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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                              -------------------
                                   FORM 10-K
                              -------------------
 
                ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                      THE SECURITIES EXCHANGE ACT OF 1934
 
FOR THE FISCAL YEAR ENDED: DECEMBER 31, 1995                COMMISSION FILE
                                                             NUMBER: 000-23966
 
                            BDM INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)
 
                  DELAWARE                                     EI 54-1561881
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                       Identification No.)
 
       1501 BDM WAY, MCLEAN, VIRGINIA                           22102-3204
   (Address of principal executive office)                      (Zip Code)
 
                                  703-848-5000
              Registrant's telephone number, including area code:
                              -------------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
                                                           NAME OF EACH EXCHANGE
             TITLE OF EACH CLASS                            ON WHICH REGISTERED
             -------------------                           ---------------------
   COMMON STOCK, PAR VALUE $.01 PER SHARE                         NASDAQ
 
                              -------------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                                      NONE
                                (Title of class)

                              -------------------
 
    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
 
                               Yes _X_    No ___
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
 
    The aggregate market value of the registrant's voting stock held by persons
considered by the registrant for this purpose to be non-affiliates of the
registrant on January 31, 1996, computed with reference to the closing price of
the Common Stock on Nasdaq as reported for January 31, 1996, was
$186,202,738.70.
                              -------------------
 
    As of the close of business February 23, 1996, the registrant had
outstanding 12,712,285 shares of Common Stock, par value $.01 per share, and
400,000 shares of Class B Common Stock, par value $.01 per share.
                              -------------------
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    Certain information called for by Part III of the Form 10-K will either be
filed with the Commission under Regulation 14A under the Securities Exchange Act
of 1934 or by amendment to this Form 10-K, in either case on or before April 30,
1996.
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<PAGE>
                                     PART I
 
ITEM 1. BUSINESS.
 
GENERAL
 
    BDM International, Inc. ("BDM") is a multinational information technology
company that operates in three interrelated markets: Systems and Software
Integration, Computer and Technical Services and Enterprise Management and
Operations. The Company serves public and private sector clients, including the
Department of Defense ("DOD") (approximately 37% of total revenue in 1995),
international defense agencies (approximately 25%), civil government agencies
(approximately 23%), and commercial clients (approximately 15%). The Company
provides its services through four decentralized subsidiaries: BDM Federal,
Inc.; BDM Technologies, Inc.; BDM Europe BV; and Vinnell Corporation.
 
    The Company was formed in 1959 by Drs. Joseph V. Braddock, Bernard J. Dunn,
and Daniel F. McDonald as "Braddock, Dunn & McDonald, Incorporated," which was
later reorganized as BDM International, Inc. (the "Predecessor Company"). The
Predecessor Company was a public company from 1980 until 1988, when Ford
Aerospace Corporation ("Ford Aerospace"), then a wholly owned subsidiary of Ford
Motor Company ("Ford"), acquired all of the outstanding stock of the Predecessor
Company.
 
    In October 1990, on behalf of certain investors, The Carlyle Group, L.P.
("Carlyle"), a Washington, D.C.-based private merchant bank, formed BDM
Holdings, Inc. ("Holdings"), a Delaware corporation, and a wholly owned
subsidiary corporation named New BDM, Inc. ("New BDM") which acquired
substantially all of the assets of the Predecessor Company (the "1990
Acquisition"). Shortly after the 1990 Acquisition, New BDM changed its name to
BDM International, Inc. In December 1992, Holdings and BDM International, Inc.
changed their names to BDM International, Inc. and BDM Federal, Inc. ("BDM
Federal"), respectively.
 
    In March 1992, the Company acquired the outstanding common stock of Vinnell
Corporation ("Vinnell"), a company that specializes in international on-site
operations and maintenance and training services largely in the Middle East. In
January 1993, the Company began operating a new subsidiary, BDM Technologies,
Inc. ("BDM Technologies"), to focus on applying its core competencies to serve
commercial and state and local government clients. Effective January 1, 1993, a
new subsidiary, BDM Europe BV ("BDM Europe"), acquired two European businesses,
FACE Industrial Automation BV and Logisticon BV, and merged them into a single
entity called FACE, located in Eindhoven, The Netherlands. FACE provides systems
integration and technical services to industrial clients, primarily in the areas
of automated distribution and advanced manufacturing systems. In November 1993,
BDM Europe acquired management control of, through a 45% ownership interest in,
Industrieanlagen-Betriebsgesellschaft mbH ("IABG"), located in Ottobrunn,
Germany. The interest was acquired primarily from
Industrieverwaltungsgesellschaft AG (IVG) under a privatization plan approved by
the relevant ministries of the German Government, the principal owner of IVG.
IABG provides test and evaluation and information services, principally to the
German Government. In February 1994, the Company acquired Geoscience
Consultants, Ltd. ("GCL"), a company that provides environmental assessment and
engineering services to industrial and governmental clients. For financial
reporting purposes, GCL is included under BDM Federal. In February 1996, the
Company acquired three affiliated companies--CW Systems, Inc. IG Systems, Inc.
and Melco Systems, Inc.--which will operate collectively as a new IT Services
Group within BDM Technologies.
 
