementary to~~ our ~~business,~~estimates ~~and~~are ~~as a result~~reasonable, ~~those~~there ~~acquisition~~can ~~opportunities may not~~ be ~~available~~no toassurance ~~us. In addition, our Parent's Bylaws provide~~ that ~~so long as Veritas Capital beneficially owns a majority of~~ our ~~Parent's~~existing ~~outstanding~~contracts ~~Class A common stock, the foregoing advance notice procedures for stockholder proposals~~ will ~~not~~result ~~apply~~in toactual ~~Veritas~~revenue ~~Capital. Amendment of the provisions described above~~ in ~~our~~any ~~Parent's~~particular ~~Amended~~period ~~and~~or ~~Restated Certificate of Incorporation generally will require an affirmative vote of our Parent's directors, as well as the affirmative vote of~~ at ~~least~~all. aOur ~~majority~~estimated ~~of our~~remaining ~~Parent's~~contract ~~then~~value ~~outstanding~~could ~~voting~~vary ~~stock~~or ifeven ~~Veritas~~change ~~Capital~~significantly ~~beneficially~~depending ~~owns~~upon avarious ~~majority~~factors ofincluding ~~our~~government ~~Parent's~~policies, ~~outstanding~~government ~~Class A~~budgets ~~common~~and ~~stock~~appropriations, or the ~~affirmative~~accuracy ~~vote~~ of ~~at least 80% of~~ our ~~Parent's then~~estimates ~~outstanding voting stock if Veritas Capital beneficially owns less than a majority~~ of ~~our~~work ~~Parent's then outstanding Class A common stock. Amendments~~ to any other provisions of our Parent's Amended and Restated Certificate of Incorporation generally will require the affirmative vote of a majority of our Parent's outstanding voting stock. In addition, because our Parent is a controlled company within the meaning of the New York Stock Exchange rules, our Parent's board is exempt from the New York Stock Exchange requirements that it be ~~composed~~performed ofunder ~~a majority of independent directors,~~ time-and-material ~~that~~contracts ~~its compensation~~ and whether ~~corporate~~we ~~governance~~successfully ~~committees~~compete bewith ~~composed~~any ~~entirely~~multiple ofbidders ~~independent~~in ~~directors~~IDIQ contracts.

18The following table sets forth our estimated remaining contract value as of the dates indicated (dollars in millions):

DIV Holding LLC is a party to a registration rights agreement, which grants it rights to require our Parent to effect the registration of its shares of common stock. In addition, if our Parent proposes to register any of its common stock under the Securities Act of 1933, as amended, whether for its own account or otherwise, DIV Holding LLC is entitled to include its shares of common stock in that registration.


	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

Regulatory Matters ~~ITEM 1B. UNRESOLVED STAFF COMMENTS.~~

~~None~~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.

13 ~~ITEM 2. PROPERTIES.~~

OurTable principal executive office is located in, and a portion of our operations are conducted from, 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 services rendered to our customers. Upon expiration of our leases, we do not anticipate any difficulty in obtaining 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. Contents

~~We believe~~Our ~~that~~international ~~substantially~~operations ~~all~~and ofinvestments ~~our~~are ~~property~~subject to U.S. government laws, regulations and ~~equipment~~policies, isincluding the International Traffic in ~~good~~Arms ~~condition~~Regulations, ~~subject~~Export toAdministration ~~normal~~Act, ~~wear~~the Foreign Corrupt Practices Act and ~~tear~~other export laws and ~~that~~regulations. ~~our~~We ~~facilities~~must ~~have~~also ~~sufficient~~comply ~~capacity~~with toforeign ~~meet~~government ~~the~~laws, ~~current~~regulations and procurement policies and ~~projected~~practices, ~~needs~~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 ~~business~~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 the information required for the U.S. government to negotiate the contract effectively. ~~following~~In ~~table~~addition, ~~lists~~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. ~~leased~~government ~~properties,~~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 ~~inside~~U.S. ~~square~~government ~~footage~~typically performs an incurred cost audit of ~~those~~all ~~properties~~aspects asof 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 ~~March 30~~$650,000, ~~2007~~to determine if the cost proposed and negotiated was accurate, current and complete as of the time of negotiations.

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

The Defense Contract Audit Agency (“DCAA”) performs 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 labor, billing, accounting, purchasing, property, estimating, budgeting & planning, indirect vs. direct costs, and compensation and management information systems. The DCAA has the right to perform audits on our incurred costs on all flexibly priced contracts on an annual 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 indirect costs for U.S. government contracts completed through fiscal year 2004 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 “Item 1.A. Risk Factors — A negative audit or other actions by the U.S. government could adversely affect our operating performance”.

At any ~~ITEM~~given 3time, many of our contracts are under review by the DCAA and other government agencies. ~~LEGAL~~ ~~PROCEEDINGS~~We cannot predict the outcome of such ongoing audits and what, if any, impact such audits may have on our future operating performance.

~~Pending~~Over ~~Litigation~~the last few years, U.S. government contractors, including our Company, have seen a trend of increased scrutiny by the DCAA and ~~Claims~~ other U.S. government agencies. If any of our internal control systems or policies are found non-compliant or inadequate, payments may be suspended under our contracts or we may be subjected to increased government scrutiny and approval that could delay or adversely affect our ability to invoice and receive timely payment on our contracts, perform contracts or compete for contracts with the U.S. government. These adverse outcomes could also occur if the DCAA cannot timely complete periodic reviews of our control systems which could then render the status of these systems as “not reviewed”.

OnSales ~~April 24, 2007, March 14, 2007, December 29, 2006~~ and ~~December 4,~~Marketing 2006 four lawsuits were served, seeking unspecified monetary damages against the Company 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.

19We primarily market our services to U.S. and foreign governments, including their military branches. We also market our services to other prime contractors who have contracts with the U.S. and foreign governments in certain instances where our competencies help to deliver effective solutions. We position our sales and marketing personnel to cover key accounts such as the DoS and the DoD, as well as market segments which hold the most promise for aggressive growth.

~~On May 29,~~We ~~2003,~~participate ~~Gloria~~in ~~Longest,~~national ~~a former accounting manager for the Company, filed suit against the Company under the False Claims Act~~ and international ~~the Florida Whistleblower Statute~~tradeshows, ~~alleging~~ ~~that~~particularly itas ~~submitted~~they ~~false~~apply ~~claims~~ to ~~the~~aviation ~~government under the International Narcotics & Law Enforcement Affairs contract with the DoS. The action~~services, ~~titled U.S. ex rel. Longest v. DynCorp and DynCorp International LLC~~logistics, ~~was~~contingency ~~filed in the U.S. District Court for the Middle District of Florida under seal. The case was unsealed in 2005~~support, and ~~the~~ ~~Company learned of its existence on August 15, 2005 when it was served with the complaint~~defense. ~~After~~We ~~conducting~~are also an ~~investigation~~active ofmember ~~the~~in ~~allegations~~several ~~made~~organizations byrelated ~~the~~to ~~plaintiff,~~services ~~the U.S. government did not join the action. The complaint does not demand any specific monetary damages; however~~contracting, asuch ~~court~~as ~~ruling against~~ the ~~Company~~Professional inServices ~~this lawsuit could have a material adverse effect on its operating performance~~Council.

~~On September 11,~~We ~~2001,~~leverage aour ~~class~~experience ~~action lawsuit seeking $100.0 million on behalf of approximately 10,000 citizens of Ecuador was filed against the Company~~ and ~~several~~capability ~~of its former affiliates~~ in ~~the~~providing ~~U.S.~~value ~~District~~added ~~Court for the District of Columbia. The action alleges personal injury, property damage~~ and ~~wrongful~~complementary ~~death~~services ~~as a consequence of the spraying of narcotic plant crops along the Colombian border adjacent~~ to ~~Ecuador.~~companies ~~The spraying operations were and continue to be conducted under a DoS contract in cooperation with the Colombian government. The terms of the DoS contract provide~~ that ~~the DoS will indemnify the Company against third-party liabilities arising out of the contract, subject to available funding. The Company is also entitled to indemnification by~~require ~~Computer~~support ~~Sciences Corporation~~ in ~~connection~~remote ~~with~~and ~~this~~hazardous ~~lawsuit,~~regions ~~subject~~of ~~to certain limitations. Additionally, any damage award would have to be apportioned between~~ the ~~other defendants and the Company~~globe.

~~General~~14 ~~Legal Matters~~

TheTable Company and its subsidiaries and affiliates are involved in various lawsuits and claims that have arisen in the normal course of business. In most cases, we have denied, or believe we have a basis to deny, liability. We have recorded, in the consolidated financial statements found elsewhere in this Form 10-K, our best estimate of the aggregate liability that will result from these matters and believe that these matters are adequately reserved. While it is not possible to predict with certainty the outcome of litigation and other matters discussed above, it is the opinion of the Company's management, based in part upon opinions of counsel, insurance in force and the facts currently known, that liabilities in excess of those recorded, if any, arising from such matters would not have a material adverse effect on the results of operations, consolidated financial condition or liquidity of the Company over the long term. Contents

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 ~~Investigations~~ security and foreign policy objectives.

~~The~~Intellectual ~~Company~~Property is occasionally the subject of investigations by various agencies of the U.S. government. Such investigations, whether related to its U.S. government contracts or conducted for other reasons, could result in administrative, civil or criminal liabilities, including repayments, fines or penalties being imposed upon the Company, or could lead to suspension or debarment from future U.S. government contracting.

~~On January 30,~~We ~~2007,~~hold ~~the~~an ~~Special~~exclusive, ~~Inspector~~perpetual, ~~General for Iraq Reconstruction ("SIGIR") issued a report on Company contract number S-LMAQM-04-C-0030~~irrevocable, ~~Task Order 0338~~worldwide, ~~concerning~~royalty-free ~~the~~and ~~Iraqi~~fully ~~Police~~paid ~~Training~~license ~~Program.~~to ~~Among~~use ~~other items,~~ the ~~report~~“Dyn ~~raises~~International” ~~questions about the Company's~~and ~~work~~“DynCorp ~~under~~International” ~~Task~~names ~~Order~~in ~~0338~~connection towith ~~establish~~aviation aservices, ~~residential~~security ~~camp~~services, intechnical ~~Baghdad~~services toand ~~house~~marine ~~training personnel~~services. ~~Specifically,~~We ~~the~~also ~~SIGIR~~own ~~report~~various ~~recommends~~licenses ~~that~~for ~~the~~names ~~Director,~~associated ~~Office~~with ofPhoenix ~~Acquisition~~Consulting ~~Management~~Group, ~~DoS, seek~~Inc. ~~reimbursement~~(“Phoenix”) ~~from~~and Casals ~~the~~and ~~Company~~Associates, ~~of $4~~Inc.~~2 million~~ ~~paid by the State Department for work that the SIGIR maintains was not contractually authorized~~(“Casals”). ~~In addition~~Additionally, ~~the~~we ~~SIGIR~~own ~~report~~various ~~recommends that~~registered ~~the~~domain ~~DoS~~names, ~~request~~trademarks ~~the~~and ~~DCAA~~copyrights. toWe ~~review~~currently have two ~~Company~~patent ~~invoices~~applications ~~totaling~~pending ~~$19~~approval.~~1 million.~~ InBecause ~~management's~~most ~~opinion~~of ~~and~~our ~~based~~business oninvolves ~~facts~~providing ~~currently~~services to ~~known~~government entities, ~~the~~our ~~above~~operations ~~described~~generally ~~matters~~are ~~raised~~not insubstantially ~~the~~dependent ~~SIGIR report~~upon ~~will~~obtaining ~~not~~and/or ~~have~~maintaining acopyright ~~material~~or ~~adverse~~trademark ~~effect~~protections, onalthough ~~the~~our ~~Company's~~operations ~~consolidated~~make ~~financial~~use ~~condition,~~of ~~results~~such ofprotections ~~operations~~and orbenefit ~~liquidity~~from them.

20Environmental Matters

Our operations include the use, generation and disposal of petroleum products and other hazardous materials. We are subject to various U.S. ~~Government~~federal, ~~Audits~~ state, local and foreign laws and regulations relating to 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.

~~U.S.~~Employees Government 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~~As ~~Contract Management Agency ("DCMA") formally notified the Company~~ of ~~non-compliance with Cost Accounting Standard ("CAS") 403, Allocation of Home Office Expenses to Segments, on~~ April 112, ~~2007.~~2010, ~~The~~we ~~Company~~had ~~issued~~approximately ~~a response to the DCMA on April 26~~22,300 ~~2007~~employees ~~with~~from aour ~~proposed~~consolidated ~~solution~~entities toin ~~resolve~~38 ~~the non-compliance~~countries, ~~which related to the allocation~~ of ~~corporate~~which ~~general and administrative costs between the Company's divisions. This issue is currently pending a DCMA response to the Company's April 26, 2007 letter. In management's~~approximately ~~opinion and based on facts currently known~~3,000 ~~the~~are ~~above~~represented ~~described~~by ~~matters~~labor ~~will~~unions. ~~not~~We ~~have~~consider aour ~~material~~relationships ~~adverse~~with ~~effect~~our onemployees ~~the~~inclusive ~~Company's~~of ~~consolidated~~our ~~financial~~union ~~condition,~~employees ~~results~~to ofbe ~~operations~~generally ~~or liquidity~~good.

Availability of ~~ITEM~~Forms ~~4. SUBMISSION~~Filed OFWith ~~MATTERS~~the TOU.S. ASecurity ~~VOTE~~and OFExchange ~~SECURITY~~Commission ~~HOLDERS.~~

~~None~~Copies of the following documents (and any amendments thereto) may be obtained free of charge 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:

21• annual reports on Form 10-K;

• quarterly ~~PART~~reports II on Form 10-Q;

• current ~~ITEM~~reports ~~5. MARKET~~on ~~FOR~~Form ~~REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.~~ 8-K;

~~There~~• isstatement noof ~~public~~changes ~~trading~~in ~~market~~beneficial ~~for~~ownership ~~our member units. We are a direct wholly owned subsidiary~~ of ~~our~~Our Parent~~, DynCorp International Inc., who owns all of our Company'~~’s ~~100~~securities ~~member~~for ~~units outstanding.~~ insiders;

~~We did~~• ~~not~~Our ~~sell,~~Parent’s ~~issue~~proxy orstatements; ~~repurchase any equity securities in fiscal 2007.~~ and

• any ~~ITEM~~amendments 6thereto. ~~SELECTED FINANCIAL DATA.~~

The ~~selected~~public ~~consolidated~~may ~~financial~~read and copy any materials we file with or furnish to the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. You may obtain information ~~for~~on the ~~period~~operation ~~from~~of ~~March 30~~the Public Reference Room by calling the SEC at 1-800-SEC-0330. You can also request copies of these documents, ~~2002~~upon ~~through~~payment ~~March 7~~of a duplicating fee, ~~2003~~by ~~has~~writing ~~been~~to ~~derived~~the ~~from~~SEC ~~our~~at ~~consolidated~~its ~~financial~~principal office at 100 F Street, N.E., Washington, D.C. 20549. The SEC maintains an Internet site that contains reports, proxy and information statements, ~~referred~~and toother asinformation regarding issuers that file or furnish such information electronically with the ~~"original~~SEC ~~predecessor~~which ~~period~~may be obtained at www."sec.gov. OnOur ~~March 7,~~SEC ~~2003~~filings are accessible through the Internet at that website. A copy of these filings may also be obtained by going to our Internet website at www.dyn-intl.com and selecting “Investor Relations” and selecting “Financial Information.” Copies may also be obtained by providing a written request for such copies or additional information regarding our operating or financial performance to Corporate Secretary, DynCorp International ~~Inc.~~, ~~and~~3190 ~~its~~Fairview ~~subsidiaries~~Park Drive, ~~including~~Suite us700, ~~were~~Falls ~~acquired~~Church, VA 22042. Except as otherwise stated in these reports, the information contained on our website or available by ~~Computer~~hyperlink from our website is not incorporated into ~~Sciences~~this ~~Corporation~~Annual Report or other documents we file with, or furnish to, the SEC.

~~The selected~~15 historical consolidated financial data for the period from March 8, 2003 through March 28, 2003, as of and for the fiscal year ended April 2, 2004 and for the period from April 3, 2004 through February 11, 2005, the period of Computer Science Corporation's ownership, are derived from our consolidated financial statements, referred to as the "immediate predecessor period."

On February 11,Table 2005, we were 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 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." Contents

~~We use~~ITEM ~~a 52/53-week fiscal year ending on the closest Friday to March 31~~1A. ~~The~~RISK ~~period from April 3, 2004 to February 11, 2005 was a 45-week period~~FACTORS. The fiscal year ended April 2, 2004 was a 53-week year. The period from March 30, 2002 to March 7, 2003 included 49 weeks. During the original predecessor period, DynCorp used a calendar year. Accordingly, the financial statements covered by that period were restated to 52/53-week fiscal year ends.

~~This~~The risks ~~information~~described below should be ~~read~~carefully inconsidered, ~~conjunction~~together with ~~"Management's~~all ~~Discussion~~of ~~and~~the ~~Analysis~~other ofinformation ~~Financial~~contained ~~Condition~~in ~~and~~this ~~Results~~Form of10-K. ~~Operations"~~Any ~~and~~of the ~~consolidated~~following ~~financial~~risks ~~statements~~could materially and ~~related~~ ~~notes~~adversely ~~thereto~~affect ~~included~~our ~~elsewhere~~financial incondition ~~this~~or ~~Form 10-K~~results of operations.

22We rely on sales to U.S. government entities. A loss of contracts, a failure to obtain new contracts or a reduction of sales under existing contracts with the U.S. government could adversely affect our operating performance and our ability to generate cash flow to fund our operations.

	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)		–		–		–		–
Loss on early extinguishment of debt		(3,484)		–		–		–		–		–		–
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)		35,742		28,385		(922)		59,733		31,360		1,229		18,866
Cash flows provided (used) by operating activities		93,533		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		661,551		700,000		NA		–		–		NA
Member's equity		379,674		326,159		223,908		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

We derive substantially all of our revenue from contracts and subcontracts with the U.S. government and its agencies, primarily the DoD and the DoS. The remainder of our revenue is derived from 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. The continuation and renewal of our existing government contracts and new government contracts are, among other things, contingent upon the availability of adequate funding for various U.S. government agencies, including the DoD and 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, earnings and 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 30 fiscal year basis, even though contract periods of performance may extend over many years. Consequently, at the beginning of a major program, the contract is usually partially funded, and additional monies are normally committed to the contract by the procuring agency only as appropriations are made by Congress for future fiscal years. Among the factors that could impact U.S. government spending and reduce our federal government contracting business include:

23• policy and/or spending changes implemented by the Obama administration;

~~The~~• ~~following~~a ~~table~~significant ~~presents~~decline ain, ~~reconciliation~~or reapportioning of, ~~income~~spending toby ~~Earnings~~the ~~before~~U.S. ~~Interest~~government, ~~Taxes~~in general, ~~Depreciation~~or ~~and~~by ~~Amortization~~the ~~("EBITDA")~~DoD ~~for~~or the ~~periods~~DoS, ~~included~~in ~~below.~~ particular;

	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)	$	35,742	$	28,385	$	(922)	$	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(1)		61,896		56,686		8,054		–		–		–		–
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, delays or cancellations of U.S. government programs, requirements or policies;

• the ~~ITEM~~adoption ~~7. MANAGEMENT'S~~of ~~DISCUSSION~~new ~~AND~~laws ~~ANALYSIS~~or OFregulations ~~FINANCIAL~~that ~~CONDITION~~affect ~~AND~~companies ~~RESULTS~~that OFprovide ~~OPERATIONS~~services to the U. S. government;

~~The~~• ~~following~~U.S. ~~discussion~~government ~~and~~shutdowns ~~analysis~~or isother ~~provided~~delays ~~to increase the understanding of, and should be read~~ in ~~conjunction with,~~ the ~~accompanying~~government ~~consolidated financial~~appropriations 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. process;

• curtailment ~~Business~~of ~~Overview~~ the U.S. government’s outsourcing of services to private contractors including the expansion of insourcing;

We• ~~are~~changes ~~a leading provider of specialized mission-critical outsourced technical services to civilian and military government agencies. Our specific global expertise is~~ in ~~law enforcement training and support, security services, base operations and aviation services and operations. We also provide logistics support for all of our services. Our current customers include~~ the ~~DoS;~~political ~~the Army~~climate, ~~Air~~including ~~Force,~~with ~~Navy~~regard ~~and~~to ~~Marine Corps (collectively,~~ the ~~DoD);~~funding ~~and~~or ~~commercial~~operation ~~customers and foreign governments. As~~ of ~~March 30,~~the ~~2007,~~services we ~~had~~provide; ~~over 14,600 employees in 33 countries, 45 active contracts ranging in duration from three to ten years~~ and ~~over 100 task orders.~~

~~Our business~~• ~~strategy~~general iseconomic ~~to further increase our revenues and earnings by expanding current business opportunities~~conditions, ~~capitalizing~~including ~~on industry trends, pursuing commercial and foreign government opportunities and expanding our domestic service offerings. We have~~ a ~~long-standing~~slowdown ~~record of providing services~~ in ~~support~~the ofeconomy aor ~~broad~~unstable ~~array~~economic ofconditions ~~highly~~in ~~complex platforms and systems that are vital to our customers' operations and, together with our predecessors, have provided support services to~~ the ~~U.S.~~United ~~government~~States ~~for~~or ~~55 years.~~in ~~We believe that~~ the ~~longevity~~countries 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~~which ~~target~~we ~~markets~~operate.

24These or other factors could cause U.S. government agencies to reduce their purchases under our contracts, to 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.

~~Operating~~Our ~~Environment~~ U.S. government contracts may be terminated by the U.S. government at any time prior to their completion and contain other unfavorable provisions, which could lead to an unexpected loss of revenue and a reduction in backlog.

WeUnder ~~are~~the ~~primarily a U.S. government contractor providing a broad range~~ terms of ~~critical~~our ~~technical services to civilian and military government agencies and to a lesser extent~~contracts, ~~commercial~~the ~~customers. As a result, our operating performance for any time period is impacted primarily by trends in~~ U.S. government ~~outsourcing,~~may ~~spending~~unilaterally: and the awarding of contracts and related payment 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.

~~Increased~~• ~~Outsourcing~~terminate byor ~~U.S.~~modify and Foreign Governments – We have seen and benefited from a continued trend toward outsourcing of services by the U.S. 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 GS segment has witnessed strong growth as a result of the U.S. government's trend 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. contracts;

~~Increased~~• ~~Spending~~reduce by Our Customers – The DoD budget for fiscal 2008, excluding 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~~value ~~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%).~~existing Ascontracts athrough ~~result~~partial of the U.S. 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.S. government, in general, or by the DoD or the DoS, specifically. termination;

~~Shift~~• todelay ~~More Multiple Awards in IDIQ Contracts – The trend in~~ the ~~service~~payment ~~segment~~ of the U.S. government has been to award more multiple award IDIQ contracts. We expect these trends to continue. Strong customer relationships combined with strong past performance will increase the probability of obtaining a customer's business under multiple award IDIQ contracts, as well as winning new procurements. In fiscal 2007 and 2006, 56.7% and 58.9% of our ~~revenues~~invoices ~~were~~by ~~attributable to IDIQ contracts, respectively. Traditional~~ government ~~contracts~~payment typically have a base year award plus four to nine option years, limiting the competition to the 5-10 year contract cycle. Under multiple award IDIQ contracts, the customer has the ability to compete for the work more frequently among the contract holders, or even move the work on a sole source basis to one of the other providers. This trend toward multiple award IDIQ contracts could increase the volatility in our revenue but also potentially allows us to compete more frequently for work not previously secured. offices;

~~Shift~~• ~~from~~audit ~~Cost-Reimbursement~~our ~~Contracts to Time-and-Materials or Fixed-Price Contracts – Our government~~ contract ~~services have three distinct pricing structures: fixed~~-~~price,~~related time-and-materials and cost-reimbursement, representing approximately of 43%, 36% and 21% our revenues, respectively, for fiscal 2007, and approximately 34%, 38% and 28% of our revenues, respectively, for fiscal 2006. We believe that our profitability will continue to improve as we anticipate that our customers will 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 favorable pricing structure that exists within fixed-price and time-and-materials contracts. We assume financial risk on time-and-materials and fixed-price contracts, because we assume the risk of performing those contracts at the stipulated prices or negotiated hourly rates. If we do not accurately estimate ultimate costs and ~~control~~fees; ~~costs during performance of the work, we could lose money on a particular contract or have lower than anticipated margins. The movement from cost type contracts to time-~~and~~-materials or fixed-price contracts, while increasing our risks, allows us the opportunity to earn higher margins.~~

25• suspend us from receiving new contracts, pending the resolution of alleged violations of procurement laws or regulations.

