##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended October 2, 2009
 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: 333-127343
 
 DYNCORP INTERNATIONAL LLC
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    52-228712
(I.R.S. Employer
Identification No.)
 3190 Fairview Park Drive, Suite 700, Falls Church, Virginia 22042
(571) 722-0210
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes o No þ




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##### 



DYNCORP INTERNATIONAL LLC
TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONForward-Looking StatementsItem 1. Financial StatementsUnaudited Consolidated Statements of IncomeThree Months Ended October 2, 2009 and October 3, 2008
    
    
    3Unaudited Consolidated Statements of IncomeSix Months Ended October 2, 2009 and October 3, 2008
    
    
    4Unaudited Consolidated Balance SheetsOctober 2, 2009 and April 3, 2009
    
    
    5Unaudited Consolidated Statements of Cash FlowsSix Months Ended October 2, 2009 and October 3, 2008
    
    
    6Unaudited Consolidated Statements of Members EquitySix Months Ended October 2, 2009 and April 3, 2009
    
    
    7Notes to Consolidated Financial Statements (unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    33Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    45Item 4. Controls and Procedures
    
    
    45PART II. OTHER INFORMATIONItem 1. Legal Matters
    
    
    46Item 1A. Risk Factors
    
    
    46Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    46Item 3. Defaults Upon Senior Securities
    
    
    46Item 4. Submission of Matters to a Vote of Security Holders
    
    
    46Item 5. Other Information
    
    
    46Item 6. Exhibits
    
    
    46Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2




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Disclosure Regarding Forward-Looking Information
   2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 DYNCORP INTERNATIONAL LLC
 
 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 (Amounts in thousands)
 For the Three Months EndedOctober 2, 2009
    
    
    October 3, 2008Revenue
    
    $
    821,372
    
    
    $
    779,151Cost of services
    
    
    (727,279
    )
    
    
    (696,519
    )Selling, general and administrative expenses
    
    
    (31,304
    )
    
    
    (25,994
    )Depreciation and amortization expense
    
    
    (10,238
    )
    
    
    (10,005
    )Operating income
    
    
    52,551
    
    
    
    46,633Interest expense
    
    
    (13,691
    )
    
    
    (14,905
    )Loss on early extinguishment of debt
    
    
    (162
    )
    
    
    (4,443
    )Earnings from affiliates
    
    
    1,527
    
    
    
    1,523Interest income
    
    
    103
    
    
    
    677Other (loss)/income, net
    
    
    (12
    )
    
    
    960Income before income taxes
    
    
    40,316
    
    
    
    30,445Provision for income taxes
    
    
    (13,301
    )
    
    
    (9,131
    )Net income
    
    
    27,015
    
    
    
    21,314Noncontrolling interests
    
    
    (6,460
    )
    
    
    (8,443
    )Net income attributable to DynCorp International LLC
    
    $
    20,555
    
    
    $
    12,871
   3




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##### Table of Contents



DYNCORP INTERNATIONAL LLC
 
 UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
 (Amounts in thousands)
 For the Six Months EndedOctober 2, 2009
    
    
    October 3, 2008Revenue
    
    $
    1,606,549
    
    
    $
    1,495,945Cost of services
    
    
    (1,426,372
    )
    
    
    (1,334,908
    )Selling, general and administrative expenses
    
    
    (54,742
    )
    
    
    (53,845
    )Depreciation and amortization expense
    
    
    (20,383
    )
    
    
    (20,565
    )Operating income
    
    
    105,052
    
    
    
    86,627Interest expense
    
    
    (28,301
    )
    
    
    (29,120
    )Loss on early extinguishment of debt
    
    
    (146
    )
    
    
    (4,443
    )Earnings from affiliates
    
    
    2,581
    
    
    
    2,640Interest income
    
    
    442
    
    
    
    1,021Other (loss)/income, net
    
    
    (241
    )
    
    
    1,665Income before income taxes
    
    
    79,387
    
    
    
    58,390Provision for income taxes
    
    
    (25,928
    )
    
    
    (18,447
    )Net income
    
    
    53,459
    
    
    
    39,943Noncontrolling interests
    
    
    (12,259
    )
    
    
    (9,092
    )Net income attributable to DynCorp International LLC
    
    $
    41,200
    
    
    $
    30,851
   4




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DYNCORP INTERNATIONAL LLC
 
 UNAUDITED CONSOLIDATED BALANCE SHEETS  (Amounts in thousands)
 As ofOctober 2, 2009
    
    
    April 3, 2009ASSETSCurrent assets:Cash and cash equivalents
    
    $
    132,084
    
    
    $
    200,222Restricted cash
    
    
    15,990
    
    
    
    5,935Accounts receivable, net of allowances of $348 and $68, respectively
    
    
    636,352
    
    
    
    564,432Prepaid expenses and other current assets
    
    
    116,277
    
    
    
    124,214Total current assets
    
    
    900,703
    
    
    
    894,803Property and equipment, net
    
    
    54,166
    
    
    
    18,338Goodwill
    
    
    420,180
    
    
    
    420,180Tradename
    
    
    18,318
    
    
    
    18,318Other intangibles, net
    
    
    125,377
    
    
    
    142,719Deferred income taxes
    
    
    9,530
    
    
    
    12,788Other assets, net
    
    
    30,177
    
    
    
    32,068Total assets
    
    $
    1,558,451
    
    
    $
    1,539,214LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    14,137
    
    
    $
    30,540Accounts payable
    
    
    213,699
    
    
    
    160,419Accrued payroll and employee costs
    
    
    113,275
    
    
    
    137,993Deferred income taxes
    
    
    14,700
    
    
    
    8,278Other accrued liabilities
    
    
    108,390
    
    
    
    111,590Income taxes payable
    
    
    3,843
    
    
    
    5,986Total current liabilities
    
    
    468,044
    
    
    
    454,806Long-term debt, less current portion
    
    
    537,887
    
    
    
    569,372Other long-term liabilities
    
    
    6,101
    
    
    
    6,779Total liabilities
    
    
    1,012,032
    
    
    
    1,030,957Commitments and contingenciesMembers equity:Members units, 100 outstanding
    
    
    331,613
    
    
    
    331,008Retained earnings
    
    
    220,755
    
    
    
    179,555Purchases of Parents common stock
    
    
    (9,085
    )
    
    
    (8,618
    )Accumulated other comprehensive loss
    
    
    (3,257
    )
    
    
    (4,424
    )Total members equity attributable to DynCorp International LLC
    
    
    540,026
    
    
    
    497,521Noncontrolling interests
    
    
    6,393
    
    
    
    10,736Total equity
    
    
    546,419
    
    
    
    508,257Total
liabilities and members equity
    
    $
    1,558,451
    
    
    $
    1,539,214
   5




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DYNCORP INTERNATIONAL LLC
 
 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 For the Six Months EndedOctober 2, 2009
    
    
    October 3, 2008Cash flows from operating activitiesNet income
    
    $
    53,459
    
    
    $
    39,943Adjustments to reconcile net income to net cash provided by
(used in) operating activities:Depreciation and amortization
    
    
    20,979
    
    
    
    21,087Amortization of deferred loan costs
    
    
    1,969
    
    
    
    1,723Loss on early extinguishment of debt
    
    
    146
    
    
    
    4,443Recovery for losses on accounts receivable
    
    
    (12
    )
    
    
    (173
    )Equity-based compensation
    
    
    2,171
    
    
    
    1,225Loss on disposition of assets, net
    
    
    453
    
    
    
    Earnings from affiliates
    
    
    (2,581
    )
    
    
    (2,640
    )Distributions from affiliates
    
    
    1,725
    
    
    
    1,385Deferred income taxes
    
    
    13,540
    
    
    
    (4,112
    )Other
    
    
    195
    
    
    
    (304
    )Changes in assets and liabilities:Restricted cash
    
    
    (10,055
    )
    
    
    7,326Accounts receivable
    
    
    (71,908
    )
    
    
    (64,104
    )Prepaid expenses and other current assets
    
    
    7,054
    
    
    
    (26,070
    )Accounts payable and accrued liabilities
    
    
    21,519
    
    
    
    54,096Income taxes payable
    
    
    (5,276
    )
    
    
    4,128Net cash provided by operating activities
    
    
    33,378
    
    
    
    37,953Cash flows from investing activitiesPurchase of property and equipment
    
    
    (34,687
    )
    
    
    (2,303
    )Purchase of computer software
    
    
    (1,635
    )
    
    
    (1,212
    )Change in cash restricted as collateral on letters of credit
    
    
    
    
    
    
    (16,568
    )Other
    
    
    60
    
    
    
    365Net cash (used in) investing activities
    
    
    (36,262
    )
    
    
    (19,718
    )Cash flows from financing activitiesBorrowings on long-term debt
    
    
    
    
    
    
    323,751Payments on long-term debt
    
    
    (48,626
    )
    
    
    (301,129
    )Purchases of Parents common stock
    
    
    (712
    )
    
    
    Borrowings under other financing arrangements
    
    
    
    
    
    
    16,158Payments of deferred financing cost
    
    
    13
    
    
    