    Unless the context otherwise requires, reference herein to "the Company" or
"BDM" includes BDM International, Inc. and its subsidiaries.
 
                                       1
<PAGE>
    The principal office and corporate headquarters of the Company is located at
1501 BDM Way, McLean, Virginia 22102-3204, and its telephone number is (703)
848-5000.
 
BUSINESS AREAS
 
    In 1995, the Company, through its subsidiaries, engaged in contracts and
programs on behalf of public and private sectors. A cross-section follows,
showing major contract and program areas, by subsidiary.
 
    BDM Federal. The following are examples of contracts and program areas in
which BDM Federal performs systems and software integration, computer and
technical services and enterprise management and operations services. The
Company:
 
    -- Modernizes the way information is managed by both defense and civil
       government agencies under the Defense Enterprise Integration Services
       ("DEIS") Program contract. The work includes developing an overall
       enterprise architecture to integrate disparate information systems, known
       as legacy systems, introducing modern information technologies, and
       re-engineering information management processes. BDM is one of six prime
       contractors on the DEIS contract, and has received the second highest
       dollar volume of delivery order awards (approximately $200 million) among
       the six contractors since the program began in 1994. 1995 revenue was
       approximately $72.5 million
 
    -- Provides systems and software integration services to the Securities and
       Exchange Commission ("SEC") as the developer of the Electronic Data
       Gathering, Analysis and Retrieval System ("EDGAR"). This system permits
       publicly held companies to file periodic reports electronically with the
       SEC, thus replacing paper filings, and provides for immediate public
       dissemination of financial filing and reporting data. EDGAR is now
       operational, and all public companies will make the transition to filing
       via EDGAR by the end of 1996. 1995 revenue was approximately $9.5
       million.
 
    -- Consolidates defense logistics computer systems for the United States Air
       Force ("USAF") under the $362 million DMRD-924 Program. The Company
       provides systems and software integration services, ranging from hardware
       acquisition to large-scale systems integration, pursuant to a DOD
       directive mandating consolidation of computer sites to enhance
       performance and reduce costs. 1995 revenue was approximately $46.4
       million.
 
    -- Developed and implemented for the Federal Aviation Administration ("FAA")
       and the DOD a Terminal Radar Approach Air Traffic Control ("TRACON")
       system for the High Desert TRACON facility in Southern California. The
       Company believes that this system, based on open system architecture and
       the use of commercial off-the-shelf hardware and software, represents a
       major technological step forward in air traffic control systems. BDM is a
       key member of a team headed by Boeing, one of three teams selected to
       compete for a major FAA air traffic control replacement system contract
       (known as "STARS"), that is expected to be awarded in 1996. 1995
       development revenue from the Company's air traffic control and air space
       management projects was approximately $2.0 million.
 
    -- Provides comprehensive systems integration services to various state and
       local school districts in the areas of financial and administrative
       software applications, instructional applications, system architectures
       and network designs, teacher and administrator training and management
       consulting. The Company is working to advance the productivity and
       efficiency of administrative systems and improve student performance. The
       Company's largest contract in this area ($27.5 million), awarded in 1995,
       combines systems integration with outsourcing of the school district's
       information services department. 1995 revenue in this area was
       approximately $13.3 million.
 
                                       2
<PAGE>
    -- Supports the Department of Energy ("DOE") in development of plans and
       technologies and the implementation of strategies to advance its waste
       management, technology development and environmental restoration
       programs. The Company performs information systems support, technical
       assessments and other services to help the DOE meet federally mandated
       responsibility for waste management and site cleanup under the Resource
       Conservation Recovery Act, the Comprehensive Environmental Response,
       Compensation, and Liability Act of 1980 and other laws and regulations.
       1995 revenue was approximately $22.7 million.
 