~~Increased~~The ~~Maintenance,~~U.S. ~~Overhaul~~government ~~and~~can ~~Upgrades~~terminate ~~("O&M")~~or ~~needed~~modify toany ~~Support~~of ~~Aging~~its ~~Military~~contracts ~~Platforms –~~with ~~Another~~us ~~trend~~either ~~we monitor~~for toits ~~determine~~convenience ~~our~~or ~~future~~if ~~strategy~~we isdefault ~~the~~by ~~age~~failing ~~and use of weapon systems. The high-visibility/high-cost weapons systems tend~~ to perform beunder the ~~target~~terms of ~~budget reductions, while~~ the ~~O&M~~applicable ~~budget continues to grow as a percentage of the total budget~~contract. ~~The~~A ~~O&M~~termination ~~portion~~arising ofout ~~the DoD budget, which includes the majority~~ of ~~the~~our ~~services~~default wecould ~~provide,~~expose isus ~~the~~to ~~largest~~liability and ~~fastest~~adversely ~~growing segment~~affect ofour ~~DoD~~operating ~~military~~performance ~~spending.~~and ~~Also,~~lead ~~as the purchase of new weapons systems is delayed or cancelled, the current weapons systems continue~~ to ~~age~~an ~~and~~unexpected ~~require~~loss ~~increased maintenance. This aging, combined with the increased use~~ of ~~the equipment, often in harsh environments, provides opportunities for the services we offer~~revenue.

~~Competition –~~16 We believe that the favorable industry trends that we anticipate may also attract additional competition by certain existing and potential competitors. We compete with various entities across geographic and business lines. Some of our competitors have greater financial and other resources than we do or are better positioned than we are to compete for contract opportunities. In addition, we are at a disadvantage when bidding for contracts put up for re-competition for which we are not the incumbent provider, because incumbent providers are frequently able to capitalize on customer relationships, technical knowledge and pricing experience gained from their prior service.

We haveTable alignedof and report our business operations through two reporting segments: GS and MTSS. Contents

GSOur ~~Segment~~U.S. ~~Activity~~ government contracts typically 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 typically 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 frequently required to be re-competed if the government still requires the services covered by the contract.

~~GS,~~If ~~with~~the ~~revenues~~U.S. ofgovernment ~~approximately~~terminates ~~$1.4 billion,~~and/or ~~$1.3 billion~~materially ~~and~~modifies ~~$1.2 billion~~any ~~for~~of ~~fiscal~~our ~~years~~contracts ~~2007,~~or ~~2006~~if ~~and~~option ~~2005,~~periods ~~respectively,~~are ~~provides~~not ~~outsourced~~exercised, ~~technical~~our ~~services~~failure to ~~government~~replace ~~agencies,~~revenue ~~and~~generated ~~commercial~~from ~~customers~~such ~~worldwide.~~contracts GSwould ~~consists~~result ofin ~~the~~lower ~~four~~revenue ~~operating~~and ~~units~~would ~~(i) Law~~likely ~~Enforcement~~adversely ~~and~~affect ~~Security~~our earnings, ~~(ii) Contingency~~which ~~and Logistics~~could ~~Operations,~~have ~~(iii) Operations~~a ~~Maintenance~~material ~~and~~effect ~~Construction~~on ~~Management,~~our ~~and~~financial ~~(iv) Specialty~~condition ~~Aviation~~ and ~~Counter-drug~~results ~~Operations.~~of operations.

~~Law~~Our ~~Enforcement~~U.S. ~~and~~government ~~Security –~~contracts ~~This~~are ~~operating~~subject ~~unit~~to ~~provides~~competitive ~~international policing and police training~~bidding, ~~judicial support,~~both ~~immigration~~upon ~~support~~initial issuance and ~~base operations~~re-competition. InIf ~~addition,~~we are itunable ~~provides~~to ~~security~~successfully ~~and~~compete ~~personal~~in ~~protection~~the ~~for~~bidding ~~diplomats,~~process ~~designs,~~or ~~installs~~if ~~and~~we ~~operates~~fail ~~security~~to ~~systems~~win ~~and~~re-competitions, ~~develops~~it ~~security software,~~could ~~smart~~adversely ~~cards~~affect ~~and~~our ~~biometrics~~operating ~~for~~performance ~~use~~and bylead ~~government~~to ~~agencies~~an ~~and~~unexpected ~~commercial~~loss ~~customers~~of revenue.

~~Contingency~~Substantially ~~and~~all ~~Logistics~~of ~~Operations –~~our ~~This~~U.S. ~~operating~~government ~~unit~~contracts ~~provides~~are ~~peace-keeping~~awarded ~~support,~~through ~~humanitarian~~a ~~relief~~competitive bidding process upon initial award and renewal, and ~~de-mining,~~we ~~worldwide~~expect ~~contingency~~that ~~planning~~this ~~and~~will ~~other~~continue ~~rapid~~to ~~response~~be ~~services~~the case. InThere ~~addition,~~is itoften ~~offers~~significant ~~inventory~~competition ~~procurement~~ and ~~tracking~~pricing ~~services,~~pressure ~~equipment~~as ~~maintenance,~~a ~~property~~result ~~control, data~~of ~~entry~~this ~~and~~process. ~~mobile~~The ~~repair~~competitive ~~services.~~bidding process presents a number of risks, including the following:

~~Operations~~• ~~Maintenance~~we ~~and~~may ~~Construction~~expend ~~Management –~~substantial ~~This~~funds ~~operating unit provides facility~~ and ~~equipment~~time ~~maintenance and~~to ~~control~~prepare ~~and~~bids ~~custodial~~ and ~~administrative~~proposals ~~services.~~for Incontracts ~~addition,~~that itmay ~~provides~~ultimately ~~civil,~~be ~~electrical,~~awarded ~~infrastructure,~~to ~~environmental~~one ~~and~~of ~~mechanical~~our ~~engineering and construction management services.~~ competitors;

~~Specialty~~• ~~Aviation~~we may be unable to accurately estimate the resources and ~~Counter-drug~~costs ~~Operations –~~that ~~This~~will ~~operating~~be ~~unit~~required ~~provides~~to ~~services~~perform ~~including~~any ~~drug eradication~~contract ~~and~~we ~~host~~are ~~nation~~awarded, ~~pilot~~which ~~and~~could ~~crew~~result ~~training.~~in substantial cost overruns; and

~~MTSS~~• ~~Segment~~we ~~Activity~~ may encounter expense and delay if our competitors protest or challenge awards of contracts, and any such protest or challenge could result in a requirement to resubmit bids on modified specifications or in the termination, reduction or modification of the awarded contract. Additionally, the protest of contracts awarded to us may result in the delay of program performance and the generation of revenue while the protest is pending.

~~MTSS~~The government contracts for which we compete typically have multiple option periods, ~~with~~and ~~revenues~~if ofwe ~~approximately~~fail ~~$720.0 million~~to win a contract or a task order, ~~$700.0 million~~we ~~and~~generally ~~$690.0 million~~will be unable to compete again for ~~fiscal~~that contract for several years. ~~2007~~If we fail to win new contracts or to receive renewal contracts upon re-competition, ~~2006~~it may result in additional costs and ~~2005,~~expenses ~~respectively~~and possible loss of revenue, ~~offers~~ ~~the~~and ~~following~~we ~~services:~~will not have an opportunity to compete for these contract opportunities again until such contracts expire.

~~Aviation~~Because ~~Services~~of ~~and~~the ~~Operations –~~nature ~~Our~~of ~~aviation~~our ~~services and operations include aircraft fleet maintenance~~business, ~~depot augmentation,~~it ~~aftermarket~~is ~~logistics~~not ~~support,~~unusual ~~aircrew~~for ~~services~~us ~~and~~to ~~training,~~lose ~~ground~~contracts ~~equipment~~to ~~maintenance~~competitors ~~and~~or ~~modifications,~~to ~~quality~~gain ~~control,~~contracts ~~FAA~~once ~~certification,~~held ~~facilities and operations support,~~by ~~aircraft~~competitors ~~scheduling~~during ~~and~~re-compete ~~flight planning and the provisioning of pilots, test pilots and flight crews~~periods. ~~Services are provided from both main base locations and forward operating locations.~~

~~Aviation~~Additionally, ~~Engineering –~~some ~~Our~~contracts ~~technicians~~simply ~~manufacture~~end ~~and~~as ~~install~~projects ~~aircraft~~are ~~modification~~completed ~~programs~~or ~~for~~funding ais terminated. ~~broad~~We ~~range~~have ~~of weapons~~included ~~systems~~our ~~and~~most ~~aircraft~~significant ~~engines.~~contracts Inby ~~addition,~~reportable wesegment ~~provide~~in ~~services~~our ~~such~~contract astables ~~engineering~~in ~~design,~~“Item 1. ~~kit~~Business”. ~~manufacturing~~Contract ~~and~~end ~~installation,~~dates ~~field~~are ~~installations,~~included ~~configuration~~within ~~management,~~the ~~avionics~~tables ~~upgrades, cockpit~~to ~~and~~better ~~fuselage~~inform ~~redesign~~investors ~~and~~regarding ~~technical~~the ~~data,~~potential impact ~~drawings~~for ~~and~~our ~~manual~~most ~~revisions~~significant contracts for this risk.

26Current or worsening economic conditions could impact our business.

~~Aviation~~Our ~~Ground~~business ~~Equipment~~may ~~Support –~~be ~~Our~~adversely ~~services~~affected ~~include~~by ~~ground~~factors ~~equipment~~in ~~support,~~the ~~maintenance~~U.S. and ~~overhaul, modifications~~other ~~and~~countries ~~upgrades,~~that ~~corrosion~~are beyond our control, ~~engine~~such ~~rebuilding~~as disruptions in financial markets or downturns in economic activity in specific countries or regions, ~~hydraulic~~or ~~and~~in ~~load~~the ~~testing~~various ~~and~~industries ~~serviceability~~in ~~inspections.~~which Wewe ~~provide~~operate, ~~these~~adverse ~~services~~changes ~~worldwide~~in the availability and ~~offer~~cost ~~both~~of ~~short~~capital, ~~and~~interest ~~long~~rates, ~~duration~~tax ~~field~~rates, ~~teams~~or regulations in the jurisdictions in which we operate. AsIf for any reason we lose access to our currently available lines of ~~March 30~~credit, ~~2007,~~or if we ~~employed~~are ~~over~~required ~~850~~to ~~mechanics~~raise additional capital, ~~technicians~~we may be unable to do so in the current credit and ~~support~~stock market ~~personnel~~environment, ~~who~~or ~~perform~~we ~~depot~~may ~~level~~be ~~overhaul~~able ofto ~~ground~~do ~~support~~so ~~equipment~~only ~~for~~on Uunfavorable terms.S. ~~Navy~~Adverse ~~and~~changes ~~U.S.~~to ~~Coast Guard~~financial ~~programs~~conditions ~~and~~could ~~provide~~jeopardize ~~depot~~certain ~~level~~counterparty ~~ground~~obligations, ~~support~~including ~~equipment~~those atof 20our ~~worldwide~~insurers ~~locations~~and financial institutions.

~~Ground~~In ~~Vehicle~~particular, ~~Maintenance –~~if ~~Our~~the ~~ground~~Federal ~~vehicle~~government, ~~maintenance~~due ~~services~~to ~~include~~budgetary ~~vehicle maintenance~~considerations, ~~overhaul~~accelerates ~~and corrosion~~the ~~control~~expected ~~and~~reduction ~~scheduling~~in ~~and~~combat ~~work~~troops ~~flow~~from ~~management.~~Iraq, fails Weto ~~perform~~sustain ~~maintenance~~the ~~and~~troop ~~overhaul~~increases onin ~~wheeled~~Afghanistan, ~~and~~reduces ~~tracked vehicles for~~ the ~~U.S.~~DoD ~~Army~~Operations and ~~U.S.~~Maintenance ~~Marine~~budget ~~Corps,~~or inreduces ~~support~~funding offor ~~their pre-positioning~~DoS ~~programs.~~initiatives Wein ~~also~~which ~~provide~~we ~~overall program management~~participate, ~~logistics~~our ~~support~~business, ~~tear~~financial ~~down~~condition and ~~inspection~~results of ~~equipment~~operations ~~cycled~~could ~~off~~be ~~of pre-positioned ships~~adversely affected.

~~Explanation~~Furthermore, although we believe that our current sources of ~~Reporting~~liquidity ~~Periods~~will enable us to continue to perform under our existing contracts and ~~Basis~~further grow our business, we cannot assure you that will be the case. 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 ~~Presentation~~ operations. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” for additional discussion regarding liquidity.

~~The~~17 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 Inc. agreed to acquire us, (the "2005 Acquisition"). DynCorp International Inc. assigned its rights to acquire our 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 us. We survived the merger and are now a wholly owned subsidiary of DynCorp International Inc.

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 our Parent's 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 Parent's preferred equity, $6.1 million represents accumulated dividends on our Parent's preferred stock issued in connection with the working capital adjustment and the remaining amounts were transaction expenses. Contents

InOur operations involve considerable risks and hazards. An accident or incident ~~addition~~involving toour ~~the~~employees ~~issuance~~or ofthird parties could harm our ~~Parent's~~reputation, ~~preferred~~affect ~~stock~~our ability to ~~Computer~~compete ~~Sciences~~for ~~Corporation~~business, and ~~the~~if ~~additional~~not ~~preferred~~adequately ~~stock~~insured ~~equity~~or ~~investment~~indemnified, ascould ~~discussed~~adversely ~~above,~~affect ~~the~~our ~~2005~~results ~~Acquisition was~~of ~~funded~~operations ~~by:~~and financial condition.

~~Additional~~We are exposed to liabilities that arise from the services we provide. Such liabilities may relate to an accident or ~~discussion~~incident ofinvolving our ~~senior~~employees ~~credit~~or ~~facilities~~third ~~and~~parties, ~~subordinated~~particularly ~~notes~~where iswe ~~included~~are deployed on-site at active military installations or in ~~Note 7~~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 ~~consolidated~~business. ~~financial~~Any ~~statements~~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.

~~As a~~We ~~result~~maintain ofinsurance ~~the~~policies ~~2005~~that ~~Acquisition,~~mitigate risk and potential liabilities related to our ~~assets~~operations. ~~and~~Our insurance coverage may not be adequate to cover those claims or liabilities, ~~have~~and ~~been~~we ~~adjusted~~may be forced to ~~their~~bear ~~estimated~~substantial ~~fair~~costs ~~value~~from an accident or incident. ~~The~~Substantial claims in excess of ~~the~~our ~~total~~related ~~purchase~~insurance ~~price~~coverage ~~over~~could adversely ~~the~~affect ~~fair~~our ~~value~~operating ofperformance ~~our~~and ~~assets has~~may ~~been~~result ~~allocated~~in toadditional ~~goodwill~~expenses and ~~other~~possible ~~intangible~~loss ~~assets~~of revenue.

~~Reporting~~Furthermore, any ~~period~~accident ~~explanation –~~or Asincident ~~discussed~~for ~~above,~~which onwe ~~February 11,~~are ~~2005~~liable, weeven ~~were~~if ~~sold~~fully byinsured, ~~Computer~~may ~~Sciences Corporation~~result toin annegative ~~entity~~publicity ~~controlled~~which bycould ~~Veritas~~adversely ~~Capital.~~affect ~~The~~our ~~financial~~reputation ~~statements~~among ~~from~~our ~~March 8~~customers, ~~2003~~including toour ~~February 11,~~government ~~2005~~customers, and the ~~period~~public, which could result in the loss of ~~Computer~~existing ~~Sciences~~and ~~Corporation~~future ~~ownership,~~contracts ~~are referred~~or tomake asit ~~the~~more ~~"immediate~~difficult ~~predecessor~~to ~~period"~~compete ~~statements~~effectively for future contracts. WeThis ~~refer~~could toadversely ~~financial~~affect ~~statements~~our ~~from~~operating performance and ~~after~~may ~~February 12,~~result ~~2005~~in asadditional ~~the~~expenses ~~"successor~~and ~~period"~~possible ~~statements~~loss of revenue.

~~Pro~~Political ~~forma~~destabilization ~~financial~~or ~~information –~~insurgency Wein ~~are providing~~ the ~~following~~regions ~~supplemental~~in ~~comparative~~which ~~financial~~we ~~information~~operate onmay have a ~~pro~~ ~~forma~~material ~~and~~adverse ~~combined~~effect 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 historical statement of 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,~~our ~~2004. The statement of operations for the 49 days ended April 1, 2005 represents the historical results of~~operating ~~the successor company~~performance.

27Certain regions in 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. During fiscal years 2010, 2009 and 2008, revenue generated from our operations in the Middle East contributed 73%, 64%, and 52% of our revenue, respectively. Insurgents in Iraq and Afghanistan have targeted installations where we have personnel, and these insurgents 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 transferred to our customers through our contracts. To the extent that we are unable 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, 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. The Obama administration has made policy changes with respect to U.S. government activities in Iraq or Afghanistan. Congressional pressure to reduce, if not eliminate, the number of 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.

~~The pro~~We ~~forma adjustments~~ are ~~described~~exposed ~~in the notes~~ to ~~the~~risks ~~pro~~associated forma statement of operations and are based on available information and assumptions that management believes are reasonable. The pro forma statement of operations is not 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, 2004. Unless otherwise indicated, references in this section to results for the full year of fiscal 2005 reflect pro forma and combined results of the immediate predecessor and successor periods. These pro forma results should be read in conjunction with ~~the~~operating ~~consolidated financial statements, related notes and other consolidated financial information included elsewhere in this Form 10-K~~internationally.

28A large portion of our business is conducted internationally. Consequently, we are subject to a variety of risks that are specific to international operations, including the following:

• export ~~Pro~~regulations ~~Forma~~that ~~Financial~~could ~~Information~~ erode profit margins or restrict exports;

	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 income		170		7		–			177
Income (loss) before income taxes		94,689		(862)		(80,648)			13,179
Provision for income taxes		(34,956)		(60)		30,153	(5)		(4,863)
Net income (loss)	$	59,733	$	(922)	$	(50,495)		$	8,316
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

•

compliance with the U.S. Foreign Corrupt Practices Act;

		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

•

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

29• contract award and funding delays;

~~Results~~• potential restrictions on transfers of ~~Operations~~ funds;

~~Fiscal~~• ~~Year~~foreign ~~Ended~~currency ~~March 30, 2007 Compared to Fiscal Year Ended March 31, 2006~~ fluctuations;

~~The~~• ~~following~~import ~~tables~~and ~~set~~export ~~forth,~~duties ~~for the periods indicated, our consolidated results of operations, both in dollars~~ and asvalue aadded ~~percentage of revenues:~~ taxes;

	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%)
Loss on early extinguishment of debt		(3,484)	(0.1%)		–	0.0%
Net earnings from affiliates		2,913	0.1%		–	0.0%
Interest income		1,789	0.1%		461	0.0%
Income before taxes		56,291	2.7%		45,012	2.2%
Provision for income taxes		(20,549)	(1.0%)		(16,627)	(0.8%)
Net income	$	35,742	1.7%	$	28,385	1.4%

Consolidated Table of Contents

~~Revenues –~~• ~~Revenues~~transportation indelays the fiscal year ended March 30, 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 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. interruptions;

~~Cost~~• ofuncertainties ~~services –~~arising Cost 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, or 5.6%, compared with the fiscal year ended March 31, 2006. As a percentage of revenue, costs of services decreased to 87.3% for fiscal year ended March 30, 2007 from ~~87.5%~~foreign ~~for~~local ~~fiscal~~business ~~year ended~~practices ~~March 31, 2006. The factors contributing to the decrease in cost of services as a percentage of revenue were (i) continued strong performance of fixed-price task orders under the Civilian Police~~ and ~~Air-Wing~~cultural ~~programs~~considerations; (ii) improved contract mix resulting from a larger proportion of higher-margin fixed-price and time-and-materials contracts; (iii) contract modifications for construction efforts in Afghanistan completed in earlier periods; 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.

~~Selling,~~• ~~general~~requirements ~~and~~by ~~administrative~~foreign ~~expenses~~governments ~~("SG&A") –~~that ~~SG&A~~we ~~primarily~~locally ~~relates~~invest toa ~~functions~~minimum ~~such~~level as ~~management,~~part ~~legal, financial~~of ~~accounting,~~our 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 organizational capability, compliance and systems improvements. SG&A in the fiscal year ended March 30, 2007 increased $10.2 million, or 10.4%, compared with ~~the fiscal year ended March 31~~them, ~~2006.~~which Inmay ~~addition,~~not asyield aany ~~percentage~~return; of revenue, SG&A increased slightly to 5.2% for the fiscal year ended March 30, 2007 from 5.0% for the fiscal year ended March 31, 2006. Factors contributing to the increase for the fiscal year ended March 30, 2007 include an increase in business development costs and an increase in corporate administrative costs, primarily the result of developing these functions as an independent company. 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.

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

~~Depreciation~~While we have and ~~amortization –~~will ~~Depreciation~~continue ~~and~~to ~~amortization~~adopt inmeasures to reduce the ~~fiscal~~potential ~~year~~impact ~~ended~~of ~~March 30,~~losses ~~2007~~resulting ~~decreased $2.7 million,~~from orthe 6%risks of our foreign business, aswe ~~compared~~cannot ~~with~~ensure ~~the~~that ~~fiscal~~such ~~year~~measures ~~ended~~will ~~March 31,~~be ~~2006~~adequate.

~~Interest~~Our ~~expense –~~IDIQ ~~Interest~~contracts ~~expense~~are innot ~~the~~firm ~~fiscal~~orders ~~year~~for ~~ended March 30~~services, ~~2007 increased by $1.7 million, or~~ ~~3.0%, as compared with the fiscal year ended March 31, 2006. The interest expense incurred relates to our Senior Secured Credit Facility, revolving credit facility, senior subordinated notes~~ and ~~amortization~~we ofmay ~~deferred~~never ~~financing~~receive ~~fees.~~revenue ~~The increase is due to the higher interest expense related to the Senior Secured Credit Facility~~ from ~~increasing~~these ~~variable interest rates during the fiscal year ended March 30~~contracts, ~~2007. Partially offsetting the higher variable rate interest expense was lower interest incurred on the senior subordinated notes,~~ which ~~have~~could aadversely ~~fixed~~affect ~~interest rate of 9.5%, due to the partial redemption in connection with~~ our ~~Parent's~~operating ~~Equity Offering~~performance.

~~Loss~~Many of onour ~~debt~~government ~~extinguishment –~~contracts Inare ~~conjunction~~IDIQ ~~with~~contracts, ~~our~~which ~~Parent's~~are ~~Equity~~often ~~Offering~~awarded into ~~May 2006~~multiple contractors. The award of an IDIQ contract does not represent a firm order for services. Generally, weunder ~~incurred:~~an IDIQ contract, the government is not obligated to order ~~(i)~~ a ~~premium~~minimum of $2services or supplies from its contractor, irrespective of the total estimated contract value.~~7 million~~ ~~related~~Furthermore, tounder an IDIQ contract, the ~~redemption~~customer develops requirements for task orders that are competitively bid against all of the contract awardees, usually under a ~~portion~~best-value approach. However, many contracts also permit the government customer to direct work to a specific contractor. Our Civilian Police, Contract Field Team and LOGCAP IV programs are three of our ~~senior~~contracts ~~subordinated~~performed under ~~notes;~~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 ~~(ii) the~~may ~~write-off~~result in additional expenses and loss of $0revenue.~~8 million~~ There can be no assurance that our existing IDIQ contracts will result in ~~deferred financing~~actual ~~costs~~revenue ~~associated~~during ~~with~~any ~~the~~particular ~~early~~period ~~retirement~~or ofat aall. ~~portion~~In fiscal years 2010, 2009 and 2008, 76%, 73% and 70% of our ~~senior~~revenue, ~~subordinated~~respectively, ~~notes~~was attributable to IDIQ contracts.

