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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
  þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 001-34551
 Global Defense Technology & Systems, Inc.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    20-4477465(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)1501 Farm Credit Drive, Suite 2300McLean, VA
    
    22102-5011(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
703-738-2840
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Class
    
    Name of each exchange on which registeredCommon Stock $0.01 par value per share
    
    Nasdaq Stock Market
 Securities registered pursuant to Section 12(g) of the Act:
 o þ
 o þ
 þ  o
 o  o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ




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##### 



GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC
 PART IItem 1: Business
    
    
    1Item 1A: Risk Factors
    
    
    7Item 1B: Unresolved Staff Comments
    
    
    17Item 2: Properties
    
    
    17Item 3: Legal Proceedings
    
    
    17Item 4: Reserved
    
    
    17PART IIItem 5: Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    17Item 6: Selected Financial Data
    
    
    18Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 7A: Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 8: Financial Statements and Supplementary Data
    
    
    31Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    31Item 9A(T): Controls and Procedures
    
    
    31Item 9B: Other Information
    
    
    32Part IIIItem 10: Directors, Executive Officers and Corporate Governance
    
    
    32Item 11: Executive Compensation
    
    
    36Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    55Item 13: Certain Relationships and Related Transaction, and Director Independence
    
    
    57Item 14: Principal Accountant Fees and Services
    
    
    58Part IVItem 15: Exhibits, Financial Statement Schedules
    
    
    59Signatures
    
    
    62Exhibit 21Exhibit 23Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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PART I
 
 ITEM 1. BUSINESS
 Except as otherwise indicated, or as the context otherwise requires, the Company, GTEC,
we, us, and our refer to Global Defense Technology & Systems, Inc., a Delaware corporation,
and, where appropriate, its direct and indirect subsidiaries, Global Strategies Group (North
America) Inc., our operating company which we refer to as GNA, The Analysis Corp (TAC), GTEC
Assured IT, LLC (AIT) and GTEC Cyber Solutions, Inc.(CS).
 Note regarding forward-looking statements
    Our Company
   
    
    counterterrorism and intelligence analysis
 
    
    cyber security systems & operations
 
    
    data analysis and intelligence information sharing
 
    
    C4ISR and mission systems
 
    
    assured enterprise IT
 
    
    network design and management
 
    
    data center architectures
 
    
    force mobility, modernization, and survivability solutions
    1




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Our History and Organizational Structure
   Capabilities and Customer Solutions
  Capabilities
  
    
    Cyber Security Systems & Operations
    
    Intelligence Analysis
    
    Software Engineering
    
    Systems Engineering
    
    Mission System IT & Architectures
    
    Assured Enterprise IT
    
    Technology Development
    
    Engineering Design, Prototyping and Integration
 Cyber Security Systems & Operations
   2




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Intelligence Analysis
  Software Engineering
  Systems Engineering
  Mission Systems IT & Architectures
  Assured Enterprise IT
  Technology Development
  Engineering Design, Prototyping and Integration
   3




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Customer Solutions
  
    
    Counterterrorism, Intelligence, Cyber Security, and Command, Control and Decision
Support Solutions
    
    Highly Engineered Force Mobility and Modernization Solutions
 Counter-Terrorism, Intelligence, Cyber Security, and Command, Control and Decision Support
Solutions
 
    
    Watch-standing systems for U.S. government agencies.We provide IT specialists,
software developers and counter-terrorism subject matter experts to a number of agencies
in the U.S. government who maintain active terrorist watch lists and counter-terrorism
analytical centers. Our experts assist the government with the technical infrastructure
required for all-source strategic and tactical analysis. For the systems and tools we
design and develop, we also provide the experts to monitor multiple classified and
unclassified networks for potential terrorist-related threats, and to provide early
warning and threat notification to key government officials for rapid decision-making. We
also assist the government by facilitating the flow of critical information between
federal, state and local agencies. We believe our work contributes significantly to
closing the gaps between the collection and analysis of actionable intelligence.
 
    
    Management of a Software Development Center for a national security agency.We
perform custom application development, integration and various levels of analysis,
testing and validation.
 
    
    Critical cyber security solutions for the Intelligence Community.GTEC works with
the national intelligence community to develop and deploy next generation net-centric
mission solutions that collect, analyze and protect vital information in cyberspace. GTEC
works alongside U.S. government agencies and major defense and intelligence companies on
projects that require a nimble approach and fast turnaround for their mission-critical
needs. We pride ourselves on our high quality people, technical innovation, mission
expertise, and ingenuity in solving complex problems. GTEC supports the cyber security
systems & operations priorities of our clients by leveraging our core competencies in
systems engineering, network architecture, software development, intelligence analysis,
IT security and more.
 
    
    Analytical and information-sharing tools to integrate commercial off-the-shelf
software with government systems.For a prominent Intelligence Community customer, we
are currently deploying innovative analytical tools and specialists to facilitate faster
and more thorough analysis of threats, as well as cross-agency information sharing. We
integrate key data sources to explore relationships of interest. These findings can then
be shared among analysts in a collaborative work environment.
 
    
    Identity management solutions.We design solutions to enable clients to counter
the threat of terrorism on the Internet by analyzing the increased use of the web by
extremist organizations, with a focus on identifying and analyzing terrorist
communications and attack planning. Using our solution, analysts can identify, monitor
and assess the intent and capabilities of extremists via the Internet.
 
    
    Complex network and communications toolkits and solutions for the U.S. Navy and the
U.S. Coast Guard.These solutions include network topology design, data encryption
algorithm development, cross domain solution development, data visualization and high
assurance guard (HAG) development, which enables the transfer of classified and
unclassified data to and from multiple security enclaves (groups of machines pulled
together to protect networks from outside interference and attacks by forming secure
virtual subnets). Our solutions are applied to dynamic and heterogeneous voice, video and
data infrastructures for mission-critical systems and weapons platforms.
 
    
    Systems and tools to integrate, process and distribute data from diverse and
disparate sensors, equipment and information sources that allow decision-makers to
improve their situational awareness and decision making.Using proprietary tool kits
and systems, we have developed solutions such as WatchIT®, which integrates complex
sensor data with a geospatial overlay into a desktop command and control system. This
capability allows operators to intuitively manage a large array of sensor systems and
automates many of the manual tasks that the decision-maker must execute in a time of
crisis. In addition to WatchIT®, we have developed a plug-and-play architecture for
legacy and state-of-the-art C4ISR sensors. This architecture, called ResourceNet®,
provides a quick and easy application interface for any kind of sensor or network
appliance with a digital interface, greatly reducing the non-recurring costs for
sensor/device integration.
 
    
    Navigation and geospatial information systems to enhance maritime domain awareness.
For over 15 years we have designed and deployed computer-based navigation systems and
geospatial information systems that integrate data from multiple sensors in order to give
the U.S. Coast Guard and other maritime services real-time situational awareness of the
littoral waterways and port/harbor environments.
 Highly Engineered Force Mobility and Modernization Solutions
 
    
    Innovative tactical water purification and packaging systems that provide high
quality drinking water to U.S. troops in operational environments.Our tactical water
purification system (TWPS) is capable of purifying, storing and dispensing potable water
from fresh, brackish, sea and nuclear, biological and chemically contaminated waters. Our
water purification technology has also been extended to shower waste water reuse. This
initial design is also being extended to handle laundry
and other gray waters to provide a more general use. In addition to our systems for
purifying water, we have also developed a system to transport and to package drinking water
for users in the field, known as our mobile water packaging system (MWPS). We are currently
pursuing revenue opportunities for these water technologies.
  4




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
    
    Operational systems that support deployed military personnel over extended periods
in austere field environments.These systems include expeditionary field feeding units,
showers and laundry units to support personal hygiene. We also provide a complete,
self-contained expeditionary base camp system that provides billeting, feeding and
hygiene services for over 550 soldiers and support staff. We design units that are
entirely self-sufficient and environmentally-friendly.
 
    
    Transportable military medical systems.These systems include service-proven
Mobile Dental Units (MODENT), Chemical Protected Deployable Medical Units (CPDEPMED), and
Chemical Protected Expeditionary Waste Disposal Units to support personal hygiene for
mobile military hospitals.
 
    
    Command and control systems used for communications and mobile applications.We
have developed significant expertise in mobile systems integration of communications and
electronics equipment into platforms ranging from land vehicles to transportable
shelters.
 
    
    Technical, engineering, and software development support services.We have been
supporting the U.S. Army Aberdeen Test Center, Aberdeen Proving Ground continuously for
over 20 years, providing scientific and engineering support for the development of
instrumentation systems and test facilities. Our support has been enhanced with on-site
engineers and software developers. The emphasis has been quick response design and
development of instrumentation solutions to collect, process and display operational
characteristics associated with testing of military systems.
 Customers
   Department of Defense
    
    National Security Agencies   Space and Naval Warfare Systems Command
    
       Other Intelligence Community   Naval Research Laboratory (NRL)
    
       Department of Homeland   U.S. Army Aberdeen Test Center
    
       Department of Justice   U.S. Army Natick Soldiers Systems Center
    
       Transportation Security Agency   U.S. Army TACOM (Tank-Automotive and
Armaments Command)
    
       U.S. Coast Guard   Department of Defense Intelligence
Community
    
       Department of State   U.S. Air Force
    
       Federal Bureau of Investigation
 Contracts
     5




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Backlog
    Business Development
      Competition
   6




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
    
    Among large defense contractors, BAE Systems plc, The Boeing Company, General
Dynamics Corporation, ITT Corporation, L-3 Communications Holdings, Inc, Lockheed Martin
Corporation, Northrop Grumman Corporation, and SAIC, Inc.
 
    
    Among mid-tier technology services firms, CACI International Inc., ManTech
International Corporation, SRA International, Inc., and KEYW Corporation.
 Employees
  Financial Information about Geographic Areas
  Intellectual Property
  Research and Development
  Available Information
 www.gtec-inc.com
 www.sec.gov
 investors@gtec-inc.com
 
 ITEM 1A. RISK FACTORS
 You should carefully consider the risks and uncertainties described below together with
information included elsewhere in this annual report on Form 10-K and other documents we file with
the SEC, in your evaluation of our business and us. The risks and uncertainties described below are
those that we identified as material, but are not the only risks and uncertainties facing us. If
any of the events or developments described below occur, our business, financial condition or
results of operations could be negatively affected. In that case, the trading price of our common
stock could decline, and you could lose all or part of your investment in our common stock.
  7




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Risks Related to Our Business
 We depend on contracts with the U.S. government for substantially all of our revenue. If our
relationships with U.S. government agencies were harmed, our business, future revenue and growth
prospects would be adversely affected.
  
    
    the government ceases to do business with us, or significantly decreases the amount
of business it does with us;
 
    
    we were suspended or debarred from contracting with the U.S. government or a
significant government agency; or
 
    
    our reputation or relationship or that of our senior managers with the government
agencies with which we currently do business or seek to do business is impaired.
 U.S. government spending and mission priorities may change in a manner that adversely affects our
future revenue and limits our growth prospects.
  
    
    budgetary constraints affecting U.S. government spending generally, or specific
departments or agencies in particular, and changes in available funding;
 
    
    changes in U.S. government programs or requirements;
 
    
    U.S. government shutdowns (such as that which occurred during fiscal year 1996) and
other potential delays in the appropriations process;
 
    
    realignment of funding with changed federal government priorities, which may impact
the U.S. war efforts, including reductions in funding for in-theater missions; and
 
    
    curtailment of the U.S. governments outsourcing of mission-critical support and IT
services.
  We rely on a few large contracts for a significant portion of our revenue and net income. The
loss of any one or more of these contracts could cause a material decline in our operating
results.
   8




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We may lose money on some contracts if we do not accurately estimate the expense, time and
resources necessary to satisfy our contractual obligations.
  Contract Type
    
    2010
    
    
    2009
    
    
    2008Fixed-price
    
    
    55.6
    %
    
    
    59.0
    %
    
    
    58.8
    %Time-and-materials
    
    
    33.8
    %
    
    
    29.0
    %
    
    
    29.3
    %Cost-plus
    
    
    10.6
    %
    
    
    12.0
    %
    
    
    11.9
    %
      If we fail to comply with complex procurement laws and regulations, we could lose business and be
liable for various penalties or sanctions.
  
    
    the Federal Acquisition Regulation, which comprehensively regulates the formation,
administration and performance of federal government contracts;
 
    
    the Truth in Negotiations Act, which requires certification and disclosure of all
cost and pricing data in connection with contract negotiations;
 
    
    the Cost Accounting Standards and Cost Principles, which imposes accounting
requirements that govern our right to reimbursement under certain cost-based federal
government contracts; and
 
    
    laws, regulations and executive orders restricting the use and dissemination of
classified information and, under U.S. export control laws, the export of certain
products and technical data.
  
    
    termination of contracts;
 
    
    forfeiture of profits;
 
    
    cost associated with triggering of price reduction clauses;
 
    
    suspension of payments;
 
    
    fines; and
 
    
    suspension or debarment from doing business with federal government agencies.
   9




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Because we are under foreign ownership, control or influence (FOCI), and perform on U.S.
classified contracts, we are a party to a Security Control Agreement with the Department of
Defense and are subject to other requirements of the National Industrial Security Program
Operating Manual, which impose significant compliance obligations upon us. Our failure to comply
with these obligations could result in our not being able to continue performing under our U.S.
classified contracts, which would have a material adverse effect on our business.
   We derive most of our revenue from contracts awarded through a competitive bidding process. This
process can impose substantial costs upon us and we may lose revenue if we fail to compete
effectively.
  
    
    bidding on programs in advance of the completion of their design, which may result
in unforeseen technological difficulties and cost overruns;
 
    
    devoting substantial resources and managerial time and effort to preparing bids and
proposals for contracts that are not awarded to us, which may result in reduced
profitability;
 
    
    failing to accurately estimate the resources and cost structure that will be
required to service any contract we are awarded;
 
    
    incurring expense and delay due to a competitors protest or challenge of contract
awards made to us, including the risk that any such protest or challenge could result in
the resubmission of bids on modified specifications, or in the termination, reduction or
modification of the awarded contract, either of which may result in reduced
profitability;
 
    
    changes to client bidding practices or government reform of procurement practices,
which may alter the prescribed contract relating to contract vehicles, contract types and
consolidations; and
 
    
    changes in policy and goals by the government providing set-aside funds to small
businesses or disadvantaged businesses, and other socio-economic requirements in the
allocation of contracts.
  We face intense competition from many competitors that, among other things, have greater
resources than we do.
    10




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Our estimated contract backlog may not result in actual revenue.
  The loss of any member of our senior management could impair our relationships with federal
government clients and disrupt the management of our business.
  If we fail to attract and retain skilled employees, we might not be able to perform under our
contracts and our ability to maintain and grow our business could be limited.
  Internal system or service failures could disrupt our business and impair our ability to
effectively provide our products and services to our customers, which could damage our reputation
and adversely affect our revenue and profitability.
  Our quarterly operating results may fluctuate significantly as a result of factors outside our
control, which could cause the market price of our common stock to decline.
  
    
    fluctuations in revenue earned on government contracts;
 
    
    seasonal fluctuations in our staff utilization rates;
 
    
    commencement, completion or termination of contracts during any particular quarter;
 
    
    variable purchasing patterns of our customers;
 
    
    changes in contract requirements by our government agency customers, particularly
with respect to customer requirements for our expeditionary systems; and
 
    
    changes in presidential administrations and senior federal government officials
that affect the timing of technology procurement.
  11




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We will be liable for products and service failures to our customers.
  