    (9,645
    )Payments of dividends to noncontrolling interests
    
    
    (15,936
    )
    
    
    Other financing activities
    
    
    7
    
    
    
    30Net cash (used in) provided by financing activities
    
    
    (65,254
    )
    
    
    29,165Net (decrease) increase in cash and cash equivalents
    
    
    (68,138
    )
    
    
    47,400Cash and cash equivalents, beginning of period
    
    
    200,222
    
    
    
    85,379Cash and cash equivalents, end of period
    
    $
    132,084
    
    
    $
    132,779Income taxes paid, net of refunds
    
    $
    9,848
    
    
    $
    18,965Interest paid
    
    $
    27,103
    
    
    $
    30,054Non-cash investing activities
    
    $
    3,394
    
    
    $
    10,722
   6




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##### Table of Contents



DYNCORP INTERNATIONAL LLC
 
 UNAUDITED STATEMENTS OF MEMBERS EQUITY
 (Dollars in thousands)
 TotalMembersEquityAccumulated
    
    
    AttributableParents
    
    
    Other
    
    
    to DynCorpMembers
    
    
    Retained
    
    
    Common
    
    
    Comprehensive
    
    
    International
    
    
    Noncontrolling
    
    
    TotalUnits
    
    
    Earnings
    
    
    Stock
    
    
    Income (Loss)
    
    
    LLC
    
    
    Interests
    
    
    EquityBalance at April 3, 2009
    
    $
    331,008
    
    
    $
    179,555
    
    
    $
    (8,618
    )
    
    $
    (4,424
    )
    
    $
    497,521
    
    
    $
    10,736
    
    
    $
    508,257Comprehensive income (loss):Net income
    
    
    
    
    
    $
    53,459
    
    
    
    
    
    
    
    
    
    
    $
    53,459
    
    
    
    
    
    
    
    53,459Interest
rate swap, net of tax
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    
    769
    
    
    $
    769
    
    
    
    
    
    
    
    769Currency translation adjustment, net of tax
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    
    398
    
    
    $
    398
    
    
    
    
    
    
    
    398Comprehensive income
    
    
    
    
    
    $
    53,459
    
    
    
    
    
    
    
    1,167
    
    
    $
    54,626
    
    
    
    
    
    
    
    54,626Noncontrolling interests
    
    
    
    
    
    $
    (12,259
    )
    
    
    
    
    
    
    
    
    
    $
    (12,259
    )
    
    
    
    
    
    
    (12,259
    )Comprehensive income attributable to DynCorp
    
    
    
    
    
    $
    41,200
    
    
    
    
    
    
    
    1,167
    
    
    $
    42,367
    
    
    
    
    
    
    
    42,367Net Income and comprehensive income
attributable to noncontrolling interests
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    
    
    
    
    $
    0
    
    
    
    12,259
    
    
    
    12,259DIFZ financing, net of tax
    
    
    189
    
    
    $
    0
    
    
    
    
    
    
    
    
    
    
    $
    189
    
    
    
    
    
    
    
    189Purchases of Parents common stock
    
    
    
    
    
    $
    0
    
    
    
    (712
    )
    
    
    
    
    
    $
    (712
    )
    
    
    
    
    
    
    (712
    )Parents shares issued to settle RSU liability
    
    
    55
    
    
    $
    0
    
    
    
    245
    
    
    
    
    
    
    $
    300
    
    
    
    
    
    
    
    300Equity-based compensation
    
    
    354
    
    
    $
    0
    
    
    
    
    
    
    
    
    
    
    $
    354
    
    
    
    
    
    
    
    354Tax benefit reduction associated with equity-based
compensation
    
    
    7
    
    
    $
    0
    
    
    
    
    
    
    
    
    
    
    $
    7
    
    
    
    
    
    
    
    7Dividends paid to noncontrolling interests
    
    
    
    
    
    $
    0
    
    
    
    
    
    
    
    
    
    
    $
    0
    
    
    
    (16,602
    )
    
    
    (16,602
    )Balance at October 2, 2009
    
    $
    331,613
    
    
    $
    220,755
    
    
    $
    (9,085
    )
    
    $
    (3,257
    )
    
    $
    540,026.0
    
    
    $
    6,393
    
    
    $
    546,419
   7




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##### Table of Contents



DYNCORP INTERNATIONAL LLC
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 Note 1Basis of Presentation and Accounting Policies
 Basis of Presentation
      Consolidation
 Principles of Consolidation
 Consolidation
  8




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Contingency Response Services LLC
    
    
    45.0
    %Babcock DynCorp Limited
    
    
    44.0
    %Partnership for Temporary Housing LLC
    
    
    40.0
    %
 Consolidation
 Global Linguist Solutions LLC
    
    
    51.0
    %DynCorp International FZ-LLC
    
    
    50.0
    %
 Noncontrolling Interests
  Restricted cash
  Property and Equipment
  Accounting Policies
  Accounting Developments
 Pronouncements Implemented
 Consolidation
  9




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Business Combinations
 Collaborative Arrangements
 Intangibles Risks and Uncertainties
 Business Combinations
 Subsequent Events
  10




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Generally Accepted Accounting Principles
 Pronouncements Not Yet Implemented
 Consolidation
 Fair Value Measurements and Disclosures
 Note 2
  Prepaid expenses and other current assets 
 October 2,
    
    
    April 3,2009
    
    
    2009Prepaid expenses
    
    $
    53,608
    
    
    $
    61,570Inventories
    
    
    16,971
    
    
    
    10,840Work-in-process
    
    
    30,184
    
    
    
    33,885Joint venture receivables
    
    
    5,125
    
    
    
    2,491Other current assets
    
    
    10,389
    
    
    
    15,428Total
    
    $
    116,277
    
    
    $
    124,214
  Other assets, net 
 October 2,
    
    
    April 3,2009
    
    
    2009Deferred financing costs, net
    
    $
    11,464
    
    
    $
    13,828Investment in affiliates
    
    
    9,517
    
    
    
    8,982Promissory notes, long-term portion
    
    
    6,968
    
    
    
    6,631Other
    
    
    2,228
    
    
    
    2,627Total
    
    $
    30,177
    
    
    $
    32,068
  11




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Accrued payroll and employee costs 
 October 2,
    
    
    April 3,2009
    
    
    2009Wages, compensation and other benefits (1)
    
    $
    84,496
    
    
    $
    108,879Accrued vacation
    
    
    26,917
    
    
    
    26,329Accrued contributions to employee benefit plans
    
    
    1,862
    
    
    
    2,785Total
    
    $
    113,275
    
    
    $
    137,993
 (1)
    
    Includes RSUs accounted for as liability awards presented in Note 9. Other accrued liabilities 
 October 2,
    
    
    April 3,2009
    
    
    2009Deferred revenue
    
    $
    22,387
    
    
    $
    30,739Insurance expense
    
    
    27,567
    
    
    
    28,061Interest expense and short-term swap liability
    
    
    11,129
    
    
    
    11,688Contract losses
    
    
    6,032
    
    
    
    11,730Legal matters
    
    
    21,270
    
    
    
    16,993Other
    
    
    20,005
    
    
    
    12,379Total
    
    $
    108,390
    
    
    $
    111,590
  Note 3Goodwill and Other Intangible Assets
   (Dollars in thousands)
    
    LCM/GSDS
    
    
    ISS /GLS
    
    
    MTSS/GPSS
    
    
    TotalGoodwill balance as of April 3, 2009
    
    $
    39,935
    
    
    $
    300,094
    
    
    $
    80,151
    
    
    $
    420,180Reallocation of goodwill
    
    
    169,138
    
    
    
    (300,094
    )
    
    
    130,956
    
    
    
    Goodwill balance as of October 2, 2009
    
    $
    209,073
    
    
    $
    
    
    
    $
    211,107
    
    
    $
    420,180
   12




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October 2, 2009WeightedAverageUseful Life
    
    
    Gross
    
    
    Accumulated(Amounts in thousands, except years)
    
    (Years)
    
    
    Carrying Value
    
    
    Amortization
    
    
    NetFinite-lived intangible assets:Customer-related intangible assets
    
    
    8.5
    
    
    $
    290,716
    
    
    $
    (172,443
    )
    
    $
    118,273Other
    
    
    5.3
    
    
    
    17,012
    
    
    
    (9,908
    )
    
    
    7,104$
    307,728
    
    
    $
    (182,351
    )
    
    $
    125,377Indefinite-lived intangible assets  Tradename
    
    
    
    
    
    $
    18,318
    
    
    $
    
    
    
    $
    18,318
 April 3, 2009WeightedAverageUseful Life
    
    
    Gross Carrying
    
    
    Accumulated(Amounts in thousands, except years)
    
    (Years)
    
    
    Value
    
    
    Amortization
    
    
    NetFinite-lived intangible assets:Customer-related intangible assets
    
    
    8.5
    
    
    $
    290,716
    
    
    $
    (155,142
    )
    
    $
    135,574Other
    
    
    5.5
    
    
    
    15,351
    
    
    
    (8,206
    )
    
    
    7,145$
    306,067
    
    
    $
    (163,348
    )
    