~~Income~~Our ~~tax~~cost ~~expense –~~of ~~Income~~performing ~~tax~~under ~~expense~~time-and-materials inand ~~the~~fixed-price ~~fiscal~~contracts ~~year~~may ~~ended March 30, 2007 increased $3.9 million or~~exceed ~~23.6%,~~our ~~compared with the fiscal year ended March 31~~revenue, ~~2006.~~which ~~The~~would ~~increase~~result ~~is consistent with the increase~~ in ~~net~~a ~~income~~recorded ~~before~~loss ~~tax~~on as the ~~effective tax rate for both fiscal years was approximately 37%~~contracts.

~~Results~~Our bygovernment ~~Segment~~ contract services have three distinct pricing structures: cost-reimbursement, time-and-materials and fixed-price. With cost-reimbursement contracts, so long as actual costs incurred are within the contract funding and allowable under the terms of the contract, we are entitled to reimbursement of the costs plus a stipulated fixed-fee and, in some cases, an incentive-based award fee. We assume additional financial risk on time-and-materials and fixed-price contracts, however, because we assume the risk of performing those contracts at the stipulated prices or negotiated hourly/daily 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 or have lower than anticipated margins. Also, we assume the risk of damage or loss to government property, and we are responsible for third-party claims under fixed-price contracts. The failure to meet contractually defined performance standards may result in a loss of a particular contract 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.

~~The~~A ~~following~~negative ~~table~~audit ~~sets~~or ~~forth~~other ~~the~~actions ~~revenues~~by ~~and~~the ~~operating~~U.S. ~~income~~government ~~for~~could ~~our~~adversely GSaffect ~~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~~performance.

		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%

At 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.

~~Government~~The ~~Services~~ DCAA 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 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 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~~19 ~~for the fiscal year ended March 30, 2007 increased $95.0 million, or 7.5%, as compared with the fiscal year ended March 31, 2006. The increase primarily reflected the following:~~

31Table of Contents

~~partially offset~~We are subject to investigation by: the U.S. government, which could result in our inability to receive government contracts and could adversely affect our future operating performance.

~~Operating~~As ~~income~~ a U.S. government contractor, we must comply with laws and regulations relating to U.S. government contracts that do not apply to a 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.

~~Operating~~Furthermore, ~~income~~our ~~for~~reputation ~~the~~could ~~fiscal~~suffer ~~year~~serious ~~ended~~harm ~~March 30,~~if ~~2007~~allegations ~~increased~~of impropriety $3were made against us.~~9 million~~ If we were suspended or prohibited from contracting with the U.S. government, or 4any significant U.1%S. government agency, asif ~~compared~~our reputation or relationship with ~~the~~U.S. ~~fiscal~~government ~~year~~agencies ~~ended~~was ~~March 31, 2006~~impaired or if the U.S. government ~~The~~otherwise ~~increase~~ceased ~~primarily~~doing ~~reflected~~business with us or significantly decreased the ~~following:~~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.

~~partially~~U.S. government contractors like us that provide support services in theaters of conflict such as Iraq and Afghanistan have come under ~~offset~~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.

~~Maintenance &~~The ~~Technical~~expiration ~~Support~~of ~~Services~~ our collective bargaining agreements could result in increased operating costs or work disruptions, which could potentially affect our operating performance.

~~Revenues~~ As of April 2, 2010, we had approximately 22,300 employees located 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 could experience a significant disruption of operations and increased operating costs as a result of higher wages or benefits paid to union members, which could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

~~Revenues~~Proceedings ~~for~~against ~~the~~us ~~fiscal~~in ~~year~~domestic ~~ended~~and ~~March 30,~~foreign ~~2007~~courts ~~increased~~could ~~$20.3 million,~~result orin ~~2.9%,~~legal ~~compared~~costs ~~with~~and ~~the~~adverse ~~fiscal~~monetary judgments, ~~year~~adversely ~~ended~~affecting ~~March 31,~~our ~~2006.~~operating ~~The increase~~performance ~~primarily~~and ~~reflected~~causing ~~the~~harm ~~following:~~to our reputation.

32We 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.

~~partially~~Other litigation in which we are involved includes wrongful ~~offset~~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~~20 ~~income~~

OperatingTable incomeof for the fiscal year ended March 30, 2007 increased $8.3 million, or 83%, compared with the fiscal year ended March 31, 2006. The increase primarily reflected the following: Contents

~~partially~~We are subject to certain U.S. laws and regulations, which are the subject of rigorous ~~offset~~enforcement by: the U.S. government; our noncompliance with such laws and regulations could adversely affect our future operating performance.

~~Fiscal~~We ~~Year~~may ~~Ended~~be ~~March 31~~subject to qui tam litigation brought by private individuals on behalf of the government under the Federal Civil False Claims Act, ~~2006~~which ~~Compared~~could toinclude ~~Fiscal~~claims ~~Year~~for ~~Ended~~treble ~~April 1~~damages. Government contract violations could result in the imposition of civil and criminal penalties or sanctions, ~~2005~~contract ~~Pro~~termination, ~~Forma~~ 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.

~~The~~To ~~following~~the ~~tables~~extent ~~set~~that ~~forth~~we export products, ~~for~~technical data and services outside the ~~periods~~United ~~indicated~~States, ~~our~~we ~~historical~~are subject to U.S. laws and regulations ~~pro~~governing ~~forma~~international ~~combined~~trade ~~results~~and ofexports, ~~operations~~including but not limited to, ~~both~~the International Traffic in ~~dollars~~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 awell ~~percentage~~as the denial of export ~~revenues:~~privileges and debarment from participation in U.S. government contracts.

	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 income		461	0.0%		177	0.0%
Income before taxes		45,012	2.2%		13,179	0.6%
Provision for income taxes		(16,627)	(0.8%)		(4,863)	(0.3%)
Net income (loss)	$	28,385	1.4%	$	8,316	0.3%

We do business in certain parts of the world that have experienced, or may be susceptible to, governmental corruption. Our 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, including substantial monetary fines, as well as disgorgement, and could damage our reputation and, therefore, our ability to do business.

33Competition in our industry could limit our ability to attract and retain customers or employees, which could result in a loss of revenue and/or a reduction in margins, which could adversely affect our operating performance.

~~The~~We ~~following~~compete ~~discussion~~with ~~provides~~various aentities ~~comparison~~across ofgeographic ~~the~~and ~~results~~business lines. Competitors of ~~operations~~our ~~for~~GSDS ~~the~~operating ~~successor~~segment ~~company~~are ~~for~~typically ~~the~~various solution ~~fiscal~~providers ~~year~~that ~~ended~~compete ~~March 31,~~in ~~2006~~any ~~with~~one of the ~~pro~~service ~~forma~~areas ~~combined~~provided ~~results of~~by ~~operations~~those ~~for~~business ~~the~~units. ~~Company~~Competitors ~~for~~of ~~the~~our ~~fiscal~~GPSS ~~year~~operating ~~ended~~segment ~~April 1,~~are ~~2005.~~typically ~~The~~large ~~discussion~~defense isservices ~~provided~~contractors ~~for~~that ~~comparative~~offer ~~purposes~~services ~~only,~~associated ~~but~~with ~~the~~maintenance, ~~value~~training and ofother ~~such~~activities. aCompetitors ~~comparison~~of ~~may~~our beGLS ~~limited.~~operating ~~The information~~segment inare ~~this~~typically ~~section~~contractors ~~should~~that beprovide ~~read~~services in ~~conjunction~~Iraq ~~with~~and ~~the~~Afghanistan ~~consolidated~~or ~~financial~~companies ~~statements~~that ~~and~~provide ~~the~~language ~~related~~interpretation ~~notes~~and ~~contained~~translation ~~elsewhere~~services inboth ~~this~~domestically ~~Form 10-K.~~and internationally.

~~Consolidated~~ We compete on a number of factors, including our broad range of services, geographic reach, mobility and response time. Foreign competitors may obtain an advantage over us in competing for U.S. government contracts and attracting employees to the extent we are required by U.S. laws and regulations to remit to the U.S. government statutory payroll withholding amounts for U.S. nationals working on U.S. government contracts while employed by our majority-owned foreign subsidiaries, since foreign competitors may not be similarly obligated by their governments.

~~Revenues –~~Some ~~Total~~of ~~revenues~~our ~~for~~competitors ~~the~~may ~~fiscal~~have ~~year~~greater ~~ended~~resources ~~March 31,~~or ~~2006~~are ~~were $1,967.0 million,~~otherwise anbetter ~~increase~~positioned ofto ~~$46.1 million,~~compete orfor 2contract opportunities.~~4%,~~ ~~from~~For $1example,~~920.9 million~~ original ~~for~~equipment ~~the~~manufacturers ~~fiscal~~that ~~year~~also ~~ended~~provide ~~April 1,~~aftermarket ~~2005~~support ~~pro~~services ~~forma.~~have ~~For~~a ~~the~~distinct ~~twelve~~advantage ~~months~~in ~~ended March 31,~~obtaining ~~2006~~service ~~and~~contracts ~~April 1,~~for ~~2005,~~aircraft ~~approximately~~they ~~34%~~have manufactured, ~~38%~~as ~~and~~they ~~28%~~frequently have better access to replacement and ~~approximately~~service ~~27%~~parts, ~~39%~~as well ~~and~~as ~~34%~~an existing technical understanding of ~~our~~the ~~revenues~~platform ~~were~~they ~~derived~~have ~~from~~manufactured. ~~fixed~~In addition, we are at a disadvantage when bidding for contracts up for re-~~price~~competition for which we are not the incumbent provider, because incumbent providers are ~~time-and-materials~~frequently able to capitalize on customer relationships, technical knowledge and ~~cost-reimbursement~~pricing ~~contracts,~~experience ~~respectively~~gained from their prior service.

~~Revenues from~~In ~~our~~addition GSto ~~segment for~~ the ~~fiscal~~competition ~~year~~we ~~ended~~face ~~March 31,~~in ~~2006~~bidding ~~were $1,264.6 million, an increase of $31.9 million, or 2.6%, from $1,232.7 million~~ for ~~the~~ ~~fiscal~~contracts ~~year~~and ~~ended~~task ~~April 1~~orders, ~~2005~~we ~~pro~~must ~~forma.~~also ~~Increases~~compete into ~~this~~attract ~~segment include $79.0 million of revenue under~~ the ~~International~~skilled ~~Narcotics~~ and ~~Law Enforcement Air-Wing~~ ~~program~~experienced aspersonnel aintegral ~~result~~to ofour acontinued ~~new contract that went into effect on November 1, 2005 for~~ operations,. ~~and~~We ~~added~~hire ~~work~~from toa ~~provide~~limited ~~helicopter~~pool ~~support~~of ~~for~~potential ~~ground eradication efforts in Afghanistan~~employees, ~~$27.1 million~~ ofas ~~new~~military ~~work~~and ~~providing~~law ~~hurricane~~enforcement ~~relief efforts along the Gulf Coast~~experience, ~~$26.0 million~~specialized ~~due~~technical toskill ~~added~~sets ~~work~~and ~~under~~security ~~our~~clearances ~~Africa~~are ~~Peacekeeping~~prerequisites ~~contract~~for ~~with the DoS and~~many ~~$12~~positions.~~8 million~~ ofOur ~~additional~~failure ~~construction~~to ~~work~~compete ~~under~~effectively ~~the~~for ~~Worldwide~~employees, ~~Personal~~or ~~Protective~~excessive ~~Services~~attrition ~~program.~~among ~~These~~our ~~increases~~skilled ~~were~~personnel, ~~partially~~could ~~offset~~reduce byour aability ~~reduction of $16.6 million under the Civilian Police program due~~ to ~~the~~satisfy ~~timing~~our ofcustomers’ ~~various~~needs ~~construction~~and ~~efforts~~increase in the ~~Middle~~costs ~~East,~~ and ~~$67.5 million~~time ~~from~~required ~~a series of contracts~~ to ~~provide~~perform ~~security~~our ~~and logistics support to various~~contractual Uobligations.S. ~~government construction efforts in the Middle East as a subcontractor.~~ This ~~type~~could ofadversely ~~subcontract~~affect ~~effort~~our ~~was~~operating ~~typically~~performance ~~short term with delayed payments,~~ and ~~therefore~~may weresult ~~decided to exit this line of business until it can be performed~~ in aadditional ~~more~~expenses ~~stable~~and ~~environment~~possible ~~with~~loss ~~improved financial terms. Further offsetting the increases described above was a reduction in our DynMarine Services~~ of ~~Virginia LLC business of $32~~revenue.~~0 million~~ ~~due to the discontinuance of our work under the Oceanographics Ships contract.~~

~~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.

~~Cost~~Our ofcontinued ~~services –~~success ~~Cost~~depends ofin ~~services~~large ~~are~~part ~~comprised~~on ofour ~~direct~~ability ~~labor,~~to ~~direct~~recruit ~~material, subcontractor costs, other direct costs~~ and ~~overhead.~~retain ~~Other direct costs include travel, supplies and other miscellaneous costs. Costs of services for~~ the ~~fiscal~~skilled personnel ~~year~~necessary ~~ended~~to ~~March 31,~~serve ~~2006~~our ~~were~~customers $1effectively,~~722.1 million,~~ ~~a decrease~~including ofpersonnel ~~$19.4 million,~~with orextensive ~~1.1%,~~military ~~from~~and ~~$1,741.5 million~~law ~~for~~enforcement ~~the~~training ~~fiscal~~and ~~year ended April 1, 2005 pro forma~~backgrounds. AsThe aproper ~~percentage~~execution of ~~revenue,~~our ~~costs~~contract ofobjectives ~~services~~depends inupon the ~~fiscal~~availability ~~year~~of ~~ended March 31,~~quality ~~2006 was 87.5%~~resources, especially aqualified ~~decrease from 90~~personnel.7% inGiven the ~~fiscal~~nature ~~year~~of ~~ended~~our ~~April 1~~business, ~~2005~~we ~~pro~~have ~~forma.~~substantial ~~This~~need ~~reduction~~for aspersonnel awho ~~percentage~~are ofwilling ~~revenue was due~~ to ~~the~~work ~~following:~~overseas, ~~(i) strong performance~~frequently onin fixed-price construction projects and on fixed-price task orders under the Civilian Police program; and (ii) improved contract mix resulting from a larger proportion of higher-margin fixed-price and time-and-materials contracts as opposed to lower-margin cost reimbursable contracts.

~~Selling,~~21 general and administrative expenses – Selling, general and administrative expenses primarily relate to functions such as management, legal, financial accounting, contracts and administration, human resources, management information systems, purchasing and business development. Selling, general and administrative expenses for the fiscal year ended March 31, 2006 were $97.5 million, an increase of $32.1 million, or 49.1%, from $65.4 million for the fiscal year ended April 1, 2005 pro forma. In addition, as a percentage of revenue, selling, general and administrative expenses were 5.0% for the fiscal year ended March 31, 2006, an increase from 3.4% for the fiscal year ended April 1, 2005 pro forma. This increase was primarily the result of developing our administrative functions as an independent company, which contributed approximately $15.0 million to the fiscal 2006 increase. Prior to the 2005 Acquisition, these services were provided by our predecessor parent, Computer Sciences Corporation. In addition 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 $32.0 million or 33% of total

34Table of Contents

~~selling,~~ ~~general~~locations experiencing political or civil unrest, for extended periods of time and ~~administrative~~often ~~expense~~on short notice. ~~Other~~We ~~factors~~may ~~contributing~~not tobe ~~higher~~able ~~selling,~~to ~~general~~meet ~~and~~the ~~administrative~~need ~~expenses~~for inqualified ~~fiscal~~personnel ~~2006~~as ~~include:~~such need arises.

~~Depreciation~~In ~~and~~addition, ~~amortization –~~we ~~Depreciation~~must ~~and~~comply ~~amortization~~with ~~for~~provisions ~~the~~in ~~fiscal~~U.S. ~~year~~government ~~ended~~contracts ~~March 31,~~that ~~2006~~require ~~was $46.1 million,~~employment ~~an increase~~ of ~~$0.6 million~~persons ~~from~~with ~~$45.5 million~~specified work ~~for~~experience ~~the~~and ~~fiscal~~security ~~year ended April 1, 2005 pro forma~~clearances. ~~This~~An ~~increase~~inability ~~was primarily due~~ to ~~higher~~maintain ~~depreciation expense.~~employees ~~Amortization~~with in the ~~fiscal~~required ~~year~~security ~~ended~~clearances ~~April 1,~~could ~~2005~~have ~~pro~~a ~~forma~~material ~~was~~adverse ~~based~~effect on anour ~~estimate~~ability ofto ~~current~~win ~~year~~new ~~amortization.~~business ~~The~~and ~~amortization~~satisfy ~~for~~our ~~the~~existing ~~fiscal~~contractual ~~year ended March 31~~obligations, ~~2006~~and could ~~was~~adversely ~~based~~affect onour ~~the~~operating ~~2005~~performance ~~Acquisition,~~and ~~which~~may ~~included~~result ~~a step-up~~ in ~~basis~~additional ofexpenses ~~our~~and ~~customer-related~~possible ~~intangibles~~loss ~~resulting~~of ~~in increased amortization~~revenue. ~~An independent valuation study was done to allocate the purchase price between goodwill and intangibles.~~

~~Interest~~The ~~Expense –~~loss ~~Interest expense for the fiscal year ended March 31, 2006 was $56.7 million, an~~of ~~increase~~services ~~from~~of ~~$55.5 million~~any ~~for~~of the ~~fiscal~~members ~~year~~of ~~ended~~our ~~April 1,~~senior ~~2005~~management ~~pro~~could ~~forma.~~adversely ~~The~~affect ~~interest expense incurred related to~~ our ~~Senior~~business ~~Secured~~until ~~Credit~~a ~~Facility,~~suitable ~~the~~replacement ~~revolving~~can ~~credit~~be ~~facility and our senior subordinated notes~~found. ~~This~~There ~~interest~~may ~~expense~~be ~~includes~~a ~~interest~~limited ~~costs~~number ~~applicable~~of topersonnel with the ~~fiscal~~requisite ~~year~~skills asto ~~well~~serve asin ~~amortization~~these ofpositions, ~~deferred~~and ~~financing~~we ~~fees.~~may ~~The~~be unable ~~increase~~to ~~was~~locate ~~primarily~~and ~~due~~employ tosuch ~~the increasing~~qualified ~~interest~~personnel ~~rates~~on ~~during~~acceptable ~~fiscal 2006~~terms.

~~Income~~If ~~tax~~our ~~expense –~~subcontractors Weor ~~had~~joint ~~income tax expense for the fiscal year ended March 31, 2006 of $16.6 million,~~venture anpartners ~~increase~~fail ofto ~~$11.7 million,~~perform ortheir ~~238.8%,~~contractual ~~from income tax expense of $4.9 million for the fiscal year ended April 1~~obligations, ~~2005~~then ~~pro~~our ~~forma.~~performance ~~The~~as ~~increase is consistent with~~ the ~~increase~~prime ~~in net~~contractor ~~income~~and ~~before~~our ~~income~~ability ~~taxes~~to asobtain ~~the~~future ~~effective~~business ~~rate~~could ~~for~~be ~~the~~materially ~~fiscal year ended March 31, 2006~~ and ~~the~~adversely ~~fiscal year ended April 1, 2005 pro forma was 36~~impacted.~~9%.~~

~~Results~~Many of our contracts 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 ~~Segment~~ 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.

We ~~have~~often ~~aligned~~enter into joint ventures so that we can jointly bid and ~~report~~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 our ~~business~~joint ~~operations~~venture ~~through~~partners. ~~two~~If ~~operating~~our ~~segments:~~partners GSdo not meet their obligations, the joint ventures may be unable to adequately perform and ~~MTSS~~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.

~~The following~~Environmental ~~table~~laws ~~sets forth the revenues~~ and ~~operating~~regulations ~~income~~may ~~for~~subject ~~our~~us GSto ~~and~~significant ~~MTSS~~costs ~~operating segments, both in dollars~~ and asliabilities athat ~~percentage~~could adversely ofaffect our ~~consolidated revenues for segment revenue and as a percentage of segment specific revenue for~~ operating ~~income, for the fiscal year ended March 31, 2006 as compared to the fiscal year ended April 1, 2005 pro forma~~performance.

		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%

We are subject to numerous environmental, legal and regulatory requirements related to our operations worldwide. In the U.S., these laws and regulations include those governing the management and disposal of hazardous substances and wastes and the maintenance of a safe workplace, primarily associated with our aviation services activities, 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, states and other countries where we do business have numerous environmental, legal and regulatory requirements by which we must abide. We could incur substantial costs, including clean-up costs, as a result of violations of, or liabilities under, environmental laws. This could adversely affect our operating performance and may result in additional expenses and possible loss of revenue.

35Our 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 the aggregate for the remaining period from April 2, 2010 through fiscal the end of year 2015 and thereafter (see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Commitments). Such indebtedness could have material consequences for our business, operations and liquidity position, including the following:

~~Revenues –~~• ~~Revenues~~our ~~for~~ability 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 obtain additional ~~revenue~~ ~~under~~financing ~~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,~~working ~~added work to provide helicopter support for ground eradication efforts in Afghanistan~~capital, ~~new~~debt ~~work~~service ~~providing hurricane relief efforts along the Gulf Coast~~requirements, 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 Eastacquisitions, ~~and~~general ~~from~~corporate aor ~~series~~other ofpurposes ~~contracts~~may 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. impaired;

~~Operating~~22 income – Operating income for the fiscal year 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 1, 2005 pro forma. Operating income as a percentage of revenue for the fiscal year ended March 31, 2006 and April 1, 2005 pro forma was 7.4% and 3.8%, respectively. The increase is due to the following: (i) strong performance on fixed-price construction projects and on fixed-price task orders under the Civilian Police program; and (ii) improved contract mix resulting from a larger proportion of higher-margin fixed-price and time-and-materials contracts as opposed to lower-margin cost reimbursable contracts. The Civilian Police contract changed from cost-reimbursement to a combination of fixed-price and time-and-materials in February 2004, and the International 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 &Table Technicalof Support Services Contents

~~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;

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

~~Consolidated~~• ~~Cash~~our ~~Flows~~ ability to refinance indebtedness may be limited.

The ~~following~~indenture ~~table~~governing ~~sets~~our ~~forth~~senior ~~cash~~subordinated ~~flow~~notes ~~data~~and ~~for~~our senior secured credit facility contain various covenants limiting the discretion ~~periods~~of ~~indicated~~our ~~therein:~~management in operating our business.