    
    lose revenue due to adverse customer reaction;
 
    
    be required to provide additional services to a customer at no charge;
 
    
    receive negative publicity, which could damage our reputation and adversely affect
our ability to attract or retain customers; and
 
    
    suffer claims for substantial damages against us.
   Security breaches in classified government systems could adversely affect our business.
  Our employees or subcontractors may engage in misconduct or other improper activities, which
could cause us to lose contracts.
  Our business depends upon obtaining and maintaining required security clearances.
   12




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If our status as a smaller reporting company changes, Section 404(b) of the Sarbanes-Oxley Act of
2002 may require an independent registered public accounting firm to report on the effectiveness
of our internal control over financial reporting. Any delays or difficulty in satisfying these
requirements could adversely affect our future results of operations and our stock price.
   If our subcontractors or suppliers fail to perform their contractor obligations, our performance
and reputation as a prime contractor and our ability to obtain future business could suffer.
  Acquisitions could result in operating difficulties or other adverse consequences to our
business.
  
    
    we may not be able to identify suitable acquisition candidates at prices we
consider attractive;
 
    
    we may not be able to compete successfully for identified acquisition candidates,
complete acquisitions or accurately estimate the financial effect of acquisitions on our
business;
 
    
    future acquisitions may require us to issue common stock or spend significant cash,
resulting in dilution of ownership or additional debt leverage;
 
    
    we may have difficulty retaining an acquired companys key employees or customers;
 
    
    we may have difficulty integrating acquired businesses, resulting in unforeseen
difficulties, such as incompatible accounting, information management, or other control
systems;
 
    
    acquisitions may disrupt our business or distract our management from other
responsibilities; and
 
    
    as a result of an acquisition, we may need to record write-downs from future
impairments of intangible assets, which could reduce our future reported earnings.
  We have a substantial investment in recorded goodwill as a result of our acquisitions and changes
in future business conditions could cause this investment to become impaired, requiring
substantial write-downs that could reduce our net income.
   13




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We may be harmed by intellectual property infringement claims.
  
    
    pay substantial damages;
 
    
    cease selling and using products and services that incorporate the challenged
intellectual property;
 
    
    obtain a license or additional licenses from our vendors or third parties, which
may not be available on commercially reasonable terms or at all; and
 
    
    redesign our products and services that rely on the challenged intellectual
property, which may be very expensive or commercially impractical.
  We expect to incur debt in the future, which could substantially reduce our profitability, limit
our ability to pursue certain business opportunities, and reduce the value of your investment.
  
    
    our ability to obtain additional financing for working capital, capital
expenditures, product and service development, acquisitions, general corporate purposes,
and other purposes may be impaired;
 
    
    a substantial portion of our cash flow from operations could be dedicated to the
payment of the principal and interest on our debt;
 
    
    we are and may continue to be vulnerable to economic downturns and rises in
interest rates;
 
    
    our flexibility in planning for and reacting to changes in our business and the
marketplace may be limited; and
 
    
    we may be placed at a competitive disadvantage relative to other firms in our
industry.
 Our ability to grow will be limited if we cannot obtain additional capital.
  Our credit facility contains financial and operating covenants that limit our operations and
could lead to adverse consequences if we fail to comply.
  Risks Related to Our Industry
 Our U.S. government contracts may be terminated by the federal government at any time and, if we
do not replace terminated contracts, our operating results would be adversely affected.
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U.S. government contracts contain other provisions that may be unfavorable to contractors.
  
    
    reduce or modify contracts or subcontracts;
 
    
    cancel multi-year contracts and related orders if funds for contract performance
for any subsequent year become unavailable;
 
    
    claim rights in products and systems produced by us; and
 
    
    suspend or debar us from doing business with the U.S. government.
  The industry in which our largest beneficial stockholder operates is frequently subject to
government and media scrutiny which can harm our reputation and our business.
  A preference for minority-owned, small and small disadvantaged businesses could impact our
ability to be a prime contractor on certain government procurements.
  Unfavorable U.S. government audit results could subject us to a variety of penalties and
sanctions, and could harm our reputation and relationships with our clients.
   The U.S. government may revise its procurement or other practices in a manner adverse to us.
   15




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Additional Risks Related to Our Common Stock
 If our stock price fluctuates, you could lose a significant part of your investment.
  
    
    changes in stock market analysts recommendations regarding us, our competitors or
the industry in which we operate generally, or lack of analyst coverage of our common
stock;
 
    
    announcements by us or our competitors of significant contracts or task orders,
acquisitions or capital commitments;
 
    
    loss of one or more of our significant customers;
 
    
    changes in market valuations or earnings of our competitors;
 
    
    variations in quarterly operating results;
 
    
    availability of capital;
 
    
    general economic conditions;
 
    
    terrorist acts;
 
    
    military action related to international conflicts, wars or otherwise;
 
    
    adverse legislative or regulatory changes;
 
    
    departures of key personnel;
 
    
    future sales of our common stock; and
 
    
    investor perception of us and our industry.
  Our largest beneficial stockholder has significant influence over us, which could result in our
taking actions of which you or other stockholders do not approve.
  Sales of outstanding shares of our common stock into the market in the future could cause the
market price of our common stock to drop significantly.
  We do not intend to pay dividends.
   16




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ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
  
 ITEM 4. RESERVED
 
 PART II
 
 ITEM 5. MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED
STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  Closing Price(High-Low)Common Stock - Market Prices
    
    2010
    
    2009First Quarter
    
    $16.65  $11.74
    
    N/ASecond Quarter
    
    $15.65  $12.77
    
    N/AThird Quarter
    
    $14.00  $10.45
    
    N/AFourth Quarter
    
    $16.99  $12.85
    
    $16.46  $13.00Year ended December 31
    
    $16.99  $10.45
    
    $16.46  $13.00
   17




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Stock Performance Graph
  
 
 ITEM 6. SELECTED FINANCIAL DATA
  Basis of Presentation
      18




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Successor
    
    
    
    PredecessorPeriod
    
    
    
    PeriodFebruary 9 to
    
    
    
    April 1, 2006 toYear Ended December 31,
    
    
    December 31,
    
    
    
    February 8,(in thousands, except share and per share data)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Consolidated Statements of OperationsRevenue
    
    $
    232,669
    
    
    $
    212,845
    
    
    $
    189,426
    
    
    $
    134,818
    
    
    
    $
    123,124Operating costs and expensesCost of revenue
    
    
    192,806
    
    
    
    175,231
    
    
    
    156,271
    
    
    
    114,264
    
    
    
    
    105,644Selling, general and administrative expenses
    
    
    21,726
    
    
    
    24,861
    
    
    
    16,957
    
    
    
    13,202
    
    
    
    
    16,317Amortization of intangible assets
    
    
    3,754
    
    
    
    8,356
    
    
    
    8,841
    
    
    
    10,279
    
    
    
    
    72Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    2,447
    
    
    
    
    
    
    
    
    Total operating costs and expenses
    
    
    218,286
    
    
    
    208,448
    
    
    
    184,516
    
    
    
    137,745
    
    
    
    
    122,033Operating income (loss)
    
    
    14,383
    
    
    
    4,397
    
    
    
    4,910
    
    
    
    (2,927
    )
    
    
    
    1,091Other income (expense)Interest income
    
    
    12
    
    
    
    7
    
    
    
    40
    
    
    
    46
    
    
    
    
    270Interest expense
    
    
    (477
    )
    
    
    (1,849
    )
    
    
    (2,750
    )
    
    
    (3,594
    )
    
    
    
    (67
    )Income (loss) before income taxes
    
    
    13,918
    
    
    
    2,555
    
    
    
    2,200
    
    
    
    (6,475
    )
    
    
    
    1,294(Provision for)/benefit from income taxes
    
    
    (5,165
    )
    
    
    (1,286
    )
    
    
    (1,138
    )
    
    
    2,406
    
    
    
    
    (2,116
    )Net income (loss)
    
    $
    8,753
    
    
    $
    1,269
    
    
    $
    1,062
    
    
    $
    (4,069
    )
    
    
    $
    (822
    )Earnings (loss) per shareBasic (1)
    
    $
    0.97
    
    
    $
    0.20
    
    
    $
    0.18
    
    
    $
    (0.68
    )
    
    
    $
    (2.49
    )Diluted (1)
    
    $
    0.96
    
    
    $
    0.20
    
    
    $
    0.18
    
    
    $
    (0.68
    )
    
    
    $
    (2.49
    )Weighted average common shares outstandingBasic
    
    
    9,056,196
    
    
    
    6,341,079
    
    
    
    6,000,000
    
    
    
    6,000,000
    
    
    
    
    329,378Diluted
    
    
    9,156,879
    
    
    
    6,440,301
    
    
    
    6,000,000
    
    
    
    6,000,000
    
    
    
    
    329,378Successor
    
    
    
    PredecessorDecember 31,
    
    
    December 31,
    
    
    December 31,
    
    
    December 31,
    
    
    
    February 8,(in thousands)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    
    2007Consolidated Balance
Sheet DataCash and cash equivalents
    
    $
    566
    
    
    $
    7
    
    
    $
    1,422
    
    
    $
    279
    
    
    
    $
    20,869Working capital (2)
    
    
    51,676
    
    
    
    33,728
    
    
    
    18,054
    
    
    
    13,698
    
    
    
    
    16,095Total assets
    
    
    214,279
    
    
    
    112,511
    
    
    
    105,652
    
    
    
    112,537
    
    
    
    
    62,996Total debt (3)
    
    
    79,605
    
    
    
    3,686
    
    
    
    37,014
    
    
    
    43,692
    
    
    
    
    18,000Total stockholders equity
    
    
    95,703
    
    
    
    85,352
    
    
    
    43,129
    
    
    
    41,902
    
    
    
    
    5,131
 
 (1)
    
    See Note 14 to the notes to the consolidated financial statements contained within this
annual report on Form 10-K for an explanation of the method used to calculate basic and
diluted earnings (loss) per share.(2)
    
    Working capital is defined as current assets net of current liabilities, excluding loans from
affiliates and the current portion of bank loans.(3)
    
    Represents bank loans (including current maturities) and, prior to December 31, 2009, loans
from affiliates.  19




---



##### Table of Contents



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Basis of Presentation
     Overview
     20




---



##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Department of Defense
    
    
    71.1
    %
    
    
    75.0
    %
    
    
    74.2
    %National security agencies
    
    
    28.9
    %
    
    
    25.0
    %
    
    
    25.8
    %Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)TIS SegmentDepartment of Justicecounter-terrorism contract
    
    $
    26,465
    
    
    $
    27,657
    
    
    $
    26,508FMMS SegmentU.S. Army TACOM contract
    
    
    22,027
    
    
    
    45,763
    
    
    
    40,622U.S. Army Aberdeen Test Center contract
    
    
    16,188
    
    
    
    20,239
    
    
    
    23,628U.S. Army field feeding system contract
    
    
    36,598
    
    
    
    23,211
    
    
    
    15,065Total FMMS Segment
    
    $
    74,813
    
    
    $
    89,213
    
    
    $
    79,315Total
    
    $
    101,278
    
    
    $
    116,870
    
    
    $
    105,823As a percentage of total revenue
    
    
    43.5
    %
    
    
    54.9
    %
    
    
    55.9
    %
      21




---



##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Prime contract revenue
    
    
    82.7
    %
    
    
    87.5
    %
    
    
    82.0
    %Subcontract revenue
    
    
    17.3
    %
    
    
    12.5
    %
    
    
    18.0
    %Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Backlog
     As of December 31,2010
    
    
    2009
    
    
    2008(in thousands)TIS SegmentFunded
    
    $
    60,103
    
    
    $
    37,411
    
    
    $
    38,711Unfunded
    
    
    492,880
    
    
    
    417,721
    
    
    
    200,002Total
    
    $
    552,983
    
    
    $
    455,132
    
    
    $
    238,713FMMS SegmentFunded
    
    $
    101,815
    
    
    $
    65,658
    
    
    $
    77,145Unfunded
    
    
    136,140
    
    
    
    118,823
    
    
    
    160,542Total
    
    $
    237,955
    
    
    $
    184,481
    
    
    $
    237,687CompanyFunded
    
    $
    161,918
    
    
    $
    103,069
    
    
    $
    115,856Unfunded
    
    
    629,020
    
    
    
    536,544
    
    
    
    360,544Total Backlog
    
    $
    790,938
    
    
    $
    639,613
    
    
    $
    476,400
  Revenue
   22




---



##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Fixed-price
    
    
    55.6
    %
    
    
    59.0
    %
    
    
    58.8
    %Time-and-materials
    
    
    33.8
    %
    
    
    29.0
    %
    
    
    29.3
    %Cost-plus
    
    
    10.6
    %
    
    
    12.0
    %
    
    
    11.9
    %Total revenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
 Fixed-price contracts .
 Time-and-materials contracts
 Cost-plus contracts
  Operating Costs and Expenses
  Cost of revenue.
 Selling, general and administrative expenses.
 Amortization of intangible assets
 Impairment of intangible asset
  23




---



##### Table of Contents



Results of Operations
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)Revenue
    
    $
    232,669
    
    
    $
    212,845
    
    
    $
    189,426Operating costs and expensesCost of revenue
    
    
    192,806
    
    
    
    175,231
    
    
    
    156,271Selling, general and administrative
expenses
    
    
    21,726
    
    
    
    24,861
    
    
    
    16,957Amortization of intangible assets
    
    
    3,754
    
    
    
    8,356
    
    
    
    8,841Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    2,447Total operating costs and expenses
    
    
    218,286
    
    
    
    208,448
    
    
    
    184,516Operating income
    
    
    14,383
    
    
    
    4,397
    
    
    
    4,910Other income (expense)Interest income
    
    
    12
    
    
    
    7
    
    
    
    40Interest expense
    
    
    (477
    )
    
    
    (1,849
    )
    
    
    (2,750
    )Income before income taxes
    
    
    13,918
    
    
    
    2,555
    
    
    
    2,200Provision for income taxes
    
    
    (5,165
    )
    
    
    (1,286
    )
    
    
    (1,138
    )Net income
    
    $
    8,753
    
    
    $
    1,269
    
    
    $
    1,062
 Revenue
  Year Ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)TIS Segment
    
    $
    105,591
    
    
    $
    90,388
    
    
    $
    80,433As a percentage of total
revenue
    
    
    45.4
    %
    
    
    42.5
    %
    
    
    42.5
    %FMMS Segment
    
    
    127,078
    
    
    
    122,457
    
    
    
    108,993As a percentage of total
revenue
    
    
    54.6
    %
    
    
    57.5
    %
    
    
    57.5
    %Total revenue
    
    $
    232,669
    
    
    $
    212,845
    
    
    $
    189,426
      24




---



##### Table of Contents



Cost of Revenue
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)TIS Segment
    
    $
    88,042
    
    
    $
    75,066
    
    
    $
    65,195As a percentage of related
revenue
    
    
    83.4
    %
    
    
    83.0
    %
    
    
    81.1
    %FMMS Segment
    
    
    104,764
    
    
    
    100,165
    
    
    
    91,076As a percentage of related
revenue
    
    
    82.4
    %
    
    
    81.8
    %
    
    
    83.6
    %Total cost of revenue
    
    $
    192,806
    
    
    $
    175,231
    
    
    $
    156,271As a percentage of revenue
    
    
    82.9
    %
    
    
    82.3
    %
    
    
    82.5
    %
  SG&A Expenses
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)Total segment SG&A expenses
    
    $
    15,758
    
    
    $
    13,566
    
    
    $
    12,654As a percentage of total revenue
    
    
    6.8
    %
    
    
    6.4
    %
    
    
    6.7
    %Corporate SG&A expenses:Retention bonuses
    
    
    
    
    
    
    
    
    
    
    1,195Stock-based compensation expense
    
    
    909
    
    
    