    -- Provides logistic support services to the Royal Saudi Air Force
       encompassing IT services, logistics and supply, training, engineering and
       systems maintenance, administration and other areas. 1995 revenue was
       approximately $21.6 million.
 
    -- Provides the Ballistic Missile Defense Organization with comprehensive
       engineering and technical systems assistance in areas such as systems
       architecture and design, system simulation and modeling, command,
       control, communications and intelligence, systems testing and logistics
       planning. 1995 revenue was approximately $20.7 million.
 
    -- Manages and operates elements of the Joint Readiness Training Center of
       the U.S. Army Training and Doctrine Command, where approximately 50,000
       soldiers a year are trained on integrated battlefields with
       near-real-time performance feedback. Systems designed and operated by BDM
       collect data through lasers, electronics and videos to provide the U.S.
       Army with the most comprehensive experience and data feedback short of
       actual combat. 1995 revenue was approximately $14.3 million.
 
    -- Creates and implements systems and processes to improve blood
       collections, processing and distribution for the American Red Cross.
       Tasks involve developing standard operating procedures, installing
       hardware and software, and providing training to Red Cross personnel.
       This is a joint activity with BDM Technologies. Aggregate 1995 revenue
       was approximately $13.0 million.
 
    BDM Technologies. The following are examples of contracts and program areas
in which BDM Technologies performs systems and software integration, computer
and technical services and enterprise management and operations for commercial
and state and local government clients. The Company:
 
    -- Designs and integrates state-wide information systems aimed at
       strengthening welfare and human services management and provides tested
       solutions in such areas as child welfare and child support enforcement.
       Major programs are underway in Alabama, Iowa, Missouri, Montana and other
       states. In Montana, the BDM-designed child support enforcement system was
       the nation's first to achieve the federal certification that all such
       systems are required to have. 1995 revenue in this area was approximately
       $35.6 million.
 
    -- Automates warehouse distribution and control operations to improve
       distribution process efficiencies for major national and international
       clients including Ford Motor Company ("Ford"), Franklin Mint, Merck and
       Co., Inc., Ortho-McNeil, Inc., Bell Canada, Federal Express, Dot Foods
       and Spalding. Using the Company's proprietary MARCTM system, BDM helps
       clients achieve increased inventory accuracy, improved response time and
       other benefits. 1995 revenue in this area was approximately $7.8 million.
 
    -- Performs application outsourcing, maintenance and support and develops
       critical software enhancements to various information systems for Ford.
       BDM Technologies has been directly involved in the development and
       implementation of Computer Integrated Manufacturing applications for
       Ford's Electronics Division. In addition, BDM Technologies has also
       designed, developed and implemented several key client/server
       applications for Ford. 1995 revenue was approximately $6.5 million.
 
                                       3
<PAGE>
    -- Delivers business process re-engineering, project management and
       Internet/Intranet services to US West to implement communications and
       process improvements in this client's large project management systems. A
       current focus of BDM development activity is US West's "Global Village"
       network which uses the Internet's World Wide Web for both internal and
       customer support communications. 1995 revenue was approximately $3.2
       million.
 
    -- Provides systems integration and manufacturing execution services to
       support clients in the semiconductor manufacturing industry.
       Representative clients include Advanced Micro Devices, Sony
       Semiconductors, National Semiconductor, Hitachi Semiconductor and Zilog.
       1995 revenue was approximately $2.5 million.
 
    -- Provides IT systems and services, through its newly acquired companies
       (CW Systems, IG systems and Melco Systems), to Fortune 1000 companies and
       other large organizations in the oil and gas, telecommunications,
       financial, insurance, health care, public utility and entertainment
       sectors. They have also served state government agencies in Texas,
       Florida, California, Georgia and Oklahoma. These acquired companies' 1995
       revenue aggregated approximately $35.2 million.
 
    BDM Europe. The following are examples of program areas in which BDM Europe
provides systems and technology services, primarily to German Government and
industrial clients. BDM Europe:
 
    -- Provides information technology and systems support in software
       standardization, development and integration of management information
       systems for government and commercial clients and strengthening of
       command, control, communications and intelligence systems for the German
       Ministry of Defense. 1995 revenue was approximately $35.7 million.
 