	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	$	93,533	$	55,111	$	(33,332)
Net Cash used by investing activities		(7,595)		(6,231)		(880,101)
Net Cash provided by (used by) financing activities		(4,056)		(41,781)		920,397

Our 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 $93.5 million for fiscal year 2007, an increase of $38.4 million,~~ or ~~70%,~~guarantee as compared to the fiscal year 2006. The increase in operating cash flow is primarily attributable to earnings growth of $7.4 million and cash flows provided by working capital of $37.2 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 our Parent's 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 Parent's 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 used~~• bymake ~~financing activities was $4.1 million for the fiscal year ended March 30~~investments, ~~2007,~~contribute ~~compared~~capital to cash used of $41.8 million for the fiscal year March 31, 2006. Financing activities during the fiscal year 2007 included: (i) partial redemption of senior subordinated notes of $31.5 million, including redemption premium; (ii) transfers received from our ~~Parent;~~unconsolidated ~~and~~partnerships ~~(iii) borrowings~~or ~~under~~execute other financing arrangements. The cash used in financing activities during the fiscal year 2006 was due to the $35.0 million repayment of borrowings under our revolving credit facility, the $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 used~~• bycreate ~~financing~~liens ~~activities~~or ~~was~~other $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 of our Parent's 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;

37• repurchase our outstanding shares or our public debt;

~~Based on~~• ~~our~~transfer ~~current~~or ~~level~~sell ofcertain ~~operations,~~assets we believe our cash flow 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~~merge ~~future borrowings will be available to us under our Senior Secured Credit Facility in an amount sufficient to enable us to repay our indebtedness, including the senior subordinated notes,~~ or toconsolidate ~~fund~~with ~~our~~another ~~other liquidity needs.~~ 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 ~~Parent~~senior ~~consummated~~secured ancredit ~~Equity~~facility ~~Offering~~also ofrequires ~~25,000,000 shares~~us ofto ~~its~~maintain ~~Class A~~certain ~~common~~financial ~~stock,~~ratios ~~par~~and ~~value~~limits $0our ability to make capital expenditures.01 ~~per~~These ~~share,~~financial atratios include a ~~price~~ ofminimum ~~$15.00~~interest ~~per~~coverage ~~share~~ratio and a leverage ratio. The ~~gross~~interest ~~proceeds~~coverage ~~from~~ratio is the ~~Equity~~ratio ~~Offering~~ of ~~$375.0 million,~~consolidated ~~together~~EBITDA ~~with~~(as ~~cash~~defined onin ~~hand,~~our ~~were~~senior ~~used:~~secured (icredit facility) to ~~redeem~~interest ~~all~~expense offor the ~~our~~preceding ~~Parent's~~four ~~outstanding~~quarters. ~~preferred stock,~~The leverage ratio is a ratio of ~~which~~our ~~$222.8 million~~indebtedness (as defined in ~~stated~~our ~~amount,~~senior ~~including~~secured ~~accrued~~credit ~~and~~facility) ~~unpaid~~to ~~dividends~~consolidated ~~thereon,~~EBITDA ~~was~~for ~~outstanding~~the aspreceding offour ~~May 9,~~quarters. ~~2006;~~The ~~(ii) to~~senior ~~pay~~secured acredit ~~special~~facility ~~Class B distribution~~also inrestricts the maximum amount of ~~$100.0 million,~~our ~~representing~~capital aexpenditures ~~return~~during ofeach ~~capital~~year of ~~$95.9 million~~the toterm ~~DIV~~of ~~Holding LLC,~~ the ~~holder~~senior ofsecured ~~our~~credit ~~Parent's~~facility. ~~common~~Subject ~~stock; (iii)~~ to ~~redeem $28.0 million~~certain ofexceptions, our ~~senior~~capital ~~subordinated~~expenditures ~~notes~~may onnot ~~June 8~~exceed, ~~2006;~~in ~~(iv) to~~any ~~pay~~fiscal ~~prepayment~~year, ~~penalties~~the greater of $~~8.4~~15 million, $or 5~~.7 million~~% of ~~which~~our consolidated ~~represented~~EBITDA ~~prepayment penalties~~for onthe ~~our~~preceding ~~Parent's~~fiscal ~~preferred~~year ~~stock~~during ~~and~~the ~~$2.7 million~~term of ~~which represented prepayment penalties on~~ our senior ~~subordinated~~secured ~~notes;~~credit ~~and~~facility. ~~(v) to~~Capital ~~pay~~expenditures ~~transaction~~are ~~expenses~~expenditures ~~of approximately~~that ~~$30.0 million,~~are ~~including~~required anby ~~underwriters'~~generally ~~commission~~accepted ofaccounting ~~$22.5 million,~~principles ~~a fee of $5.0 million~~ to ~~Veritas~~be ~~Capital~~classified ~~and~~as ~~$2.5 million~~capital ofexpenditures ~~miscellaneous fees and~~in ~~expenses~~a ~~related~~statement toof ~~the~~cash ~~Equity Offering~~flows.

~~Debt~~If 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 ~~Other~~to ~~Obligations~~ exercise their remedies there under, which will typically include the right to declare the principal amount of such debt, together 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 our assets that are subject to liens securing such debt and to terminate any commitments they had made to supply us with further funds. Moreover, any of our 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.

~~Long-term~~Our ~~debt~~ability ~~consisted~~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 ~~following:~~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.

	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

FutureTable maturities of long-term debt for each of the fiscal years subsequent to March 30, 2007 were as follows: Contents

(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

Servicing our indebtedness 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.

38Our ability to make payments on and to refinance our indebtedness depends on our ability to generate cash. This, to a certain extent, is subject to general economic, political, financial, competitive, legislative, regulatory and other factors that are beyond our control. Additionally, the floating interest rates associated with our senior secured credit facility became unhedged as of May 24, 2010 and float with either the London Interbank Offered Rate (“LIBOR”) or the Prime rate.

~~Senior~~We ~~Secured~~cannot assure ~~Credit~~you, ~~Facility~~ 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.

OnDespite ~~February 11,~~our ~~2005,~~current weindebtedness ~~entered~~level, ~~into~~our acompany, ~~senior~~including ~~secured~~our ~~credit facility (the "Senior Secured Credit Facility") with a syndicate of banks. The Senior Secured Credit Facility was initially comprised of a senior secured term loan of up to $345.0 million~~subsidiaries, ~~and a senior secured revolving credit facility of up to $75.0 million~~may, ~~subsequently~~subject ~~amended~~ to ~~$103.0 million~~conditions in ~~November 2006. The full amount of~~ the ~~term loans was drawn at the closing to fund the 2005 Acquisition (see Note 2 to the consolidated financial statements)~~Merger ~~and pay related fees and expenses. The term loans are due in quarterly payments of $0.7 million through April 1~~Agreement, ~~2010,~~incur ~~and~~substantially ~~$73.4 million~~more ~~thereafter~~debt, ~~with~~which ~~final~~could ~~payment~~exacerbate ~~due February 11, 2011. Borrowings under~~ the ~~Senior~~risks ~~Secured~~associated ~~Credit~~with ~~Facility are secured by substantially all of~~ our ~~assets~~substantial ~~and the capital stock of our subsidiaries~~leverage. The Senior Secured Credit Facility also provides for a commitment guarantee of a maximum of $60.0 million, as amended, for letters of credit. The Senior Secured Credit Facility requires letter of credit fees up to 2.5%, payable quarterly in arrears on the amount available for drawing under all letters of credit.

~~Borrowings under~~As ~~the~~of ~~term~~April 2, ~~loan~~2010, ~~bear~~we ~~interest~~had atup ato ~~rate~~$170.0 million ~~per~~of ~~annum~~additional ~~equal~~availability ~~to,~~under atour ~~the~~senior ~~Company's~~secured ~~option,~~credit ~~either~~facility (1)which gives effect to $30.0 ~~the~~million ~~Prime~~of ~~Rate~~outstanding orletters (2of credit) . The terms of the ~~London~~senior ~~Interbank~~secured ~~Offered~~credit ~~Rate ("LIBOR"),~~facility ~~plus~~and anthe ~~applicable~~Notes ~~margin~~do ~~determined~~not byfully ~~reference~~prohibit us or our subsidiaries from incurring additional indebtedness. 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 were~~our ~~1.25%~~senior secured credit facility and 2the indenture governing the Notes, as applicable.~~25%~~ If either we or our subsidiaries were to incur additional indebtedness, ~~respectively~~the related risks that we now face could increase.

~~Borrowings under~~We ~~the~~have ~~revolving~~recently ~~facility~~acquired ~~bear~~two ~~interest~~complementary businesses. atAcquisition atransactions ~~rate~~require ~~per~~substantial ~~annum~~management ~~equal~~resources ~~to,~~and atmay disrupt our ~~option,~~business ~~either~~and ~~(1) the~~divert ~~Prime~~our ~~Rate~~management orfrom ~~(2) LIBOR~~other ~~plus~~responsibilities. anAcquisitions ~~applicable~~are ~~margin determined~~accompanied by ~~reference~~other ~~to the leverage ratio~~risks, asincluding: ~~set forth in the debt agreement. The applicable margins for the Prime Rate and LIBOR as of March 30, 2007 were 1.0% and 2.0%, respectively.~~

~~We are~~• ~~required, under certain circumstances as defined in~~ the ~~Senior~~difficulty ~~Secured Credit Facility, to use a percentage~~ of ~~excess~~integrating ~~cash~~the ~~generated from~~ operations toand ~~reduce~~personnel ~~the outstanding principal~~ of the ~~term~~acquired 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. companies;

~~On May 2,~~• ~~2005, we entered into an interest rate cap, which has~~ the ~~effect~~inability of ~~placing~~our amanagement ~~ceiling on the interest expense we could incur on $172.5 million of variable debt indexed~~ to ~~LIBOR~~maximize atour ~~6.5%~~financial ~~plus~~and ~~the~~strategic ~~applicable~~position ~~floating margin (2.25% at March 30, 2007) as defined~~ by the ~~Senior~~successful ~~Secured~~incorporation ~~Credit~~of ~~Facility~~acquired ~~agreement.~~personnel ~~See~~into ~~Note 9~~our toservice ~~the consolidated financial statements for further discussion of interest rate derivatives.~~ offerings;

~~On January 9,~~• ~~2006,~~we ~~the~~may ~~Company~~not ~~and~~realize ~~its~~anticipated ~~Parent~~synergies entered into a first amendment and waiver of its Senior Secured Credit Facility. The first amendment and waiver increased the revolving commitment under its Senior Secured Credit Facility by $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 also permitted the Company to: (i) pay a transaction fee to Veritas Capital related to our Parent's Equity Offering of up to $10.0 million; (ii) pay a distribution to the holders of our Parent's Class B common 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 offering expenses; (iii) redeem all of our Parent's then currently outstanding preferred stock; and (iv) redeem up to $65.0 million of the $320.0 million aggregate principal amount of the senior subordinated notes. The first amendment and waiver waived the requirement in the Senior Secured Credit Facility that the Company use 50% of the net cash proceeds from the Equity Offering to prepay loans under the Senior Secured Credit Facility and/or ~~permanently~~financial ~~reduce the revolving commitments.~~ growth;

~~On June 28,~~• ~~2006,~~we ~~the~~may ~~Company~~assume ~~and~~material ~~its~~liabilities ~~Parent~~that entered into a second amendment and waiver of its Senior Secured Credit Facility. The second amendment and waiver provided for a new term loan in the amount 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 maturity date of the new term loan is unchanged from the maturity date of the existing term loan. The proceeds from the new term loan were ~~used~~not toidentified ~~repay~~during ~~the~~due ~~existing term loan. The second amendment and waiver also~~diligence, ~~among~~including ~~other~~potential ~~things,~~regulatory ~~(i) decreases~~penalties ~~the~~resulting interest rate margin applicable to the term loan under our Senior Secured Credit Facility; (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~~acquisition ~~of capitalized leases permitted under our Senior Secured Credit Facility; (v) allows for the payment of dividends and the repurchase of our Parent'~~target’s ~~capital~~previous 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) activities;

39• difficulty maintaining uniform standards, controls, procedures and policies, with respect to accounting matters and otherwise;

~~for each~~• ~~fiscal year; and (vi) postpones~~ the ~~first~~potential ~~prepayment~~loss of ~~the~~key ~~Senior~~employees ~~Secured~~of ~~Credit~~acquired ~~Facility based on our excess cash flow until 90 days following our fiscal year which ended on March 30, 2007.~~ companies;

~~In November~~• ~~2006,~~ the ~~Company~~impairment ~~obtained~~of ~~additional~~relationships ~~commitments~~with ~~from~~employees ~~two~~and ~~new~~customers ~~lenders~~as ~~which~~a ~~increased~~result ~~the~~of ~~revolving~~changes ~~credit~~in ~~facility~~management toand ~~$103.0 million.~~operational structure; and

~~At March 30,~~• ~~2007,~~acquisitions ~~availability~~may ~~under~~require ~~the~~us ~~revolving credit line for additional borrowings was approximately $81.9 million (which gives effect~~ to ~~approximately $21.1 million~~invest ofsignificant ~~outstanding~~amounts ~~letters~~ of ~~credit,~~cash ~~which~~resulting ~~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,~~dilution of ~~the~~stockholder ~~unused portion of the revolving credit facility~~value.

~~The Senior~~Any ~~Secured~~inability ~~Credit~~to ~~Facility~~successfully ~~contain~~integrate ~~various~~the ~~financial~~operations ~~covenants,~~and ~~including~~personnel ~~minimum~~associated ~~levels~~with ofan ~~EBITDA,~~acquired ~~minimum~~business ~~interest~~ and/or ~~fixed~~service ~~charge~~line ~~coverage~~may ~~ratios, and maximum capital~~harm ~~expenditures~~our business and ~~total~~results ~~leverage~~of ~~ratio~~operation. ~~Non-financial~~The ~~covenants~~Merger ~~restrict~~Agreement restricts the ability of usthe ~~and~~Company ~~our subsidiaries~~ to ~~dispose of assets; incur additional indebtedness; prepay other indebtedness or amend certain debt instruments; pay dividends; create liens on assets;~~ enter into ~~sale~~acquisition ~~and leaseback~~ transactions; ~~make~~subject ~~investments,~~to ~~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~~exceptions.

~~The carrying~~We ~~amount~~may ofnot ~~our~~be ~~borrowings~~able ~~under~~to ~~the~~profitably ~~Senior~~deploy ~~Secured~~all ~~Credit Facility approximates fair value based on the variable interest rate~~ of ~~this~~our ~~debt~~helicopter assets.

9We have approximately $39.5%7 ~~Senior~~million ~~Subordinated~~in ~~Notes~~ helicopter assets. These were originally purchased to support our new WPPS air services task order. Given the availability of customer assets to support this program, the parties mutually agreed to a task order modification under which the customer will now supply its own helicopters. As a result, we plan to utilize most of the purchased helicopter assets on another program. Due to the past military history of these helicopters and their associated restricted certification status with the FAA, the helicopters are limited to Public Use applications (Police, Fire, trash hauling) or movement of our people and supplies on programs like LOGCAP IV. The 13 Huey helicopters are being remanufactured

In24 February 2005, we completed an offering of $320.0 million in aggregate principal amount of our 9.5% senior subordinated notes due 2013. Proceeds from the original issuance of the senior subordinated notes, net of fees, were $310.0 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 the Company and certain guarantor subsidiaries.

Prior toTable February 15, 2009, we may redeem the senior subordinated notes, in whole or in part, at a price equal to 100% of the principal amount of the senior subordinated notes plus a defined make-whole premium, plus accrued interest to the redemption date. After February 15, 2009, we can redeem the senior subordinated notes, in whole or in part, at defined 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 February 15, 2008, with the net cash proceeds of certain equity offerings at a price equal to 109.5% of the principal amount of the senior subordinated notes, plus accrued interest to the redemption date. The holders of 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. Contents

On ~~June 9,~~under ~~2006,~~a incontract ~~connection~~ with ~~our~~a ~~Parent's~~vendor. ~~Equity~~To ~~Offering~~date, wethis ~~redeemed~~vendor ~~approximately~~is ~~$28.0 million~~behind schedule on delivery of the ~~$320~~helicopters.~~0 million~~ ~~aggregate~~Even ~~principal~~though ~~amount~~the offirst ~~the senior~~seven ~~subordinated~~helicopters ~~notes.~~are Wesubstantially ~~also~~complete, ~~paid~~this ~~$0.8 million~~vendor incontinues to ~~accrued~~be ~~interest~~plagued ~~through~~by material shortages and challenging communication with the ~~redemption~~FAA ~~date~~in ~~and~~completing ahelicopter ~~prepayment~~production, ~~penalty~~conformance ofand $2certification.~~7 million,~~ We sold one helicopter and weplan ~~recognized~~to asell $0the remaining two “small bird” helicopters (i.~~8 million~~e., MD ~~loss~~530FF) ~~related~~that towe ~~the~~do ~~write-off~~not ofintend ato ~~portion~~use ofin ~~the~~other ~~previously~~programs. ~~capitalized~~Thus, ~~loan~~the ~~cost~~main ~~for~~risks related to the ~~senior~~helicopters ~~subordinated~~are ~~notes.~~as follows:

~~The fair~~• ~~value~~we ofmay ~~the~~not ~~senior~~be ~~subordinated~~able ~~notes~~to isprofitably ~~based~~utilize onall ~~their quoted market value. As~~ of ~~March 30,~~these ~~2007,~~assets ~~the~~on ~~quoted~~our ~~market value of the senior subordinated notes was 106.1% of stated value.~~ contracts;

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

~~Contractual~~• ~~Commitments~~ delays in deploying the helicopters could extend the period that it takes to recoup our investment, which would negatively affect liquidity.

~~The~~We ~~following~~are ~~table~~subject ~~represents~~to ~~our~~the ~~contractual~~Internal ~~commitments~~Control ~~associated~~Evaluation ~~with~~and ~~our~~Attestation ~~debt~~Requirements ~~and~~of ~~other~~Section 404 ~~obligations~~of the asSarbanes-Oxley Act of ~~March 30, 2007:~~2002.

	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

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 believes we maintained, in all material respects, effective internal control over financial reporting as of the end 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.

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

WeAs ~~track~~of ~~contracted~~June 15, ~~backlog~~2010, Veritas Capital owned a majority of the outstanding membership interest in ~~order~~Our toParent’s ~~assess~~controlling ~~our~~stockholder, ~~current~~DIV ~~business~~Holding ~~development~~LLC ~~effectiveness~~(“DIV”). ~~and~~Veritas toCapital ~~assist~~indirectly uscontrols inapproximately ~~forecasting~~37.1% ~~our~~of ~~future~~DynCorp ~~business~~International ~~needs~~Inc. ~~and~~As long as Veritas Capital continues to own a ~~financial~~significant ~~performance.~~amount ~~Backlog~~of ~~consists~~Our Parent’s outstanding shares of ~~orders~~Class A ~~and~~common ~~priced~~stock, ~~options~~it ~~under~~will ~~our~~continue ~~contracts.~~to Webe ~~define~~able ~~contracted~~to ~~backlog~~strongly asinfluence ~~the~~or ~~estimated~~effectively ~~value~~control ofour ~~contract~~decisions, ~~modifications~~including ~~received~~the ~~from~~election ~~customers~~of ~~that~~Our Parent’s directors, determine our ~~have~~corporate ~~not~~and ~~been~~management ~~recognized~~policies asand ~~revenue.~~determine, without the consent of Our ~~backlog~~Parent’s ~~consists~~other stockholders, the outcome of ~~funded~~any corporate transaction or other matter submitted to Our Parent’s stockholders for approval, including potential mergers or acquisitions, asset sales and ~~unfunded~~other ~~amounts~~significant corporate transactions. ~~Funded~~Two ~~backlog~~of isOur ~~based~~Parent’s ~~upon~~thirteen ~~amounts~~directors ~~actually~~are ~~appropriated~~employees byof aVeritas ~~customer~~Capital. ~~for~~Concurrently ~~payment~~with the execution of ~~goods~~the ~~and~~Merger ~~services~~Agreement, DIV Holding entered into the ~~less~~Voting ~~actual~~Agreement ~~revenue~~with ~~recorded~~Merger asParent ofand ~~the~~Merger ~~measurement~~Sub ~~date~~whereby ~~under~~DIV ~~that~~Holding ~~appropriation.~~and ~~Unfunded~~its ~~backlog~~affiliates, iscommitted, among other things, subject to the ~~actual~~terms ~~dollar~~and ~~value~~conditions of ~~unexercised~~the ~~contract~~Voting ~~options.~~Agreement, ~~Most~~to vote 34.9% of ~~our~~Our ~~U.S.~~Parent’s ~~government~~outstanding ~~contracts~~shares of Our ~~allow~~Parent’s Common Stock for the ~~customer~~adoption of the ~~option~~Merger toAgreement. ~~extend~~DIV ~~the~~Holding ~~period~~and certain of ~~performance~~its affiliates also agreed not to transfer, sell or encumber any of atheir ~~contract~~shares, ~~for~~and ato ~~period~~notify Merger Parent of ~~one~~any oradditional ~~more~~shares ~~years.~~or ~~These~~rights ~~options~~to acquire ~~may~~additional beshares ~~exercised~~acquired atafter the ~~sole~~execution ~~discretion~~ of the ~~customer~~Voting Agreement. ~~Historically, it~~The ~~has~~Voting ~~been~~Agreement ~~our~~automatically ~~experience~~terminates ~~that~~upon the ~~customer~~termination ~~has~~of ~~exercised~~the ~~contract~~Merger ~~options~~Agreement.

~~Firm funding~~The ~~for~~Merger ~~our contracts~~ is ~~usually~~subject ~~made~~to ~~for~~satisfaction ~~one~~or ~~year~~waiver ~~at a time, with the remainder~~ of ~~the~~certain ~~contract~~customary ~~period consisting of a series of one-year options. As is the case with the base period of our U.S. government contracts~~conditions, ~~option~~including ~~periods are subject to~~ the ~~availability~~approval of ~~funding for contract performance. The U.S. government is legally prohibited from ordering work under a contract in~~ the ~~absence~~Merger ofby ~~funding.~~ Our Parent’s ~~historical experience has been that the government generally has exercised and funded the option periods of our contracts~~stockholders.

~~The~~Completion of the Merger is subject to the satisfaction or waiver of certain customary ~~following~~conditions, ~~table~~including ~~sets~~the ~~forth~~adoption ~~our~~of ~~approximate~~the ~~contracted~~Merger ~~backlog~~Agreement asby Our Parent’s stockholders, receipt of required antitrust approvals (or termination or expiration of applicable waiting periods), the ~~dates~~accuracy ~~indicated:~~of the representations and warranties of the parties and 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.

(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

The Merger may not be completed if sufficient financing is not funded.

InMerger ~~December 2006,~~Parent ~~the~~has ~~Company,~~obtained ~~through~~equity ~~a joint venture named Global Linguist Solutions LLC ("GLS"), was awarded the Intelligence~~ and ~~Security~~ ~~Command~~debt ~~("INSCOM")~~financing ~~contract by the U~~commitments.S. ~~Army~~The ~~for~~funding ~~management~~under ofthose ~~translation~~commitments ~~and~~is ~~interpretation~~subject ~~services~~to inconditions, ~~support~~including conditions ofthat ~~Operation~~do ~~Iraqi~~not ~~Freedom.~~relate ~~The~~directly ~~five-year~~to ~~contract~~the ~~has~~Merger ~~a maximum value of approximately $4~~Agreement.~~6 billion.~~ We ~~have~~believe athe ~~51%~~committed ~~ownership~~amounts ~~interest~~will inbe ~~GLS~~sufficient ~~and~~to ~~will~~complete ~~consolidate~~ the ~~joint~~Merger, ~~venture~~but inwe ~~our~~cannot ~~financial~~assure ~~statements.~~you As of ~~March 30,~~that. ~~2007,~~Those ~~the~~amounts ~~funded~~might ~~and unfunded~~be ~~backlog~~insufficient ~~related to this program was $49.0 million and $3.3 billion~~if, ~~respectively,~~among ~~and~~other ~~has been included in the table above. However~~things, ~~the~~we ~~incumbent contractor's protest of the~~have ~~award~~substantially toless ~~GLS~~cash ~~was sustained by the Government Accountability Office ("GAO"). Our backlog and estimated remaining contract value metrics may require future adjustment depending~~ on ~~the~~hand ~~outcome~~or ofMerger ~~future procurement~~Parent ~~actions~~has ~~taken~~substantially byless ~~the~~net ~~Army~~proceeds infrom ~~implementing~~ the ~~GAO's~~equity ~~recommendation.~~and

4125

EstimatedTable Remainingof Contract Value Contents

~~Our~~ debt ~~estimated~~financings ~~remaining~~than ~~contract~~we ~~value~~currently ~~represents~~expect. ~~total~~Although ~~backlog~~obtaining ~~plus~~the ~~management's~~equity ~~estimate of future revenues under IDIQ contracts that have not been funded,~~ or ~~award~~ ~~term~~debt ~~periods~~financing ~~that~~is ~~have~~ not ~~yet~~a ~~been~~condition ~~earned.~~to ~~These~~the ~~future~~completion ~~revenues represent our estimate~~ of ~~revenue~~the ~~that~~Merger, ~~would occur from~~ the ~~end~~failure of ~~currently~~Merger ~~funded~~Parent ~~task~~and ~~orders~~Merger ~~until~~Sub ~~the~~to ~~end of the IDIQ~~obtain ~~contracts.~~sufficient ~~Our~~financing ~~estimated remaining contract value~~ is ~~based~~likely onto ~~our experience under contracts, and we believe our estimates are reasonable. However, there can be no assurance that our existing contracts will~~ result in ~~actual~~the ~~revenues~~failure inof ~~any~~the ~~particular~~Merger ~~period~~to orbe ~~at all~~completed. ~~These~~We ~~amounts~~believe ~~could~~the ~~vary~~committed oramounts ~~even~~will ~~change~~be ~~significantly~~sufficient ~~depending~~to ~~upon~~complete ~~government~~the ~~policies~~transaction, ~~government~~but ~~budgets, appropriations~~cannot ~~and~~provide ~~the~~any ~~outcome~~assurance ofto ~~protested~~that ~~contract awards~~effect. ~~The following table sets forth our estimated remaining contract value as of the dates indicated:~~

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

Although the debt 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 required. As of the date of this Annual Report on Form 10-K, no alternative financing arrangements or alternative financing plans have been made in the event the debt financing described herein is not available as anticipated. Even though obtaining the equity or debt financing is not a condition to the completion of the Merger, the failure of Merger Parent and Merger Sub to obtain sufficient financing is likely to result in the failure of the Merger to be completed. In that case, Merger Parent may be obligated to pay us a termination fee, which obligation is guaranteed under the Limited Guarantee by an affiliate of Cerberus.