    4,757
    
    
    
    435Management fees paid to GLOBAL
    
    
    
    
    
    
    1,924
    
    
    
    28Other corporate expenses
    
    
    5,059
    
    
    
    4,614
    
    
    
    2,645Total Corporate SG&A expenses
    
    
    5,968
    
    
    
    11,295
    
    
    
    4,303As a percentage of total revenue
    
    
    2.6
    %
    
    
    5.3
    %
    
    
    2.3
    %Total SG&A expenses
    
    $
    21,726
    
    
    $
    24,861
    
    
    $
    16,957As a percentage of total revenue
    
    
    9.3
    %
    
    
    11.7
    %
    
    
    9.0
    %
    25




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##### Table of Contents



Operating Income
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(in thousands)TIS Segment
    
    $
    9,957
    
    
    $
    7,766
    
    
    $
    7,441As a percentage of related segment
revenue
    
    
    9.4
    %
    
    
    8.6
    %
    
    
    9.3
    %FMMS Segment
    
    
    14,148
    
    
    
    16,282
    
    
    
    13,060As a percentage of related segment
revenue
    
    
    11.1
    %
    
    
    13.3
    %
    
    
    12.0
    %Total segment operating income
    
    
    24,105
    
    
    
    24,048
    
    
    
    20,501As a percentage of total revenue
    
    
    10.4
    %
    
    
    11.3
    %
    
    
    10.8
    %Unallocated Corporate expenses:Corporate SG&A expenses
    
    
    (5,968
    )
    
    
    (11,295
    )
    
    
    (4,303
    )Amortization of intangible assets
    
    
    (3,754
    )
    
    
    (8,356
    )
    
    
    (8,841
    )Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    (2,447
    )Total operating income
    
    $
    14,383
    
    
    $
    4,397
    
    
    $
    4,910As a percentage of total revenue
    
    
    6.2
    %
    
    
    2.1
    %
    
    
    2.6
    %
    Amortization and Impairment of Intangible Assets
  Interest Expense
  26




---



##### Table of Contents



Provision for Income Taxes
  Liquidity and Capital Resources
  Working Capital
   Cash from Operating, Investing and Financing Activities.
    27




---



##### Table of Contents



Capital Expenditures.
 Debt and Other Obligations.
    Future Liquidity Needs.
 Off-Balance Sheet Arrangements, Contractual Obligations, Guaranty and Indemnification Obligations
 Off-Balance Sheet Arrangements .
  28




---



##### Table of Contents



Contractual Obligations.
 Payments Due by PeriodMoreLess Than
    
    
    1-3
    
    
    3-5
    
    
    Than(in thousands)
    
    Total
    
    
    1 Year
    
    
    Years
    
    
    Years
    
    
    5 YearsContractual ObligationsBank loans
    
    $
    79,605
    
    
    $
    
    
    
    $
    79,605
    
    
    $
    
    
    
    $
    Interest payments on loan
agreements(1)
    
    
    8,729
    
    
    
    2,843
    
    
    
    5,886
    
    
    
    
    
    
    
    Operating leases
    
    
    10,715
    
    
    
    3,145
    
    
    
    5,702
    
    
    
    1,868
    
    
    
    Uncertain tax positions(2)
    
    
    1,766
    
    
    
    64
    
    
    
    1,702
    
    
    
    
    
    
    
    Total contractual obligations
    
    $
    100,815
    
    
    $
    6,052
    
    
    $
    92,895
    
    
    $
    1,868
    
    
    $
    
 
 (1)
    
    Interest payments for the bank loans were estimated using the current floating rates
charged by the lender as of December 31, 2010 through the maturity date of the instruments,
December 10, 2013.(2)
    
    Includes interest on the uncertain tax positions at an estimated 4% interest rate. Critical Accounting Policies
  Revenue Recognition
         29




---



##### Table of Contents



Long-Lived Assets (Excluding Goodwill)
  Intangible Assets
  Goodwill
     Stock-Based Compensation
    30




---



##### Table of Contents



New Accounting Pronouncements
  Interest Rate and Other Market Risk
 Interest Rate Risk
  Inflation Risk
 Seasonality
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH THE ACCOUNTANTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
  
 ITEM 9A(T). CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Managements Report on Internal Controls over Financial Reporting
   31




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Name
    
    Age
    
    
    PositionJohn Hillen
    
    
    45
    
    
    President and Chief Executive Officer, DirectorJoseph M. Cormier
    
    
    34
    
    
    Executive Vice President and Chief Financial OfficerRonald C. Jones
    
    
    52
    
    
    Executive Vice President, Corporate Strategy and Development, DirectorMichael Weixel
    
    
    57
    
    
    Senior Vice President, Contracts and AdministrationKirk Herdman
    
    
    47
    
    
    Senior Vice President, Business Development and OperationsAlexander Drew
    
    
    50
    
    
    President, Intelligence SolutionsTimothy Jones
    
    
    47
    
    
    Senior Vice President and General Manager, Defense EngineeringJohn J. Devine
    
    
    70
    
    
    Independent DirectorJacques S. Gansler
    
    
    76
    
    
    Independent DirectorDamian Perl
    
    
    42
    
    
    DirectorEric S. Rangen
    
    
    54
    
    
    Independent DirectorThomas R. Wilson
    
    
    64
    
    
    Non-Executive Chairperson of the Board
 John Hillen
 Joseph M. Cormier
  32




---



##### Table of Contents



Ronald C. Jones
 Michael Weixel
 Kirk Herdman
 Alexander Drew
 Timothy Jones
 John J. Devine
 Jacques Gansler
  33




---



##### Table of Contents



Damian Perl
 Eric S. Rangen
 Thomas Wilson
 Section 16(a) Beneficial Ownership Reporting Compliance
  Code of Ethics and Business Conduct
 http://investor.gtec-inc.com
 Identifying Individuals to Stand for Election as Directors
   34




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##### Table of Contents



Voting
Commitment
   Audit Committee
 http://investor.gtec-inc.com
  35




---



##### Table of Contents




    
    evaluating the performance of our independent registered public
accounting firm and determining whether to retain or terminate its services;
 
    
    determining and pre-approving the engagement of our independent
registered public accounting firm to perform audit services and any permissible
non-audit services, other than immaterial aggregate amounts of non-audit services as
excepted under applicable laws and rules;
 
    
    reviewing and discussing with management and our independent registered
public accounting firm the results of the annual audit and the independent
registered public accounting firms review of our quarterly financial statements and
annual and quarterly reports;
 
    
    reviewing with management and our independent registered public
accounting firm any significant issues that arise regarding accounting principles
and financial statement presentation;
 
    
    conferring with management and our independent registered public
accounting firm regarding the scope, adequacy and effectiveness of our internal
control over financial reporting; and
 
    
    establishing procedures for the receipt, retention and treatment of any
complaints we receive regarding accounting, internal control or auditing matters.
 
 ITEM 11. EXECUTIVE COMPENSATION
 Compensation Discussion and Analysis
 Overview of Our Executive Compensation Philosophy
   
    
    attract and retain talent;
 
    
    provide total direct compensation opportunities that are competitive with
opportunities provided to executives of comparable companies at comparable levels of
performance;
 
    
    ensure that our executives total compensation levels are correlated to
both our short-term and long-term financial performance in areas such as revenue,
net income and operating efficiency, which we believe are then reflected in
increased stockholder value over time;
 
    
    focus and motivate executives on the achievement of objectives at the
individual, business-unit and company-wide levels; and
 
    
    reward executives in accordance with their relative contributions to
achieving strategic milestones and advancing key mission-related objectives.
  
    
    Total compensation for executive officers is measured at the 50th-75th
percentile of the median of local and nationally recognized survey data. Our survey
information is discussed in more detail below. We believe this is necessary to
attract outstanding executives.
 
    
    The mix of total compensation elements reflects an appropriate balance
between competitive market requirements and strategic business needs. We believe the
opportunity for executives to receive additional compensation based upon achieving
or exceeding established performance objectives properly aligns our equity programs
and managements focus with the interests of our stockholders.
  36




---



##### Table of Contents




    
    The short-term non-equity incentive compensation portion of total
compensation, which we refer to as the Management Performance Incentive Plan,
provides the opportunity to earn total cash compensation at the upper quartile of
competitive pay based on outstanding corporate performance. Each executive is
eligible to receive cash incentive payments based on achievement of specific
performance measures. The amount awarded annually is determined by the Compensation
Committees review of the executives achievement of such performance measures. As
an executives responsibility increases, the portion of his or her total
compensation represented by incentive compensation payments increases.
 
    
    The long-term equity incentive compensation portion of each executives
annual compensation is linked to our overall performance with a goal of maximizing
stockholder return.
 
    
    Benefits are designed to be market competitive.
 Compensation Committee Process
  th
  Elements of Executive Compensation
  
    
    base salary, which is designed to allow us to attract and retain the most
qualified candidates,
 
    
    short-term non-equity incentive compensation (consisting of cash
performance bonuses), which is designed to provide performance-based incentives to
our executives for the achievement of important financial objectives, and
 
    
    long-term equity incentive compensation (consisting of stock options and
restricted stock awards), which are granted to incentivize executive performance
that increases stockholder value.
   37




---



##### Table of Contents



Base Salary
  % Increasein Base
    
    
    2010Name
    
    Salary
    
    
    Base SalaryJohn Hillen
    
    
    5
    %
    
    $
    400,000President and Chief Executive OfficerJoseph M. Cormier(1)
    
    
    0
    %
    
    $
    275,000Executive Vice President and Chief Financial OfficerJames P. Allen(2)
    
    
    0
    %
    
    $
    300,000former Chief Financial OfficerRonald C. Jones
    
    
    0
    %
    
    $
    300,000Executive Vice President, Corporate Strategy and DevelopmentAlexander Drew
    
    
    6
    %
    
    $
    238,826President, Intelligence SolutionsTimothy Jones(3)
    
    
    22
    %
    
    $
    220,000Senior Vice President and General Manager, Defense Engineering
 
 (1)
    
    Mr. Cormier was hired as Senior Vice President, Finance on January 25, 2010 with
a salary of $275,000 per annum. Effective upon his promotion to Executive Vice President
and Chief Financial Officer on October 1, 2010, Mr. Cormiers base salary was increased
18% to $310,000 per annum.(2)
    
    Mr. Allen resigned as Chief Financial Officer effective October 1, 2010.
Following that date, Mr. Allen was compensated at an hourly rate of $200 per hour.(3)
    
    Mr. T. Jones was promoted to Senior Vice President and General Manager, Defense
Engineering on April 1, 2010.     Attendance/Punctuality
    
       Ability to Direct Activities of Others   Knowledge
    
       Acceptance of Supervision/Criticism   Problem Solving and Creativity
    
       Productivity/Efficiency   Judgment/Decision Making
    
       Quality of Output   Planning and Organization
    
       Effectiveness of Customer Relations   Flexibility and Adaptability
    
       Company Identification   Ability to Work Independently
    
       Written Expression   Ability to Work With Others
    
       Oral Expression
   38




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##### Table of Contents



Short-Term Non-Equity Incentive Compensation
   2010 Potential Payments under Management Performance Incentive Plan
  Management Performance Incentive Potential (as a percentage of 2010 base salary)
 Management
    
    
    Management
    
    
    ManagementPerformance
    
    
    Performance
    
    
    PerformanceIncentive
    
    
    Incentive
    
    
    IncentivePotential at
    
    
    Potential at
    
    
    Maximum atName
    
    Threshold
    
    
    Target(1)
    
    
    Stretch(2)John Hillen
    
    
    0
    %
    
    
    80
    %
    
    
    120
    %James P. Allen
    
    
    0
    %
    
    
    50
    %
    
    
    75
    %Joseph M. Cormier
    
    
    0
    %
    
    
    65
    %(3)
    
    
    97.5
    %(3)Ronald C. Jones
    
    
    0
    %
    
    
    50
    %
    
    
    75
    %Alexander Drew
    
    
    0
    %
    
    
    50
    %
    
    
    75
    %Timothy Jones
    
    
    0
    %
    
    
    50
    %
    
    
    75
    %
 
 (1)
    
    When a performance measure was achieved above the threshold level, but below the
target level, the executive earned management performance incentive compensation on a
linear basis between the management performance incentive potential at threshold and at
target for such performance measure.  39




---



##### Table of Contents



(2)
    
    When a performance measure was achieved above the target level, the executive
earned management performance incentive compensation on a linear basis between the
management performance incentive potential at target and at stretch for such performance
measure.(3)
    
    Represents Mr. Cormiers management incentive potential following his promotion
to Executive Vice President and Chief Financial Officer on October 1, 2010. Prior to
such time, Mr. Cormiers management performance incentive potential at target and his
management performance incentive maximum at stretch were 50% and 75%, respectively. 2010 Performance Measures Under Management Performance Incentive Plan
 Hillen and Allen:
  Performance Measure
    
    Allocation(1)
    
    
    Threshold
    
    
    Target
    
    
    StretchRevenue
    
    
    20
    %
    
    
    234.0
    (2)
    
    
    255.0
    (3)
    
    >TargetDiluted Earnings Per Share (EPS)
    
    
    50
    %
    
    
    0.90
    (4)
    
    
    1.07
    (5)
    
    >TargetFunded Backlog
    
    
    15
    %
    
    
    113.3
    (6)
    
    
    123.6
    (7)
    
    >TargetOtherManagement by Objectives
    
    
    15
    %
    
    
    n/a
    
    
    
    
    (8)
    
    n/a
 
 US$ in millions, except per share data.(1)
    
    Amounts above threshold are calculated on a linear basis. For this reason, the
percentage allocation for the Revenue, EPS and Funded Backlog performance measures is
subject to change based on the Companys achievement in each category.(2)
    
    The threshold goal for the Revenue performance measure represents a 10% increase
in revenue from 2009.(3)
    
    The target goal for the Revenue performance measure represents a 20% increase in
revenue from 2009.(4)
    
    The threshold goal for EPS is based on EBITDA representing 8% of the threshold
goal for revenue.(5)
    
    The target goal for EPS was based on the top end of the EPS guidance range
initially provided to investors for 2010 in February 2010.(6)
    
    The threshold goal for the Funded Backlog performance measure represents a 10%
increase over the Funded Backlog at December 31, 2009.(7)
    
    The target goal for the Funded Backlog performance measure represents a 20%
increase over Funded Backlog at December 31, 2009.(8)
    
    The Management by Objectives performance measure was focused on the successful
closing of accretive acquisitions during the year.  40




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##### Table of Contents



Cormier
  Performance Measure
    
    Allocation(1)
    
    
    Threshold
    
    
    Target
    
    
    StretchRevenue
    
    
    15
    %
    
    
    234.0
    (2)
    
    
    255.0
    (3)
    
    >TargetEPS
    
    
    50
    %
    
    
    0.90
    (4)
    
    
    1.07
    (5)
    
    >TargetFunded Backlog
    
    
    15
    %
    
    
    113.3
    (6)
    
    
    123.6
    (7)
    
    >TargetOtherManagement by Objectives
    
    
    20
    %
    
    
    n/a
    
    
    
    
    (8)
    
    n/a
 
 US$ in millions, except per share data.(1)
    
    Amounts above threshold are calculated on a linear basis. For this reason, the
percentage allocation for the Revenue, EPS and Funded Backlog performance measures is
subject to change based on the Companys achievement in each category.(2)
    
    The threshold goal for the Revenue performance measure represents a 10% increase
in revenue from 2009.(3)
    
    The target goal for the Revenue performance measure represents a 20% increase in
revenue from 2009.(4)
    
    The threshold goal for EPS is based on EBITDA representing 8% of the threshold
goal for revenue.(5)
    