    $
    142,719Indefinite-lived intangible assets  Tradename
    
    
    
    
    
    $
    18,318
    
    
    $
    
    
    
    $
    18,318
   AmortizationExpense(Dollars in thousands)Six month period ended October 2, 2010
    
    $
    18,995Estimate for fiscal year 2011
    
    
    33,926Estimate for fiscal year 2012
    
    
    23,248Estimate for fiscal year 2013
    
    
    19,480Estimate for fiscal year 2014
    
    
    8,282Thereafter
    
    
    21,446
 Note 4 Income Taxes
  Three Months EndedOctober 2,
    
    
    October 3,2009
    
    
    2008(Dollars in thousands)Current portion:Federal
    
    $
    5,346
    
    
    $
    11,024State
    
    
    676
    
    
    
    842Foreign
    
    
    1,968
    
    
    
    1,2717,990
    
    
    
    13,137Deferred portion:Federal
    
    
    5,146
    
    
    
    (3,874
    )State
    
    
    172
    
    
    
    (130
    )Foreign
    
    
    (7
    )
    
    
    (2
    )5,311
    
    
    
    (4,006
    )Provision for income taxes
    
    $
    13,301
    
    
    $
    9,131
  13




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Six Months EndedOctober 2,
    
    
    October 3,2009
    
    
    2008(Dollars in thousands)Current portion:Federal
    
    $
    8,509
    
    
    $
    20,610State
    
    
    1,069
    
    
    
    1,650Foreign
    
    
    2,810
    
    
    
    3,81112,388
    
    
    
    26,071Deferred portion:Federal
    
    
    13,105
    
    
    
    (7,370
    )State
    
    
    438
    
    
    
    (246
    )Foreign
    
    
    (3
    )
    
    
    (8
    )13,540
    
    
    
    (7,624
    )Provision for income taxes
    
    $
    25,928
    
    
    $
    18,447
  October 2,
    
    
    April 3,2009
    
    
    2009(Dollars in thousands)Current deferred tax liabilities
    
    $
    (14,700
    )
    
    $
    (8,278
    )Non-current deferred tax assets
    
    
    9,530
    
    
    
    12,788Deferred tax (liabilities)/assets, net
    
    $
    (5,170
    )
    
    $
    4,510
     Note 5 Accounts Receivable
  (Dollars in thousands)
    
    October 2, 2009
    
    
    April 3, 2009Billed
    
    $
    239,303
    
    
    $
    220,501Unbilled
    
    
    397,049
    
    
    
    343,931Total
    
    $
    636,352
    
    
    $
    564,432
   14




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##### Table of Contents



Note 6Long-Term Debt
  October 2,
    
    
    April 3,2009
    
    
    2009(Dollars in thousands)Term loans
    
    $
    176,637
    
    
    $
    200,0009.5% Senior subordinated notes(1)
    
    
    375,387
    
    
    
    399,912552,024
    
    
    
    599,912Less current portion of long-term debt
    
    
    (14,137
    )
    
    
    (30,540
    )Total long-term debt
    
    $
    537,887
    
    
    $
    569,372
 (1)
    
    This includes the impact of the discount which had a carrying value of ($0.8) million ($1.0)
million as of October 2, 2009 and April 3, 2009, respectively. Long-Term Debt
 Senior Secured Credit Facility
   9.5% Senior Subordinated Notes
    15




---



##### Table of Contents



Note 7Interest Rate Derivatives
  Fixed
    
    
    VariableNotional
    
    
    Interest
    
    
    Interest RateDate Entered
    
    Amount
    
    
    Rate Paid*
    
    
    Received

    
    Expiration DateApril 2007
    
    $
    168,620
    
    
    
    4.975
    %
    
    3-month LIBOR
    
    May 2010April 2007
    
    $
    31,380
    
    
    
    4.975
    %
    
    3-month LIBOR
    
    May 2010
 *
    
    Plus applicable margin (2.5% at October 2, 2009).     Fair Value at
    
    
    Fair Value atDerivatives designated as hedges under ASC 815
    
    Balance Sheet Location
    
    October 2, 2009
    
    
    April 3, 2009Interest Rate Swaps
    
    Other accrued liabilities
    
    $
    5,221
    
    
    $
    5,259Interest Rate Swaps
    
    Other long-term liabilities
    
    
    
    
    
    
    957Total
    
    
    
    $
    5,221
    
    
    $
    6,216
 Fair Value at
    
    
    Fair Value atDerivatives not designated as hedges under ASC 815
    
    Balance Sheet Location
    
    October 2, 2009
    
    
    April 3, 2009Interest Rate Swaps
    
    Other accrued liabilities
    
    $
    964
    
    
    $
    893Interest Rate Swaps
    
    Other long-term liabilities
    
    
    
    
    
    
    182Total
    
    
    
    $
    964
    
    
    $
    1,075Total Derivatives
    
    
    
    $
    6,185
    
    
    $
    7,291
  16




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##### Table of Contents



Change in OCI fromGains (Losses)
    
    
    GAINS (LOSSES) RECLASSIFIED FROM
    
    
    GAINS (LOSSES) RECOGNIZEDRecognized in OCI
    
    
    ACCUMULATED OCI INTO INCOME
    
    
    IN INCOME ON DERIVATIVESon Derivatives
    
    
    (EFFECTIVE PORTION)
    
    
    (INEFFECTIVE PORTION)Derivatives Designated as
    
    (Effective Portion)
    
    
    Line Item
    
    
    
    
    
    Line ItemCash Flow Hedging
    
    Three Months ended
    
    
    in Statements
    
    
    
    
    
    in StatementsInstruments under ASC 815
    
    October 2, 2009
    
    
    of Income
    
    Amount
    
    
    of Income
    
    AmountInterest rate derivatives
    
    $
    320
    
    
    Interest expense
    
    $
    (1,854
    )
    
    Other (loss)/income, net
    
    $
    Total
    
    $
    320
    
    
    
    
    $
    (1,854
    )
    
    
    
    $
    
  Change in OCI fromGains (Losses)
    
    
    GAINS (LOSSES) RECLASSIFIED FROM
    
    
    GAINS (LOSSES) RECOGNIZEDRecognized in OCI
    
    
    ACCUMULATED OCI INTO INCOME
    
    
    IN INCOME ON DERIVATIVESon Derivatives
    
    
    (EFFECTIVE PORTION)
    
    
    (INEFFECTIVE PORTION)Derivatives Designated as
    
    (Effective Portion)
    
    
    Line Item
    
    
    
    
    
    Line ItemCash Flow Hedging
    
    Six Months ended
    
    
    in Statements
    
    
    
    
    
    in StatementsInstruments under ASC 815
    
    October 2, 2009
    
    
    of Income
    
    Amount
    
    
    of Income
    
    AmountInterest rate derivatives
    
    $
    1,206
    
    
    Interest expense
    
    $
    (3,754
    )
    
    Other (loss)/income net
    
    $
    Total
    
    $
    1,206
    
    
    
    
    $
    (3,754
    )
    
    
    
    $
    
  Change in OCI fromGains (Losses)
    
    
    GAINS (LOSSES) RECLASSIFIED FROM
    
    
    GAINS (LOSSES) RECOGNIZEDRecognized in OCI
    
    
    ACCUMULATED OCI INTO INCOME
    
    
    IN INCOME ON DERIVATIVESon Derivatives
    
    
    (EFFECTIVE PORTION)
    
    
    (INEFFECTIVE PORTION)Derivatives Designated as
    
    (Effective Portion)
    
    
    Line Item
    
    
    
    
    
    Line ItemCash Flow Hedging
    
    Three Months ended
    
    
    in Statements
    
    
    
    
    
    in StatementsInstruments under ASC 815
    
    October 3, 2008
    
    
    of Income
    
    Amount
    
    
    of Incomes
    
    AmountInterest rate
derivatives
    
    $
    (56
    )
    
    Interest expense
    
    $
    (918
    )
    
    Interest expense
    
    $
    (152
    )Total
    
    $
    (56
    )
    
    
    
    $
    (918
    )
    
    
    
    $
    (152
    )
  17




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##### Table of Contents



Change in OCI fromGains (Losses)
    
    
    GAINS (LOSSES) RECLASSIFIED FROM
    
    
    GAINS (LOSSES) RECOGNIZEDRecognized in OCI
    
    
    ACCUMULATED OCI INTO INCOME
    
    
    IN INCOME ON DERIVATIVESon Derivatives
    
    
    (EFFECTIVE PORTION)
    
    
    (INEFFECTIVE PORTION)Derivatives Designated as
    
    (Effective Portion)
    
    
    Line Item
    
    
    
    
    
    Line ItemCash Flow Hedging
    
    Six Months ended
    
    
    in Statements
    
    
    
    
    
    in StatementsInstruments under ASC 815
    
    October 3, 2008
    
    
    of Income
    
    Amount
    
    
    of Incomes
    
    AmountInterest rate
derivatives
    
    $
    5,571
    
    
    Interest expense
    
    $
    (2,784
    )
    
    Interest expense
    
    $
    158Total
    
    $
    5,571
    
    
    