~~Off-Balance~~Our ~~Sheet~~future ~~Arrangements~~ business and financial position may be adversely affected if the Merger is not completed.

~~The~~If ~~Company's~~the ~~off-balance~~Merger ~~sheet~~Agreement ~~arrangements~~is ~~relate~~terminated toand ~~operating~~the ~~lease~~Merger ~~obligations~~is ~~and~~not ~~letters~~consummated, ofwe ~~credit,~~will ~~which~~have incurred ~~are~~substantial ~~excluded~~expenses ~~from~~without realizing the ~~balance~~expected ~~sheet~~benefits ~~in accordance~~of ~~with~~the ~~generally~~Merger. ~~accepted~~In ~~accounting~~addition, ~~principles.~~we may also be subject to additional risks including, without limitation:

~~Effects~~• upon termination of ~~Inflation~~ the Merger Agreement under specified circumstances, the Company may be required to pay Merger Parent a termination fee of $30 million or to reimburse transaction expenses incurred by Merger Parent and Merger Sub up to $12 million. In addition, under certain circumstances involving Merger Parent’s termination of the Merger Agreement where we have committed a “Willful Breach” (as defined in the Merger Agreement) of the Merger Agreement, we will be required to pay Merger Parent liquidated damages in the amount of $300 million;

We• ~~have~~substantial ~~generally been able to anticipate increases in~~ costs ~~when~~related ~~pricing our contracts. Bids for longer-term fixed-price and time-and-materials type contracts typically include sufficient labor and other cost escalations in amounts expected~~ to ~~cover cost increases over~~ the ~~period~~Merger, ofsuch ~~performance. Consequently~~as legal, ~~because~~accounting ~~costs~~ and ~~revenues~~financial ~~include~~advisory ~~an inflationary increase commensurate with the general economy in which we operate~~fees, ~~net~~must ~~income~~be aspaid aregardless ~~percentage~~ of ~~revenues~~whether ~~has~~the ~~not~~Merger ~~been~~is ~~significantly impacted~~completed; ~~by inflation.~~ and

~~Critical~~• ~~Accounting~~potential ~~Policies~~ disruption to the current plan, operations, businesses and distraction of our workforce and management team.

~~Our~~Since ~~discussion~~announcing ~~and~~the ~~analysis~~proposed ~~of our financial condition and results of operations are based upon our consolidated financial statements~~Merger, ~~which~~two ~~are~~class ~~prepared~~action ~~in accordance~~lawsuits ~~with~~have ~~GAAP.~~been ~~The~~filed ~~preparation~~against ~~of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect~~ the ~~reported~~Company ~~amounts of assets~~ and ~~liabilities~~its ~~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~~directors. ~~Management~~The ~~evaluates these estimates and assumptions on an ongoing basis, including those relating to revenue recognition and cost estimation on~~outcome ~~long-term~~or ~~contracts,~~settlement ~~allowance for doubtful accounts, determination~~ of ~~goodwill~~these ~~and~~claims ~~customer-related~~may ~~intangible assets, goodwill impairment, accounting for contingencies and litigation and accounting for income taxes. Our estimates and assumptions~~ have ~~been~~an ~~prepared~~adverse oneffect ~~the~~upon ~~basis of~~ the ~~most~~Company’s ~~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~~operation. ~~Actual results could materially differ from these estimates under different assumptions and conditions.~~

WeSince the ~~have~~announcement ~~several~~of ~~critical~~the ~~accounting~~proposed ~~policies~~Merger, ~~that~~two ~~are~~putative ~~both~~class ~~important~~action lawsuits seeking to enjoin the ~~portrayal~~Merger, ofamong ~~our~~other ~~financial~~things, ~~condition~~have ~~and~~been ~~results~~filed on behalf of ~~operations~~stockholders ~~and~~of ~~require~~DynCorp ~~management's~~International ~~most~~Inc. ~~difficult, subjective~~in federal and ~~complex~~state ~~judgments~~court. ~~Typically~~Descriptions of these lawsuits, ~~the~~are ~~circumstances~~set ~~that~~forth ~~make~~in ~~these~~Note ~~judgments~~8 ~~complex~~to ~~and~~the ~~difficult~~consolidated ~~relate~~financial tostatements, ~~making~~in ~~estimates~~“Item 8. ~~about~~Financial ~~the~~Statements ~~effect~~and Supplementary Data” of ~~matters~~this ~~that~~Form ~~are~~10-K ~~inherently~~and ~~uncertain~~is incorporated herein by reference. ~~Our~~The cost of defending such law suits and ~~critical~~paying ~~accounting~~any ~~estimates~~judgment ~~are~~or assettlement ~~follows:~~in connection therewith could have an adverse impact on our financial results.

42The Merger creates unique risks in the time leading up to closing, and there are also risks of completing the conditions to closing.

~~Revenue~~The ~~Recognition~~Merger ~~and~~Agreement ~~Cost~~generally ~~Estimation~~requires onus ~~Long~~to operate our business in the ordinary course pending consummation of the proposed combination, but restricts us, without Merger Parent’s consent, from taking certain specified actions until the Merger is complete or the Merger Agreement is terminated. Further, the pending Merger increases the Company’s risk of loss of key employees due to, among other things, uncertainty concerning the post-~~Term~~Merger ~~Contracts~~ operation of the Company.

~~General –~~Until ~~Revenues~~all conditions to the Merger are ~~recognized~~satisfied ~~when~~and ~~persuasive~~the ~~evidence~~related ofdebt anfinancing ~~arrangement~~is ~~exists~~ready to be funded, ~~services or~~we ~~products~~cannot ~~have~~be ~~been~~certain ~~provided~~that the Merger will close. We will incur significant transaction costs relating to the ~~client~~proposed Merger, ~~the~~whether ~~sales~~or ~~price~~not isthe ~~fixed~~proposed Merger oris ~~determinable~~completed. Additionally, ~~and~~matters ~~collectibility~~relating isto ~~reasonably~~the ~~assured.~~Merger ~~Revenues~~(including byintegration ~~contract~~planning) ~~type~~may inrequire ~~fiscal~~substantial ~~2007~~commitments of time and ~~2006~~resources, which could otherwise have been devoted to other beneficial opportunities and ~~for~~there ~~the~~may be ~~combined~~potential ~~periods~~difficulties in ~~fiscal~~employee ~~2005~~retention ~~were~~ as ~~follows:~~a result of the Merger.

	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%

Any loss of business opportunities or key personnel could have an adverse impact on future business, and, as a result, result in lower future sales and earnings.

~~The~~26 Company expenses pre-contract costs as incurred for an anticipated contract until the contract is awarded. Throughout the life of the contract, indirect costs, including general and administrative costs, are expensed as incurred and are based on DCAA-approved indirect rates.

When revenueTable recognition is deferred relative to the timing of cost incurred, costs that are direct and incremental to a specific transaction are deferred and charged to expense in proportion to the revenue recognized. Contents

~~Customer acceptance~~If ~~provisions~~we ~~generally~~are ~~allow~~unable ~~the customer~~ to ~~cancel~~complete anour ~~arrangement~~proposed ~~when~~Merger ~~products~~with ~~delivered~~affiliates or services rendered do not meet benefits expected from the arrangement. Acceptance generally occurs before revenue recognition. However, if it can be shown objectively that the acceptance criteria have been satisfied for separable units of ~~accounting~~Cerberus ~~or profit centers, as~~Our ~~applicable~~Parent’s ~~within~~stock anprice ~~arrangement,~~could ~~revenue is recognized before formal acceptance~~suffer.

~~Management regularly~~The ~~reviews~~termination ~~project~~of ~~profitability~~the ~~and~~Merger ~~underlying~~Agreement ~~estimates.~~would ~~Revisions~~likely result in a decline in Our Parent’s stock price to the ~~estimates~~extent ~~are~~that ~~reflected~~Our inParent’s ~~results~~stock ofprice ~~operations~~reflects as a ~~change~~market inassumption ~~accounting~~that ~~estimate~~we inwill complete the ~~period~~ inMerger ~~which~~and ~~the~~Our ~~facts~~Parent’s ~~that~~stockholders ~~give~~will ~~rise~~receive to the ~~revision~~Per ~~become~~Share ~~known~~Merger byConsideration ~~management~~specified in the Merger Agreement.

~~Major factors~~27 the Company considers in determining total estimated revenue and cost include the basic contract price, contract options, change orders (modifications of the original contract), back charges and claims, 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.

FederalTable 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 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. Contents

~~Revenue on~~ITEM ~~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~~1B. ~~For example,~~UNRESOLVED ~~"output~~STAFF ~~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~~COMMENTS. ~~"Input measures" can include a cost-to-cost method, such as for procurement-related services.~~

~~Revenue on fixed-price construction or production-type contracts is recognized on the basis of the estimated percentage of completion~~None. 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.

~~Cost-reimbursement type~~ITEM ~~contracts can be cost plus fixed fee, or cost plus award fee~~2. ~~Revenue recognition for these two contract types is very similar~~PROPERTIES. In both cases, revenue is based on actual direct cost plus DCAA-approved indirect rates. In the case of cost 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, the fee is made up of two components, base fee and award 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 in total expected revenues based on an average of the last two award fee periods or award experience for similar contracts.

43We are 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 ~~completed~~ ~~contract~~following ~~method~~locations isrepresent ~~sometimes~~our ~~used~~primary ~~for~~leased ~~short~~properties ~~duration~~as ~~projects when the results~~ of operations would not vary materially from those resulting from use of the percentage-of-completion method or when reliable estimates cannot be supported for percentage-of-completion method recognition. Until completeApril 2, ~~project costs are maintained in work in progress, a component of inventory~~2010.

Contract costs on U.S. government contracts, including indirect costs, are subject to audit and adjustment by negotiations between the Company and government representatives. Substantially all of the Company's indirect contract costs have been agreed upon through 2004. Contract revenues on U.S. government contracts have been recorded in amounts that are expected to be realized upon final settlement.


Location	Description	Business Segment	Size (sq ft)
Fort Worth, TX	Executive offices — finance and administration	Corporate	194,335
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

~~Other~~We ~~Contracts –~~believe ~~The~~that substantially ~~Company's~~all ~~contracts~~of ~~with~~our ~~non-federal~~property ~~government~~and ~~customers~~equipment ~~are~~is ~~predominantly multiple-element. Multiple-element arrangements involve multiple obligations~~ in ~~various~~good ~~combinations to deliver products~~condition, ~~perform~~subject ~~services,~~to ~~grant~~normal ~~licenses~~use orand ~~other~~that ~~rights,~~our orfacilities ~~take~~have ~~certain~~sufficient ~~actions.~~capacity ~~The Company evaluates these elements~~ to ~~establish~~meet ~~whether~~the ~~they~~current ~~represent separable units of accounting~~ and ~~allocate~~projected ~~revenue~~needs ~~to the identifiable units~~ of ~~accounting~~our ~~based on relative fair values~~business. ~~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~~ITEM ~~may include software and software related deliverables, construction contracts, and services with related equipment and materials~~3. ~~The~~LEGAL ~~same pricing mechanisms found in federal government contracts are found in other contracts~~PROCEEDINGS.

~~The Company~~Information ~~applies~~required ~~the~~with ~~guidance~~respect ~~in FASB Statement of Position ("SOP") 97-2, "Software Revenue Recognition,"~~ to ~~its~~this ~~software and~~item ~~software~~is ~~related~~set ~~deliverables,~~forth ~~SOP~~in ~~81-1~~Note ~~"Accounting~~8 ~~for Performance of Construction-Type and Certain Production-Type Contracts"~~ to ~~our~~the ~~construction~~consolidated ~~contracts,~~financial ~~and U.S. Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104~~statements, ~~"Revenue Recognition~~ in “Item 8. Financial Statements" ~~("SAB No. 104"),~~ and ~~other~~Supplementary ~~transaction-specific~~Data” ~~accounting~~of ~~literature~~this toForm ~~deliverables~~10-K ~~related~~and tois ~~non-federal~~incorporated ~~government services,~~herein ~~equipment~~by ~~and materials~~reference.

~~Use~~ITEM of4. ~~Estimates~~ [REMOVED AND RESERVED]

~~The~~28 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.

AllowanceTable forof Doubtful Accounts Contents

~~The~~PART ~~Company~~II establishes 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 accounts, the financial 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 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~~ITEM ~~and~~5. ~~Equipment~~ MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

~~The~~There ~~cost~~is ofno ~~property~~public ~~and~~trading ~~equipment,~~market ~~less~~for ~~applicable~~our ~~residual~~member ~~values, is depreciated using the straight-line method~~units. ~~Depreciation~~We ~~commences~~are ~~when~~a ~~the specific~~direct ~~asset~~wholly isowned ~~complete,~~subsidiary ~~installed and ready for normal use. As part~~ of ~~the~~Our ~~purchase accounting~~Parent, ~~which~~DynCorp ~~resulted~~International ~~from the acquisition~~Inc., ~~all fixed assets were adjusted to fair value on~~ ~~February 11,~~who ~~2005,~~owns ~~thus~~all ~~resetting~~of ~~accumulated~~our ~~depreciation~~Company’s to100 $0member atunits ~~the acquisition date~~outstanding. ~~See~~We ~~Note 2~~did tonot ~~the~~sell, ~~consolidated~~issue ~~financial~~or ~~statements~~repurchase ~~for~~any ~~further discussion~~ of ~~the~~our ~~acquisition. The~~equity ~~Company's~~securities ~~depreciation~~in ~~and~~fiscal ~~amortization~~year ~~policies~~2010. ~~are as follows:~~

Computer and related equipment		3 to 5 years
Furniture and other equipment		2 to 10 years
Leasehold improvements		Shorter of lease term or useful life

ITEM 6.

SELECTED FINANCIAL DATA.

44The selected historical consolidated 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.

~~Impairment~~This information should be read in conjunction with “Item 7. Management’s Discussion and Analysis of ~~Long-Lived~~Financial ~~Assets,~~Condition ~~including~~and ~~Amortized~~Results ~~Intangibles~~ of Operations” and the consolidated financial statements and related notes thereto included elsewhere in this Annual Report.

Values 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.


	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	)
Loss on early extinguishment of debt, net		(146	)		(4,131	)		—			(3,484	)		—
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			35,742			28,385
Noncontrolling interests		(24,631	)		(20,876	)		3,306			—			—
Net income attributable to DynCorp International LLC		86,088			69,770			47,955			35,742			28,385
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		552,147			599,912			593,162			630,994			661,561
Total member’s equity attributable to DynCorp International LLC		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

~~The Company~~(1) ~~evaluates~~Working ~~the~~capital 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~~defined ~~impaired~~as ~~when~~current 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~~net ~~that fair values are reduced for the cost~~ of ~~disposal.~~current ~~Changes in estimates of future cash flows could result in a write-down of the asset in a future period~~liabilities.

~~During 2007~~(2) We define Earnings before Interest, ~~the~~Taxes ~~Company~~and ~~recognized~~Depreciation an& ~~impairment~~Amortization of(“EBITDA”) ~~approximately~~as ~~$0.6 million~~Generally ~~associated~~Accepted ~~with~~Accounting aPrinciples ~~customer-related~~(“GAAP’) ~~intangible~~net ~~due~~income attributable to ~~the~~DynCorp ~~loss~~International ofLLC aadjusted ~~contract~~for ininterest, ~~Saudi~~taxes, ~~Arabia.~~depreciation Asand ~~of March 30~~amortization, ~~2007,~~loss ~~management~~on ~~believes~~extinguishment ~~there~~of ~~have~~debt, ~~been~~and noa portion of other ~~events~~expense orrelated ~~circumstances~~to ~~that~~interest ~~would~~rate ~~indicate~~swap anlosses. ~~impairment~~We use EBITDA as a supplemental measure in the evaluation of ~~long-lived~~our ~~assets.~~business and believe that EBITDA

~~Indefinite~~29 ~~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

~~Income~~provides ~~Taxes~~ 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 LLC 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.

~~The~~(3) ~~Company~~Backlog ~~determines~~data ~~the~~is ~~provision~~as ~~for~~of ~~income taxes using~~ the ~~asset~~end ~~and liability approach. Under this approach, deferred income taxes represent the expected future tax consequences~~ of ~~temporary differences between~~ the ~~carrying~~applicable ~~amounts~~period. ~~and~~See ~~tax~~“Item ~~basis of assets and liabilities~~1. ~~The~~Business” ~~Company~~for ~~records~~further adetails ~~valuation~~concerning ~~allowance to reduce deferred tax assets when uncertainty regarding their reliability exists~~backlog.

~~Equity-Based~~The ~~Compensation~~following ~~Expense~~ table presents a reconciliation of net income attributable to DynCorp International LLC to EBITDA for the periods included below.

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 10 for further discussion on equity-based compensation.


	Fiscal Years Ended
RECONCILIATION OF NET INCOME ATTRIBUTABLE TO DYNCORP INTERNATIONAL LLC 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 LLC	$	86,088	$	69,770	$	47,955	$	35,742	$	28,385
Income taxes		51,893		41,995		27,999		20,549		16,627
Interest expense, loss on early extinguishment of debt and interest rate swap losses recorded in other income/expense (1)(2)		56,298		64,158		55,374		61,896		56,686
Depreciation and amortization		42,578		41,634		43,492		45,251		47,020

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

~~Fair~~(1) ~~Values~~Fiscal year 2009 includes the costs associated with replacing our senior secured credit facility, as defined and further discussed in “Item 7. Management’s Discussion and Analysis of Financial ~~Instruments~~ Conditions and Results of Operations”, including the write-off of deferred financing fees. Also included is the premium on the redemption of a portion of the senior subordinated notes and write-off of deferred financing costs associated with the early retirement of a portion of the senior subordinated notes. These premiums and write-off represent additional costs of financing. In addition, we added back amounts associated with hedge accounting recorded in other income/expense.

~~Fair~~(2) ~~values~~Fiscal ofyear ~~financial~~2007 ~~instruments~~includes ~~are~~premium ~~estimated~~on by the ~~Company~~redemption ~~using~~of ~~available~~a ~~market~~portion ~~information~~of ~~and~~the ~~other~~senior ~~valuation~~subordinated ~~methods.~~notes ~~Values~~and ~~are~~write-off ~~based~~of ondeferred ~~available market~~financing ~~quotes~~costs orassociated ~~estimates~~with ~~using~~the aearly ~~discounted~~retirement ~~cash~~of ~~flow~~a ~~approach~~portion ~~based~~of on the ~~interest~~senior ~~rates~~subordinated ~~currently~~notes. ~~available~~These ~~for~~premiums ~~similar~~and ~~instruments.~~write-off ~~The~~represent ~~fair~~additional ~~values~~costs of ~~financial~~financing ~~instruments~~and ~~for~~our ~~which~~capital ~~estimated fair value amounts are not specifically presented are estimated to approximate the related recorded values~~structure.

4530

CurrencyTable Translation of Contents

~~The~~ITEM ~~assets and liabilities of the Company's subsidiaries outside the U~~7.S. ~~are translated into U.~~MANAGEMENT’S. ~~dollars~~DISCUSSION atAND ~~the~~ANALYSIS ~~rates~~OF ofFINANCIAL ~~exchange~~CONDITION inAND ~~effect~~RESULTS atOF ~~the balance sheet dates~~OPERATIONS. 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.

~~Recent~~The ~~Accounting~~following ~~Pronouncements~~ 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, 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.

In February 2007, the FASB issued SFAS No. 159, ("SFAS No. 159"), "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. Under SFAS No. 159, entities that elect the fair value option will report unrealized gains and losses in earnings at each subsequent reporting date. The fair value option may be elected on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the instrument in its entirety. The fair value option election is irrevocable, unless a new election date occurs. SFAS No. 159 establishes presentation and disclosure requirements to help financial statement users understand the effect of the entity's election on its earnings but does not eliminate disclosure requirements of other accounting standards. Assets and liabilities that are measured at fair value must be displayed on the face of the balance sheet. SFAS No. 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. SFAS No. 159 requires prospective application. The Company ~~does~~Overview ~~not expect to elect the fair value option for any of its assets and financial liabilities not already measured at fair value under other accounting literature.~~

~~In September 2006,~~We ~~the~~are ~~FASB~~a ~~issued~~global ~~SFAS~~government ~~No. 158,~~services ~~"Employers'~~provider ~~Accounting~~in ~~for~~support ~~Defined~~of ~~Benefit~~U.S. ~~Pension~~national security and ~~Other~~foreign ~~Post-retirement~~policy objectives, delivering support ~~Plans".~~solutions ~~Among~~for ~~other~~defense, ~~items~~diplomacy, ~~SFAS~~and Nointernational development. ~~158~~ ~~requires~~We ~~recognition~~are a leading provider of ~~the~~specialized ~~over~~mission-~~funded~~critical orprofessional ~~under-funded~~and ~~status~~support ofservices anoutsourced ~~entity's~~by ~~defined~~the ~~benefit~~U.S. ~~postretirement~~military, ~~plan~~non-military asU.S. governmental agencies and foreign angovernments. ~~asset~~Our orspecific ~~liability~~global inexpertise ~~the~~is ~~financial~~in ~~statements,~~intelligence ~~the~~and ~~measurement~~law ofenforcement ~~defined~~training ~~benefit~~and ~~post-retirement~~support, ~~plan~~security ~~assets~~services, base and ~~obligations~~logistics asoperations, rule of ~~the~~law ~~end~~development ofand ~~the~~construction ~~employer's~~management, ~~fiscal~~platform ~~year~~services and operations, and ~~recognition~~linguist ofservices. ~~the~~We ~~funded~~also ~~status~~provide oflogistics ~~defined~~support ~~benefit~~for ~~post-retirement~~all ~~plans~~our inservices. ~~other~~As ~~comprehensive~~of ~~income~~April 2, ~~("OCI").~~2010, ~~The~~we ~~standard~~had ~~was~~approximately ~~effective~~22,300 ~~for~~employees, ~~the~~including ~~Company~~employees asfrom ofour ~~March 30~~consolidated subsidiaries, ~~2007.~~in ~~The~~38 countries, approximately 60 active contracts ~~adoption~~ranging ofin ~~SFAS~~duration ~~No. 158~~from ~~did~~three ~~not~~to ~~have~~ten anyears ~~impact~~and onapproximately ~~the~~127 ~~Company's~~active ~~consolidated~~task ~~financial~~orders. ~~position,~~We ~~results~~have ofprovided ~~operations~~essential services to numerous U.S. government departments and ~~cash~~agencies ~~flows~~since 1951.