    The target goal for EPS was based on the top end of the range EPS guidance
initially provided to investors for 2010 in February 2010.(6)
    
    The threshold goal for the Funded Backlog performance measure represents a 10%
increase over the Funded Backlog at December 31, 2009.(7)
    
    The target goal for the Funded Backlog performance measure represents a 20%
increase over Funded Backlog at December 31, 2009.(8)
    
    The Management by Objectives performance measure was focused on the successful
closing of accretive acquisitions during the year. Ronald C. Jones
  Performance Measure
    
    Allocation(1)
    
    
    Threshold
    
    
    Target
    
    
    StretchRevenue
    
    
    10
    %
    
    
    234
    (2)
    
    
    255
    (3)
    
    >TargetEPS
    
    
    40
    %
    
    
    .90
    (4)
    
    
    1.07
    (5)
    
    >TargetFunded Backlog
    
    
    10
    %
    
    
    113.3
    (6)
    
    
    123.6
    (7)
    
    >TargetOtherManagement by Objectives
    
    
    40
    %
    
    
    n/a
    
    
    
    
    (8)
    
    n/a
 
 US$ in millions, except per share data(1)
    
    Amounts above threshold are calculated on a linear basis. For this reason, the
percentage allocation for the Revenue, EPS and Funded Backlog performance measures is
subject to change based on the Companys achievement in each category.(2)
    
    The threshold goal for the Revenue performance measure represents a 10% increase
in revenue from 2009.(3)
    
    The target goal for the Revenue performance measure represents a 20% increase in
revenue from 2009.(4)
    
    The threshold goal for EPS is based on EBITDA representing 8% of the threshold
goal for revenue.(5)
    
    The target goal for EPS was based on the top end of the EPS guidance range
initially provided to investors for 2010 in February 2010.(6)
    
    The threshold goal for the Funded Backlog performance measure represents a 10%
increase over the Funded Backlog at December 31, 2009.(7)
    
    The target goal for the Funded Backlog performance measure represents a 20%
increase over Funded Backlog at December 31, 2009.(8)
    
    The Management by Objectives performance measure was focused on the successful
closing of accretive acquisitions during the year.  41




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##### Table of Contents



Timothy Jones
  Performance Measure
    
    Allocation(1)
    
    
    Threshold
    
    
    Target
    
    
    StretchDE Revenue
    
    
    25
    %
    
    
    128.0
    (2)
    
    
    138.0
    (3)
    
    > TargetDE EBIT
    
    
    25
    %
    
    
    13.7
    (4)
    
    
    14.6
    (5)
    
    >TargetDE Funded Backlog
    
    
    20
    %
    
    
    72.1
    (6)
    
    
    78.8
    (7)
    
    >TargetEPS
    
    
    30
    %
    
    
    0.90
    (8)
    
    
    1.07
    (9)
    
    >Target
 
 US$ in millions, except per share data(1)
    
    Amounts above threshold are calculated on a linear basis. For this reason, the
percentage allocation for the DE Revenue, DE EBIT and DE Funded Backlog performance
measures is subject to change based on the Companys achievement in each category.(2)
    
    The threshold goal for the DE Revenue performance measure was an approximately 5%
increase from 2009 DE revenue.(3)
    
    The target goal for the DE Revenue performance measure was an approximately 16%
increase from 2009 DE revenue.(4)
    
    The threshold goal for the DE EBIT performance measure was achieving 10% profit
on the threshold DE revenue.(5)
    
    The target goal for the DE EBIT performance measure was achieving 10% profit on
the target DE revenue.(6)
    
    The threshold goal for the DE Funded Backlog performance measure represents a 10%
increase from the DE Funded Backlog at December 31, 2009.(7)
    
    The target goal for the DE Funded Backlog performance measure represents a 20%
increase from the DE Funded Backlog at December 31, 2009.(8)
    
    The threshold goal for EPS is based on EBITDA representing 8% of the threshold
goal for revenue.(9)
    
    The target goal for EPS was based on the top end of the EPS guidance range
initially provided to investors for 2010 in February 2010. Drew:
  Performance Measure
    
    Allocation(1)
    
    
    Threshold
    
    
    Target
    
    
    StretchIS Revenue
    
    
    25
    %
    
    
    75.0
    (2)
    
    
    85.0
    (3)
    
    > TargetIS EBIT
    
    
    25
    %
    
    
    8.0
    (4)
    
    
    9.0
    (5)
    
    >TargetIS Funded Backlog
    
    
    20
    %
    
    
    23.7
    (6)
    
    
    25.8
    (7)
    
    >TargetEPS
    
    
    30
    %
    
    
    0.90
    (8)
    
    
    1.07
    (9)
    
    >Target
 
 US$ in millions, except per share data(1)
    
    Amounts above threshold are calculated on a linear basis. For this reason, the
percentage allocation for the IS Revenue, IS EBIT and IS Funded Backlog performance
measures is subject to change based on the Companys achievement in each category.(2)
    
    The threshold goal for the IS Revenue performance measure represents a 24%
increase over 2009 IS revenue.  42




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##### Table of Contents



(3)
    
    The target goal for the IS Revenue performance measure was an approximately 41%
increase over 2009 IS revenue.(4)
    
    The threshold goal for the IS EBIT performance measure represents 11% of the
threshold IS revenue.(5)
    
    The target goal for the IS EBIT performance measure was achieving IS EBIT equal
to 11% of the target IS revenue.(6)
    
    The threshold goal for the IS Funded Backlog performance measure represents a 10%
increase from the IS funded backlog at December 31, 2009.(7)
    
    The target goal for the IS Funded Backlog performance measure represents a 20%
increase from the IS funded backlog at December 31, 2009.(8)
    
    The threshold goal for EPS is based on EBITDA representing 8% of the threshold
goal for revenue.(9)
    
    The target goal for EPS was based on the top end of the EPS guidance range
initially provided to investors for 2010 in February 2010. 2010 Achievements under Management Incentive Performance Plan Performance Measures
  Performance Measure
    
    AchievementRevenue
    
    
    232.7EPS
    
    
    0.96Funded Backlog
    
    
    162DE Revenue
    
    
    127DE EBIT
    
    
    14.2DE Funded Backlog
    
    
    102IS Revenue
    
    
    72IS EBIT
    
    
    7.2IS Funded Backlog
    
    
    300.4
 
 US$ in millions, except per share data  Percentage ofExecutive
    
    Base Salary(1)John Hillen
    
    
    45
    %James P. Allen
    
    
    21
    %Joseph M. Cormier
    
    
    33
    %Ronald C. Jones
    
    
    35
    %Alexander Drew
    
    
    5
    %Timothy Jones
    
    
    41
    %
 
 (1)
    
    Represents base salary as of December 31, 2010, except for Mr. Allen, who
converted to part-time status on October 1, 2010. As a result, for Mr. Allen, represents
his base salary as of February 1, 2010 when the Management Performance Incentive Plan
was adopted. Long-Term Incentive Compensation
   43




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##### Table of Contents



Indirect Compensation: Benefits and Perquisites
   Other Bonus Compensation
   Executive Equity Ownership
   44




---



##### Table of Contents



Government Limitations on Compensation
  Deductibility of Executive Compensation
  Summary Executive Compensation
  Non-EquityOption
    
    
    Stock
    
    
    Incentive Plan
    
    
    All OtherSalary
    
    
    Bonus
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    TotalName and Principal Position
    
    Year
    
    
    ($)
    
    
    ($)
    
    
    ($)(1)
    
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)
    
    
    ($)John Hillen, President and
Chief Executive Officer
    
    
    2010
    
    
    
    399,171
    
    
    
    84,706
    (3)
    
    
    290,790
    
    
    
    327,400
    
    
    
    181,496
    
    
    
    60
    (4)
    
    $
    1,283,6232009
    
    
    
    379,995
    
    
    
    75,000
    
    
    
    
    
    
    
    
    
    
    
    221,124
    
    
    
    60
    (4)
    
    
    676,1802008
    
    
    
    126,665
    
    
    
    
    
    
    
    566,731
    
    
    
    
    
    
    
    275,281
    
    
    
    
    
    
    
    968,677Joseph M. Cormier, Executive
Vice President and Chief
Financial Officer
    
    
    2010
    
    
    
    253,204
    (5)
    
    
    128,523
    (6)
    
    
    456,517
    
    
    
    
    
    
    
    94,128
    
    
    
    44
    (7)
    
    $
    932,416James P. Allen, former Chief
Financial Officer
    
    
    2010
    
    
    
    271,899
    
    
    
    29,780
    (8)
    
    
    
    
    
    
    
    
    
    
    63,807
    
    
    
    330
    (9)
    
    $
    365,8162009
    
    
    
    171,153
    
    
    
    40,000
    
    
    
    307,424
    
    
    
    620,460
    
    
    
    109,108
    
    
    
    203,507
    (10)
    
    
    1,352,814Ronald C. Jones, Executive
Vice President, Corporate
Strategy and Development
    
    
    2010
    
    
    
    299,998
    
    
    
    31,765
    (11)
    
    
    
    
    
    
    
    
    
    
    105,247
    
    
    
    787
    (12)
    
    $
    437,7972009
    
    
    
    16,538
    (13)
    
    
    149,108
    (14)
    
    
    
    
    
    
    3,686,187
    (15)
    
    
    
    
    
    
    
    
    
    
    3,851,833Alexander Drew, President,
Intelligence Solutions
    
    
    2010
    
    
    
    234,573
    (16)
    
    
    47,356
    
    
    
    92,359
    
    
    
    
    
    
    
    12,644
    
    
    
    23,911
    (17)
    
    $
    410,8422009
    
    
    
    223,026
    
    
    
    30,000
    
    
    
    
    
    
    
    
    
    
    
    91,349
    
    
    
    84,496
    
    
    
    428,871Timothy Jones, Senior Vice
President and General Manager,
Defense Engineering
    
    
    2010
    
    
    
    208,335
    (18)
    
    
    17,470
    
    
    
    92,359
    
    
    
    
    
    
    
    89,600
    
    
    
    123
    (19)
    
    $
    407,8892009
    
    
    
    175,663
    
    
    
    35,000
    
    
    
    183,739
    
    
    
    
    
    
    
    66,528
    
    
    
    90
    
    
    
    461,020
  45




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##### Table of Contents



(1)
    
    Amounts in these columns reflect the aggregate grant date fair value of the awards
calculated in accordance with generally accepted accounting principles. For assumptions
used in determining the fair value of stock awards, see Note 11 to the Companys
consolidated financial statements included in this Annual Report on Form 10-K.(2)
    
    Executive officers are eligible for non-equity incentive compensation in the form
of cash awards that are based upon achievement of Company and/or business unit
performance goals in accordance with our Management Performance Incentive Plan. Cash
bonuses under the Management Performance Incentive Plan are accrued in the year earned
and paid in the following year. The amounts identified in this column were paid in
February 2011 for 2010 performance. For a detailed description of our short-term
non-equity incentive compensation, see Compensation Discussion and AnalysisShort Term
Non-Equity Incentive Compensation.(3)
    
    Dr. Hillen received a discretionary bonus of $84,706 due to the EPS addback
described under Other Bonus Compensation above.(4)
    
    The other compensation that Dr. Hillen received in 2010 and 2009 consisted of a
gross up payment in the amount of $60 for excess life insurance above $50,000.(5)
    
    From January 25, 2010 until his promotion to Executive Vice President and Chief
Financial Officer on October 1, 2010, Mr. Cormiers salary was $275,000 per annum. From
October 1, 2010 to December 31, 2010, Mr. Cormiers salary was $310,000 per annum.(6)
    
    Mr. Cormier received a discretionary bonus of $40,371 due to the EPS addback
described under Other Bonus Compensation, a discretionary bonus in the amount of
$28,152 for his efforts in closing two accretive acquisitions prior to year end 2010 and
a signing bonus of $60,000 upon joining the Company on January 25, 2010.(7)
    
    The other compensation that Mr. Cormier received in 2010 consisted of a gross up
payment in the amount of $44 for excess life insurance above $50,000.(8)
    
    Mr. Allen received a discretionary bonus of $29,779 due to the EPS addback
described under Other Bonus Compensation.(9)
    
    The other compensation that Mr. Allen received in 2010 consisted of a gross up
payment in the amount of $330 for excess life insurance above $50,000.(10)
    
    The other compensation that Mr. Allen received in 2009 included $98,838 for
consulting fees that he earned prior to becoming an employee of the Company in May 2009.
Also included is a make-whole payment because of the failure to re-price Mr. Allens
stock bonus award in connection with a dividend and debt repayment that occurred in
connection with restructuring transactions that occurred prior to our initial public
offering. As a result, of the dividend and debt repayment, the value of Mr. Allens
stock grant was reduced by $104,438. In February 2010, the Compensation Committee
approved the make-whole payment in cash versus providing additional shares. In addition,
Mr. Allen received a gross up payment in the amount of $231 for excess life insurance
above $50,000.(11)
    
    Mr. R. Jones received a discretionary bonus of $31,765 due to the EPS addback
described under Other Bonus Compensation.(12)
    
    The other compensation that Mr. R. Jones received in 2010 included $649 for
unused accrued paid time off and a gross up payment in the amount of $138 for excess
life insurance above $50,000.(13)
    
    Mr. R. Jones did not become an employee of the Company until our initial public
offering in November 2009. As a result, Mr. R. Jones salary reflects compensation he
received from November 25, 2009 through December 31, 2009. Mr. R. Jones 2009 salary was
$300,000 per annum.(14)
    
    In 2009, Mr. R. Jones received a discretionary bonus in the amount of $40,000 for
his efforts related to our initial public offering and a bonus of $109,108 approved by
the Compensation Committee in lieu of a bonus under his prior employment agreement.(15)
    
    In 2006, Mr. R. Jones was granted a 12% membership interest in Contego Systems
LLC, our former parent. In 2009, immediately prior to our initial public offering Mr. R.
Jones restricted membership interest was redeemed by
Contego Systems LLC in exchange for unrestricted Shares of the Company owned by
Contego Systems LLC of equal value. The redemption and completion of the initial
public offering triggered recognition of the compensation expense reflected in the
table above.  46




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##### Table of Contents



(16)
    
    Mr. Drew received a discretionary bonus of $18,965 due to the EPS addback
described under Other Bonus Compensation and a discretionary bonus in the amount of
$28,391 for his efforts in growing Intelligence Solutions revenue by 20%.(17)
    
    The other compensation that Mr. Drew received in 2010 consisted of a payment for
unused accrued paid time off in the amount of $23,773 and a gross up payment in the
amount of $138 for excess life insurance above $50,000.(18)
    
    Mr. T. Jones received a discretionary bonus of $17,470 due to the EPS addback
described under Other Bonus Compensation above.(19)
    
    The other compensation that Mr. T. Jones received in 2010 consisted of a gross up
payment in the amount of $33.23 for a $25 gas card and $90 for excess life insurance
above $50,000. Grants of Plan-Based Awards
  All OtherOptionAll Other
    
    
    Awards:Stock Awards:
    
    
    Number of
    
    
    Exercise Price
    
    
    Grant DatePayouts Under Non-Equity Incentive
    
    
    Number of
    
    
    Securities
    
    
    of Option
    
    
    Fair ValueGrant (1)
    
    
    Plan Awards(2)
    
    
    Shares of Stock
    
    
    Underlying
    
    
    Awards (per
    
    
    of OptionName
    
    Date
    
    
    Threshold
    
    
    Target
    
    
    Stretch
    
    
    or Units
    
    
    Options
    
    
    share)
    
    
    Awards(3)John Hillen
    
    
    1/4/2010
    
    
    $
    0
    
    
    $
    320,000
    
    
    $
    480,000
    
    
    