    -- Performs environmental assessments, both to meet requirements at
       contaminated sites (site inventory, investigation, assessment and
       remediation engineering) and to support environmental planning and the
       development of improved remediation systems and techniques. One project
       underway involves surveying and environmental risk assessment for former
       Soviet military sites in the former East Germany. 1995 revenue was
       approximately $25.0 million.
 
    -- Analyzes, tests, evaluates and simulates defense systems, missions, and
       operations for the German Ministry of Defense. Typical programs involve
       engineering assessments of new weapons systems and platforms, support of
       Battlefield Training Centers, fatigue testing of military aircraft,
       design and simulation of camouflage measures and development and
       implementation of computer-based models for operational analysis and
       training. 1995 revenue was approximately $68.1 million.
 
    -- Tests commercial and military aircraft structures, such as the Airbus
       A330/340 airliners and the Tornado and new Eurofighter aircraft; programs
       include testing of major assemblies, components and structural elements
       to identify structural weaknesses and improve safety and service life.
       1995 revenue was approximately $17.7 million.
 
    -- Performs comprehensive testing of satellites and other space structures,
       space simulation, thermal vacuum testing, vibration and shock-testing and
       project monitoring for the German Ministry of Research and Technology,
       the European Space Agency, and private clients at the Space Test Center
       in Ottobrunn, Germany. 1995 revenue was approximately $22.5 million.
 
    -- Tests vehicles and their components for various German automobile
       manufacturers and suppliers such as BMW, Audi and Volkswagen, including
       climatic testing, emissions testing and mechanical tests of suspension
       and steering elements. 1995 revenue was approximately $5.4 million.
 
                                       4
<PAGE>
    -- Operates the Magnetic Levitation (MagLev) test facility in Elmsland,
       Germany, including the performance of numerous technical investigations
       and demonstration runs. The successful operation of this facility
       contributed to the decision of the German Government to implement the
       first MagLev service route in Germany connecting Hamburg and Berlin. 1995
       revenue was approximately $11.7 million.
 
    Vinnell. The following are examples of contracts under which Vinnell
performs training and complementary capabilities in technical services as well
as enterprise management and operations for its clients in the United States and
abroad. The Company:
 
    -- Provides training, logistical support and comprehensive developmental,
       advisory and operational services under the Saudi Arabian National Guard
       ('SANG") Modernization Program. In April 1995, Vinnell was selected for
       an award of a new three-year contract with the SANG to continue this
       effort through June 1, 1998. This work is performed by a joint venture,
       of which Vinnell owns 51%. Aggregate 1995 revenue was approximately $67.2
       million.
 
    -- Performs training, logistical support and comprehensive developmental,
       advisory and operational services for FMC Arabia (an affiliate of FMC
       Corporation) in connection with the fielding of the Bradley Fighting
       Vehicle System for the Royal Saudi Land Forces. This work is being
       performed through an affiliate, of which Vinnell owns 60%. Aggregate 1995
       revenue was approximately $34.1 million.
 
    -- Manages and operates six Job Corps Centers in the United States for the
       Department of Labor ("DOL") under a program designed to bring education
       and vocational training to disadvantaged youth. Vinnell's Larado, Texas
       center was ranked the nation's number one Job Corps Center by the DOL in
       program year 1995. Aggregate 1995 revenue was approximately $26.3
       million.
 
    -- Manages and operates U.S. military facilities in Turkey and three USAF
       facilities in Oman and provides personnel support services in Egypt under
       joint ventures with Brown & Root Services Corporation, Airwork Ltd and
       SEACOR Services, Inc., respectively. Total 1995 revenue earned by these
       joint ventures was approximately $75.1 million. As a 50% partner in these
       joint ventures, Vinnell reports earnings using the equity method.
       Aggregate equity in earnings from these joint ventures was approximately
       $1.8 million in 1995.
 
CONTRACTS
 
    Types of Contracts. The Company's services are provided through three types
of contracts: fixed-price, time-and-material and cost-reimbursable contracts.
Fixed-price contracts require the Company to perform services under the contract
at a stipulated price. Time-and-material contracts reimburse the Company for the
number of labor hours expended at established hourly rates negotiated in the
contract, and the cost of materials incurred. Cost-reimbursable contracts
reimburse the Company for all actual costs incurred in performing the contract
to the extent that such costs are within the contract ceiling and allowable
under the terms of the contract, plus a fee or profit.
 