~~In September 2006,~~During ~~the~~fiscal ~~FASB~~years ~~issued~~2006 ~~SFAS~~through ~~No. 157~~2008, ~~"Fair~~we ~~Value~~conducted ~~Measurements."~~our ~~SFAS~~operations ~~No. 157~~through ~~defines~~two ~~fair~~reportable ~~value, establishes~~segments: aGS ~~framework for measuring fair value under GAAP~~ and ~~expands~~MTSS. ~~disclosures~~On ~~about~~March 29, ~~fair~~2008, we ~~value~~divided ~~measurements.~~our ~~This~~GS ~~statement~~operating ~~does~~segment ~~not~~into ~~require~~two ~~any~~ new ~~fair~~segments, ~~value~~ISS ~~measurements;~~and ~~rather~~LCM, itto ~~applies under~~enable ~~other~~us ~~accounting~~to ~~pronouncements~~better ~~that~~capitalize ~~require~~on orbusiness ~~permit~~development ~~fair~~opportunities ~~value~~and ~~measurements.~~enhance ~~The~~our ~~provisions~~ongoing ofservice. ~~this~~Our ~~statement~~ISS ~~are~~operating tosegment beconsisted ~~applied prospectively as~~ of ~~the~~our ~~beginning~~Law ofEnforcement ~~the~~and ~~fiscal~~Security strategic ~~year~~business inunit, ~~which this~~our ~~statement~~Specialty isAviation ~~initially~~and ~~applied,~~Counter-Drug ~~with~~Operations ~~any~~strategic ~~transition~~business ~~adjustment~~unit ~~recognized~~and asGLS, aour ~~cumulative-effect~~joint ~~adjustment~~venture tofor the ~~opening~~INSCOM ~~balance~~contract. ofOur ~~retained~~LCM ~~earnings.~~operating ~~This~~segment ~~statement~~consisted isof ~~effective~~our ~~for~~Contingency ~~financial statements~~and ~~issued~~Logistics ~~for~~Operations ~~fiscal~~strategic business ~~years~~unit ~~beginning~~and ~~after~~our ~~November 15,~~Operations ~~2007,~~Maintenance and ~~interim~~Construction ~~periods~~Management ~~within~~strategic ~~those~~business ~~fiscal~~unit ~~years.~~and ~~The~~includes ~~Company~~any iswork ~~currently~~awarded ~~evaluating~~under the ~~impact~~LOGCAP ofIV. ~~adopting~~Our ~~SFAS No. 157~~third onsegment ~~its~~was ~~consolidated~~MTSS, ~~financial~~which ~~statements~~did not significantly change.

~~In September~~On April ~~2006~~6, ~~the~~2009, ~~SEC~~we ~~issued~~announced ~~SAB~~a ~~No. 108~~further ~~"Considering~~reorganization ~~the Effects~~ of ~~Prior~~our ~~Year~~business ~~Misstatements~~structure ~~when Quantifying Misstatements in Current Year Financial Statements,"~~ to ~~address~~better ~~diversity~~align inwith ~~practice~~strategic inmarkets ~~quantifying~~and streamline ~~financial~~our ~~statement misstatements~~infrastructure. ~~SAB~~Under ~~No. 108 requires~~ the ~~Company~~new toalignment, ~~quantify~~our ~~misstatements based~~three onreportable ~~their~~segments ~~impact~~were onrealigned ~~each~~into ofthree ~~its~~new ~~consolidated~~segments, ~~financial~~two ~~statements and related disclosures. SAB No. 108 is effective as~~ of ~~the~~which, ~~end~~GSDS ofand ~~fiscal 2007~~GPSS, ~~allowing~~are ~~a one~~wholly-~~time transitional cumulative effect adjustment to retained earnings as of April 1~~owned, ~~2006~~and ~~for~~a ~~errors~~third ~~that~~segment ~~were not previously deemed material~~GLS, ~~but~~which ~~are~~is ~~material~~a ~~under~~51% ~~the~~owned ~~guidance~~joint ~~in SAB No~~venture. ~~108.~~ The ~~adoption~~new structure ofbecame ~~SAB~~effective ~~No.~~April ~~108~~4, ~~did~~2009, ~~not have a material impact on~~ the ~~Company's~~start ~~consolidated financial position, results~~ of ~~operations~~our ~~and~~2010 ~~cash~~fiscal ~~flows~~year.

In ~~June 2006,~~ ~~the~~addition ~~FASB~~to ~~issued~~the ~~FASB~~information ~~Interpretation No. 48~~presented below, ~~"Accounting~~Note ~~for~~13 ~~Uncertainty~~to inour ~~Income~~consolidated ~~Taxes –~~financial anstatements ~~interpretation~~contains ofadditional ~~FASB Statement~~information ~~No. 109"~~about ~~("FIN~~our ~~48").~~operating ~~FIN~~segments ~~48 clarifies the accounting~~ and ~~reporting~~geographic ~~for~~areas ~~income taxes recognized~~ in ~~accordance~~which ~~with~~we ~~SFAS~~have ~~No. 109, "Accounting~~conducted ~~for~~business ~~Income~~during ~~Taxes." This~~fiscal ~~interpretation~~years ~~prescribes a comprehensive model for the financial statement recognition~~2010, ~~measurement~~2009, ~~presentation~~ and ~~disclosure~~2008. ofWe ~~uncertain~~have ~~tax~~recast ~~positions~~the ~~taken~~corresponding items ~~or expected to be taken in income tax returns. The requirements~~ of ~~FIN~~segment 48information ~~are~~during ~~effective for~~ fiscal ~~periods~~years ~~beginning~~2009 ~~after December 15, 2006. The Company is currently evaluating the interpretation~~ and ~~will~~2008 ~~adopt~~to ~~FIN~~conform 48to inour ~~the first quarter of~~ fiscal year ~~2008.~~2010 ~~The~~segment ~~cumulative effect of adopting FIN 48 will be recorded in retained earnings~~presentation. ~~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.~~

46As 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 the surviving corporation and be a wholly owned subsidiary of Merger Parent. The Merger Agreement was approved by the Board.

~~On May 18,~~Pursuant ~~2006~~to the Merger Agreement, at the ~~State~~effective time of ~~Texas~~the ~~enacted~~Merger, aeach ~~law~~issued ~~replacing~~and outstanding share of Our Parent’s Class A Common Stock, other than shares owned by the ~~current~~Company, ~~franchise~~Merger ~~tax~~Parent ~~with~~or Merger Sub, or by any stockholders who have perfected and not withdrawn a ~~new~~demand ~~margin~~for ~~tax~~appraisal ~~that~~rights under Delaware law, will gobe canceled and will be automatically converted into ~~effect~~the onright ~~January 1~~to receive the $17.55 Per Share Merger Consideration, ~~2008~~without interest. ~~The~~Additionally, ~~Company estimates~~Our ~~that~~Parent’s restricted stock units granted under the ~~new~~DynCorp ~~margin~~International ~~tax~~2007 OIP will ~~not~~vest ~~have~~at athe ~~significant~~effective ~~impact~~time onof ~~tax~~the ~~expense~~Merger and orwill ~~deferred~~be ~~tax~~converted ~~assets~~into ~~and~~the ~~liabilities~~right to receive the Per Share Merger Consideration.

~~In May 2005,~~Current ~~the~~Operating ~~FASB~~Environment ~~issued SFAS No. 154, "Accounting Changes~~ and ~~Error Corrections – a replacement of APB Opinion No. 20~~ ~~and~~Outlook FASB Statement No. 3." SFAS No. 154 provides guidance on the accounting for, and reporting 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 a material impact on the Company's consolidated financial position, results of operations and cash flows.

External Factors ~~ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.~~

~~The~~Over ~~inherent~~most ~~risk~~of inthe ~~market~~last ~~risk~~two ~~sensitive~~decades, ~~instruments~~the U.S. government has increased its reliance on the private sector for a wide range of professional and ~~positions~~support ~~primarily~~services. ~~relates~~This toincreased ~~potential~~use ~~losses~~of ~~arising~~outsourcing ~~from~~by ~~adverse~~the ~~changes~~U.S. government has been driven by a variety of factors including: lean-government initiatives launched in ~~interest~~the ~~rates~~1990s, ~~and~~surges in demand during times of national crisis, the increased ~~foreign~~complexity ~~currency~~of ~~exchange~~missions ~~rates~~conducted by the U.S. ~~For~~military ~~further~~and ~~discussion~~the DoS, increased focus of ~~market~~the ~~risks~~U.S. wemilitary ~~may~~on ~~encounter,~~war-fighting ~~see~~efforts ~~"Risk~~and ~~Factors~~the loss of skills within the government caused by workforce reductions and retirements."

~~Interest~~31 ~~Rate Risk~~

WeTable 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. Contents

The overall level of U.S. defense spending has increased in recent years for numerous ~~table~~reasons, ~~below~~including ~~provides~~increases ~~information~~in ~~about~~funding of operations in Iraq and Afghanistan and the DoD’s modernization initiatives. However, the funding of our ~~fixed~~programs ~~rate~~is subject to the overall U.S. government budget and ~~variable~~appropriation ~~rate~~decisions ~~long~~and processes which are driven by numerous factors, including geo-~~term~~political ~~debt~~events ~~agreements~~and macroeconomic conditions, asand ofare ~~March~~beyond our control. While these dynamics 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 (i) 30the need to reset equipment coming out of Iraq, ~~2007~~(ii) the logistics and support chain associated with repositioning of forces and eventual drawdown in Iraq and (iii) deployments into Afghanistan.

	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

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:

~~The~~• ~~carrying amount of our borrowings under~~ the ~~Senior~~continued ~~Secured~~transformation ~~Credit~~of ~~Facility~~military ~~approximates~~forces, ~~fair~~leading ~~value~~to ~~based~~increased onoutsourcing ~~the variable interest rates~~ of ~~this~~ ~~debt.~~non-combat ~~The~~functions, ~~fair~~including ~~value~~life-cycle ofasset ~~senior~~management ~~subordinated~~functions ~~notes~~ranging isfrom ~~based~~organizational ~~on their quoted market value. The above table does not give effect~~ to ~~$21.1 million~~depot oflevel ~~outstanding letters of credit as of March 30, 2007.~~ maintenance;

~~In April 2007,~~• in order to mitigate interest rate risk related to the term loans, the Company entered into interest rate hedge agreements with notional amounts totaling $200.0 million, whereby the Company effectively fixed the interest rate at 4.975%, plus an ~~applicable~~increased ~~margin~~level ~~(2.25%~~and atfrequency ~~March 30, 2007) on the first $200.0 million~~ of ~~its~~overseas ~~debt indexed~~deployment toand ~~LIBOR~~peacekeeping ~~through~~operations ~~May 22,~~for ~~2010. The Company concluded that~~ the ~~interest~~DoS ~~rate swaps qualify as cash flow hedges under the provisions of SFAS No. 133, "Accounting for Derivative Instruments~~ and ~~Hedging Activities."~~DoD;

47• increased maintenance, overhaul and upgrade needs to support aging military platforms;

~~Foreign~~• ~~Currency~~increased ~~Exchange~~outsourcing ~~Rate~~by ~~Risk~~ foreign governments of maintenance, supply support, facilities management and construction management-related services; and

We• ~~are~~a ~~exposed~~shift toby ~~changes~~the ~~in foreign currency rates~~U.S. Atgovernment ~~present,~~from wesingle doaward ~~not utilize any derivative instruments~~ to ~~manage~~more ~~risk~~multiple ~~associated~~award ~~with~~IDIQ ~~currency exchange rate fluctuations. The functional currency of certain foreign operations is the local currency. Accordingly~~contracts, ~~these~~which ~~foreign~~may ~~entities~~offer ~~translate~~us ~~assets~~an ~~and~~opportunity ~~liabilities from their local currencies~~ to ~~U.S. dollars~~increase ~~using~~revenue ~~year-end~~under ~~exchange~~these ~~rates~~contracts ~~while~~by ~~income~~competing ~~and~~for ~~expense~~task ~~accounts~~orders ~~are~~with ~~translated at~~ the ~~average rates in effect during the year. The resulting translation adjustment is recorded as accumulated~~ other ~~comprehensive~~contract ~~(loss) income~~awardees.

48During the last year, the U.S. began to drawdown troops in Iraq. Although the timeframe to complete the drawdown is uncertain, we believe that the U.S. will have a sizeable military and contractor presence in Iraq for at least the next four to six years. As a result, we expect our level of existing business involving Iraq to gradually diminish over the next four to six years. Nevertheless, we believe that we still have opportunities to win new Iraq based business with demand remaining strong over the next four to six years for logistics, equipment reset, training and mentoring of Iraqi forces and government agencies and translation services to support security and peacekeeping activities.

On the other hand, President Obama ordered increases in troop levels in Afghanistan. We believe we are well positioned in Afghanistan to ~~ITEM 8~~capitalize on increased U. ~~FINANCIAL~~S. ~~STATEMENTS~~government ~~AND~~focus ~~SUPPLEMENTARY~~through ~~DATA~~many of our service offerings, including police training and mentoring, aircraft logistics and operations, infrastructure development, mine resistant and ambush protected or “MRAP” services, and logistics services under LOGCAP IV. Additionally, although some specific initiatives and priorities may change from year to year, the investments and acquisitions we made have been focused on aligning our business to address areas that have high growth potential, including intelligence training and rule of law development. However, the possibility remains that one or more of our programs could be reduced, postponed, or terminated as a result of the administration’s assessment of priorities.

Current ~~INDEX~~Economic TOConditions ~~CONSOLIDATED FINANCIAL STATEMENTS~~

~~Report~~We ofbelieve ~~Independent~~that ~~Registered~~our ~~Public~~industry ~~Accounting~~and ~~Firm~~customer ~~Consolidated~~base ~~Statements~~are ofless ~~Operations~~likely ~~for~~to ~~the~~be ~~fiscal~~affected ~~year~~by ~~ended~~many ~~March~~of ~~30, 2007, for~~ the ~~fiscal~~factors ~~year~~generally ~~ended~~affecting ~~March~~business ~~31,~~and consumer ~~2006,~~spending. ~~for~~Our ~~the~~contract 49awards ~~Days~~typically ~~ended~~last ~~April~~one 1,to ~~2005~~five ~~(Successor),~~years and ~~from~~we ~~April~~have 3,a ~~2004~~strong tohistory ~~February 11, 2005 (Immediate Predecessor) Consolidated Balance Sheets as~~ of ~~March~~being ~~30,~~awarded ~~2007~~a ~~and~~majority ~~March 31, 2006 (Successor) Consolidated Statements~~ of ~~Cash Flows for~~ the ~~fiscal~~contract ~~year~~options. ~~ended March 30~~Additionally, ~~2007,~~since ~~for~~our ~~the~~primary ~~fiscal~~customer ~~year~~is ~~ended March 31, 2006, for~~ the 49federal ~~Days ended April 1~~government, ~~2005~~we ~~(Successor),~~have ~~and~~not ~~from~~historically had ~~April~~significant 3,issues ~~2004~~with tobad ~~February~~debt. 11However, ~~2005~~we ~~(Immediate~~cannot ~~Predecessor)~~be ~~Consolidated~~certain ~~Statements~~that ~~of Member's Equity for~~ the ~~fiscal~~economic ~~year~~environment ~~ended~~or ~~March~~other ~~30,~~factors ~~2007,~~will ~~for~~not ~~the~~adversely ~~fiscal~~impact ~~year~~our ~~ended March 31~~business, ~~2006,~~financial ~~for~~condition ~~the~~or 49results ~~Days~~of ~~ended~~operations ~~April~~in ~~1, 2005 (Successor), and for~~ the ~~period~~future. ~~from April 3, 2004 to February 11, 2005 (Immediate predecessor) Notes to Consolidated Financial Statements~~

49Furthermore, 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.

See “Item 1A. Risk Factors — Current or worsening economic conditions could adversely impact our business” for a ~~REPORT~~discussion OFof ~~INDEPENDENT~~the ~~REGISTERED~~risks ~~PUBLIC~~associated ~~ACCOUNTING~~with ~~FIRM~~ the current economic condition.

~~To the~~32 ~~Board of Managers and Member of DynCorp International LLC Falls Church, Virginia~~

We haveTable audited the accompanying consolidated balance sheets of DynCorp International LLC and subsidiaries (the "Company") as of March 30, 2007 and March 31, 2006 (Successor), and the related consolidated statements of operations, member's 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). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits. Contents

~~We conducted~~Internal ~~our~~Factors audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~As discussed~~Our ininternal ~~Note 2~~focus tofor ~~the~~success ~~financial~~centers ~~statements,~~around ~~DynCorp~~five ~~International~~key ~~LLC~~principles: was a wholly owned subsidiary of DynCorp, which was acquired by a newly formed entity, DynCorp International Inc., on February 11, 2005. As a result, the periods presented in the accompanying financial statements reflect a new basis of accounting beginning February 12, 2005.

~~In our~~• ~~opinion,~~Relentless ~~such~~Performance ~~consolidated~~— ~~financial~~Through ~~statements~~a ~~present~~relentless ~~fairly,~~mindset in ~~all~~meeting ~~material~~our ~~respects,~~commitments ~~the~~to ~~financial~~our ~~position~~customers ofevery ~~the~~day ~~Company as of March 30, 2007~~ and ~~March 31,~~in ~~2006,~~operating ~~and~~with ~~the results~~absolute ofintegrity ~~their operations~~ and ~~their~~in ~~cash~~accordance ~~flows~~with ~~for~~our ~~the~~Code ~~fiscal~~of ~~year~~Ethics ~~ended March 30, 2007, the fiscal year ended March 31, 2006, the 49 days ended April 1, 2005, (Successor),~~ and ~~the~~Business ~~period~~Conduct ~~from April 3, 2004 to February 11, 2005 (Immediate Predecessor),~~ in ~~conformity~~all ~~with~~that ~~accounting~~we ~~principles generally accepted in the United States of America~~do.

~~/s/ Deloitte &~~• ~~Touche~~Lean ~~LLP~~Enterprise — In order to further fuel our growth and invest in our people, we must generate additional investment capacity by ensuring that our infrastructure is as efficient as possible without jeopardizing our ability to perform.

~~Fort Worth~~• Clear Strategic Investment — We must have clarity in our strategic priorities, ~~Texas~~and we must properly focus our investments in people, new program pursuits and efforts to penetrate new segments of the market.

~~June 18~~• New Business — Growing our business profitably starts with winning new business. This involves having a winning attitude across our enterprise, ~~2007~~ particularly in satisfying our current customers and competing for new business.

50• People — We must be the employer of choice with strong, trusted leadership, an employee-focused environment and a culture of mutual respect in which our employees are empowered and rewarded for serving our customers and ensuring their success.

We apply ~~DYNCORP~~these ~~INTERNATIONAL~~key ~~LLC CONSOLIDATED~~principles ~~STATEMENTS~~continuously OFas ~~OPERATIONS (Dollars~~we inassess ~~thousands)~~ our operational and administrative performance.

		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)		–
	Loss on early extinguishment of debt		(3,484)		–		–		–
	Net earnings from affiliates		2,913		–		–		–
	Interest income		1,789		461		7		170
Income (loss) before income taxes			56,291		45,012		(862)		94,689
Provision for income taxes			(20,549)		(16,627)		(60)		(34,956)
Net income (loss)		$	35,742	$	28,385	$	(922)	$	59,733

Notable Fiscal Year 2010 Developments

~~See~~• ~~notes~~In toJuly ~~consolidated~~2009, ~~financial~~we ~~statements~~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.

51• In September 2009, we were awarded a contract by the U.S. Air Force to provide aircraft maintenance support at Sheppard Air Force Base. The value of the contract is $31.2 million for the base period, and a potential maximum value of $256 million over seven years, if all options are exercised. Operations began in October 2009.

• During ~~DYNCORP~~the ~~INTERNATIONAL~~second ~~LLC CONSOLIDATED~~quarter ~~BALANCE~~of ~~SHEETS (Dollars~~fiscal year 2010, we purchased helicopters in ~~thousands)~~ support of our new WPPS air services task order. Given the availability of customer assets to support this program, we mutually agreed to a task order modification under which the customer has supplied its own helicopters. As a result, we plan to utilize all but three of 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.

			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 MEMBER'S 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		–
Commitments and contingencies
Member's equity:
	Member's units, 100 outstanding			316,633		298,914
	Retained earnings			63,205		27,463
	Accumulated other comprehensive loss			(164)		(218)
		Total member's equity		379,674		326,159
Total liabilities and member's equity			$	1,362,901	$	1,239,089

•

We were awarded a WPPS task order that was originally expected to ramp up in the second quarter of fiscal year 2010, but was delayed due to changes in customer requirements. Most of the services are now being delivered under the INL Air Wing program, which commenced in the third quarter of fiscal year 2010.

~~See~~• ~~notes~~On the GLS program, we completed negotiations with the customer to ~~consolidated~~modify our largest task order to include a ceiling for recoverable cost of $752 million for Option Year 1. While this resulted in a cumulative reduction in revenue, the impact, net of award fee, was not material to our financial ~~statements~~results. In connection with these negotiations, our customer exercised another option under the task order covering a period from December 2009 to June 2010.

52• We purchased Phoenix on October 19, 2009 and Casals on January 22, 2010. See Note 16 to our consolidated financial statements for additional discussion.

• On ~~DYNCORP~~December ~~INTERNATIONAL~~16, ~~LLC CONSOLIDATED~~2009, ~~STATEMENTS~~we OFfiled ~~CASH~~a ~~FLOWS~~ pre-award protest with the Government Accountability Office (~~Dollars~~“GAO”) concerning the planned procurement of training and mentoring of police and government personnel in ~~thousands~~Afghanistan by the DoD through task orders issued by the U.S. Army Space and Missile Defense Command Counter-Narcoterrorism Technology Program Office (“CNTPO”) . On March 15, 2010 the GAO announced its ruling in favor of our protest of the issuance of task order request for proposals by the Department of the Army for training and facilities support for the Ministry of Interior and Afghan National Police. The DoD is expected to issue the request for proposal for the contract during the second quarter of our fiscal year 2011, and the Company intends to propose on the contract.

				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)				$	35,742	$	28,385	$	(922)	$	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		–		–		–
		Excess tax benefits from equity-based compensation			(495)		–		–		–
		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
		Income taxes payable			5,921		8,370		60		218
			Net cash provided by (used by) operating activities		93,533		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
	Payments on long-term debt				(30,556)		(3,449)		–		–
	Premium paid on redemption of senior subordinated notes				(2,657)		–		–		–
	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				17,943		–		–		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		(4,056)		(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				$	49,090	$	57,464	$	322	$	–
Non-cash investing activities				$	–	$	1,194	$	–	$	–

•

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 conspiracy, 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

~~See~~33 ~~notes to consolidated financial statements.~~

53Table of Contents

the work ~~DYNCORP~~under ~~INTERNATIONAL LLC CONSOLIDATED~~existing ~~STATEMENTS~~task OForders. ~~MEMBER'S~~We ~~EQUITY (Dollars~~have intransitioned ~~thousands)~~ 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.

Immediate Predecessor			Parent's Net Investment		Accumulated Other Comprehensive Income (Loss)		Total
Balance at April 2, 2004			$	396,566	$	7	$	396,573
	Comprehensive income:
		Net income		59,733				59,733
		Foreign currency translation		–		60		60
	Comprehensive income					67		59,793
Net transfers to Computer Sciences Corporation				14,325				14,325
Balance at February 11, 2005			$	470,624	$	67	$	470,691

•

In February 2010, we were awarded a contract from the U.S. Army Research, Development and Engineering Command (“RDECOM”) to assist the Combined Security Transition Command-Afghanistan (“CSTC-A”) and NATO Training Mission (“NTM”) by providing mentors and trainers to develop the Afghanistan Ministry of 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.