    20,000
    
    
    
    50,000
    
    
    $
    16.37
    
    
    $
    290,790Joseph M. Cormier
    
    
    1/25/2010
    
    
    $
    0
    
    
    $
    152,515
    
    
    $
    228,773
    
    
    
    
    
    
    
    50,000
    
    
    $
    15.06
    
    
    $
    264,01710/1/2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    $
    13.59
    
    
    $
    192,500James P. Allen
    
    
    
    
    
    $
    0
    
    
    $
    150,000
    
    
    $
    225,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Ronald C. Jones
    
    
    
    
    
    $
    0
    
    
    $
    150,000
    
    
    $
    225,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Alexander Drew
    
    
    2/26/2010
    
    
    $
    0
    
    
    $
    119,412
    
    
    $
    179,119
    
    
    
    
    
    
    
    20,000
    
    
    $
    13.48
    
    
    $
    92,359Timothy Jones
    
    
    2/26/2010
    
    
    $
    0
    
    
    $
    110,000
    
    
    $
    165,000
    
    
    
    
    
    
    
    20,000
    
    
    $
    13.48
    
    
    $
    92,359
 
 (1)
    
    Does not reflect the grant date for Payouts Under Non-Equity
Incentive Plan Awards(2)
    
    Represents the amounts that could have been paid at threshold, target and stretch
performance levels for 2010 under our Management Performance Incentive Plan. The
Non-Equity Incentive Plan Compensation column of the Summary Compensation Table sets
forth the actual amounts paid under our Management Performance Incentive Plan for 2010.
For a detailed description of our short-term non-equity incentive compensation, see
Compensation Discussion and AnalysisShort Term Non-Equity Incentive Compensation.(3)
    
    Represents the aggregate grant date fair value recognized for financial reporting
purposes with respect to all awards made in 2010.  47




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##### Table of Contents



Outstanding Equity Awards at Year-End
  Option Awards
    
    
    Stock AwardsEquity IncentivePlanNumber of
    
    
    Number of
    
    
    
    
    
    
    
    
    
    
    Number of
    
    
    
    
    
    
    Awards: NumberSecurities
    
    
    Securities
    
    
    
    
    
    
    
    
    
    
    Shares or
    
    
    
    
    
    
    ofUnderlying
    
    
    Underlying
    
    
    
    
    
    
    
    
    
    
    Units of
    
    
    Market Value of
    
    
    Unearned Shares,Unexercised
    
    
    Unexercised
    
    
    Option
    
    
    Option
    
    
    Stock That
    
    
    Shares or Units of
    
    
    Units or OtherOptions (#)
    
    
    Options (#)
    
    
    Exercise
    
    
    Expiration
    
    
    Have Not
    
    
    Stock That Have
    
    
    Rights That HaveName
    
    Exercisable
    
    
    Unexercisable
    
    
    Price ($)
    
    
    Date
    
    
    Vested (#)
    
    
    Not Vested ($)
    
    
    Not Vested (#)(a)
    
    (b)
    
    
    (c)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)John Hillen
    
    
    33,750
    
    
    
    101,250
    
    
    $
    8.54
    
    
    
    8/18/2018
    
    
    
    20,000
    
    
    $
    337,200
    
    
    
    0
    
    
    
    50,000
    
    
    $
    16.37
    
    
    
    1/4/2020
    
    
    
    
    
    
    
    
    
    
    
    Joseph M. Cormier
    
    
    0
    
    
    
    50,000
    
    
    $
    15.06
    
    
    
    1/25/2020
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    50,000
    
    
    $
    13.59
    
    
    
    10/1/2020
    
    
    
    
    
    
    
    
    
    
    
    James P. Allen
    
    
    4,099
    
    
    
    12,296
    
    
    $
    14.38
    
    
    
    4/30/2019
    
    
    
    
    
    
    
    
    
    
    
    Ronald C. Jones
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Alexander Drew
    
    
    25,002
    
    
    
    8,334
    
    
    $
    6.52
    
    
    
    2/7/2017
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    20,000
    
    
    $
    13.48
    
    
    
    2/26/2020
    
    
    
    
    
    
    
    
    
    
    
    Timothy Jones
    
    
    8,197
    
    
    
    24,592
    
    
    $
    14.38
    
    
    
    4/30/2019
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    20,000
    
    
    $
    13.48
    
    
    
    2/26/2020
    
    
    
    
    
    
    
    
    
    
    
    
 
 (1)
    
    Options granted to executive officers other than Mr. Allen vest in four equal, annual
installments beginning on the anniversary of the grant unless vesting is accelerated
based upon a designated change in control event. Mr. Allens options vest in three equal
annual installments beginning on the anniversary of the grant. Option Exercises and Stock Vested
  Pension Benefits and Non-Qualified Deferred Compensation
  Executive Employment Contracts and Potential Payments upon Termination or Change in Control
 Employment Agreements
    48




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##### Table of Contents



Employment Agreements for Dr. Hillen and Messrs. Allen, Cormier and R. Jones
    
    
    accrued and unpaid salary through the date of termination;
 
    
    for Dr. Hillen, cash payments equal to 100% of his annual salary in
effect immediately prior to termination, as well as 100% of his target incentive
bonus, for termination by the Company without cause or by Dr. Hillen for good
reason, but if the termination occurs within six months after the date of a change
in control, Dr. Hillen will receive 200% of his annual salary and 200% of his target
incentive bonus.
 
    
    for Mr. Cormier, cash payments equal to 100% of his annual salary in
effect immediately prior to termination, as well as 100% of his target incentive
bonus, for termination by the Company without cause or by Mr. Cormier for good
reason, but if the termination occurs within six months after the date of a change
in control, Mr. Cormier or will receive 150% of his annual salary and 100% of his
target incentive bonus.
 
    
    for Mr. Allen and Mr. R. Jones, cash payments equal to 50% of his annual
salary in effect immediately prior to termination, as well as 50% of his target
incentive bonus, for termination by the Company without cause or by Mr. Allen or
Mr. R. Jones for good reason, but if the termination occurs within six months
after the date of a change in control, Mr. Allen or Mr. R. Jones or will receive
100% of his annual salary and 100% of his target incentive bonus.
 
    
    for Dr. Hillen and Messrs. Allen, Cormier and R. Jones, in the event of a
termination within six months after the date of a change in control, full vesting of
the executives stock and stock option awards that have not yet become vested.
   
    
    willfully failing to perform his duties in a material manner if such
failure is not discontinued promptly after written notice to the executive;
 
    
    being charged with or indicted for a felony or other crime casting doubt
on the executives trustworthiness or integrity;
 
    
    knowingly and/or materially breaching certain covenants of the agreement;
 
    
    committing any act of dishonesty that is intended to result in personal
enrichment of the executive at our expense; or
 
    
    in bad faith, committing any act or omitting to take any action, to our
material detriment.
  49




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##### Table of Contents




    
    the acquisition of more than 50% of the combined voting power of the
Companys then-total outstanding voting securities by any person or related
group of persons (as such terms are used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended) other than (x) the Company or any of
its affiliate, (y) any employee benefit plan of the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company (or its
subsidiaries), or (z) Contego Systems LLC, Kende Holding kft, Global Strategies
Group Holding, S.A. or any of their affiliates or successor entities; or
 
    
    the consummation of a merger or consolidation of the Company with any
other corporation or other entity, following which the voting securities of the
Company outstanding immediately prior to such merger or consolidation no longer
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or any parent thereof) at least 50% of the
combined voting power of the securities of the Company or such surviving entity or
any direct or indirect parent thereof outstanding immediately after such merger or
consolidation; or
 
    
    the stockholders of the Company approve a plan of complete liquidation or
dissolution.
  
    
    the assignment to the executive of any duties materially and adversely
inconsistent with his position as set forth in the agreement including, but not
limited to status, office or responsibilities;
 
    
    a change in the executives reporting relationship such that he no longer
reports directly to the GTEC Board;
 
    
    a material breach by us of any provision of the agreement after receipt
of written notice from the executive and failure by us to cure the breach within 30
days; or
 
    
    the relocation of the executives office as assigned to him by us to a
location more than 50 miles from his office prior to the date of such relocation,
except for travel reasonably required in the performance of the executives
responsibilities.
 Other Executive Employment Agreements
   
    
    a good faith finding by the President and Chief Executive Officer that
the executive: (i) has been convicted of a felony; (ii) has been convicted of a
misdemeanor (excluding traffic violations) to the extent such conviction could
reasonably be considered to compromise our best interests or any of our subsidiaries
or render the executive unfit or unable to perform his/her services and duties;
(iii) has committed any other act or omission involving dishonesty, disloyalty or
fraud with respect to us or any of our subsidiaries or any of our customers or
suppliers, (iv) has engaged in illegal use of drugs or unauthorized use of alcohol
in the workplace; or (v) has committed an act involving unlawful or disreputable
conduct in the context of executives employment which is likely to be harmful to us
or our reputation;
 
    
    the continued failure by the executive to perform his duties in all
material respects for us or any of our subsidiaries continuing for a period of 10
days following a written demand for such performance by the Chief Executive Officer
or a designated official or a material breach by the executive of his obligations
under his employment agreement
continuing uncured (if curable) for a period of 10 days following written notice from
the Chief Executive Officer or a designated official (other than any such failure or
breach resulting from the executives incapacity due to physical or mental illness),
which demand shall identify in reasonable detail the manner that the executive has not
performed his duties or has breached his obligations (as applicable) and give the
executive an opportunity to respond; provided, that, the foregoing shall not be
construed to include the executives failure to achieve financial or operating
objectives and goals established by the GTEC Board, President and Chief Executive
Officer or a designated official; or
 
    
    a good faith finding by the GTEC Board or the President and Chief
Executive Officer or a designated official that the executive engaged in (i)
misconduct materially injurious to us or any of our subsidiaries or our or any of
our subsidiaries reputation or (ii) gross negligence or willful misconduct by the
executive which has a material adverse effect on us or any of our subsidiaries.
  50




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##### Table of Contents



Severance and Change in Control Payments
 General
  Following a Change in Control, Termination by the Company without
Cause or by the Executive for Good Reason
 Change in Control
    
    
    Early Vesting ofName
    
    Severance Amount
    
    
    Option Awards(1)
    
    
    TotalJohn Hillen
    
    $
    1,440,000
    (2)
    
    $
    866,900
    
    
    $
    2,306,900Joseph M. Cormier
    
    $
    666,500
    (3)
    
    $
    253,503
    
    
    $
    920,003James P. Allen
    
    
    
    
    
    $
    523,892
    
    
    $
    523,892Ronald C. Jones
    
    $
    450,000
    (4)
    
    
    
    
    
    $
    450,000
 
 (1)
    
    Represents the value of the stock option awards held by the executive and
unvested as of December 31, 2010. The value of the unvested awards is the number of
unvested shares multiplied by the difference between the closing price of our common
stock on The NASDAQ Global Market on December 31, 2010 ($16.86) and the exercise price
for each such option award.(2)
    
    Represents a cash payment of 200% of annual base salary and 200% of target
incentive bonus.(3)
    
    Represents a cash payment of 150% of annual base salary and 100% of target
incentive bonus.(4)
    
    Represents a cash payment of 100% of annual base salary and 100% of target
incentive bonus. Without a Change in Control, Termination by the Company without
Cause or by the Executive for Good Reason
 Termination SeveranceName
    
    Amount
    
    
    TotalJohn Hillen
    
    $
    720,000
    (1)
    
    $
    720,000Joseph M. Cormier
    
    
    511,500
    (2)
    
    $
    511,500James P. Allen
    
    
    
    
    
    
    Ronald C. Jones
    
    $
    300,000
    (3)
    
    $
    300,000Alexander Drew
    
    $
    298,530
    (4)
    
    $
    298,530Timothy Jones
    
    $
    220,000
    (5)
    
    $
    220,000
 
 (1)
    
    Represents a cash payment of 100% of annual base salary and 100% of target
incentive bonus.(2)
    
    Represents a cash payment of 100% of annual base salary and 100% of target
incentive bonus.(3)
    
    Represents a cash payment of 50% of annual base salary and 100% of target
incentive bonus.(4)
    
    Represents a cash payment of 75% of annual base salary and pro-rated incentive
bonus (which is a full annual incentive bonus due to assumption of December 31, 2010
termination date).(5)
    
    Represents a cash payment of 50% of annual base salary and pro-rated incentive
bonus (which is a full annual incentive bonus due to assumption of December 31, 2010
termination date).  51




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##### Table of Contents



Employee Benefit Plans
 401(k) Plan
   2009 Performance Incentive Plan
  Administration.
 Eligibility.
 Maximum Shares and Award Limits.
 Stock Options.
  52




---



##### Table of Contents



Stock Awards and Performance Based Compensation.
 Stock Appreciation Rights.
 Deferred Shares.
 Performance Shares and Performance Units.
 Amendment and Termination.
  53




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##### Table of Contents



Compensation of Directors
  Fees Earned or
    
    
    
    
    
    
    
    
    
    
    All OtherPaid in Cash
    
    
    Stock Awards
    
    
    Option Awards
    
    
    Compensation
    
    
    TotalName
    
    ($)(1)
    
    
    ($)(2)
    
    
    ($)
    
    
    ($)
    
    
    ($)John J. Devine
    
    
    82,750
    
    
    
    
    
    
    
    46,180
    
    
    
    
    
    
    
    128,930Jacques Gansler
    
    
    80,000
    
    
    
    
    
    
    
    46,180
    
    
    
    
    
    
    
    126,180Damian Perl
    
    
    63,250
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63,250Eric S. Rangen
    
    
    88,250
    
    
    
    
    
    
    
    46,180
    
    
    
    
    
    
    
    134,430Thomas Wilson
    
    
    96,000
    
    
    
    
    
    
    
    46,180
    
    
    
    
    
    
    
    142,180Total
    
    
    410,250
    
    
    
    
    
    
    
    184,720
    
    
    
    
    
    
    
    594,970
 
 (1)
    
    Amounts in this column represent fees earned or paid in cash in 2010 for
retainers and board and committee meetings as described more fully in the table below.(2)
    
    Amounts in this column reflect the aggregate grant date fair value of the awards
calculated in accordance with generally accepted accounting principles. For assumptions
used in determining the fair value of stock awards, see Note 11 to the Companys
consolidated financial statements included in this Annual Report on Form 10-K.  
    
    each non-employee Director will receive an annual retainer of $42,000 to
be paid in equal, quarterly installments (the Annual Retainer);
 
    
    each non-employee Chairperson of the Board and of each committee of the
GTEC Board will receive, in addition to the Annual Retainer, an additional retainer
(a Chairperson Retainer) as set forth in the table below, to be paid in equal,
quarterly installments;
 
    
    each non-employee Director will be paid a fee, as set forth in the table
below, for each meeting of the GTEC Board or of a committee of the GTEC Board that
he or she attends, whether in person (for a meeting of any length) or by telephone
(for a meeting lasting one hour or more); and
 
    
    the Company will reimburse all Directors for travel expenses to attend
meetings of the GTEC Board, of a committee of the GTEC Board or of the Company.
 Amount paid per meetingChairperson
    
    
    if attending:Membership
    
    Retainer(1)
    
    
    in person
    
    
    by telephoneBoard of Directors
    
    $
    10,000
    
    
    $
    2,000
    
    
    $
    1,000Audit Committee
    
    $
    10,000
    
    
    $
    1,500
    
    
    $
    750Compensation Committee
    
    $
    5,000
    
    
    $
    1,500
    
    
    $
    750Government Security Committee
    
    $
    5,000
    
    
    $
    1,500
    
    
    $
    750Nominating and Governance Committee
    
    $
    5,000
    
    
    $
    1,500
    
    
    $
    750
 
 (1)
    
    For 2010, the current Chairperson of the Board agreed to forgo any Chairperson
Retainer for service on any committee while concurrently serving as Chairperson of the
Board. Compensation Committee Interlocks and Insider Participation
   54




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##### Table of Contents



COMPENSATION COMMITTEE REPORT
   
 
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
 Equity Compensation Plan Information
  Number of securitiesNumber of
    
    
    
    
    
    
    remaining available forsecurities to be
    
    
    
    
    
    
    future issuance underissued upon
    
    
    
    
    
    equity compensationexercise of
    
    
    Weighted average exercise
    
    
    plans (excludingoutstanding options,
    
    
    price of outstanding options,
    
    
    securities reflected inwarrants and rights
    
    
    warrants and rights
    
    
    column (a))Plan category
    
    (a)
    
    
    (b)
    
    
    (c)Equity
compensation plans
approved by
security holders
(1)
    
    
    805,805
    
    
    $
    11.99
    
    
    
    208,815Equity compensation
plans not approved
by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    805,805
    
    
    $
    11.99
    
    
    
    208,815
 
 (1)
    
    Consists entirely of common shares authorized for issuance under the SFA Plan and
the 2009 Performance Incentive Plan. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
   55




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##### Table of Contents



OptionsCurrentlyExercisable or
    
    
    
    
    
    
    Percentage ofExercisable
    
    
    Total Shares
    
    
    OutstandingWithin 60
    
    
    Beneficially
    
    
    SharesName of Beneficial Owner
    
    Common
    
    
    Days
    
    
    Owned
    
    
    Owned(1)5% stockholdersContego Systems LLC
    
    
    3,803,274
    (2)
    
    
    
    
    
    
    3,803,274
    
    
    
    41.14
    %1501 Farm Credit Drive
Suite 2300
McLean, VA 22102-5011Ameriprise Financial, Inc.
    