    The Company assumes greater financial risk on fixed-price contracts than on
either time-and-material or cost-reimbursable contracts. Commercial contracts
are generally fixed-price contracts. Failure to anticipate technical problems,
estimate costs accurately, or control costs during contract performance may
reduce the Company's profit or cause a loss. Greater risks are involved under
time-and-material contracts than under cost-reimbursable contracts because the
Company assumes the responsibility for the delivery of specified skills at a
fixed hourly rate. Higher profit margins are generally negotiated with the
government for fixed-price and time-and-material contracts because the Company
bears the risk that increased or unexpected costs may reduce the Company's
profit or cause a loss, while lower than anticipated costs may result in
increased profit.
 
                                       5
<PAGE>
    The following table shows the approximate percentage of revenue by contract
type recognized by the Company during the indicated periods:
 

                                                            YEARS ENDED DECEMBER
                                                                    31,
                                                            --------------------
    TYPE OF CONTRACT                                        1995    1994    1993
    ----------------                                        ----    ----    ----
Cost-reimbursable........................................    39%     43%     68%
Fixed-price..............................................    28      30      29
Time-and-material........................................    33      27       3
                                                            ----    ----    ----
      Total..............................................   100%    100%    100%
                                                            ----    ----    ----
                                                            ----    ----    ----

 
    Award of Contracts. The Company may obtain a government contract after the
solicitation by the relevant government agencies, in open and free competition,
of sealed bids from various suppliers or through the process of negotiation with
the Government. Under certain circumstances, most government agencies are
authorized to enter into contracts based on negotiation rather than sealed bids.
 
    Negotiated contracts may or may not involve the solicitation of competitive
proposals. Generally, negotiated contracts are entered into without competitive
solicitation when the services or supplies desired by the government can be
obtained from only one available source. In most noncompetitive procurements,
the government solicits a proposal from the contractor and then negotiates the
price and other terms in accordance with the applicable federal regulations.
 
    Government Contract Operations. Many of the government programs in which the
Company participates as a contractor or subcontractor may extend for several
years, but they are normally funded on an annual basis. The Company's government
contracts and subcontracts are subject to modification, curtailment, and
termination in the event of changes in government funding. Accordingly, all of
the Company's contracts and subcontracts involving the U.S. Government may be
terminated at any time by the U.S. Government, without cause, for the
convenience of the U.S. Government. If a U.S. Government contract is terminated
for convenience, the Company would be entitled to receive compensation for the
services provided or costs incurred at the time of termination and a negotiated
amount of the profit on the contract.
 
    The Company's costs and revenue under government contracts are subject to
adjustment as a result of audits by the DCAA. Audits have been completed of
costs incurred on all years through 1988. Audits for 1989 through 1995 have not
been completed. However, management does not believe the results of these audits
will have a material effect on the Company's financial position or results of
future operations.
 
  Backlog
 
    The Company's backlog at December 31, 1995 was approximately $1.7 billion
compared to approximately $1.5 billion at December 31, 1994. Approximately 42%
of the Company's backlog at December 31, 1995 is expected to be converted to
revenue within the current fiscal year.
 
    The Company's backlog amounts are composed of funded and unfunded
components. Funded backlog consists of the dollar portion of contracts that is
currently appropriated by the government client or other clients and allocated
to the contract by the purchasing government agency or otherwise authorized for
payment by the client upon completion of a specified portion of work. The
Company's funded backlog was approximately $667 million and $535 million as of
December 31, 1995 and December 31, 1994, respectively. Although unfunded backlog
can include up to the stated award value of the contract including renewals or
extensions that have been priced but still remain at the discretion of the
client whether to fund, the Company, to be conservative, often recognizes only a
portion of stated award values on multi-year contracts into its backlog records.
Because many of the Company's contracts are multi-year contracts, total backlog
may include revenue expected to be realized several
 
                                       6
<PAGE>
years into the future. The unfunded backlog may not be an indicator of future
contract revenue or earnings because there is no assurance that the unfunded
portion of the Company's backlog will be funded. In addition, most of the
contracts included in backlog are subject to termination for the convenience of
the government client.
 