Successor			Member's Units		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Initial Capitalization – February 12, 2005			$	224,808	$	–	$	–	$	224,808
	Comprehensive loss:
		Net income				(922)				(922)
		Foreign currency translation						22		22
	Comprehensive loss									(900)
Balance April 1, 2005				224,808		(922)		22		223,908
	Comprehensive income:
		Net income				28,385				28,385
		Foreign currency translation						(260)		(260)
		Change in fair value of interest rate cap						20		20
	Comprehensive income					28,385		(240)		28,145
		Working capital adjustment		71,689						71,689
		Equity-based compensation		2,417						2,417
Balance March 31, 2006				298,914		27,463		(218)		326,159
	Comprehensive income:
		Net income				35,742				35,742
		Foreign currency translation						70		70
		Change in fair value of interest rate cap						(16)		(16)
	Comprehensive income					35,742		54		35,796
		Contribution from parent		14,871						14,871
		Equity-based compensation		2,353						2,353
		Tax benefit associated with equity-based compensation		495						495
Balance March 30, 2007			$	316,633	$	63,205	$	(164)	$	379,674

•

During fiscal year 2010, we continued to encounter cost overruns in our Afghanistan construction projects, within our infrastructure service offering, due to significant challenges including the deteriorating security environment and issues with passing equipment through customs in Afghanistan. Our fiscal year 2010 results included a loss on Afghanistan construction of $16.5 million, including $6.5 million related to the fourth fiscal quarter. We expect to complete our remaining construction projects in fiscal year 2011 and expect to earn approximately $11 million in revenue and incur approximately $11 million in costs, net of reserve releases, in fiscal year 2011. Subsequently, this strategic business area is expected to become idle as we do not expect to bid on any similar firm fixed-price contracts without revised terms and conditions.

~~See~~• ~~notes~~On March 29, 2010, we received a favorable appellate court decision related to ~~consolidated~~the ~~financial~~Worldwide ~~statements~~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.

54• 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 additional detail.

Fiscal Year ~~DYNCORP~~Ended ~~INTERNATIONAL~~April 2, ~~LLC NOTES~~2010 TOCompared ~~CONSOLIDATED~~to ~~FINANCIAL~~Fiscal ~~STATEMENTS~~ Year Ended April 3, 2009

Consolidated Results ~~For~~of ~~the~~Operations ~~Fiscal Year Ended March 30, 2007, Fiscal Year Ended March 31, 2006, 49 Days Ended April 1, 2005, and the Period from April 3, 2004 to February 11, 2005~~

~~Note 1—Summary~~The following table sets forth, for the periods indicated, our consolidated results of ~~Significant~~operations, ~~Accounting~~both ~~Policies~~ in dollars and as a percentage of revenue:

DynCorp International LLC and subsidiaries (together, the "Company") provides defense and technical services and government outsourced solutions primarily to U.S. government agencies throughout the U.S. and internationally. Key offerings include aviation services, such as maintenance and related support, as well as base maintenance/operations and personal and physical security services. Primary customers include the U.S. Departments of Defense ("DoD") and U.S. Department of State ("DoS"), but also include other government agencies, foreign governments and commercial customers.


	Fiscal Years Ended
	April 2, 2010					April 3, 2009
	(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 LLC	$	86,088		2.4	%	$	69,770		2.2	%

~~Principles~~34 ~~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~~Revenue — Revenue for fiscal year 2010 increased $484.2 million, or 15.6%, ~~following~~as ~~table~~compared ~~sets~~to ~~forth~~fiscal ~~the~~year ~~Company's~~2009, ~~ownership~~reflecting increases in ~~joint~~our ~~ventures~~GSDS and ~~companies~~GLS ~~that~~operating ~~are~~segments ~~not~~which ~~consolidated~~were ~~into~~partially ~~the~~offset ~~Company's~~by ~~financial~~a ~~statements~~decline asin ofour ~~March 30,~~GPSS ~~2007,~~operating ~~and are~~segment. ~~accounted~~The ~~for~~increase was primarily driven by the ~~equity~~ramp ~~method.~~up ~~For~~of ~~all~~the LOGCAP IV program and the benefit of a full twelve months of revenue including award fees from the ~~entities~~Intelligence ~~listed~~and ~~below~~Security Command (“INSCOM”) contract, ~~the~~as ~~Company~~compared ~~has~~to the ~~right~~INSCOM toramp ~~elect~~up ~~half~~period, ofwhich occurred during the ~~board~~first quarter of ~~directors~~fiscal oryear ~~other~~2009. ~~management~~Our acquisitions ~~body.~~of ~~Economic~~Phoenix ~~rights~~and ~~are~~Casals ~~indicated by~~also ~~the~~contributed ~~ownership~~to ~~percentages~~our ~~listed~~revenue ~~below~~growth.

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%

Cost of 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.

~~The~~Selling, ~~following~~general ~~table~~and ~~sets~~administrative ~~forth~~expenses ~~the~~(“SG&A”) ~~Company's~~— ~~ownership~~SG&A inprimarily relates ~~joint~~to ~~ventures~~functions ~~that~~such ~~are~~as ~~consolidated~~corporate ~~into~~management, ~~the~~legal, ~~Company's~~finance, ~~financial~~accounting, ~~statements~~contracts asand ofadministration, human resources, management information systems, purchasing and business development. SG&A for fiscal year 2010 increased ~~March~~$2.8 30million, ~~2007~~or 2.7%, ~~For~~compared ~~the~~to ~~entities~~fiscal ~~listed~~year ~~below~~2009. As a percentage of revenue, SG&A decreased by 0.3%. This decrease was primarily attributable to the ~~Company~~reversal ~~has~~of a $10.0 million legal reserve in the ~~right~~fourth quarter of fiscal year 2010 related to ~~elect~~a ~~half~~favorable appellate court decision on the WWNS case as described in the “Notable Fiscal Year 2010 Developments” section above. Also contributing to the comparative decrease was the fiscal year 2009 severance charges related to our former Chief Executive Officer (“CEO”) and former GPSS president. Partially offsetting this was an increase in SG&A costs associated with higher business development costs incurred in support of our growth and severance costs associated with the ~~Board~~termination without cause of ~~Directors~~our orformer ~~other~~Senior ~~management~~Vice ~~body~~President and isChief ~~the~~Compliance ~~primary~~Officer, ~~beneficiary~~approximately as$0.6 ~~defined~~million of which was unrecoverable. Additionally, we incurred approximately $3.2 million in ~~FIN~~costs ~~46R~~associated with our two acquisitions and the proposed merger, $2.9 million of costs associated with retention related compensation expenses connected to our acquisitions and $0.4 million in costs associated with the filing of a Form S-3 registration statement.

Global Linguist Solutions LLC		51.0%
Global Nation B		51.0%

Depreciation 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.

~~Revenue~~Interest expense ~~Recognition~~— 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 ~~Cost~~repurchases ~~Estimation~~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 ~~Long~~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-~~Term~~off ~~Contracts~~ of deferred financing fees associated with our extinguished senior secured credit facility, as further discussed in Note 7 to our consolidated financial statements.

~~General –~~Income ~~Revenues~~tax ~~are~~expense ~~recognized~~— ~~when~~Our ~~persuasive~~effective ~~evidence~~tax rate of an31.9% ~~arrangement~~for ~~exists,~~fiscal ~~services~~year 2010 orincreased ~~products~~from ~~have~~31.7% ~~been~~for ~~provided~~fiscal toyear ~~the~~2009. ~~client,~~Our ~~the~~effective ~~sales~~tax ~~price~~rate iswas ~~fixed~~impacted orby ~~determinable,~~the ~~and~~tax ~~collectibility~~treatment isof ~~reasonably~~our ~~assured.~~GLS ~~Revenues~~and byDynCorp ~~contract~~International ~~type~~FZ-LLC in(“DIFZ”) ~~fiscal~~joint ~~2007~~ventures, ~~and~~which ~~2006,~~are ~~and~~consolidated for ~~the combined~~financial ~~periods~~reporting inpurposes ~~fiscal~~but ~~2005~~are ~~were~~not consolidated asfor ~~follows:~~tax purposes.

55Noncontrolling interests — Noncontrolling interests reflect the impact of our joint 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.

	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%

TheTable Company expenses pre-contract costs as incurred for an anticipated contract until the contract is awarded. Throughout the life of the contract, indirect costs, including general and administrative costs, are expensed as incurred and are based on Defense Contract Audit Agency ("DCAA") approved indirect rates. Contents

~~When revenue~~Results ~~recognition~~by isSegment ~~deferred relative to the timing of cost incurred, costs that are direct and incremental to a specific transaction are deferred and charged to expense in proportion to the revenue recognized.~~

~~Customer acceptance~~The ~~provisions~~following ~~generally~~table ~~allow~~sets ~~the~~forth ~~customer to cancel an arrangement when products delivered or services rendered do not meet benefits expected from~~ the ~~arrangement. Acceptance generally occurs before~~ revenue ~~recognition.~~and ~~However,~~operating ifincome itfor ~~can be shown objectively that~~ the ~~acceptance~~GSDS ~~criteria~~operating ~~have~~segments, ~~been satisfied~~ for ~~separable~~fiscal ~~units~~year ~~of accounting or profit centers~~2010, as ~~applicable~~ ~~within~~compared anto fiscal ~~arrangement,~~year ~~revenue is recognized before formal acceptance~~2009.

~~Management regularly~~Global ~~reviews~~Stabilization & ~~project~~Development ~~profitability~~Solutions and underlying estimates. Revisions to the estimates are reflected in results of operations as a change in accounting estimate in the period in which the facts that give rise to the revision become known by management.

Major factors the Company considers in determining total estimated revenue and cost include the basic contract price, contract options, change orders (modifications of the original contract), back charges and claims, 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.


	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

~~Federal Government Contracts – Projects under the Company's U.S. federal government contracts~~Revenue ~~typically~~— ~~have~~Revenue ~~different~~for ~~pricing~~fiscal ~~mechanisms~~year ~~that~~2010 ~~influence~~increased ~~how revenue is earned and recognized~~$551. ~~These pricing mechanisms are classified as cost plus fixed-fee~~0 million, ~~fixed-price,~~or ~~cost reimbursement~~50.8%, ~~cost~~as ~~plus~~compared ~~award~~to ~~fee,~~fiscal ~~time-and-materials~~year ~~(including Unit-Price/level-of-effort contracts), or indefinite delivery, indefinite quantity ("IDIQ")~~2009. The ~~exact~~increase ~~timing~~primarily ~~and~~resulted ~~quantity~~from ~~of delivery for IDIQ profit centers are not known at~~ the ~~time~~following: ~~of contract award, but they can contain any type of pricing mechanism; fixed-price, time and materials, cost reimbursable or cost plus fixed fee.~~

Training & Mentoring: Revenue of $713.7 million decreased $18.6 million, or 2.5%, primarily due to declines in our onCivPol ~~fixed-price~~program ~~projects~~due isto ~~generally~~lower ~~recognized~~rates ~~ratably~~in ~~over~~both Iraq and Afghanistan stemming from changes in the contract ~~period~~type ~~measured~~from byfirm ~~either~~fixed-price ~~output~~to orcost-reimbursement ~~input~~and ~~methods~~reductions ~~appropriate~~in services in Iraq due to the U.S. troop drawdown. Partially offsetting this was a scope increase in our WPPS security services ortask ~~products~~order ~~provided~~in Iraq and a new WPPS security services task order in Pakistan. ~~For example~~Also offsetting the decrease was our new MNSTC-I program, ~~"output~~which ~~measures"~~launched ~~can~~in ~~include~~the ~~period~~third quarter of ~~service~~fiscal year 2009. We expect Training & Mentoring revenue to increase in fiscal year 2011, ~~such~~primarily asdue ~~for~~a ~~aircraft~~recent ~~fleet~~contract ~~maintenance;~~award to support the Afghanistan Ministry of Defense and ~~units~~increases ~~delivered~~on orour ~~produced~~WPPS programs, ~~such~~which asare ~~aircraft~~expected ~~for~~to ~~which~~be ~~modification~~partially ~~has~~offset ~~been~~by ~~completed~~reductions to our CivPol program. ~~"Input measures"~~Future ~~can~~revenue ~~include~~may aalso ~~cost-~~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-~~cost~~compete ~~method,~~which ~~such~~we asexpect could occur in the summer or fall of 2010. See our discussion above in “Notable Fiscal Year 2010 Developments” for ~~procurement~~further details regarding the re-~~related~~competition ~~services~~of this contract.

Logistics: Revenue on ~~fixed-price~~of ~~construction~~$586.8 million orincreased ~~production-type~~$582.1 million, ~~contracts~~primarily isdue ~~recognized~~to onincreases ~~the~~from ~~basis of~~ the ~~estimated~~ramp-up ~~percentage~~ of ~~completion.~~our ~~Progress~~task ~~towards completion is~~orders ~~typically measured based~~ on ~~achievement~~our ofLOGCAP ~~specified~~IV ~~contract milestones, when available, or based on costs incurred as a proportion of estimated total costs~~program. ~~Cost~~We ofexpect ~~sales~~significant isrevenue ~~based~~growth onin ~~actual~~fiscal ~~costs incurred~~year ~~to date~~2011, ~~and~~primarily ~~revenues~~due ~~are recorded in an amount equal~~ to ~~costs~~a ~~incurred~~full ~~plus~~year ~~the~~of ~~estimated~~operations ~~gross profit based~~ on the ~~percentage-of-completion.~~current ~~Gross~~task ~~profit~~orders ~~for~~on ~~any period equals total expected revenues less total expected costs, multiplied by~~ the ~~percentage-complete~~LOGCAP atIV ~~the end of the period in question, less gross profit recognized in prior periods~~program.

~~Cost-reimbursement type~~Operations & ~~contracts~~Development: ~~can~~Revenue beof ~~cost~~$322.8 million ~~plus~~decreased ~~fixed fee~~$24.7 million, orprimarily ~~cost~~due ~~plus~~to ~~award~~the ~~fee.~~termination ~~Revenue~~of ~~recognition~~an airport ~~for~~construction ~~these two~~ contract ~~types~~in ~~is very similar. In both cases~~Africa, ~~revenue is~~which ~~based~~occurred onin ~~actual~~the ~~direct~~first ~~cost~~quarter ~~plus~~of ~~DCAA-approved~~fiscal ~~indirect~~year ~~rates.~~2009, Inoffset ~~the~~by ~~case~~increased ofservice ~~cost~~levels ~~plus~~in ~~fixed~~our ~~fee,~~AFRICAP/Africa ~~the~~Peacekeeping ~~fixed~~program. ~~fee~~Revenue isrelated ~~recognized~~to ~~based~~our onAfghanistan ~~the~~construction ~~ratio~~was offlat. ~~the~~We ~~fixed~~expect fiscal ~~fee~~year ~~for~~2011 ~~the~~revenue ~~contract~~related to ~~the~~ ~~total~~our ~~estimated~~Afghanistan ~~cost~~construction ofto ~~the~~decline ~~contract.~~as In the ~~case~~remaining ofprojects ~~cost~~are ~~plus~~expected ~~award~~to ~~fee~~be ~~contracts,~~completed in the ~~fee~~first ishalf ~~made up~~ of ~~two~~fiscal ~~components,~~year ~~base fee and award fee~~2011. ~~Base~~We ~~fee~~do isnot ~~recognized~~expect into ~~the~~bid ~~same manner as the fee~~ on ~~cost~~any ~~plus~~similar fixed-price ~~fee~~ contracts. ~~Award~~in ~~fees~~Afghanistan without ~~for~~revised ~~new~~terms ~~contracts~~and ~~that~~conditions, ~~lack~~which ~~specific~~may ~~experience~~impact ~~are~~future ~~included~~revenue in ~~total~~this ~~expected~~service ~~revenues~~offering ~~based~~by onlimiting ~~an average of~~ the ~~last~~construction ~~two~~opportunities ~~award~~available ~~fee~~to ~~periods or award experience for similar contracts~~us.

56Intelligence Training and Solutions: Revenue of $13.0 million represents Phoenix revenue from October 19, 2009 through April 2, 2010. We expect future increases in revenue as we look to leverage our investment in this service offering through the pursuit of new contracts and the benefit of a full year of operations.

~~The completed~~Operating ~~contract~~Income — ~~method~~Operating isincome ~~sometimes~~of ~~used~~$74.4 million for ~~short~~fiscal ~~duration~~year ~~projects~~2010 ~~when~~increased $24.8 million, or 50.0%, as compared with the ~~results~~fiscal ofyear ~~operations~~2009. ~~would~~Fiscal ~~not~~year ~~vary~~2010 ~~materially~~results ~~from~~were ~~those~~positively ~~resulting~~affected ~~from~~by ~~use~~a $10.0 million reversal of legal reserve related to the ~~percentage-of-completion~~ ~~method~~WWNS orissue ~~when~~(see ~~reliable~~Note ~~estimates~~8 ~~cannot~~to beour ~~supported~~consolidated financial statements for ~~percentage~~additional discussion). Also contributing to the increase was an expansion in services on our LOGCAP IV Program, WPPS programs in Iraq and Pakistan and our MNSTC-ofI program, and non-~~completion~~recurring ~~method~~revenue ~~recognition~~of $5.8 million ~~Until~~on ~~complete~~our WPPS program. Additionally, ~~project~~our Afghanistan ~~costs~~Construction ~~are~~programs ~~maintained~~incurred lower fiscal year 2010 losses as compared to fiscal year 2009. Partially offsetting this increase was lower profitability on our CivPol program as a result of the final close out of several firm fixed-price task orders during the second quarter of fiscal year 2009 and the reduction in ~~work~~services in ~~progress~~Iraq. We expect GSDS operating income in fiscal year 2011 to benefit from a full year of operations on the current LOGCAP IV task orders including the recognition of award fees, less of a ~~component~~loss on Afghanistan construction, with stable contributions from the rest of ~~inventory~~our contract mix.

~~Contract costs~~36 on U.S. government contracts, including indirect costs, are subject to audit and adjustment by negotiations between the Company and government representatives. Substantially all of the Company's indirect contract costs have been agreed upon through 2004. Contract revenues on U.S. government contracts have been recorded in amounts that are expected to be realized upon final settlement.

OtherTable Contracts – The Company's contracts with non-federal government customers are predominantly multiple- element. Multiple-element arrangements involve multiple obligations in various combinations to deliver products, perform services, grant licenses or other rights, or take certain actions. The Company evaluates 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. 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. Contents

~~Other contracts~~Global ~~may~~Platform ~~include~~Support ~~software~~Solutions and software related deliverables, construction contracts, and services with related equipment and materials. The same pricing mechanisms found in federal government contracts are found in other contracts.

The Company applies the guidance in FASB Statement of Position ("SOP") 97-2, "Software Revenue Recognition," to its software and software related deliverables, SOP 81-1 "Accounting for Performance of Construction-Type and Certain Production-Type Contracts" to its construction contracts, and U.S. Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition in Financial Statements" ("SAB No. 104"), and other transaction-specific accounting literature to deliverables related to non-federal government services, equipment and materials.


	Fiscal Years Ended				Change
	April 2, 2010		April 3, 2009		Change
	(Amounts in thousands)
Revenue	$	1,213,666	$	1,311,959	(98,293	)
Operating income	$	90,584	$	98,702	(8,118	)

~~Cash~~Revenue — ~~and~~Revenue ~~cash~~for ~~equivalents~~ fiscal year 2010 decreased $98.3 million, or 7.5%, as compared to fiscal year 2009. The decrease primarily resulted from the following:

~~For~~Aviation ~~purposes~~Maintenance & Support: Revenue of ~~reporting~~$429.2 ~~cash~~million ~~and~~decreased ~~cash~~$98.4 million, ~~equivalents~~or 18.7%, ~~the~~in ~~Company~~fiscal ~~considers~~year ~~all~~2010 ~~investments~~as compared ~~purchased~~to ~~with~~fiscal anyear ~~original~~2009. ~~maturity~~The decrease was primarily driven by a decline in CFT programs, which occurred due to the completion of ~~three~~several ~~months~~CFT ortask ~~less~~orders, for which we did not win the re-competes due to additional competitors in this service space bidding what we believe to be ~~cash~~at zero or negative margin levels. While this current competitive environment has put downward pressure on fiscal year 2010 revenue, we do not believe the current situation is sustainable and will not limit our ~~equivalents~~long-term opportunities under the CFT program. This decline was partially offset by our new contract to provide aircraft maintenance support services at Sheppard Air force Base.

~~Restricted~~Counter-Drug ~~cash~~ and Law Enforcement Aviation: Revenue of $333.5 million increased $32.8 million, or 10.9%, in fiscal year 2010 as compared to fiscal year 2009, primarily due to an increase in INL revenue in Afghanistan and Iraq resulting from new task orders, including Iraq air transportation services, which began in the third quarter of fiscal year 2011. This increase was offset by non-recurring fiscal 2009 equipment sales and construction work and scope reductions in Colombia. We expect fiscal year 2011 revenue to increase as compared to fiscal year 2010, driven by a full year of air operations in Iraq and new business.

~~Restricted~~Fleet ~~cash~~Management: ~~represents~~Revenue ~~cash~~of ~~restricted~~$309.5 bymillion adecreased ~~certain~~$23.4 million, ~~contract~~or 7.0%, in ~~which~~fiscal ~~advance~~year ~~payments~~2010 ~~are~~as ~~not~~compared ~~available~~to ~~for~~fiscal year ~~use~~2009, ~~except~~primarily due to ~~pay~~a ~~specified~~decline ~~costs~~in ~~and~~LCCS ~~vendors~~primarily ~~for work~~due ~~performed~~to onnonrecurring revenue in fiscal year 2009 related to additional elective services requested by the ~~specific~~customer ~~contract~~and cost-reimbursable support of the war on terror activities.

~~Use~~Land Systems: Revenue of ~~Estimates~~ $141.5 million decreased $9.5 million, or 6.3%, for the fiscal year 2010 as compared to fiscal year 2009, primarily due to scope decreases on our General Maintenance Corps program, the completion of the APS-3 program, and non-recurring threat systems management work. Partially offsetting this decline was increased services associated with the MRAP program. We expect revenue to decline on the existing Land Systems programs, primarily due to the adjusted rate structure that went into effect on a phase-in basis in January 2010 on the MRAP program and the loss of the APS-3 program.

~~The~~Operating ~~preparation~~Income — Operating income of ~~financial~~$90.6 million ~~statements~~decreased in$8.1 million, ~~conformity~~or ~~with~~8.2%, ~~generally~~for ~~accepted~~fiscal ~~accounting~~year ~~principles~~2010 ~~("GAAP")~~as compared ~~requires~~to ~~management~~fiscal year 2009. This was primarily due to ~~make~~declines ~~estimates~~on ~~and~~the ~~assumptions that~~CFT ~~affect~~programs due to the ~~amounts~~completion ~~reported~~of inseveral task orders, for which we did not win the ~~financial~~re-competes ~~statements~~due to additional competitors in this service space and ~~accompanying~~lower ~~notes~~rates on new business. ~~Management~~This ~~evaluates~~was ~~these~~partially ~~estimates~~offset ~~and~~by ~~assumptions~~increased margins on anthe ~~ongoing~~MRAP ~~basis~~program driven by higher revenue and better cost management in several key aviation programs, including ~~but~~our ~~not~~Life ~~limited~~Cycle ~~to,~~Contractor ~~those~~Support & INL programs. We expect ~~relating~~operating income to ~~allowances~~benefit ~~for~~from ~~doubtful~~continued ~~accounts,~~cost ~~fair~~controls ~~value~~implemented ~~and~~throughout ~~impairment~~our ofprograms ~~intangible~~offset ~~assets~~by continued margin pressure on CFT and ~~goodwill,~~expected ~~income~~declines ~~taxes,~~in ~~profitability~~margins on ~~contracts,~~the ~~anticipated~~MRAP ~~contract~~program ~~modifications,~~as ~~contingencies and~~a ~~litigation.~~result ~~Actual~~of ~~results~~a ~~could~~new ~~differ~~rate ~~from~~structure ~~those~~that ~~estimates~~is in the process of being phased in.