    
    963,166
    (3)
    
    
    
    
    
    
    963,166
    
    
    
    10.42
    %145 Ameriprise Financial Center
Minneapolis, MN 55474Lord, Abbett & Co. LLC
    
    
    470,780
    (4)
    
    
    
    
    
    
    470,780
    
    
    
    5.09
    %90 Hudson Street
Jersey City, NJ 07302Directors and Executive OfficersJohn J. Devine
    
    
    11,120
    (5)
    
    
    6,257
    
    
    
    17,377
    
    
    
    *Jacques Gansler
    
    
    6,845
    (5)
    
    
    6,257
    
    
    
    13,102
    
    
    
    *John Hillen
    
    
    78,000
    (6)
    
    
    80,000
    
    
    
    158,000
    
    
    
    1.71
    %Ronald C. Jones
    
    
    360,000
    
    
    
    
    
    
    
    360,000
    
    
    
    3.89
    %Damian Perl
    
    
    3,803,274
    (7)
    
    
    
    
    
    
    3,803,274
    
    
    
    41.14
    %Eric S. Rangen
    
    
    6,845
    (5)
    
    
    2,500
    
    
    
    9,345
    
    
    
    *Thomas Wilson
    
    
    10,395
    (5)
    
    
    6,257
    
    
    
    16,652
    
    
    
    *Joseph M. Cormier
    
    
    47,009
    (8)
    
    
    12,500
    
    
    
    59,509
    
    
    
    *James P. Allen
    
    
    109,869
    (9)
    
    
    18,216
    
    
    
    128,085
    
    
    
    1.38
    %Alexander Drew
    
    
    
    
    
    
    38,336
    
    
    
    38,336
    
    
    
    *Timothy Jones
    
    
    
    
    
    
    21,394
    
    
    
    21,394
    
    
    
    *Directors and executive officers as a group
(12 persons)
    
    
    4,336,352
    
    
    
    197,628
    
    
    
    4,533,980
    
    
    
    48.02
    %
 
 *
    
    Represents less than 1% of our outstanding Common Stock(1)
    
    The percentage of outstanding Shares owned is calculated by taking the number of
Shares reflected in the column titled Total Shares Beneficially Owned divided by
9,243,812, the total number of Shares outstanding as of March 1, 2011, plus the number
of options for such person or group reflected in the column titled Options Currently
Exercisable or Exercisable Within 60 Days.(2)
    
    This information is based upon information included in a Schedule 13G filed with
the SEC on February 16, 2010 by Contego Systems LLC (Contego), Kende Holding kft
(Kende), Global Strategies Group Holding, S.A. (GLOBAL) and Damian Perl, one of our
Directors, as a group. Contego is wholly owned and managed by Kende, which is located at
Zichy Jeno U. 4, Budapest, K5 1066. Kende is 99.98% owned and controlled by GLOBAL,
which is located at 15 Boulevard Roosevelt, Luxembourg, L-2450. GLOBAL is controlled by
Damian Perl, who shares an address with Contego. According to the filing, each of these
entities holds shared voting power and shared dispositive power with respect to all of
these Shares.(3)
    
    This information is based upon information included in a Schedule 13G/A filed
with the SEC on February 11, 2011 by Ameriprise Financial, Inc. According to the filing,
the Shares beneficially owned by Ameriprise Financial, Inc. were acquired by its
subsidiary Columbia Management Investment Advisers, LLC, which is located at 100 Federal
St., Boston, MA 02110. Ameriprise Financial, Inc. and Columbia Management Investment
Advisers, LLC share dispositive power with respect to all of these Shares.(4)
    
    This information is based upon information included in a Schedule 13G filed with
the SEC on February 14, 2011 by Lord, Abbett & Co. LLC. According to the filing, the
Shares beneficially owned by Lord, Abbett & Co. LLC are held on behalf of investment
advisory clients. Lord, Abbett & Co. LLC reported holding sole voting power with respect
to 393,480 of these Shares and sole dispositive power with respect to 470,780 of these
Shares.(5)
    
    Includes 5,564 restricted Shares.(6)
    
    Includes 63,334 restricted Shares and 4,000 Shares owned indirectly by Hillen
Family Trust.(7)
    
    These shares are owned by Contego. Contego is wholly owned and managed by Kende.
Kende is 99.98% owned and controlled by GLOBAL, which is controlled by Mr. Perl. As a
result, Mr. Perl has shared voting and investment power as to the Shares.(8)
    
    Includes 35,000 restricted Shares and 3,500 Shares owned indirectly by Joanne
Mahoney Living Trust.(9)
    
    Mr. Allen has sole voting and investment power over 36,432 Shares and shared
voting and investment power over 73,437 Shares, which are held by the Allen Family Trust
in a brokerage margin account and as such have been pledged as security for the account.  56




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##### Table of Contents



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 Review, Approval or Ratification of Transactions with Related Persons
  Transactions with Related Persons
 Services to GLOBAL and its affiliates
 GNA GIS
 Contracting Relationships
 Subcontracting and support services provided to GIS by GNA
  Subcontracting services provided to Global Strategies Group (Middle East) FZE by GNA
 GAE
  Trademark License
  Registration Rights
   57




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##### Table of Contents



Director Independence
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
 RELATIONSHIP WITH INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 PwC
 2010
    
    
    2009Audit Fees(1)
    
    $
    462,000
    
    
    $
    966,431Audit-Related Fees
    
    
    
    
    
    
    Tax Fees(2)
    
    
    247,500
    
    
    
    197,121All Other Fees
    
    
    
    
    
    
    Total
    
    $
    709,500
    
    
    $
    1,163,552
 
 (1)
    
    In 2009, audit fees included services in connection with our initial public
offering totaling $657,810.(2)
    
    Tax fees consist of fees paid to PwC for professional services rendered for tax
compliance, tax advice, and tax planning. Pre-Approval Policies and Procedures
    58




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##### Table of Contents



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    The following documents are filed as a part of this annual report on Form 10-K:
 (1)
    
    All financial statements
 (2)
    
    Financial statement schedules are omitted as the required information is either
not applicable or is included in our audited financial statements.
 (b)
    
    Exhibits:
 Number
    
    Description2.1
    
    
    Stock Purchase Agreement, dated September 13, 2010, by and among Global Defense Technology & Systems, Inc., Zytel
Corporation and Peter K. Krusell (1)2.2
    
    
    Amended and Restated Purchase Agreement, dated December 17, 2010, by and among Global Defense Technology &
Systems, Inc., Signature Government Solutions, LLC and Signature Consultants, L.L.C. (2)3.1
    
    
    Amended and Restated Certificate of Incorporation of the Registrant (3)3.2
    
    
    Amended and Restated Bylaws of the Registrant (3)4.1
    +
    
    SFA, Inc. 2007 Stock Option Plan (4)4.2
    +
    
    Form of SFA, Inc. 2007 Stock Option Plan Agreement (4)4.3
    +
    
    2009 Performance Incentive Plan (5)4.4
    +
    
    Amendments to the 2009 Performance Incentive Plan (6)4.4
    +
    
    Form of 2009 Performance Incentive Option Plan Agreement (6)4.5
    +
    
    Form of 2009 Performance Incentive Restricted Stock Agreement (6)4.6
    +
    
    Executive Nonqualified Excess Plan (7)10.1
    
    
    GSA Schedule Contract No. GS-35F-0344L awarded to The Analysis Corp., with related purchase orders for the
Department of Justice contract (7)10.2
    
    
    TWPS Contract No. DAAE07-02-DT001, dated February 6, 2002, by and between SFA, Inc. and U.S. Army TACOM, as
amended (4)10.3
    
    
    Aberdeen Contract No. W91CRB06D0054, dated August 31, 2006, by and between SFA, Inc. and U.S. Army, as amended (4)10.4
    
    
    Field Feeding System Contract No. W911QY-05-D0004, dated April 15, 2005, by and between SFA, Inc. and the U.S.
Army, as amended (7)10.5
    
    
    Preferred Supplier Services Framework Agreement, dated June 24, 2009 by and between Global Strategies Group
(North America) Inc. and Global Strategies Group (Middle East) FZE (4)10.6
    +
    
    Form of Director and Officer Indemnification Agreement (4)10.7
    
    
    Services Agreement dated June 17, 2009 by and between GSG Holding (United Kingdom) Limited and Contego Newco
Company (4)10.8
    
    
    Subcontract No. GMS-2117-08-02-001, dated December 13, 2008 by and between Global Strategies Group (Integrated
Securities), Inc. and Global Strategies Group (North America) Inc. (4)
  59




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##### Table of Contents



Number
    
    Description10.9
    
    
    Trademark License Agreement dated September 29, 2009 by and between Global Strategies Group Holding, S.A. and
Global Defense Technology & Systems, Inc. (4)10.10
    
    
    Security Control Agreement, dated September 16, 2010, by and among Global Strategies Group Holding SA, Kende
Holding Vagyonkezelo kft, Contego Systems LLC, Global Defense Technology & Systems, Inc. and the United States
Department of Defense (8)10.11
    
    
    First Amended and Restated Loan and Security Agreement, dated as of December 10, 2010, by and among Global
Defense Technology & Systems, Inc., Global Strategies Group (North America) Inc., The Analysis Corp. and GTEC
Cyber Solutions, Inc., as Borrowers, the Lenders party thereto, SunTrust Bank as Administrative Agent for the
Lenders, SunTrust Robinson Humphrey, Inc. as Joint Lead Arranger and Book Manager and Wells Fargo Securities, LLC
as Joint Lead Arranger (9)10.12
    
    
    Registration Rights Agreement to be entered into by and among Global Defense Technology & Systems, Inc., Contego
Systems LLC and Ronald Jones (3)10.13
    +
    
    Employment Agreement, dated March 26, 2010, by and among Global Defense Technology & Systems, Inc., Global
Strategies Group (North America) Inc. and John F. Hillen, III (10)10.14
    +
    
    Executive Employment Agreement, dated June 21, 2009, by and between Global Strategies Group (North America) Inc.
and Kirk Herdman (3)10.15
    +
    
    Employment Agreement, dated March 26, 2010, by and among Global Defense Technology & Systems, Inc., Global
Strategies Group (North America) Inc. and Ronald C. Jones (10)10.16
    +
    
    Employment Agreement, dated October 1, 2010, by and among Global Defense Technology & Systems, Inc., Global
Strategies Group (North America) Inc. and Chief Financial Officer Joseph M. Cormier (8)18
    
    
    Preferability Letter from PricewaterhouseCoopers LLP (8)21
    
    
    Subsidiaries of the Registrant (11)23
    
    
    Consent of PricewaterhouseCoopers LLP (11)31.1
    
    
    Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (11)31.2
    
    
    Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (11)32.1
    
    
    Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (11)32.2
    
    
    Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (11)
 
 (1)
    
    Incorporated by reference to the Exhibit filed with the Companys
Current Report on Form 8-K, filed October 7, 2010 (File No.
001-34551)(2)
    
    Incorporated by reference to the Exhibit filed with the Companys
Current Report on Form 8-K, filed December 21, 2010 (File No.
001-34551)(3)
    
    Incorporated by reference to the Exhibits filed with the
Companys Annual Report on Form 10-K, filed March 5, 2010 (File
No. 001-34551)(4)
    
    Incorporated by reference to the Exhibits filed with Amendment
No. 1 to the Companys Registration Statement on Form S-1, filed
October 7, 2009 (File No. 333-161719)  60




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##### Table of Contents



(5)
    
    Incorporated by reference to the Exhibits filed with the
Companys Registration Statement on Form S-8, filed November 25,
2009 (File No. 333-163346)(6)
    
    Incorporated by reference to the Exhibits filed with the
Companys Current Report on Form 8-K, filed November 4, 2010
(File No. 001-34551)(7)
    
    Incorporated by reference to the Exhibits filed with Amendment
No. 4 to the Companys Registration Statement on Form S-1, filed
November 5, 2009 (File No. 333-161719)(7)
    
    Incorporated by reference to the Exhibit filed with the Companys
Current Report on Form 8-K, filed December 16, 2010 (File No.
001-34551)(8)
    
    Incorporated by reference to the Exhibits filed with the
Companys Quarterly Report on Form 10-Q, filed November 5, 2010
(File No. 001-34551)(9)
    
    Incorporated by reference to the Exhibit filed with the Companys
Current Report on Form 8-K, filed December 14, 2010 (File No.
001-34551)(10)
    
    Incorporated by reference to the Exhibits filed with the
Companys Current Report on Form 8-K, filed April 1, 2010 (File
No. 001-34551)(11)
    
    Included with this filing+
    
    Management contract or compensatory plan.  61




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##### Table of Contents



SIGNATURES
  Date: March 11, 2011
    Global Defense Technology & Systems, Inc./s/ John HillenJohn HillenPresident and Chief Executive Officer

(Principal Executive Officer)  Signature
    
    Title
    
    Date/s/ John Hillen

John Hillen
    
    President and Chief Executive Officer

(Principal Executive Officer)
    
    March 11, 2011/s/ Joseph M. Cormier

Joseph M. Cormier
    
    Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
    
    March 11, 2011/s/ Thomas R. Wilson

Thomas R. Wilson
    
    Chairman of the Board
    
    March 11, 2011/s/ Ronald C. Jones

Ronald C. Jones
    
    Director
    
    March 11, 2011/s/ John J. Devine

John J. Devine
    
    Director
    
    March 11, 2011/s/ Jacques S. Gansler

Jacques S. Gansler
    
    Director
    
    March 11, 2011/s/ Damian Perl

Damian Perl
    
    Director
    
    March 11, 2011/s/ Eric S. Rangen

Eric S. Rangen
    
    Director
    
    March 11, 2011
  62




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##### Table of Contents



Global Defense Technology & Systems, Inc.
Index to Consolidated Financial Statements
 Report of Independent Registered Public Accounting Firm
    