                          BACKLOG SUMMARY BY COMPONENT
<TABLE>
<CAPTION>
                                                         AS OF DECEMBER 31,
                                                     --------------------------
                                                      1995      1994      1993
                                                     ------    ------    ------
                                                       (DOLLARS IN MILLIONS)
<S>                                                  <C>       <C>       <C>
Funded............................................   $  667    $  535    $  326
Unfunded..........................................    1,021     1,003       961
                                                     ------    ------    ------
      Total.......................................   $1,688    $1,538    $1,287
                                                     ------    ------    ------
                                                     ------    ------    ------
</TABLE>
 
MARKETING
 
    The Company's marketing activities are conducted by its professional
managers who have technical expertise and whose efforts are supplemented by the
Company's staff of engineers, scientists and analysts. The Company supports the
marketing efforts of its personnel through the direct participation of senior
management and supervisory employees. These marketing efforts are further
supported by a corporate proposal center, organized team reviews of proposals
and a formal corporate training program. The Company believes that this
marketing approach enables it to anticipate and serve the needs of its clients
and ensures that those who are seeking to obtain business for the Company have
the necessary technical expertise and resources both to develop proposals that
satisfy clients' requirements and to participate in or supervise the performance
of services that ultimately may be provided.
 
COMPETITION
 
    The information systems industry in which the Company operates is highly
fragmented with no single company or small group of companies in a dominant
position. The Company's competitors include large, diversified firms with
substantially greater financial resources and larger technical staffs than the
Company as well as firms which receive preferences under set-aside programs.
Some of the Company's competitors also operate in international markets, along
with other concerns which operate exclusively or primarily outside the United
States. Some of the larger competitors offer services in a number of markets
which overlap many of the same areas in which the Company offers services, while
certain companies are focused on only one or a few of these markets. The firms
which compete with the Company are consulting firms, computer services firms,
applications software companies and accounting firms, as well as the computer
service arms of computer manufacturing companies and defense and aerospace
firms. In addition, the internal staffs of client organizations, non-profit
federal contract research centers and universities are, in effect, competitors
of the Company. The primary factors of competition in the business in which the
Company is engaged include technical, management and marketing competence, as
well as price.
 
PROPRIETARY INFORMATION
 
    The Company believes that its business is dependent on its technical and
organizational knowledge, practices, and procedures. The Company claims a
proprietary interest in certain of its work products, software programs,
methodologies, and know-how. Some of the proprietary information is protected by
confidentiality agreements and other means.
 
    The U.S. Government has certain proprietary rights to software programs and
other products that result from the Company's services under U.S. Government
contracts or subcontracts. The U.S.
 
                                       7
<PAGE>
Government may disclose such information to third parties, including competitors
of the Company. In the case of subcontracts, the prime contractors may also have
certain rights to such programs and products.
 
EMPLOYEES AND EMPLOYEE REPRESENTATION
 
    As of March 1, 1996, the Company had approximately 7,900 full-time and
part-time employees. Joint ventures, in which the Company is a partner, employed
approximately 2,900 additional individuals as of this date. In addition, the
Company enters into agreements with a large number of consultants on a
project-specific basis who are engaged by the Company to perform specialized
work on contracts or to provide expertise in support of marketing and contract
activities. With the exception of approximately 125 Vinnell employees, and
except as discussed in the next paragraph, no other employees of the Company are
represented by a union and, to the knowledge of the Company, no union organizing
activities are in progress.
 
    As a corporation organized under the laws of and operating in Germany, IABG
is subject to the German Co-determination Law. Under this law, certain German
workers have a right to representation on supervisory boards of a company and,
through Workers' Councils, have a say in issues relating to corporate
operations, particularly those having a direct impact on workers. Approximately
40% of IABG's employees are covered by the tariff agreements of the German
metalworkers union, IG Metall. The tariff negotiations determine the annual
raises and weekly working hours for the people covered by this tariff agreement.
Negotiations have been completed to cover the period through December 31, 1996.
 
FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
 
    For information regarding revenue, operating profit or loss, and assets
attributable to each of the Company's geographic areas, see Note 16 to the
Consolidated Financial Statements in Item 8.
 
ITEM 2. FACILITIES.
 
    The Company leases all of its offices and other facilities. The Company's
corporate headquarters are located in McLean, Virginia. The Company also leases
office buildings as principal offices in Fairfax, Virginia; Albuquerque, New
Mexico; Houston, Texas; Denver, Colorado; Germantown, Maryland; Kettering, Ohio;
Huntsville, Alabama; Falls Church, Virginia; Boulder, Colorado; Eindhoven, The
Netherlands; and Ottobrunn, Germany.
 
    In addition to these principal offices, as of March 1, 1996, the Company
maintained offices or facilities in connection with the performance of its
contracts in over 80 other locations. A portion of these premises is subleased
to others. In addition to the Company's offices and facilities, Company
personnel are frequently assigned to client locations throughout the country and
overseas.
 