    
    $
    (2,784
    )
    
    
    
    $
    158
 Derivatives and Hedging
 ThreeThree Months
    
    
    MonthsEnded
    
    
    EndedDerivatives not Designated
    
    AMOUNT OF GAIN OR (LOSS) RECOGNIZED IN

    
    October 2,
    
    
    October 3,as Hedging Instruments
    
    INCOME ON DERIVATE
    
    2009
    
    
    2008under ASC 815
    
    Line Item in Statements of Income
    
    Amount
    
    
    AmountInterest rate derivatives
    
    Other (loss)/ income, net
    
    $
    (319
    )
    
    $
    Total
    
    
    
    $
    (319
    )
    
    $
    
 Six Months
    
    
    Six MonthsEnded
    
    
    EndedDerivatives not Designated
    
    AMOUNT OF GAIN OR (LOSS) RECOGNIZED IN
    
    October 2,
    
    
    October 3,as Hedging Instruments
    
    INCOME ON DERIVATE
    
    2009
    
    
    2008under ASC 815
    
    Line Item in Statements of Income
    
    Amount
    
    
    AmountInterest rate derivatives
    
    Other (loss)/ income, net
    
    $
    (506
    )
    
    $
    (404
    )Total
    
    
    
    $
    (506
    )
    
    $
    (404
    )
  Note 8Commitments and Contingencies
 Commitments
   18




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##### Table of Contents



General Legal Matters
   Pending litigation and claims
     19




---



##### Table of Contents



U.S. Government Investigations
   qui tam
 U.S. Government Audits
    20




---



##### Table of Contents



Contract Matters
  Note 9Equity-Based Compensation
 Compensation-Stock Compensation
 Class B Equity
   % Interest in
    
    
    Grant DateDIV Holding
    
    
    Fair ValueBalance April 3, 2009
    
    
    4.71
    %
    
    $
    9,669First quarter fiscal year 2010 forfeitures
    
    
    (0.03
    %)
    
    
    (37
    )Balance July 3, 2009
    
    
    4.68
    %
    
    $
    9,632Second quarter fiscal year 2010 forfeitures
    
    
    0.0
    %
    
    
    Balance October 2, 2009
    
    
    4.68
    %
    
    $
    9,632April 3, 2009 vested
    
    
    3.69
    %
    
    $
    6,950First quarter fiscal year 2010 vesting
    
    
    0.04
    %
    
    
    174July 3, 2009 vested
    
    
    3.73
    %
    
    $
    7,124Second quarter fiscal year 2010 vesting
    
    
    0.05
    %
    
    
    73October 2, 2009 vested
    
    
    3.78
    %
    
    $
    7,197April 3, 2009 nonvested
    
    
    1.02
    %
    
    $
    2,718October 2, 2009 nonvested
    
    
    0.90
    %
    
    $
    2,436
  21




---



##### Table of Contents



Six month period ending April 2, 2010
    
    $
    259Fiscal year ending April 1, 2011
    
    
    229Fiscal year ending March 30, 2012 and thereafter
    
    
    62Total
    
    $
    550
 Restricted Stock Units and Performance Stock Units
      WeightedAverageOutstanding
    
    
    GrantRestricted
    
    
    DateStock Units
    
    
    Fair ValueOutstanding, April 3, 2009
    
    
    345,895
    
    
    $
    16.71Units granted
    
    
    510,350
    
    
    $
    16.89Units forfeited
    
    
    (48,170
    )
    
    $
    16.40Units vested and settled(1)
    
    
    (37,500
    )
    
    $
    15.74Outstanding, October 2, 2009
    
    
    770,575
    
    
    $
    16.90
 (1)
    
    During the six months ended October 2, 2009, 23,375 RSU awards, with a value of $0.4
million, vested but were not settled as of October 2, 2009. We expect to settle these shares infiscal year 2010.  Six month fiscal period ended April 2, 2010
    
    $
    2,217Fiscal year ended April 1, 2011
    
    
    3,846Fiscal year ended March 30, 2012 and thereafter
    
    
    4,619Total
    
    $
    10,682
  22




---



##### Table of Contents



Note 10 Consolidating Financial Statements of Subsidiary Guarantors
       23




---



##### Table of Contents



DynCorp International LLC and Subsidiaries
 Condensed Consolidating Statement of Operations Information
For the Three Months Ended October 2, 2009
 Subsidiary
    
    
    SubsidiaryLLC
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenue
    
    $
    572,352
    
    
    $
    249,019
    
    
    $
    103,637
    
    
    $
    (103,636
    )
    
    $
    821,372Cost of services
    
    
    (502,467
    )
    
    
    (225,816
    )
    
    
    (102,632
    )
    
    
    103,636
    
    
    
    (727,279
    )Selling, general and administrative expenses
    
    
    (20,766
    )
    
    
    (10,325
    )
    
    
    (213
    )
    
    
    
    
    
    
    (31,304
    )Depreciation and amortization expense
    
    
    (10,222
    )
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (10,238
    )Operating income
    
    
    38,897
    
    
    
    12,878
    
    
    
    776
    
    
    
    
    
    
    
    52,551Interest expense
    
    
    (12,939
    )
    
    
    (752
    )
    
    
    
    
    
    
    
    
    
    
    (13,691
    )Loss on early extinguishment of debt
    
    
    (162
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (162
    )Earnings from affiliates
    
    
    1,527
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,527Equity in income of subsidiaries
    
    
    4,306
    
    
    
    67
    
    
    
    
    
    
    
    (4,373
    )
    
    
    Interest income
    
    
    (650
    )
    
    
    753
    
    
    
    
    
    
    
    
    
    
    
    103Other, net
    
    
    26
    
    
    
    3
    
    
    
    (41
    )
    
    
    
    
    
    
    (12
    )Income before income taxes
    
    
    31,005
    
    
    
    12,949
    
    
    
    735
    
    
    
    (4,373
    )
    
    
    40,316Provision for income taxes
    
    
    (10,450
    )
    
    
    (2,533
    )
    
    
    (318
    )
    
    
    
    
    
    
    (13,301
    )Net income
    
    
    20,555
    
    
    
    10,416
    
    
    
    417
    
    
    
    (4,373
    )
    
    
    27,015Noncontrolling interests
    
    
    
    
    
    
    (5,782
    )
    
    
    (678
    )
    
    
    
    
    
    
    (6,460
    )Net income attributable to DynCorp
International LLC
    
    $
    20,555
    
    
    $
    4,634
    
    
    $
    (261
    )
    
    $
    (4,373
    )
    
    $
    20,555
 DynCorp International LLC and Subsidiaries
 Unaudited Condensed Consolidating Statements of Operations Information
For the Three Months Ended October 3, 2008
 Subsidiary
    
    
    Subsidiary(Amounts in thousands)
    

LLC
    
    
    Guarantor
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenue
    
    $
    520,815
    
    
    $
    258,336
    
    
    $
    98,780
    
    
    $
    (98,780
    )
    
    $
    779,151Cost of services
    
    
    (471,107
    )
    
    
    (231,331
    )
    
    
    (92,861
    )
    
    
    98,780
    
    
    
    (696,519
    )Selling, general and administrative expenses
    
    
    (19,053
    )
    
    
    (6,750
    )
    
    
    (191
    )
    
    
    
    
    
    
    (25,994
    )Depreciation and amortization expense
    
    
    (9,989
    )
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (10,005
    )Operating income
    
    
    20,666
    
    
    
    20,255
    
    
    
    5,712
    
    
    
    
    
    
    
    46,633Interest expense
    
    
    (14,905
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,905
    )Loss on extinguishment of debt
    
    
    (4,443
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,443
    )Earnings from affiliates
    
    
    1,523
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,523Equity in income of subsidiaries, net of tax
    
    
    15,311
    
    
    
    (44
    )
    
    
    
    
    
    
    (15,267
    )
    
    
    Interest income
    
    
    672
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    677Other, net
    
    
    804
    
    
    
    46
    
    
    
    110
    
    
    
    
    
    
    
    960Income before income taxes
    
    
    19,628
    
    
    
    20,257
    
    
    
    5,827
    
    
    
    (15,267
    )
    
    
    30,445Provision for income taxes
    
    
    (6,757
    )
    
    
    (912
    )
    
    
    (1,462
    )
    
    
    
    
    
    
    (9,131
    )Net income
    
    
    12,871
    
    
    
    19,345
    
    
    
    4,365
    
    
    
    (15,267
    )
    
    
    21,314Noncontrolling interests
    
    
    
    
    
    
    (7,813
    )
    
    
    (630
    )
    
    
    
    
    
    
    (8,443
    )Net income attributable to DynCorp
International LLC
    
    $
    12,871
    
    
    $
    11,532
    
    
    $
    3,735
    
    
    $
    (15,267
    )
    
    $
    12,871
  24




---



##### Table of Contents



Condensed Consolidating Statement of Operations Information
For the Six Months Ended October 2, 2009
 Subsidiary
    