    
    F-2Financial StatementsConsolidated Balance Sheets as of December 31, 2010 and 2009
    
    
    F-3Consolidated Statements of Operations for the years ended December 31, 2010, 2009 and 2008
    
    
    F-4Consolidated Statements of Changes in Stockholders Equity for the years ended December 31, 2010, 2009 and 2008
    
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
  F-1




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
   
  F-2




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##### Table of Contents



GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (UNAUDITED)
 (in thousands, except share and per share amounts)
 As of December 31,2010
    
    
    2009AssetsCurrent assetsCash and cash equivalents
    
    $
    566
    
    
    $
    7Accounts receivable, net
    
    
    85,769
    
    
    
    50,691Due from affiliates
    
    
    501
    
    
    
    1,109Prepaid expenses and other current assets
    
    
    1,250
    
    
    
    1,238Deferred tax assets
    
    
    552
    
    
    
    324Income taxes receivable
    
    
    
    
    
    
    3,543Total current assets
    
    
    88,638
    
    
    
    56,912Property and equipment, net
    
    
    3,917
    
    
    
    3,441Intangible assets, net
    
    
    31,215
    
    
    
    21,268Goodwill
    
    
    83,593
    
    
    
    24,373Deferred tax assets
    
    
    4,406
    
    
    
    6,295Indemnification asset
    
    
    1,702
    
    
    
    Other assets
    
    
    808
    
    
    
    222Total assets
    
    $
    214,279
    
    
    $
    112,511Liabilities and Stockholders EquityCurrent liabilitiesAccounts payable
    
    $
    25,192
    
    
    $
    13,040Accrued expenses
    
    
    10,836
    
    
    
    9,521Advance payments on contracts
    
    
    515
    
    
    
    517Income taxes payable
    
    
    419
    
    
    
    Interest rate swap liability
    
    
    
    
    
    
    106Total current liabilities
    
    
    36,962
    
    
    
    23,184Deferred rent
    
    
    307
    
    
    
    289Uncertain tax position
    
    
    1,702
    
    
    
    Bank loans, net of current
    
    
    79,605
    
    
    
    3,686Total liabilities
    
    
    118,576
    
    
    
    27,159Commitments and contingencies (Note 5, 8 and 16)Stockholders EquityCommon stock, par value $0.01 per share,
90,000,000
shares authorized and 9,146,812 and 9,051,812
shares issued and outstanding, respectively
    
    
    91
    
    
    
    91Additional paid-in capital
    
    
    89,776
    
    
    
    88,178Retained earnings (accumulated deficit)
    
    
    5,836
    
    
    
    (2,917
    )Total stockholders equity
    
    
    95,703
    
    
    
    85,352Total liabilities and stockholders equity
    
    $
    214,279
    
    
    $
    112,511
   F-3




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##### Table of Contents



GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except share and per share amounts)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008RevenueProducts
    
    $
    127,078
    
    
    $
    122,457
    
    
    $
    108,993Services
    
    
    105,591
    
    
    
    90,388
    
    
    
    80,433Total revenue
    
    
    232,669
    
    
    
    212,845
    
    
    
    189,426Operating costs and expensesCost of revenue  products
    
    
    104,764
    
    
    
    100,165
    
    
    
    91,076Cost of revenue  services
    
    
    88,042
    
    
    
    75,066
    
    
    
    65,195Selling, general and administrative expenses
    
    
    21,726
    
    
    
    24,861
    
    
    
    16,957Amortization of intangible assets
    
    
    3,754
    
    
    
    8,356
    
    
    
    8,841Impairment of intangible assets
    
    
    
    
    
    
    
    
    
    
    2,447Total operating costs and expenses
    
    
    218,286
    
    
    
    208,448
    
    
    
    184,516Operating income
    
    
    14,383
    
    
    
    4,397
    
    
    
    4,910Other income (expense)Interest income
    
    
    12
    
    
    
    7
    
    
    
    40Interest expense
    
    
    (477
    )
    
    
    (1,849
    )
    
    
    (2,750
    )Income before income taxes
    
    
    13,918
    
    
    
    2,555
    
    
    
    2,200Provision for income taxes
    
    
    (5,165
    )
    
    
    (1,286
    )
    
    
    (1,138
    )Net income
    
    $
    8,753
    
    
    $
    1,269
    
    
    $
    1,062Earnings per shareBasic
    
    $
    0.97
    
    
    $
    0.20
    
    
    $
    0.18Diluted
    
    $
    0.96
    
    
    $
    0.20
    
    
    $
    0.18Weighted average common shares outstandingBasic
    
    
    9,056,196
    
    
    
    6,341,079
    
    
    
    6,000,000Diluted
    
    
    9,156,879
    
    
    
    6,440,301
    
    
    
    6,000,000
   F-4




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##### Table of Contents



GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC.
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (in thousands, except share amounts)
 RetainedEarnings /Shares
    
    
    Par
    
    
    Additional Paid-
    
    
    (Accumulated
    
    
    TotalIssued
    
    
    Value
    
    
    in Capital
    
    
    Deficit)
    
    
    EquityBalance at December 31, 2007
    
    
    6,000,000
    
    
    $
    60
    
    
    $
    47,090
    
    
    $
    (5,248
    )
    
    $
    41,902Share based compensation
    
    
    
    
    
    
    
    
    
    
    435
    
    
    
    
    
    
    
    435Cash distribution for vested options
    
    
    
    
    
    
    
    
    
    
    (270
    )
    
    
    
    
    
    
    (270
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,062
    
    
    
    1,062Balance at December 31, 2008
    
    
    6,000,000
    
    
    
    60
    
    
    
    47,255
    
    
    
    (4,186
    )
    
    
    43,129Issuance of shares from public offering, net of
offering costs
    
    
    3,000,000
    
    
    
    30
    
    
    
    34,296
    
    
    
    
    
    
    
    34,326Issuance of shares to management
    
    
    36,432
    
    
    
    1
    
    
    
    619
    
    
    
    
    
    
    
    620Issuance of restricted shares to directors
    
    
    15,380
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    3Share based compensation
    
    
    
    
    
    
    
    
    
    
    4,134
    
    
    
    
    
    
    
    4,134Excess tax benefit  share based compensation
    
    
    
    
    
    
    
    
    
    
    1,871
    
    
    
    
    
    
    
    1,871Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,269
    
    
    
    1,269Balance at December 31, 2009
    
    
    9,051,812
    
    
    
    91
    
    
    
    88,178
    
    
    
    (2,917
    )
    
    
    85,352Share based compensation
    
    
    
    
    
    
    
    
    
    
    729
    
    
    
    
    
    
    
    729Issuance of common stock for exercise of stock options
    
    
    75,000
    
    
    
    
    
    
    
    488
    
    
    
    
    
    
    
    488Issuance of restricted shares to management
    
    
    20,000
    
    
    
    
    
    
    
    180
    
    
    
    
    
    
    
    180Excess tax benefit  share based compensation
    
    
    
    
    
    
    
    
    
    
    201
    
    
    
    
    
    
    
    201Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,753
    
    
    
    8,753Balance at December 31, 2010
    
    
    9,146,812
    
    
    $
    91
    
    
    $
    89,776
    
    
    $
    5,836
    
    
    $
    95,703
   F-5




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##### Table of Contents



GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    8,753
    
    
    $
    1,269
    
    
    $
    1,062Adjustments to reconcile net income to net cash provided by (used in)
operating activitiesDepreciation and amortization
    
    
    1,059
    
    
    
    1,005
    
    
    
    996Amortization of intangible assets
    
    
    3,754
    
    
    
    8,356
    
    
    
    11,288Equity-based compensation
    
    
    909
    
    
    
    4,757
    
    
    
    435Loss on disposition of property and equipment
    
    
    
    
    
    
    64
    
    
    
    12Gain from change in fair value of interest rate swap
    
    
    (106
    )
    
    
    (166
    )
    
    
    128Deferred income taxes
    
    
    (257
    )
    
    
    (1,233
    )
    
    
    (2,111
    )Change in operating assets and liabilities, net of business acquisitionsAccounts receivable
    
    
    (24,694
    )
    
    
    (12,298
    )
    
    
    (82
    )Due to/from affiliates
    
    
    608
    
    
    
    (1,055
    )
    
    
    (61
    )Prepaid expenses and other assets
    
    
    202
    
    
    
    (383
    )
    
    
    96Income taxes receivable/payable
    
    
    4,251
    
    
    
    75
    
    
    
    (1,834
    )Excess tax benefit  share based compensation
    
    
    (289
    )
    
    
    (1,871
    )
    
    
    Accounts payable
    
    
    10,812
    
    
    
    4,453
    
    
    
    812Accrued expenses
    
    
    135
    
    
    
    (2,111
    )
    
    
    1,860Accrued interest on loans from affiliates
    
    
    
    
    
    
    1,079
    
    
    
    201Advance payments on contracts
    
    
    (2
    )
    
    
    (4,038
    )
    
    
    (4,497
    )Deferred rent
    
    
    18
    
    
    
    60
    
    
    
    132Net cash provided by (used in) operating activities
    
    
    5,153
    
    
    
    (2,037
    )
    
    
    8,437Cash flows from investing activitiesAcquisitions, net of cash acquired
    
    
    (79,247
    )
    
    
    
    
    
    
    Purchases of property and equipment
    
    
    (1,192
    )
    
    
    (1,071
    )
    
    
    (602
    )Recovery from acquisition escrow
    
    
    
    
    
    
    
    
    
    
    475Net cash used in investing activities
    
    
    (80,439
    )
    
    
    (1,071
    )
    
    
    (127
    )Cash flows from financing activitiesProceeds from stock issuance  net offering costs
    
    
    
    
    
    
    34,326
    
    
    
    Excess tax benefit  share based compensation
    
    
    289
    
    
    
    1,871
    
    
    
    Payments under term loan
    
    
    
    
    
    
    (12,600
    )
    
    
    (3,600
    )Net borrowings (payments) under revolving line of credit
    
    
    75,919
    
    
    
    (4,898
    )
    
    
    238Payments under loans from affiliates
    
    
    
    
    
    
    (16,909
    )
    
    
    (3,517
    )Distribution for vested options
    
    
    
    
    
    
    
    
    
    
    (270
    )Payments of financing costs
    
    
    (851
    )
    
    
    (97
    )
    
    
    (9
    )Proceeds from exercise of employee stock options
    
    
    488
    
    
    
    
    
    
    
    Advances to affiliates
    
    
    
    
    
    
    
    
    
    
    (9
    )Net cash provided by (used in) financing activities
    
    
    75,845
    
    
    
    1,693
    
    
    
    (7,167
    )Increase (decrease) in cash and cash equivalents
    
    
    559
    
    
    
    (1,415
    )
    
    
    1,143Cash and cash equivalents, beginning of period
    
    
    7
    
    
    
    1,422
    
    
    
    279Cash and cash equivalents, end of period
    
    $
    566
    
    
    $
    7
    
    
    $
    1,422Supplemental disclosure of cash flow informationCash paid during the year for:Income taxes
    
    $
    1,015
    
    
    $
    2,861
    
    
    $
    5,061Interest
    
    $
    477
    
    
    $
    2,577
    
    
    $
    2,420
   F-6




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##### Table of Contents



GLOBAL DEFENSE TECHNOLOGY & SYSTEMS, INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (in thousands, except share and per share amounts)
 1. Organization and Business Overview
 Basis of Presentation
       Nature of Operations
  2. Summary of Significant Accounting Policies
 Use of Estimates
   F-7




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##### Table of Contents



Revenue Recognition
          Cash and Cash Equivalents
  Accounts Receivable and Allowance for Doubtful Accounts
  Property and Equipment
  Long-Lived Assets (Excluding Goodwill)
   F-8




---



##### Table of Contents



Intangible Assets
  Goodwill
     Deferred Financing Costs
  Fair Value of Financial Instruments
  Interest Rate Swap
  Income Taxes
    F-9




---



##### Table of Contents



Product Warranties
  Research and Development
  Stock-Based Compensation
  Earnings per Share
  New Accounting Pronouncements
    F-10




---



##### Table of Contents



3. Accounts Receivable
  As of December 31,2010
    
    
    2009Billed
    
    $
    18,145
    
    
    $
    14,842UnbilledBillable
    
    
    46,093
    
    
    
    13,288Revenues in excess of billing milestones and other
    
    
    21,634
    
    
    
    22,668Total unbilled
    
    
    67,727
    
    
    
    35,956Total accounts receivable
    
    
    85,872
    
    
    
    50,798Less: allowance for doubtful accounts
    
    
    (103
    )
    
    
    (107
    )Total accounts receivable, net
    
    $
    85,769
    
    
    $
    50,691
   Balance at
    
    
    Charged to
    
    
    Write-offs,Beginning of
    
    
    Costs and
    
    
    Net of
    
    
    Balance at EndDescription
    
    Period
    
    
    Expenses
    
    
    Recoveries
    
    
    of PeriodAllowance for doubtful accountsPeriod ended December 31, 2010
    
    $
    107
    
    
    $
    
    
    
    $
    4
    
    
    $
    103Period ended December 31, 2009
    
    
    412
    
    
    
    
    
    
    
    305
    
    
    
    107Period ended December 31, 2008
    
    
    151
    
    
    
    369
    
    
    
    108
    
    
    
    412
 4. Accrued Expenses
  As of December 31,2010
    
    
    2009Profit Sharing Accruals
    
    $
    1,283
    
    
    $
    1,552Accrued Leave
    
    
    2,689
    
    
    
    2,007Payroll Accruals
    
    
    3,865
    
    
    
    2,907Bonus Accruals
    
    
    2,453
    
    
    
    2,294Other Accruals
    
    
    546
    
    
    
    761Total accrued expenses
    
    $
    10,836
    
    
    $
    9,521
 5. Property and Equipment
  As of December 31,2010
    
    
    2009Equipment and software
    
    $
    4,160
    
    
    $
    3,070Furniture and fixtures
    
    
    782
    
    
    
    725Vehicles
    
    
    27
    
    
    
    27Leasehold improvements
    
    
    2,244
    
    
    
    2,131Total property and equipment
    
    
    7,213
    
    
    
    5,953Less: accumulated depreciation and amortization
    
    
    (3,296
    )
    
    
    (2,512
    )Property and equipment, net
    
    $
    3,917
    
    
    $
    3,441
   F-11




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##### Table of Contents



6. Intangible Assets
  As of December 31,2010
    
    
    2009Customer relationships
    
    $
    38,400
    
    
    $
    25,400Less: Accumulated amortization
    
    
    (9,932
    )
    
    
    (7,303
    )28,468
    
    
    
    18,097Contract backlog
    
    $
    17,050
    
    
    
    16,400Less: Accumulated amortization
    
    
    (16,464
    )
    
    
    (15,717
    )586
    
    
    
    683Trade name
    
    $
    50
    
    
    
    Less: Accumulated amortization
    
    
    (28
    )
    
    
    22
    
    
    
    Developed technologies
    
    $
    3,492
    
    
    
    3,492Less: Accumulated amortization
    
    
    (1,353
    )
    
    
    (1,004
    )2,139
    
    
    
    2,488Total
    
    $
    31,215
    
    
    $
    21,268
  EstimatedUseful LivesCustomer relationships
    
    10  15 yearsContract backlog
    
    1  3 yearsTrade name
    
    1 yearDeveloped technologies
    
    10 years
   For the Year Ending December 31,2011
    
    $
    4,3702012
    
    
    3,7562013
    
    
    3,7562014
    
    
    3,7562015
    
    
    3,756Thereafter
    
    
    11,821$
    31,215
  F-12




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##### Table of Contents



7. Leases
   For the Year Ending December 31,2011
    
    $
    3,1452012
    
    
    2,4112013
    
    
    1,9102014
    
    
    1,3812015
    
    
    1,399Thereafter
    
    
    469$
    10,715
  8. Bank Loans and Loans from Affiliates
 Bank Loans:
       F-13