    For additional information on the Company's leases and rental expenses
thereunder, see Note 17 of the Notes to Consolidated Financial Statements.
 
ITEM 3. LEGAL PROCEEDINGS.
 
    The Company is a party to various legal actions, claims, government
inquiries and audits resulting from the normal course of business. The Company
believes that any resulting liability should not have a material adverse effect
on the Company.
 
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
    No matters were submitted during the fourth quarter of 1995 to a vote of
security holders.
 
                                       8
<PAGE>
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT.
 
    The executive officers of the Company, their positions with the Company, and
their principal occupations during the past five years are set forth below.
 
<TABLE>
<CAPTION>
    NAME                        AGE                  POSITION(S) WITH COMPANY
   ----                         ---                  ------------------------
<S>                             <C>   <C>
Frank C. Carlucci............   65    Chairman of the Board and Director
William E. Conway, Jr........   46    Vice Chairman and Director
Philip A. Odeen..............   60    President, Chief Executive Officer and Director
C. Thomas Faulders, III......   46    Executive Vice President, Treasurer, and Chief
                                      Financial Officer; President, BDM Technologies
Dr. William E. Sweeney,
Jr...........................   57    Chairman of the Board, BDM Europe, General Manager and
                                        Chairman of the Management Board, IABG and Director
Roy V. Woodle................   60    President and Chief Executive Officer, Vinnell
</TABLE>
 
    Set forth below is certain information regarding the backgrounds of each of
the executive officers of the Company.
 
    FRANK C. CARLUCCI has served as Chairman of the Board of Directors of the
Company since October 1990. Mr. Carlucci has been Chairman of the Board of
Carlyle since 1993 and served as Vice Chairman of Carlyle from 1989 to 1993. Mr.
Carlucci served as U.S. Secretary of Defense from 1987 to 1989 and has served in
a number of other government positions, including Ambassador to Portugal, Deputy
Secretary of Defense and Assistant to the President for National Security
Affairs.
 
    WILLIAM E. CONWAY, JR. has served as Vice Chairman of the Board of Directors
of the Company since October 1990. Mr. Conway has been a Managing Director of
Carlyle since 1987.
 
    PHILIP A. ODEEN has served as President, Chief Executive Officer and a
Director of the Company since May 1992. Mr. Odeen served with Coopers & Lybrand,
an international auditing and consulting firm, as Vice Chairman, Management
Consulting Services from 1991 to 1992, and as Managing Partner from 1978 to
1991. Mr. Odeen has served in a number of government positions, including
Director, Program Analysis, National Security Council, and Principal Deputy
Assistant Secretary of Defense.
 
    C. THOMAS FAULDERS, III joined the Company as Executive Vice President,
Treasurer and Chief Financial Officer on April 24, 1995. He has also served as
President of BDM Technologies, Inc. since October 20, 1995. Mr. Faulders served
with Comsat Corporation, a provider of international communications and
entertainment, as Vice President and Chief Financial Officer from 1992 to 1995.
From 1985 to 1992, he served in several senior management positions with MCI
Communications Corporation, a long distance service provider.
 
    DR. WILLIAM E. SWEENEY, JR. has served as an Executive Vice President and a
Director of the Company since October 1990 and as Chairman of the Board of BDM
Europe and General Manager and Chairman of the Management Board of IABG since
1993. Dr. Sweeney joined the Predecessor Company in 1977 and has held a number
of positions, including senior management positions in the Communications,
Command and Control Division, the Communications Technology Group and the
Systems Engineering and Development Organization.
 
    ROY V. WOODLE has served as President and Chief Executive Officer of Vinnell
since June 1993 and January 1994, respectively. Mr. Woodle joined Vinnell in
1983 as Vice President, Program Development and from 1988 to 1993, he served as
Senior Vice President.
 
                                       9
<PAGE>
                                    PART II
 
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
        MATTERS.
 
    The Company's Common Stock has been traded on the Nasdaq National Market
(Symbol BDMI) since June 29, 1995. Before that date, the shares were not listed
on any national exchange or on the over-the-counter market. As of February 23,
1996, there were 769 shareholders of record of Common Stock and two shareholders
of record of Class B Common Stock.
 