    
    SubsidiaryLLC
    
    
    Guarantor
    
    
    Non-Guarantor
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)Revenue
    
    $
    1,112,724
    
    
    $
    493,825
    
    
    $
    203,882
    
    
    $
    (203,882
    )
    
    $
    1,606,549Cost of services
    
    
    (972,605
    )
    
    
    (455,782
    )
    
    
    (201,867
    )
    
    
    203,882
    
    
    
    (1,426,372
    )Selling, general and administrative expenses
    
    
    (42,485
    )
    
    
    (11,911
    )
    
    
    (346
    )
    
    
    
    
    
    
    (54,742
    )Depreciation and amortization expense
    
    
    (20,350
    )
    
    
    (1
    )
    
    
    (32
    )
    
    
    
    
    
    
    (20,383
    )Operating income
    
    
    77,284
    
    
    
    26,131
    
    
    
    1,637
    
    
    
    
    
    
    
    105,052Interest expense
    
    
    (27,101
    )
    
    
    (1,200
    )
    
    
    
    
    
    
    
    
    
    
    (28,301
    )Loss on early extinguishment of debt
    
    
    (146
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (146
    )Earnings from affiliates
    
    
    2,581
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,581Equity in income of subsidiaries
    
    
    9,355
    
    
    
    91
    
    
    
    
    
    
    
    (9,446
    )
    
    
    Interest income
    
    
    (763
    )
    
    
    1,201
    
    
    
    4
    
    
    
    
    
    
    
    442Other, net
    
    
    (115
    )
    
    
    (12
    )
    
    
    (114
    )
    
    
    
    
    
    
    (241
    )Income before income taxes
    
    
    61,095
    
    
    
    26,211
    
    
    
    1,527
    
    
    
    (9,446
    )
    
    
    79,387Provision for income taxes
    
    
    (19,895
    )
    
    
    (5,393
    )
    
    
    (640
    )
    
    
    
    
    
    
    (25,928
    )Net income
    
    
    41,200
    
    
    
    20,818
    
    
    
    887
    
    
    
    (9,446
    )
    
    
    53,459Noncontrolling interests
    
    
    
    
    
    
    (10,917
    )
    
    
    (1,342
    )
    
    
    
    
    
    
    (12,259
    )Net income attributable to DynCorp
International LLC
    
    $
    41,200
    
    
    $
    9,901
    
    
    $
    (455
    )
    
    $
    (9,446
    )
    
    $
    41,200
 Unaudited Condensed Consolidating Statements of Operations Information
For the Six Months Ended October 3, 2008
 Subsidiary
    
    
    Subsidiary(Amounts in thousands)
    

LLC
    
    
    Guarantor
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedRevenue
    
    $
    1,063,773
    
    
    $
    432,172
    
    
    $
    195,468
    
    
    $
    (195,468
    )
    
    $
    1,495,945Cost of services
    
    
    (945,659
    )
    
    
    (397,450
    )
    
    
    (187,267
    )
    
    
    195,468
    
    
    
    (1,334,908
    )Selling, general and administrative expenses
    
    
    (41,180
    )
    
    
    (12,249
    )
    
    
    (416
    )
    
    
    
    
    
    
    (53,845
    )Depreciation and amortization expense
    
    
    (20,514
    )
    
    
    
    
    
    
    (51
    )
    
    
    
    
    
    
    (20,565
    )Operating income
    
    
    56,420
    
    
    
    22,473
    
    
    
    7,734
    
    
    
    
    
    
    
    86,627Interest expense
    
    
    (29,120
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29,120
    )Loss on extinguishment of debt
    
    
    (4,443
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,443
    )Earnings from affiliates
    
    
    2,640
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,640Equity in income of subsidiaries, net of tax
    
    
    18,000
    
    
    
    (150
    )
    
    
    
    
    
    
    (17,850
    )
    
    
    Interest income
    
    
    1,003
    
    
    
    5
    
    
    
    13
    
    
    
    
    
    
    
    1,021Other, net
    
    
    1,404
    
    
    
    156
    
    
    
    105
    
    
    
    
    
    
    
    1,665Income before income taxes
    
    
    45,904
    
    
    
    22,484
    
    
    
    7,852
    
    
    
    (17,850
    )
    
    
    58,390Provision for income taxes
    
    
    (15,053
    )
    
    
    (1,110
    )
    
    
    (2,284
    )
    
    
    
    
    
    
    (18,447
    )Net income
    
    
    30,851
    
    
    
    21,374
    
    
    
    5,568
    
    
    
    (17,850
    )
    
    
    39,943Noncontrolling interests
    
    
    
    
    
    
    (8,462
    )
    
    
    (630
    )
    
    
    
    
    
    
    (9,092
    )Net income attributable to DynCorp
International LLC
    
    $
    30,851
    
    
    $
    12,912
    
    
    $
    4,938
    
    
    $
    (17,850
    )
    
    $
    30,851
  25




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##### Table of Contents



DynCorp International LLC and Subsidiaries
 Condensed Consolidating Balance Sheet Information
October 2, 2009
 Subsidiary
    
    
    SubsidiaryLLC
    
    
    Guarantor
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    123,513
    
    
    $
    4,814
    
    
    $
    3,757
    
    
    $
    
    
    
    $
    132,084Restricted cash
    
    
    15,990
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,990Accounts receivable, net
    
    
    465,234
    
    
    
    170,040
    
    
    
    1,078
    
    
    
    
    
    
    
    636,352Prepaid expenses and other current assets
    
    
    77,736
    
    
    
    36,409
    
    
    
    2,132
    
    
    
    
    
    
    
    116,277Total current assets
    
    
    682,473
    
    
    
    211,263
    
    
    
    6,967
    
    
    
    
    
    
    
    900,703Property and equipment, net
    
    
    50,849
    
    
    
    3,005
    
    
    
    312
    
    
    
    
    
    
    
    54,166Goodwill
    
    
    398,559
    
    
    
    21,621
    
    
    
    
    
    
    
    
    
    
    
    420,180Tradename
    
    
    18,318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,318Other intangibles, net
    
    
    111,491
    
    
    
    13,886
    
    
    
    
    
    
    
    
    
    
    
    125,377Investment in subsidiaries
    
    
    73,734
    
    
    
    681
    
    
    
    
    
    
    
    (74,415
    )
    
    
    Other assets, net
    
    
    39,613
    
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    39,707Intercompany receivables
    
    
    57,043
    
    
    
    
    
    
    
    47,664
    
    
    
    (104,707
    )
    
    
    Total assets
    
    $
    1,432,080
    
    
    $
    250,550
    
    
    $
    54,943
    
    
    $
    (179,122
    )
    
    $
    1,558,451LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    14,137
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    14,137Accounts payable
    
    
    130,770
    
    
    
    82,496
    
    
    
    433
    
    
    
    
    
    
    
    213,699Accrued payroll and employee costs
    
    
    56,528
    
    
    
    34,162
    
    
    
    22,585
    
    
    
    
    
    
    
    113,275Other accrued liabilities
    
    
    51,687
    
    
    
    37,057
    
    
    
    19,646
    
    
    
    
    
    
    
    108,390Income taxes payable
    
    
    17,887
    
    
    
    
    
    
    
    656
    
    
    
    
    
    
    
    18,543Total current liabilities
    
    
    271,009
    
    
    
    153,715
    
    
    
    43,320
    
    
    
    
    
    
    
    468,044Long-term debt, less current portion
    
    
    537,887
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    537,887Other long-term liabilities
    
    
    6,101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,101Intercompany payables
    
    
    70,664
    
    
    
    34,043
    
    
    
    
    
    
    
    (104,707
    )
    
    
    Total equity
    
    
    546,419
    
    
    
    62,792
    
    
    
    11,623
    
    
    
    (74,415
    )
    
    
    546,419Total liabilities and members equity
    
    $
    1,432,080
    
    
    $
    250,550
    
    
    $
    54,943
    
    
    $
    (179,122
    )
    
    $
    1,558,451
  26




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##### Table of Contents



DynCorp International LLC and Subsidiaries
 Condensed Consolidating Balance Sheet Information
April 3, 2009
 Subsidiary
    
    
    SubsidiaryLLC
    
    
    Guarantor
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    Consolidated(Dollars in thousands)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    192,968
    
    
    $
    2,534
    
    
    $
    4,720
    
    
    $
    
    
    
    $
    200,222Restricted cash
    
    
    5,935
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,935Accounts receivable, net
    
    
    389,715
    
    
    
    172,900
    
    
    
    1,817
    
    
    
    
    
    
    
    564,432Prepaid expenses and other current assets
    
    
    112,024
    
    
    
    10,952
    
    
    
    1,238
    
    
    
    
    
    
    
    124,214Total current assets
    
    
    700,642
    
    
    
    186,386
    
    
    
    7,775
    
    
    
    
    
    
    
    894,803Property and equipment, net
    
    
    14,582
    
    
    
    3,400
    
    
    
    356
    
    
    
    
    
    
    
    18,338Goodwill
    
    
    398,559
    
    
    
    21,621
    
    
    
    
    
    
    
    
    
    
    
    420,180Tradename
    
    
    18,318
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,318Other intangibles, net
    
    
    128,833
    
    
    