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##### Table of Contents



Loans from Affiliates:
      December 31, 2010
    
    
    December 31, 2009Balance
    
    
    Rate
    
    
    Balance
    
    
    RateBank loansRevolving line of credit
    
    $
    79,605
    
    
    
    3.51
    %
    
    $
    3,686
    
    
    
    3.00
    %Total
    
    
    79,605
    
    
    
    
    
    
    
    3,686Less current portion
    
    
    
    
    
    
    
    
    
    
    $
    79,605
    
    
    
    
    
    
    $
    3,686
  For the Year Ending December 31,2011
    
    $
    2012
    
    
    2013
    
    
    79,605$
    79,605
 9. Interest Rate Swap
    F-14




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##### Table of Contents



As of December 31, 2009AtLevel 1
    
    
    Level 2
    
    
    Level 3
    
    
    Fair ValueCurrent liabilitiesInterest rate swap
    
    $
    
    
    
    $
    106
    
    
    $
    
    
    
    $
    106
 10. Acquisitions
        F-15




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##### Table of Contents



Cyber Solutions
    
    
    Assured ITCash
    
    $
    1,441
    
    
    $
    Accounts receivable
    
    
    2,666
    
    
    
    7,719Prepaid expenses and other
    
    
    188
    
    
    
    28Property, plant and equipment
    
    
    
    
    
    
    76Identifiable intangible assets
    
    
    4,550
    
    
    
    9,150Deferred tax assets
    
    
    3
    
    
    
    Indemnification asset
    
    
    1,686
    
    
    
    Goodwill
    
    
    22,183
    
    
    
    37,037Less assumed liabilitiesAccounts payable and
accrued expenses
    
    
    (1,713
    )
    
    
    (807
    )Deferred tax liabilities
    
    
    (1,836
    )
    
    
    Uncertain tax position
    
    
    (1,686
    )
    
    
    $
    27,482
    
    
    $
    53,203
  Cyber Solutions
    
    
    Assured ITWeighted Average
    
    
    
    
    
    
    Weighted AverageFair Value
    
    
    Amortization Period
    
    
    Fair Value
    
    
    Amortization PeriodCustomer relationships
    
    $
    4,300
    
    
    
    15
    
    
    $
    8,700
    
    
    
    15Contract backlog
    
    
    200
    
    
    
    1
    
    
    
    450
    
    
    
    1Trade name
    
    
    50
    
    
    
    1
    
    
    
    
    
    
    
    $
    4,550
    
    
    
    14.2
    
    
    $
    9,150
    
    
    
    14.3
  Goodwill attributable to the TIS Segment
    
    2010
    
    
    2009Balance as of January 1
    
    $
    9,935
    
    
    $
    9,935Goodwill acquired during the year
    
    
    59,220
    
    
    
    Balance at December 31
    
    $
    69,155
    
    
    $
    9,935
 Goodwill attributable to the FMMS Segment
    
    2010
    
    
    2009Balance as of January 1
    
    $
    14,438
    
    
    $
    14,438Goodwill acquired during the year
    
    
    
    
    
    
    Balance at December 31
    
    $
    14,438
    
    
    $
    14,438
  Unaudited Pro Forma Financial
  Pro forma for theYear Ended December 31,2010
    
    
    2009Revenues
    
    $
    282,095
    
    
    $
    260,504Net income
    
    
    4,374
    
    
    
    2,280
  F-16




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##### Table of Contents



11. Stock-Based Compensation Plans
       Weighted-Average GrantShares
    
    
    Date Fair ValueGranted
    
    
    15,380
    
    
    $
    14.37Outstanding at December 31,
2009
    
    
    15,380
    
    
    $
    14.37Granted
    
    
    20,000
    
    
    $
    16.37Vested
    
    
    (5,128
    )
    
    $
    14.37Outstanding at December 31,
2010
    
    
    30,252
    
    
    $
    15.69
  F-17




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##### Table of Contents



Weighted-AverageOptions
    
    
    Exercise PriceOptions outstanding at December 31, 2007
    
    
    600,039
    
    
    $
    10.00Options granted
    
    
    135,000
    
    
    $
    11.19Options exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (266,684
    )
    
    
    9.17Options outstanding at December 31, 2008
    
    
    468,355
    
    
    $
    9.75Options granted
    
    
    259,087
    
    
    $
    14.46Options exercised
    
    
    
    
    
    
    Options forfeited
    
    
    (166,131
    )
    
    
    9.57Options outstanding at December 31, 2009
    
    
    561,311
    
    
    $
    10.18Options granted
    
    
    354,500
    
    
    $
    14.18Options exercised
    
    
    (75,000
    )
    
    
    6.52Options forfeited
    
    
    (35,006
    )
    
    
    8.51Options outstanding at December 31, 2010
    
    
    805,805
    
    
    $
    11.99
  Weighted-
    
    
    WeightedAverage
    
    
    AverageGrant Date
    
    
    ExerciseOptions
    
    
    Fair Value
    
    
    PriceUnvested at December 31, 2007
    
    
    600,039
    
    
    $
    4.49
    
    
    $
    10.00Granted
    
    
    135,000
    
    
    $
    4.20
    
    
    $
    11.19Vested
    
    
    (83,339
    )
    
    
    4.49
    
    
    
    9.17Forfeited
    
    
    (266,684
    )
    
    
    4.49
    
    
    
    9.17Unvested at December 31, 2008
    
    
    385,016
    
    
    $
    4.39
    
    
    $
    9.88Vested at December 31, 2008
    
    
    83,339
    
    
    $
    4.49
    
    
    $
    9.17Granted
    
    
    259,087
    
    
    $
    4.86
    
    
    $
    14.46Vested
    
    
    (54,175
    )
    
    
    4.22
    
    
    
    10.43Forfeited
    
    
    (166,131
    )
    
    
    4.24
    
    
    
    9.57Unvested at December 31, 2009
    
    
    423,797
    
    
    $
    4.64
    
    
    $
    11.27Vested at December 31, 2009
    
    
    137,514
    
    
    $
    4.39
    
    
    $
    6.82Granted
    
    
    354,500
    
    
    $
    4.68
    
    
    $
    14.18Vested
    
    
    (144,879
    )
    
    
    4.66
    
    
    
    9.81Forfeited
    
    
    (35,006
    )
    
    
    4.53
    
    
    
    8.51Exercised
    
    
    (75,000
    )
    
    
    4.49
    
    
    
    6.52Unvested at December 31, 2010
    
    
    598,412
    
    
    $
    4.71
    
    
    $
    12.98Vested at December 31, 2010
    
    
    207,393
    
    
    $
    4.54
    
    
    $
    9.15
   F-18




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##### Table of Contents



As of December 31,2010
    
    
    2009
    
    
    2008Expected Volatility
    
    
    33.5
    %
    
    
    33.6
    %
    
    
    33.7
    %Expected term (in years)
    
    
    5
    
    
    
    5
    
    
    
    5Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Risk-free Interest Rate
    
    
    1.26  2.65
    %
    
    
    1.72  2.09
    %
    
    
    3.3
    %
 
    
    Expected Volatility. The expected volatility of the Companys shares was estimated
using the volatility of a peer group of public companies. The Company was not public for
a long enough period to have sufficient data points in calculating volatility based on
its own stock trading history.
 
    
    Expected Term. Because of the small group of option holders, the Company used
actual and expected attrition rates to estimate the term of the options.
 
    
    Dividend Yield. The Black-Scholes-Merton valuation model calls for a single
expected dividend yield as an input. The Company has not paid dividends in the past nor
does it expect to pay dividends in the future.
 
    
    Risk-free Interest Rate. The Company bases the risk-free interest rate used in
the Black-Scholes-Merton valuation method on the implied yield available on a U.S.
Treasury note with a term equal to the expected term of the underlying grants.
  F-19




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##### Table of Contents



12. Provision for Income Taxes
  Year Ended December 31,2010
    
    
    2009
    
    
    2008CurrentFederal
    
    $
    4,407
    
    
    $
    1,706
    
    
    $
    2,457State & Local
    
    
    1,015
    
    
    
    813
    
    
    
    793Total current
    
    
    5,422
    
    
    
    2,519
    
    
    
    3,250DeferredFederal
    
    
    (233
    )
    
    
    (966
    )
    
    
    (1,712
    )State & Local
    
    
    (24
    )
    
    
    (267
    )
    
    
    (400
    )Total deferred
    
    
    (257
    )
    
    
    (1,233
    )
    
    
    (2,112
    )Total income tax provision
    
    $
    5,165
    
    
    $
    1,286
    
    
    $
    1,138
  Year Ended December 31,2010
    
    
    2009
    
    
    2008U.S. Federal income tax rate
    
    
    35.0
    %
    
    
    34.0
    %
    
    
    34.0
    %State taxes
    
    
    4.8
    
    
    
    15.6
    
    
    
    11.8Change in valuation allowance
    
    
    (2.9
    )
    
    
    2.4
    
    
    
    0.0Meal and entertainment, and other
    
    
    0.2
    
    
    
    (1.7
    )
    
    
    5.9Provision for income taxes
    
    
    37.1
    %
    
    
    50.3
    %
    
    
    51.7
    %
   2010
    
    
    2009Deferred tax assetsDepreciation and amortization
    
    $
    3,523
    
    
    $
    5,677Accrued bonuses and vacation
    
    
    832
    
    
    
    522Bad debt and other reserves
    
    
    194
    
    
    
    130Net operating losses and tax credits
    
    
    463
    
    
    
    899Other
    
    
    128
    
    
    
    421Less: Valuation allowance
    
    
    
    
    
    
    (840
    )Total deferred tax assets
    
    $
    5,140
    
    
    
    6,809Deferred tax liabilitiesPrepaid expenses
    
    $
    (182
    )
    
    $
    (190
    )Total deferred tax liability
    
    
    (182
    )
    
    
    (190
    )Net deferred tax assets
    
    $
    4,958
    
    
    $
    6,619
   F-20




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##### Table of Contents



Balance at
    
    
    Additions to
    
    
    Deductions ofBeginning of
    
    
    Valuation
    
    
    Valuation
    
    
    Balance at EndDescription
    
    Period
    
    
    Allowance
    
    
    Allowance
    
    
    of PeriodTax valuation allowancePeriod ended
December 31, 2010
    
    $
    840
    
    
    $
    
    
    
    $
    840
    
    
    $
    Period ended
December 31, 2009
    
    
    
    
    
    
    840
    
    
    
    
    
    
    
    840Period ended
December 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13. Employee Benefit Plans
  14. Earnings Per Share
   F-21




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##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Net income
    
    $
    8,753
    
    
    $
    1,269
    
    
    $
    1,062Weighted average basic shares outstanding
    
    
    9,056,196
    
    
    
    6,341,079
    
    
    
    6,000,000Effect of dilutive shares:Assuming exercise of stock options
    
    
    97,643
    
    
    
    91,331
    
    
    
    Restricted shares
    
    
    3,040
    
    
    
    7,891
    
    
    
    Weighted average dilutive shares outstanding
    
    
    9,156,879
    
    
    
    6,440,301
    
    
    
    6,000,000Basic earnings per share
    
    $
    0.97
    
    
    $
    0.20
    
    
    $
    0.18Diluted earnings per share
    
    $
    0.96
    
    
    $
    0.20
    
    
    $
    0.18
  15. Related Party Transactions
     16. Contingencies
  17. Information on Reportable Segments
    F-22




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##### Table of Contents



Year Ended December 31,2010
    
    
    2009
    
    
    2008Revenue from external customersTIS Segment
    
    $
    105,591
    
    
    $
    90,388
    
    
    $
    80,433FMMS Segment
    
    
    127,078
    
    
    
    122,457
    
    
    
    108,993Total revenue from external
customers
    
    $
    232,669
    
    
    $
    212,845
    
    
    $
    189,426Operating incomeTIS Segment
    
    $
    9,957
    
    
    $
    7,766
    
    
    $
    7,441FMMS Segment
    
    
    14,148
    
    
    
    16,282
    
    
    
    13,060Unallocated Corporate expenses
    
    
    (9,722
    )
    
    
    (19,651
    )
    
    
    (15,591
    )Total operating income
    
    $
    14,383
    
    
    $
    4,397
    
    
    $
    4,910Interest expense, net
    
    
    (465
    )
    
    
    (1,842
    )
    
    
    (2,710
    )Income before income taxes
    
    $
    13,918
    
    
    $
    2,555
    
    
    $
    2,200Depreciation of fixed assetsTIS Segment
    
    $
    504
    
    
    $
    585
    
    
    $
    615FMMS Segment
    
    
    288
    
    
    
    327
    
    
    
    311Unallocated Corporate expenses
    
    
    
    
    
    
    3
    
    
    
    2Total
    
    $
    792
    
    
    $
    915
    
    
    $
    928Capital expendituresTIS Segment
    
    $
    1,037
    
    
    $
    263
    
    
    $
    211FMMS Segment
    
    
    155
    
    
    
    356
    
    
    
    379Unallocated Corporate expenses
    
    
    
    
    
    
    452
    
    
    
    12Total
    
    $
    1,192
    
    
    $
    1,071
    
    
    $
    602Revenue from major customersDepartment of Defense
    
    
    71.1
    %
    
    
    75.0
    %
    
    
    74.2
    %National security agencies
    
    
    28.9
    %
    
    
    25.0
    %
    
    
    25.8
    %
 As of December 31,2010
    
    
    2009Total assetsTIS Segment
    
    $
    33,818
    
    
    $
    19,407FMMS Segment
    
    
    57,863
    
    
    
    36,140Unallocated Corporate assets
    
    
    122,598
    
    
    
    56,964Total
    
    $
    214,279
    
    
    $
    112,511
  F-23




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##### Table of Contents



18. Unaudited Quarterly Financial Data
  First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter2010Revenue
    
    $
    45,893
    
    
    $
    49,222
    
    
    $
    55,379
    
    
    $
    82,175Operating income
    
    
    1,434
    
    
    
    3,535
    
    
    
    2,757
    
    
    
    6,657Income before income taxes
    
    
    1,429
    
    
    
    3,491
    
    
    
    2,716
    
    
    
    6,282Net income
    
    $
    1,094
    
    
    $
    2,063
    
    
    $
    2,013
    
    
    $
    3,583Basic EPS
    
    $
    0.12
    
    
    $
    0.23
    
    
    $
    0.22
    
    
    $
    0.39Diluted EPS
    
    $
    0.12
    
    
    $
    0.23
    
    
    $
    0.22
    
    
    $
    0.392009Revenue
    
    $
    49,613
    
    
    $
    53,427
    
    
    $
    54,028
    
    
    $
    55,777Operating income (loss)
    
    
    2,256
    
    
    
    1,689
    
    
    
    2,363
    
    
    
    (1,911
    )Income (loss) before income taxes
    
    
    1,749
    
    
    
    1,199
    
    
    
    1,872
    
    
    
    (2,265
    )Net (loss) income
    
    $
    919
    
    
    $
    641
    
    
    $
    1,272
    
    
    $
    (1,563
    )Basic EPS
    
    $
    0.15
    
    
    $
    0.11
    
    
    $
    0.21
    
    
    $
    (0.21
    )Diluted EPS
    
    $
    0.15
    
    
    $
    0.11
    
    
    $
    0.21
    
    
    $
    (0.21
    )
 19. Subsequent Event
   F-24