~~Allowance~~Global ~~for~~Linguist ~~Doubtful~~Solutions ~~Accounts~~

The Company establishes 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 accounts, the financial 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 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.


	Fiscal Years Ended				Change
	April 2, 2010		April 3, 2009		Change
	(Amounts in thousands)
Revenue	$	734,086	$	709,132	24,954
Operating income	$	44,906	$	39,729	5,177

57Revenue — Revenue of $734.1 million increased $25.0 million, or 3.5%, in fiscal year 2010 as compared to fiscal year 2009. GLS revenue in fiscal year 2010 benefited from higher award fees as a result of improved performance and a higher average number of linguists as compared to fiscal year 2009, which was impacted by the ramp up period during the first quarter of fiscal year 2009. This increase was partially offset by the impact of a contract modification for Option Year 1 on the INSCOM contract agreed to in the third quarter of fiscal year 2010. Additionally, our customer exercised the December 2009 through June 2010 option and on June 7, 2010, we received notice to proceed on the next six-month option spanning June 2010 through December 2010.

~~Property~~37 ~~and Equipment~~

TheTable cost of property and equipment, less applicable residual values, is depreciated using the straight-line method. Depreciation commences when the specific asset is complete, installed and ready for normal use. As part of the purchase accounting, which resulted from the acquisition, all fixed 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: Contents

Computer and related equipment		3 to 5 years
Furniture and other equipment		2 to 10 years
Leasehold improvements		Shorter of lease term or useful life

We expect fiscal year 2011 revenue to decrease due to the continued drawdown of troops in Iraq.

~~Impairment~~Operating income — Operating income of ~~Long-Lived~~$44.9 million ~~Assets~~increased $5.2 million, ~~including~~or ~~Amortized~~13.0% ~~Intangibles~~ in fiscal year 2010 as compared to fiscal year 2009. This increase was primarily due to a full twelve months of performance in fiscal year 2010, as compared to fiscal year 2009, in which we had continued transition efforts associated with the ramp up of the contract during the first quarter of that fiscal year. The increase was also supported by higher award fees earned during the period, partially offset by the impact of the modification on the INSCOM contract. We expect fiscal year 2011 operating income to decrease due to the drawdown of troops in Iraq. Operating income earned by GLS benefits net income attributable to DynCorp International LLC by our 51% ownership of the joint venture.

~~Values~~Fiscal ofYear ~~customer-related~~Ended ~~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~~April 3, ~~including~~2009 ~~the~~to ~~probability~~Fiscal ofYear ~~expected~~Ended ~~future contract renewals and sales~~March 28, ~~less~~2008 ~~a cost-of-capital charge, all of which was discounted to present value.~~

~~The Company~~Consolidated ~~evaluates~~Results ~~the carrying value~~ of ~~long-lived~~Operations 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.

~~During 2007~~The following table sets forth, for the ~~Company~~periods ~~recognized~~indicated, anour ~~impairment~~consolidated results of ~~approximately~~operations, ~~$0.6 million~~both ~~associated~~in ~~with~~dollars aand ~~customer-related~~as ~~intangible~~a ~~due~~percentage toof revenue. ~~the~~The ~~loss~~presentation ofhas abeen ~~contract~~modified into ~~Saudi~~incorporate ~~Arabia.~~the Asnew ~~of March 30,~~rules ~~2007,~~regarding ~~management~~presentation ~~believes~~of ~~there~~net ~~have~~income ~~been~~and nononcontrolling ~~other~~interests ~~events~~in oraccordance ~~circumstances~~with ~~that~~Financial ~~would~~Accounting ~~indicate~~Standards anCodification ~~impairment~~(“ASC”) ofASC ~~long-lived~~810 ~~assets~~— Consolidation.

Indefinite Lived Assets


	Fiscal Years Ended
	April 3, 2009					March 28, 2008
	(Amounts in thousands)
Revenue	$	3,101,093		100.0	%	$	2,139,761		100.0	%
Cost of services		(2,768,962	)	(89.3	)%		(1,859,666	)	(86.9	)%
Selling, general and administrative expenses		(103,583	)	(3.3	)%		(117,919	)	(5.5	)%
Depreciation and amortization expense		(40,557	)	(1.3	)%		(42,173	)	(2.0	)%

Operating income		187,991		6.1	%		120,003		5.6	%
Interest expense		(58,782	)	(1.9	)%		(55,374	)	(2.6	)%
Loss on early extinguishment of debt, net		(4,131	)	(0.1	)%		—		0.0	%
Earnings from affiliates		5,223		0.2	%		4,758		0.2	%
Interest income		2,195		0.1	%		3,062		0.1	%
Other income, net		145		0.0	%		199		0.0	%

Income before taxes		132,641		4.3	%		72,648		3.4	%
Provision for income taxes		(41,995	)	(1.4	)%		(27,999	)	(1.3	)%

Net Income		90,646		2.9	%		44,649		2.1	%
Noncontrolling interests		(20,876	)	(0.7	)%		3,306		0.2	%

Net income attributable to DynCorp International LLC	$	69,770		2.2	%	$	47,955		2.2	%

~~Indefinite-lived~~Revenue ~~assets,~~— ~~including~~Revenue ~~goodwill~~for ~~and~~fiscal ~~tradename,~~year ~~are~~2009 ~~not~~increased ~~amortized but are subject to an annual impairment test~~$961. ~~The first step of the impairment test~~3 million, ~~used~~ toor ~~identify potential impairment~~45.0%, ~~compares~~as ~~the~~compared ~~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~~to ~~unit~~fiscal ~~exceeds~~year ~~its carrying amount~~2008, ~~indefinite-lived~~reflecting ~~assets~~increased ofrevenue ~~the~~in ~~reporting~~all ~~unit~~operating ~~are~~segments. ~~not~~The ~~considered impaired~~increase, ~~and~~more ~~the~~fully ~~second~~described ~~step~~in of the ~~impairment~~results ~~test~~by ~~is unnecessary. If the carrying amount of a reporting unit exceeds its fair value~~segment, ~~the~~is ~~second~~principally ~~step~~due ~~of the impairment test shall be performed~~ to ~~measure~~growth ~~the~~from ~~amount~~new ofcontracts, ~~the~~in ~~impairment loss~~particular, ~~if any. The Company performs~~ the ~~annual~~INSCOM ~~test for impairment as of the end of February of each fiscal year~~contract. ~~Based on the results of these tests, no impairment losses were identified.~~

~~Income~~Cost ~~Taxes~~ of 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 2009 increased $909.3 million as compared to fiscal year 2008, primarily the result of the ramp up of the INSCOM contract. As a percentage of revenue, cost of services increased to 89.3% of revenue in fiscal year 2009 from 86.9% of revenue in fiscal year 2008. This was primarily a result of a change in contract mix as we earned more revenue from cost-reimbursement contracts than from firm fixed-price contracts, including the INSCOM contract and changes in portions of the CivPol contract driving this shift. In addition to our change in contract mix, cost overruns by our Afghanistan construction contracts, as further described below, also contributed to higher cost of services as a percentage of revenue in fiscal year 2009 compared to fiscal year 2008.

~~The~~Selling, ~~Company~~general ~~determines~~and ~~the~~administrative ~~provision~~expenses ~~for~~(“SG&A”) ~~income~~— ~~taxes~~SG&A ~~using~~primarily ~~the~~relates ~~asset~~to functions such as management, legal, finance, accounting, contracts and ~~liability~~administration, ~~approach~~human resources, management information systems, purchasing and business development. ~~Under~~SG&A ~~this~~for ~~approach~~fiscal year 2009 decreased $14.3 million, ~~deferred~~or ~~income~~12.2%, ~~taxes~~compared ~~represent~~to ~~the~~fiscal ~~expected~~year ~~future~~2008. ~~tax~~SG&A ~~consequences~~decreased ofprimarily ~~temporary~~as ~~differences~~a ~~between~~result ~~the~~of ~~carrying~~lean ~~amounts~~infrastructure ~~and~~initiatives, ~~tax~~primarily ~~basis~~through ofpersonnel ~~assets~~reductions and ~~liabilities.~~process ~~The~~efficiency ~~Company~~implementations ~~records~~focused aon ~~valuation~~controlling ~~allowance~~SG&A tocosts, ~~reduce~~offset ~~deferred~~by ~~tax~~approximately ~~assets~~$5.0 million ~~when~~in ~~uncertainty~~severance ~~regarding~~costs, ~~their~~including ~~reliability~~severance ~~exists~~costs from the involuntary termination of our former CEO. Fiscal year 2009 SG&A compared to fiscal year 2008

~~Equity-Based~~38 ~~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 10 for further discussion on equity-based compensation. Contents

58 was also positively impacted by non-recurring bid and proposal costs associated with the INSCOM contract which were incurred in fiscal year 2008.

~~Fair~~Interest ~~Values~~expense — Interest expense for fiscal year 2009 increased by $3.4 million, or 6.2%, as compared to fiscal year 2008. The increase in interest expense was primarily due to a higher average outstanding debt balance and higher average interest rates. In addition to the change in interest expense, deferred financing fees associated with our prior debt were also written-off. The impact of ~~Financial~~this ~~Instruments~~ write-off is separately disclosed as Loss on early extinguishment of debt in our consolidated statements of income.

~~Fair~~Income ~~values~~tax ofexpense ~~financial~~— ~~instruments~~Our ~~are~~effective ~~estimated~~tax byrate ~~the~~of ~~Company~~31.7% ~~using~~for ~~available~~fiscal ~~market~~year ~~information~~2009 ~~and~~decreased ~~other~~from ~~valuation methods~~38.5% ~~Values~~for ~~are~~fiscal ~~based~~year on2008. ~~available~~Our ~~market~~effective ~~quotes~~tax orrate ~~estimates~~was ~~using~~impacted aby ~~discounted~~the ~~cash~~tax ~~flow~~treatment ~~approach~~of ~~based~~our onGLS ~~the~~and ~~interest~~DIFZ ~~rates~~joint ~~currently~~ventures, ~~available~~which ~~for~~are ~~similar~~consolidated ~~instruments.~~for ~~The~~financial ~~fair~~reporting ~~values~~purposes ofbut ~~financial~~are ~~instruments~~not consolidated for ~~which~~tax ~~estimated fair~~purposes, ~~value~~as ~~amounts~~they are ~~not~~taxed ~~specifically~~as ~~presented~~partnerships ~~are~~under ~~estimated to approximate~~ the ~~related~~Internal ~~recorded values~~Revenue Code.

~~Currency~~Noncontrolling ~~Translation~~ interests — Noncontrolling interests reflect the impact of our joint venture partners’ interest in our consolidated joint ventures, GLS and DIFZ. For fiscal year 2009, noncontrolling interests for GLS and DIFZ was $18.5 million and $2.4 million, respectively. In fiscal year 2008, noncontrolling interest for GLS was additive to our net income attributable to DynCorp International LLC, as GLS was operating at a net loss. There was no noncontrolling interest related to DIFZ, as it was a wholly owned subsidiary during fiscal year 2008.

~~The~~Impact ~~assets and liabilities~~ of ~~the~~our ~~Company's~~Afghanistan ~~subsidiaries~~Construction ~~outside~~Contracts ~~the~~— ~~U.S.~~For ~~are~~fiscal ~~translated~~year ~~into~~2009, ~~U.S.~~revenue ~~dollars~~from atour ~~the~~Afghanistan ~~rates~~construction ofcontracts was ~~exchange~~$71.2 million, inas ~~effect~~compared atto ~~the balance sheet dates~~$18.0 million ~~Income~~for ~~and~~fiscal ~~expense~~year ~~items~~2008. ~~are~~Our ~~translated~~Afghanistan atconstruction ~~the~~contracts ~~average~~encountered ~~exchange~~operational ~~rates~~difficulties ~~prevailing~~ during ~~the~~fiscal ~~period.~~year ~~Gains~~2009, ~~and~~which ~~losses~~resulted ~~resulting~~in ~~from~~higher ~~currency~~non-reimbursable ~~transactions~~delivery ~~are~~costs ~~recognized~~and contractual ~~currently~~milestone indelays. ~~income~~As ~~and those~~a ~~resulting~~result, ~~from~~we ~~translation~~encountered losses of ~~financial~~approximately ~~statements~~$40.5 ~~are~~million ~~included~~during inthe ~~accumulated~~fiscal ~~other~~year ~~comprehensive~~associated ~~income~~with these projects.

~~Industry~~Results ~~Segments~~ by Segment

The ~~Company's~~following ~~operations~~table ~~are~~sets ~~aligned~~forth ~~into~~the ~~two~~revenue ~~divisions,~~and ~~each~~operating ofincome ~~which~~for ~~constitutes~~the aGSDS, ~~reporting~~GPSS ~~segment:~~and ~~Government~~GLS ~~Services~~operating ~~("GS")~~segments ~~and~~for ~~Maintenance~~fiscal ~~and~~year ~~Technical~~2009, as ~~Support~~compared ~~Services~~to ~~("MTSS")~~fiscal year 2008. The presentation has been recast to conform to the fiscal year 2010 segment structure.

~~Reclassifications~~ Global Stabilization & Development Solutions

Certain prior year amounts have been reclassified to conform to the current year presentation.


	Fiscal Years Ended				Change
	April 3, 2009		March 28, 2008		Change
	(Amounts in thousands)
Revenue	$	1,085,229	$	972,964	$	112,265
Operating income	$	49,560	$	94,686	$	(45,126	)

~~Recent~~Revenue ~~Accounting~~— Revenue ~~Pronouncements~~ for fiscal year 2009 increased $112.3 million, or 11.5%, as compared to fiscal year 2008. The increase primarily resulted from the following:

~~In February~~Training ~~2007,~~& ~~the~~Mentoring: ~~FASB~~Revenue ~~issued~~of ~~SFAS~~$732.3 Nomillion increased $45.8 ~~159~~million, ~~"The~~or ~~Fair~~6.7%, ~~Value~~primarily ~~Option~~due ~~for~~to ~~Financial~~increases ~~Assets~~in ~~and~~our ~~Financial~~CivPol ~~Liabilities",~~security ~~which~~services ~~permits~~in anIraq, ~~entity~~Palestine, toLiberia ~~measure~~and ~~certain~~Haiti, ~~financial~~offset ~~assets~~by ~~and~~a ~~financial~~decline ~~liabilities~~in atCivPol ~~fair~~security ~~value.~~services ~~Under~~in ~~SFAS No~~Afghanistan. ~~159,~~ ~~entities~~Revenue ~~that~~from ~~elect~~our ~~the~~CivPol ~~fair~~services ~~value option~~in ~~will~~Iraq ~~report~~increased ~~unrealized~~$31.0 ~~gains~~million, ~~and~~primarily ~~losses~~due into ~~earnings~~higher atpersonnel ~~each~~levels. ~~subsequent~~As ~~reporting~~a ~~date.~~result ~~The~~of ~~fair~~new contracts ~~value~~started ~~option~~in ~~may~~early befiscal ~~elected~~year on2009, ~~an instrument-by-instrument~~we ~~basis,~~provided ~~with~~civilian apolice ~~few~~and ~~exceptions,~~security asservices ~~long~~in asPalestine, itLiberia isand ~~applied~~Haiti, towhich ~~the~~contributed ~~instrument~~$24.8 million, in$4.4 million ~~its~~and ~~entirety~~$3.6 million ~~The~~in ~~fair~~increased ~~value~~revenue ~~option~~in ~~election~~fiscal isyear ~~irrevocable~~2009, respectively. ~~unless~~These aincreases ~~new election~~were ~~date~~partially ~~occurs.~~offset ~~SFAS~~by ~~No. 159~~a ~~establishes~~decline ~~presentation~~in ~~and~~CivPol ~~disclosure~~services ~~requirements~~in toAfghanistan ~~help~~of ~~financial~~$31.2 ~~statement~~million, ~~users~~which ~~understand~~was ~~the~~a ~~effect~~result of ~~the~~fewer ~~entity's~~supplies ~~election~~and onequipment ~~its~~sales ~~earnings~~to ~~but~~the ~~does not~~customer ~~eliminate~~during ~~disclosure~~fiscal ~~requirements~~year of2009, ~~other~~as ~~accounting~~compared ~~standards.~~to ~~Assets~~fiscal ~~and~~year ~~liabilities~~2008, combined ~~that~~with ~~are~~a ~~measured~~shift atfrom ~~fair~~a ~~value~~fixed-price ~~must~~contract bestructure ~~displayed~~in onfiscal ~~the~~year ~~face~~2008 ofto ~~the~~a ~~balance~~cost-reimbursement ~~sheet.~~contract ~~SFAS~~structure Noin fiscal year 2009. ~~159~~ ~~is effective~~Also ascontributing ofto the ~~beginning~~increase ofwas the ~~first~~increase ~~fiscal~~in ~~year~~WPPS ~~that~~services ~~begins~~in ~~after~~Iraq ~~November 15~~and Pakistan, ~~2007.~~which ~~SFAS~~increased by Noa combined $8. ~~159~~9 ~~requires~~million ~~prospective~~and ~~application.~~the ~~The~~launch ~~Company~~our ~~does~~MNSTC-I ~~not~~program ~~expect~~in tofiscal ~~elect~~year ~~the~~2009, ~~fair value~~which ~~option~~generated ~~for~~$6.1 ~~any~~million of ~~its~~revenue. ~~assets~~Partially ~~and~~offsetting ~~financial~~this ~~liabilities~~increase ~~not~~was ~~already~~reductions ~~measured~~in atWPPS ~~fair~~services ~~value~~in ~~under~~Bosnia, ~~other~~which ~~accounting~~decreased ~~literature~~by $2.2 million.

~~In September 2006,~~Logistics: ~~the~~Revenue ~~FASB~~of ~~issued SFAS No~~$4. ~~158,~~7 ~~"Employers'~~million ~~Accounting~~was ~~for Defined Benefit Pension and Other Post-retirement Plans". Among other items, SFAS No. 158 requires recognition of~~ the ~~over-funded~~result ~~or under-funded status~~ of ~~an entity's defined benefit postretirement plan as an asset or liability in~~ the ~~financial~~LOGCAP ~~statements,~~IV ~~the~~program ~~measurement of defined benefit post-retirement plan assets and obligations~~ as ofwork ~~the~~began ~~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,~~2009 ~~2007. The adoption of SFAS No. 158 did not have an impact~~ on ~~the~~awarded ~~Company's~~task ~~consolidated~~orders ~~financial position, results of operations and cash flows~~in Kuwait.

~~In September~~Operations ~~2006,~~& ~~the~~Development: ~~FASB~~Revenue ~~issued~~of ~~SFAS No~~$347. ~~157,~~6 ~~"Fair~~million ~~Value~~increased ~~Measurements."~~by ~~SFAS No~~$62.3 ~~157 defines fair value~~million, ~~establishes~~ aor ~~framework for measuring fair value under GAAP and expands disclosures about fair value measurements~~21. ~~This statement does not require any new fair value measurements; rather~~9%, itprimarily ~~applies~~due ~~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~~expansion of ~~the~~services ~~fiscal year~~ in ~~which this~~the ~~statement~~Philippines isand ~~initially~~continued ~~applied,~~progress ~~with~~on ~~any~~our ~~transition~~Afghanistan ~~adjustment~~construction ~~recognized as a cumulative-effect adjustment to the opening balance of retained earnings~~projects. ~~This~~Revenue ~~statement~~also isbenefited ~~effective~~from ~~for~~our ~~financial statements~~support ~~issued for fiscal years beginning after November 15~~services, ~~2007,~~where ~~and~~we ~~interim~~provided ~~periods~~temporary ~~within~~housing ~~those~~in ~~fiscal~~response ~~years.~~to ~~The Company is currently evaluating~~ the ~~impact~~severe offlooding ~~adopting~~in ~~SFAS No. 157~~Iowa ~~on its consolidated financial statements.~~ during

5939

InTable September 2006, the SEC issued SAB No. 108 "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements," to address diversity in practice in quantifying financial statement misstatements. SAB No. 108 requires the Company to quantify misstatements based on their impact on each of its consolidated financial statements and related disclosures. SAB No. 108 is effective as of the end of fiscal 2007, allowing a one-time transitional cumulative effect adjustment to retained earnings as of April 1, 2006 for errors that were not previously deemed material, but are material under the guidance in SAB No. 108. The adoption of SAB No. 108 did not have a material impact on the Company's consolidated financial position, results of operations and cash flows. Contents

In ~~June 2006,~~ the ~~FASB~~summer ~~issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes – an interpretation~~ of ~~FASB Statement~~2008 ~~No. 109"~~and ~~("FIN 48").~~increased ~~FIN 48~~mediation ~~clarifies the accounting~~ and ~~reporting~~humanitarian ~~for~~services ~~income~~provided ~~taxes recognized~~ in ~~accordance with SFAS No~~Sudan. ~~109, "Accounting~~ ~~for~~These ~~Income Taxes."~~increases ~~This~~were ~~interpretation~~partially ~~prescribes~~offset by a ~~comprehensive~~decline ~~model~~in ~~for~~our ~~the~~Africa ~~financial~~Peacekeeping ~~statement recognition~~program, ~~measurement,~~primarily ~~presentation and~~a ~~disclosure~~ result of ~~uncertain~~reductions ~~tax positions taken or expected to be taken~~ in ~~income~~current ~~tax~~work ~~returns.~~levels ~~The~~within ~~requirements~~this ofprogram ~~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~~completion ~~quarter~~ of ~~fiscal~~the ~~year~~Forward ~~2008.~~Operating ~~The~~Locations ~~cumulative~~contract ~~effect~~and ofcontract ~~adopting~~termination ~~FIN 48~~for ~~will~~a beconstruction ~~recorded~~project in ~~retained~~ ~~earnings~~Nigeria. ~~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.~~

~~On May~~Operating Income — Operating income for fiscal year 2009 decreased $45.1 18million, ~~2006~~or 47.7%, ~~the~~as ~~State~~compared ofto ~~Texas~~fiscal ~~enacted~~year 2008, primarily due to declining margins in our CivPol program, losses on our Afghanistan construction programs and a ~~law~~decline ~~replacing~~in ~~the~~our ~~current~~Africa ~~franchise~~Peacekeeping ~~tax~~program, ~~with~~as a ~~new~~result ~~margin~~of ~~tax~~reductions ~~that~~in ~~will~~current gowork ~~into~~levels. ~~effect~~Operating onincome ~~January 1~~was also negatively impacted by certain non-reimbursable start up costs related to our new LOGCAP IV contract, ~~2008~~which was awarded in early fiscal year 2009. ~~The~~In ~~Company~~fiscal year 2009, LOGCAP IV did not contribute significantly to revenue but incurred costs associated with ~~estimates~~contract ~~that~~set-up and other overhead costs. These declines were partially offset by the ~~new~~successful ~~margin~~resolution ~~tax~~of ~~will~~approximately ~~not~~$10 ~~have~~million aof ~~significant~~prior ~~impact~~period billing matters on ~~tax~~CivPol, and a reduction in SG&A expense, orprimarily ~~deferred~~due ~~tax~~to ~~assets~~specific contract litigation expenses in fiscal year 2008 associated with the WWNS litigation and ~~liabilities~~from our lean infrastructure initiatives focused on controlling SG&A costs.

~~In May 2005,~~Global ~~the~~Platform ~~FASB~~Support ~~issued~~Solutions SFAS No. 154, "Accounting Changes and Error Corrections – a replacement of Accounting Principles Board ("APB") Opinion No. 20 and FASB Statement No. 3." SFAS No. 154 provides guidance on the accounting for, and reporting 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 a material impact on the Company's consolidated financial position, results of operations and cash flows.

Note 2—Acquisition and Related Transition Services Agreements

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