    13,886
    
    
    
    
    
    
    
    
    
    
    
    142,719Investment in subsidiaries
    
    
    64,380
    
    
    
    589
    
    
    
    
    
    
    
    (64,969
    )
    
    
    Other assets, net
    
    
    44,762
    
    
    
    94
    
    
    
    
    
    
    
    
    
    
    
    44,856Intercompany receivables
    
    
    48,786
    
    
    
    
    
    
    
    43,663
    
    
    
    (92,449
    )
    
    
    Total assets
    
    $
    1,418,862
    
    
    $
    225,976
    
    
    $
    51,794
    
    
    $
    (157,418
    )
    
    $
    1,539,214LIABILITIES AND MEMBERS EQUITYCurrent liabilities:Current portion of long-term debt
    
    $
    30,540
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    30,540Accounts payable
    
    
    96,574
    
    
    
    63,132
    
    
    
    713
    
    
    
    
    
    
    
    160,419Accrued payroll and employee costs
    
    
    69,220
    
    
    
    32,965
    
    
    
    35,808
    
    
    
    
    
    
    
    137,993Other accrued liabilities
    
    
    94,333
    
    
    
    14,711
    
    
    
    2,546
    
    
    
    
    
    
    
    111,590Income taxes payable
    
    
    13,615
    
    
    
    
    
    
    
    649
    
    
    
    
    
    
    
    14,264Total current liabilities
    
    
    304,282
    
    
    
    110,808
    
    
    
    39,716
    
    
    
    
    
    
    
    454,806Long-term debt, less current portion
    
    
    569,372
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    569,372Other long-term liabilities
    
    
    6,744
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    6,779Intercompany payables
    
    
    30,207
    
    
    
    62,242
    
    
    
    
    
    
    
    (92,449
    )
    
    
    Total equity
    
    
    508,257
    
    
    
    52,891
    
    
    
    12,078
    
    
    
    (64,969
    )
    
    
    508,257Total liabilities and members equity
    
    $
    1,418,862
    
    
    $
    225,976
    
    
    $
    51,794
    
    
    $
    (157,418
    )
    
    $
    1,539,214
  27




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##### Table of Contents



DynCorp International LLC and Subsidiaries
 Unaudited Condensed Consolidating Statement of Cash Flow Information
For the Six Months Ended October 2, 2009
 Subsidiary
    
    
    Subsidiary(Amounts in thousands)
    

LLC
    
    
    Guarantor
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    (8,073
    )
    
    $
    13,550
    
    
    $
    27,901
    
    
    $
    
    
    
    $
    33,378Cash flows from investing activities:Purchase of property and equipment
    
    
    (34,687
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34,687
    )Other investing cash flows
    
    
    (1,575
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,575
    )Net cash used in investing activities
    
    
    (36,262
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (36,262
    )Cash flows from financing activities:Net transfers from (to) Parent
    
    
    24,198
    
    
    
    4,001
    
    
    
    (28,199
    )
    
    
    
    
    
    
    Payments on debt
    
    
    (48,626
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,626
    )Other financing activities
    
    
    (692
    )
    
    
    (15,271
    )
    
    
    (665
    )
    
    
    
    
    
    
    (16,628
    )Net cash used in financing activities
    
    
    (25,120
    )
    
    
    (11,270
    )
    
    
    (28,864
    )
    
    
    
    
    
    
    (65,254
    )Net (decrease) in cash and cash equivalents
    
    
    (69,455
    )
    
    
    2,280
    
    
    
    (963
    )
    
    
    
    
    
    
    (68,138
    )Cash and cash equivalents, beginning of period
    
    
    192,968
    
    
    
    2,534
    
    
    
    4,720
    
    
    
    
    
    
    
    200,222Cash and cash equivalents, end of period
    
    $
    123,513
    
    
    $
    4,814
    
    
    $
    3,757
    
    
    $
    
    
    
    $
    132,084
 Unaudited Condensed Consolidating Statement of Cash Flow Information
For the Six Months Ended October 3, 2008
 Subsidiary
    
    
    Subsidiary(Amounts in thousands)
    

LLC
    
    
    Guarantor
    
    
    Non-Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet cash provided by operating activities
    
    $
    121,387
    
    
    $
    (48,131
    )
    
    $
    (35,303
    )
    
    $
    
    
    
    $
    37,953Cash flows from investing activities:Purchase of property and equipment
    
    
    (2,303
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,303
    )Other investing cash flows
    
    
    (17,415
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17,415
    )Net cash used in investing activities
    
    
    (19,718
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,718
    )Cash flows from financing activities:Net transfers from (to) Parent
    
    
    (85,894
    )
    
    
    48,569
    
    
    
    37,325
    
    
    
    
    
    
    
    Payments on debt
    
    
    22,622
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,622Other financing activities
    
    
    6,543
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,543Net cash used in financing activities
    
    
    (56,729
    )
    
    
    48,569
    
    
    
    37,325
    
    
    
    
    
    
    
    29,165Net decrease in cash and cash equivalents
    
    
    44,940
    
    
    
    438
    
    
    
    2,022
    
    
    
    
    
    
    
    47,400Cash and cash equivalents, beginning of period
    
    
    79,484
    
    
    
    3,835
    
    
    
    2,060
    
    
    
    
    
    
    
    85,379Cash and cash equivalents, end of period
    
    $
    124,424
    
    
    $
    4,273
    
    
    $
    4,082
    
    
    $
    
    
    
    $
    132,779
 Note 11  Related Parties, Joint Ventures and Variable Interest Entities
 Management Fee
   28




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##### Table of Contents



Joint Ventures
   Variable Interest Entities
    Note 12Collaborative Arrangement
 Collaborative Arrangements
 Note 13Segment Information
   29




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##### Table of Contents



Global Stabilization and Development Solutions, or GSDS
 Global Platform Support Solutions, or GPSS
 Global Linguist Solutions, or GLS
  Three Months EndedOctober 2, 2009
    
    
    October 3, 2008RevenueGlobal Stabilization and Development Solutions
    
    $
    336,521
    
    
    $
    263,985Global Platform Support Solutions
    
    
    284,512
    
    
    
    315,241Global Linguist Solutions
    
    
    198,393
    
    
    
    201,305Other/Elimination
    
    
    1,946
    
    
    
    (1,380
    )Total revenue
    
    $
    821,372
    
    
    $
    779,151Operating Income
    
    $
    20,386
    
    
    $
    1,036Global Stabilization and Development SolutionsGlobal Platform Support Solutions
    
    
    19,813
    
    
    
    28,284Global Linguist Solutions
    
    
    12,352
    
    
    
    17,313Total operating income
    
    $
    52,551
    
    
    $
    46,633Depreciation and amortization
    
    $
    4,952
    
    
    $
    4,777Global Stabilization and Development SolutionsGlobal Platform Support Solutions
    
    
    5,129
    
    
    
    5,013Global Linguist Solutions
    
    
    157
    
    
    
    215Total depreciation and amortization
    
    $
    10,238
    
    
    $
    10,005
 Six Months EndedOctober 2, 2009
    
    
    October 3, 2008RevenueGlobal Stabilization and Development Solutions
    
    $
    620,606
    
    
    $
    533,539Global Platform Support Solutions
    
    
    588,160
    
    
    
    644,978Global Linguist Solutions
    
    
    396,748
    
    
    
    319,727Other/Elimination
    
    
    1,035
    
    
    
    (2,299
    )Total revenue
    
    $
    1,606,549
    
    
    $
    1,495,945Operating Income
    
    $
    36,278
    
    
    $
    24,006Global Stabilization and Development SolutionsGlobal Platform Support Solutions
    
    
    45,710
    
    
    
    44,027Global Linguist Solutions
    
    
    23,064
    
    
    
    18,594Total operating income
    
    $
    105,052
    
    
    $
    86,627Depreciation and amortization
    
    $
    9,900
    
    
    $
    9,953Global Stabilization and Development SolutionsGlobal Platform Support Solutions
    
    
    10,168
    
    
    
    10,250Global Linguist Solutions
    
    
    315
    
    
    
    362Total depreciation and amortization
    
    $
    20,383
    
    
    $
    20,565
  30




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##### Table of Contents



As ofOctober 2, 2009
    
    
    April 3, 2009AssetsGlobal Stabilization and Development Solutions
    
    $
    674,551
    
    
    $
    594,207Global Platform Support Solutions
    
    
    533,264
    
    
    
    510,583Global Linguist Solutions
    
    
    147,743
    
    
    
    152,090Corporate (1)
    
    
    202,893
    
    
    
    282,334Total assets
    
    $
    1,558,451
    
    
    $
    1,539,214
 (1)
    
    Corporate assets primarily include cash, deferred income taxes, and deferred
debt issuance cost. Note 14Fair Value of Financial Assets and Liabilities
 Fair Value Measurements and Disclosures
 
    
    Level 1, defined as observable inputs such as quoted prices in active markets;
 
    
    Level 2, defined as inputs other than quoted prices in active markets that are
either directly or indirectly observable; and
 
    
    Level 3, defined as unobservable inputs in which little or no market data exists,
therefore requiring an entity to develop its own assumptions.
   Fair Value Measurements at Reporting Date UsingBook value offinancial
    
    
    Quoted Prices inassets/(liabilities)
    
    
    Active Markets
    
    
    Significant Other
    
    
    Significantas of October 2,
    
    
    for Identical
    
    
    Observable Inputs
    
    
    Unobservable(amounts in thousands)
    
    2009
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    Inputs (Level 3)AssetsCash equivalents(1)
    
    $
    148,074
    
    
    $
    148,074
    
    
    $
    
    
    
    $
    Total assets measured at fair
value
    
    $
    148,074
    
    
    $
    148,074
    
    
    $
    
    
    
    $
    LiabilitiesInterest rate derivatives
    
    $
    6,185
    
    
    $
    
    
    
    $
    6,185
    
    
    $
    Total liabilities measured at
fair value
    
    $
    6,185
    
    
    $
    
    
    
    $
    6,185
    
    
    $
    
 (1)
    
    Includes cash equivalents and restricted cash  31




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##### Table of Contents



Note 15Subsequent Events
  Business Combination
     Business
Combinations.
    32




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  COMPANY OVERVIEW
  Strategic Business Areas and Service Offerings
  Global Stabilization and Development Solutions
  Security & Training
 
    
    CivPol This SBA provides international policing and police training, judicial
support, immigration support and base operations.
 
    
    Security & Mentoring  This SBA provides senior advisors and mentors to foreign
governmental agencies. In addition, it provides security and personal protection for
diplomats and governmental senior officials.
 Contingency Support and Operations
 
    
    LOGCAP IV  This SBA supports U.S. military operations and maintenance support,
including but not limited to: construction services, facilities management, electrical
power, water, sewage and waste management, laundry operations, food services and
transportation motor pool operations.
 
    
    Contingency Support & Operations  This SBA provides peace-keeping logistics
support, humanitarian relief, weapons removal and abatement, worldwide contingency
planning and other rapid response services. In addition, it offers inventory
procurement and tracking services, property control, data entry and mobile repair
services. Furthermore, this SBA provides facility and equipment maintenance and control
and custodial and administrative services.
 Infrastructure
 
    
    Infrastructure  This SBA provides civil, electrical, environmental and mechanical
engineering and construction management services.
   33




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##### Table of Contents



Global Platform Support Solutions
  Aviation
 
    
    Aviation Life Cycle Support  Provides worldwide support of U.S. Army, Air Force and
Navy fixed wing assets. Aircraft are deployed throughout the U.S., Europe, Asia, South
America and the Middle East. This includes flight line and depot level maintenance
consisting of scheduled and unscheduled events. Specific functions include repair,
overhaul and procurement of components, and procurement of consumable materials and
transportation of materials to and from the operating sites. In addition, the team is
responsible for obsolescence engineering, quality control, inventory management,
avionics upgrades and recovery of downed aircraft.
 
    
    Domestic Aviation Operations and Support  Provides aircraft fleet maintenance and
modification services, ground vehicle maintenance and modification services, pilot and
maintenance training, logistics support, air traffic control services, base and depot
operations, program management and engineering services. Additionally, this SBA
provides aerial firefighting services. These services are provided in the U.S.
 
    
    Field Service Operations  Provides worldwide maintenance, modification, repair, and
logistics support on aircraft, weapons systems, and related support equipment to the
DoD and other U.S. government agencies. Contract Field Teams (CFT) is the most
significant program in our Field Service Operations SBA. Our Company and its
predecessors have provided CFT services for over 58 years. This program deploys highly
mobile, quick-response field teams to customer locations to supplement a customers
workforce.
 
    
    International Aviation Operations and Support  Provides aircraft fleet maintenance
and modification services, ground vehicle maintenance and modification services, pilot
and maintenance training, logistics support, air traffic control services, air
transportation, base and depot operations, program management and engineering services.
These services are provided internationally.
 
    
    INL Air Wing  Conducts foreign assistance programs to reduce the flow of
international narcotics.
 Land Systems
 
    
    Land Systems  This SBA provides maintenance, operations, support, life extension,
engineering, marine services and program management services primarily for ground
vehicles and docked ships. This includes the Mine Resistant Ambush Protected Vehicles
Logistics Support (MRAP) contract.
 Global Linguist Solutions
 Global Linguist Solutions
 CURRENT OPERATING CONDITIONS AND OUTLOOK
  Notable Events for the six months ended October 2, 2009
 
    
    LOGCAP IV task order in southern Afghanistan with an estimated value of approximately
$600 million was awarded in July 2009 and began ramp-up activities in September 2009.
 
    
    In September 2009, we were awarded a contract by the U.S. Air Force to provide aircraft
maintenance support at Sheppard Air Force Base. The value of the contract is $31.2 million
for the base period, and a potential maximum value of $230 million over seven years, if all
options are exercised.
  34




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##### Table of Contents




    
    We were awarded a Worldwide Personal Protective Services (WPPS) task order that was
originally expected to ramp up in the second quarter of fiscal year 2010, but due to
changes in customer requirements was delayed. Our current expectation is that we will begin
performance on this program by the fourth fiscal quarter of 2010.
 
    
    During the second quarter, we made a decision to purchase helicopters in support of our
new WPPS air services task order. Given availability of customer assets to support this
program, we mutually agreed to a task order modification under which the customer will now
supply its own helicopters. As a result, we plan to utilize all but three of the purchased
helicopter assets on other programs, some of which may be structured cost-reimbursable
instead of fixed priced. We plan to sell the three helicopters that we do not intend to use
on the other programs.
 
    
    We continue to encounter cost overruns in our Afghanistan construction projects, within
our infrastructure service offering, due to significant challenges including the
deteriorating security situation in and issues with getting equipment through customs in
Afghanistan. Fiscal year 2010 second quarter results included a loss on Afghanistan
construction of $5.3 million. We expect that our firm fixed-price Afghanistan construction
contracts will continue to operate at a loss or at margins approaching zero over the
contract terms. Accordingly, we do not expect to bid any similar firm fixed-price contracts
without revised terms and conditions.
 
    
    On the GLS program, we completed negotiations with the customer to modify our largest
task order to include a ceiling for recoverable cost of $752 million, resulting in a
cumulative reduction to revenue of $3.4 million in the second quarter of fiscal year
2010. In connection with these negotiations, we received indications from our customer that
the next option period from December 2009 to December 2010 will be exercised.
 
    
    We signed an acquisition agreement in September 2009 and subsequently closed the
acquisition of Phoenix Consulting Group, LLC on October 19, 2009. See Note 15  Subsequent
Eventsfor additional information concerning this acquisition.
 CONTRACT TYPES
  
    
    Fixed-Price Type Contracts:In a fixed-price contract, the price is not subject to
adjustment based on costs incurred, which can favorably or adversely impact our
profitability depending upon our execution in performing the contracted service.
Fixed-price contracts received by us include firm fixed-price, fixed-price with economic
adjustment, and fixed-price incentive.
 
    
    Time-and-Materials Type Contracts:A time-and-materials type contract provides for
acquiring supplies or services on the basis of direct labor hours at fixed hourly/daily
rates plus materials at cost.
 
    
    Cost-Reimbursement Type Contracts:Cost-reimbursement type contracts provide for
payment of allowable incurred costs, to the extent prescribed in the contract, plus a
fixed-fee, award-fee or incentive-fee. Award-fees or incentive-fees are generally based
upon various objective and subjective criteria, such as aircraft mission capability rates
and meeting cost targets.
   35




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedOctober 2,
    
    
    October 3,
    
    
    October 2,
    
    
    October 3,2009
    
    
    2008
    
    
    2009
    
    
    2008Fixed-Price
    
    
    27
    %
    
    
    28
    %
    
    
    26
    %
    
    
    30
    %Time-and-Materials
    
    
    18
    %
    
    
    24
    %
    
    
    19
    %
    
    
    25
    %Cost-Reimbursement
    
    
    55
    %
    
    
    48
    %
    
    
    55
    %
    
    
    45
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
  BACKLOG
    October 2, 2009
    
    
    April 3, 2009Funded Backlog
    
    $
    1,809
    
    
    $
    1,431Unfunded Backlog
    
    
    4,867
    
    
    
    4,867Total Backlog
    
    $
    6,676
    
    
    $
    6,298
  ESTIMATED REMAINING CONTRACT VALUE
   36




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##### Table of Contents



RESULTS OF OPERATIONS
  Consolidated  Three and Six Months Ended October 2, 2009 Compared to Three and Six Months Ended
October 3, 2008
  Three Months Ended(Dollars in thousands)
    
    October 2, 2009
    
    
    October 3, 2008Revenue
    
    $
    821,372
    
    
    
    100.0
    %
    
    $
    779,151
    
    
    
    100.0
    %Cost of services
    
    
    (727,279
    )
    
    
    (88.5
    %)
    
    
    (696,519
    )
    
    
    (89.4
    %)Selling, general and administrative expenses
    
    
    (31,304
    )
    
    
    (3.8
    %)
    
    
    (25,994
    )
    
    
    (3.3
    %)Depreciation and amortization expense
    
    
    (10,238
    )
    
    
    (1.2
    %)
    
    
    (10,005
    )
    
    
    (1.3
    %)Operating income
    
    
    52,551
    
    
    
    6.4
    %
    
    
    46,633
    
    
    
    6.0
    %Interest expense
    
    
    (13,691
    )
    
    
    (1.7
    %)
    
    
    (14,905
    )
    
    
    (1.9
    %)Loss on early extinguishment of debt
    
    
    (162
    )
    
    
    (0.0
    %)
    
    
    (4,443
    )
    
    
    (0.6
    %)Earnings from affiliates
    
    
    1,527
    
    
    
    0.2
    %
    
    
    1,523
    
    
    
    0.2
    %Interest income
    
    
    103
    
    
    
    0.0
    %
    
    
    677
    
    
    
    0.1
    %Other (loss)/income, net
    
    
    (12
    )
    
    
    (0.0
    %)
    
    
    960
    
    
    
    0.1
    %Income before taxes
    
    
    40,316
    
    
    
    4.9
    %
    
    
    30,445
    
    
    
    3.9
    %Provision for income taxes
    
    
    (13,301
    )
    
    
    (1.6
    %)
    
    
    (9,131
    )
    
    
    (1.2
    %)Net income
    
    
    27,015
    
    
    
    3.3
    %
    
    
    21,314
    
    
    
    2.7
    %Noncontrolling interests
    
    
    (6,460
    )
    
    
    (0.8
    %)
    
    
    (8,443
    )
    
    
    (1.1
    %)Net income attributable to DynCorp International LLC
    
    $
    20,555
    
    
    
    2.5
    %
    
    $
    12,871
    
    
    
    1.7
    %
 Six Months Ended(Dollars in thousands)
    
    October 2, 2009
    
    
    October 3, 2008Revenue
    
    $
    1,606,549
    
    
    
    100.0
    %
    
    $
    1,495,945
    
    
    
    100.0
    %Cost of services
    
    
    (1,426,372
    )
    
    
    (88.8
    %)
    
    
    (1,334,908
    )
    
    
    (89.2
    %)Selling, general and administrative expenses
    
    
    (54,742
    )
    
    
    (3.4
    %)
    
    
    (53,845
    )
    
    
    (3.6
    %)Depreciation and amortization expense
    
    
    (20,383
    )
    
    
    (1.3
    %)
    
    
    (20,565
    )
    
    
    (1.4
    %)Operating income
    
    
    105,052
    
    
    
    6.5
    %
    
    
    86,627
    
    
    
    5.8
    %Interest expense
    
    
    (28,301
    )
    
    
    (1.8
    %)
    
    
    (29,120
    )
    
    
    (1.9
    %)Loss on early extinguishment of debt
    
    
    (146
    )
    
    
    (0.0
    %)
    
    
    (4,443
    )
    
    
    (0.3
    %)Earnings from affiliates
    
    
    2,581
    
    
    
    0.2
    %
    
    
    2,640
    
    
    
    0.2
    %Interest income
    
    
    442
    
    
    
    0.0
    %
    
    
    1,021
    
    
    
    0.1
    %Other (loss)/income, net
    
    
    (241
    )
    
    
    (0.0
    %)
    
    
    1,665
    
    
    
    0.1
    %Income before taxes
    
    
    79,387
    
    
    
    4.9
    %
    
    
    58,390
    
    
    
    3.9
    %Provision for income taxes
    
    
    (25,928
    )
    
    
    (1.6
    %)
    
    
    (18,447
    )
    
    
    (1.2
    %)Net income
    
    
    53,459
    
    
    
    3.3
    %
    
    
    39,943
    
    
    
    2.7
    %Noncontrolling interests
    
    
    (12,259
    )
    
    
    (0.8
    %)
    
    
    (9,092
    )
    
    
    (0.6
    %)Net income attributable to DynCorp International LLC
    
    $
    41,200
    
    
    
    2.6
    %
    
    $
    30,851
    
    
    
    2.1
    %
 Revenue 
  37




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Cost of services 
 Selling, general and administrative expenses (SG&A) 
 Depreciation and amortization 
 Interest expense 
 Income tax expense
  38




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##### Table of Contents



Results by Segment  Three Months Ended October 2, 2009 Compared to Three Months Ended October 3,
2008
  For the Three Months Ended(Dollars in thousands)
    
    October 2, 2009
    
    
    October 3, 2008RevenueGlobal Stabilization and Development Solutions
    
    $
    336,521
    
    
    
    41.0
    %
    
    $
    263,985
    
    
    
    33.9
    %Global Platform Support Solutions
    
    
    284,512
    
    
    
    34.6
    %
    
    
    315,241
    
    
    
    40.5
    %Global Linguist Solutions
    
    
    198,393
    
    
    
    24.2
    %
    
    
    201,305
    
    
    
    25.8
    %Other/elimination
    
    
    1,946
    
    
    
    0.2
    %
    
    
    (1,380
    )
    
    
    (0.2
    %)Consolidated
    
    $
    821,372
    
    
    
    100.0
    %
    
    $
    779,151
    
    
    
    100.0
    %Operating IncomeGlobal Stabilization and Development Solutions
    
    $
    20,386
    
    
    
    6.1
    %
    
    $
    1,036
    
    
    
    0.4
    %Global Platform Support Solutions
    
    
    19,813
    
    
    
    7.0
    %
    
    
    28,284
    
    
    
    9.0
    %Global Linguist Solutions
    
    
    12,352
    
    
    
    6.2
    %
    
    
    17,313
    
    
    
    8.6
    %Consolidated
    
    $
    52,551
    
    
    
    6.4
    %
    
    $
    46,633
    
    
    
    6.0
    %
 Global Stabilization and Development Solutions
 Revenue 
    Operating Income 
  39




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##### Table of Contents



Global Platform Support Solutions
 Revenue 
   Operating Income 
 Global Linguist Solutions
    40




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##### Table of Contents



Results by Segment  Six Months Ended October 2, 2009 as Compared to the Six Months Ended October
3, 2008
  For the Six Months Ended(Dollars in thousands)
    
    October 2, 2009
    
    
    October 3, 2008RevenueGlobal Stabilization and Development Solutions
    
    $
    620,606
    
    
    
    38.6
    %
    
    $
    533,539
    
    
    
    35.7
    %Global Platform Support Solutions
    
    
    588,160
    
    
    
    36.6
    %
    
    
    644,978
    
    
    
    43.1
    %Global Linguist Solutions
    
    
    396,748
    
    
    
    24.7
    %
    
    
    319,727
    
    
    
    21.4
    %Other/elimination
    
    
    1,035
    
    
    
    0.1
    %
    
    
    (2,299
    )
    
    
    (0.2
    %)Consolidated
    
    $
    1,606,549
    
    
    
    100.0
    %
    
    $
    1,495,945
    
    
    
    100.0
    %Operating IncomeGlobal Stabilization and Development Solutions
    
    $
    36,278
    
    
    
    5.9
    %
    
    $
    24,006
    
    
    
    4.5
    %Global Platform Support Solutions
    
    
    45,710
    
    
    
    7.8
    %
    
    
    44,027
    
    
    
    6.8
    %Global Linguist Solutions
    
    
    23,064
    
    
    
    5.8
    %
    
    
    18,549
    
    
    
    5.8
    %Consolidated
    
    $
    105,052
    
    
    
    6.5
    %
    
    $
    86,627
    
    
    
    5.8
    %
 Global Stabilization and Development Solutions
 Revenue 
    Operating Income 
  41




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Global Platform Support Solutions
 Revenue 
   Operating Income 
 Global Linguist Solutions
   LIQUIDITY AND CAPITAL RESOURCES
   42




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##### Table of Contents



Cash Flow Analysis
 Six Months Ended(Dollars in thousands)
    
    October 2, 2009
    
    
    October 3, 2008Net Cash provided by operating activities
    
    $
    33,378
    
    
    $
    37,953Net Cash used in investing activities
    
    
    (36,262
    )
    
    
    (19,718
    )Net Cash (used in) provided by financing activities
    
    
    (65,254
    )
    
    
    29,165
    Financing
    43




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##### Table of Contents



Debt Covenants and Other Matters
   OFF BALANCE SHEET ARRANGEMENTS
  CRITICAL ACCOUNTING POLICIES AND ESTIMATES
    Interim Goodwill Assessment
   44




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##### Table of Contents



ACCOUNTING DEVELOPMENTS
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
   45




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##### Table of Contents



PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
   
 ITEM 1A.
    
    RISK FACTORS
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 ExhibitNumber
    
    Description31.1
    *
    
    Certification of Chief Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 200231.2
    *
    
    Certification of Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act
of 200232.1
    *
    
    Certification of Chief Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 200232.2
    *
    
    Certification of Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
 *
    
    Filed herewith.  46




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##### Table of Contents



SIGNATURES
  DYNCORP INTERNATIONAL LLC/s/ Michael J. ThorneMichael J. ThorneSenior Vice President and Chief Financial Officer
Date: November 12, 2009  47