    The following table sets forth the high and low sales prices of the Common
Stock of the Company as reported by the Nasdaq National Market for each of the
quarters indicated:
 
                                                            HIGH        LOW
                                                            ----        ---
1996
1st Quarter (through March 8)...........................   $41.125    $25.438
 
1995
2nd Quarter (June 29-30)................................    21.500     19.875
3rd Quarter.............................................    28.500     20.250
4th Quarter.............................................    30.500     23.750
 
  Dividend Policy
 
    The Company does not have a policy of paying regular dividends and has no
present intention of paying any dividends. The payment of dividends is subject
to the discretion of the Board of Directors of the Company and will depend on
the Company's results of operations, financial position and capital
requirements; general business conditions; restrictions imposed by financing
arrangements, if any; legal restrictions on the payment of dividends; and other
factors, such as continued growth opportunities in which to invest, which the
Board of Directors deems relevant. In addition, pursuant to the Company's credit
facility, dividends can only be paid after September 1, 1996 and are not to
exceed 20% of the Company's cumulative net income subsequent to July 1, 1996.
The Company paid a dividend on December 15, 1993 of $.50 per share of Common
Stock and Class B Common Stock. The payment of future dividends by the Company
should not be assumed.
 
                                       10
<PAGE>
ITEM 6. SELECTED FINANCIAL INFORMATION.
 
    The consolidated statement of operations data set forth below with respect
to the calendar years ended December 31, 1995, 1994, 1993, 1992 and 1991 and the
consolidated balance sheet data at December 31, 1995, 1994, 1993, 1992 and 1991
have been derived from, and are qualified by reference to, the Company's
consolidated financial statements and notes thereto audited by Coopers & Lybrand
L.L.P., independent accountants. The selected consolidated financial data set
forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and notes thereto in Items 7 and 8.
 
<TABLE><CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                     ----------------------------------------------------
                                                       1995       1994     1993(1)    1992(2)    1991(3)
                                                     --------   --------   --------   --------   --------
<S>                                                  <C>        <C>        <C>        <C>        <C>
                                                            (IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Revenue............................................  $889,974   $774,249   $558,292   $424,389   $296,798
Cost of sales......................................   752,107    643,728    460,186    348,191    236,165
Selling, general and administrative................    80,804     82,950     63,847     41,940     32,328
Depreciation, amortization and other...............    18,154     20,627     12,089     14,802     18,650
                                                     --------   --------   --------   --------   --------
Operating profit...................................    38,909     26,944     22,170     19,456      9,655
Interest expense, net..............................     1,474      3,481      4,178      5,302      6,425
Equity in earnings of affiliates...................    (1,835)    (1,841)    (2,223)    (1,852)     --
Minority interest..................................     5,863      2,526      1,555      --         --
                                                     --------   --------   --------   --------   --------
Income before income taxes.........................    33,407     22,778     18,660     16,006      3,230
Provision for income taxes.........................    15,015      9,700      7,632      6,552      2,710
                                                     --------   --------   --------   --------   --------
Income before extraordinary gain and cumulative
 effect of accounting change.......................    18,392     13,078     11,028      9,454        520
Extraordinary gain, net of tax.....................     --         --           413      --         --
Cumulative effect of accounting change.............     --         --         --          (115)     --
                                                     --------   --------   --------   --------   --------
Net income.........................................    18,392   $ 13,078   $ 11,441   $  9,339   $    520
                                                     --------   --------   --------   --------   --------
                                                     --------   --------   --------   --------   --------
EARNINGS PER SHARE:
Income before extraordinary gain and cumulative
 effect of accounting change.......................  $   1.56   $   1.20   $   0.92   $   0.81   $   0.05
Extraordinary gain.................................     --         --          0.03      --         --
Cumulative effect of accounting change.............     --         --         --         (0.01)     --
                                                     --------   --------   --------   --------   --------
Net income.........................................  $   1.56   $   1.20   $   0.95   $   0.80   $   0.05
                                                     --------   --------   --------   --------   --------
                                                     --------   --------   --------   --------   --------
</TABLE>
<TABLE><CAPTION>
                                                                      AS OF DECEMBER 31,
                                                     ----------------------------------------------------
                                                     1995(4)    1994(5)    1993(1)    1992(2)    1991(3)
                                                     --------   --------   --------   --------   --------
                                                                        (IN THOUSANDS)
<S>                                                  <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA (AT END OF PERIOD):
Current assets.....................................  $294,654   $270,079   $242,800   $135,775   $105,220
Total assets.......................................   363,793    335,551    303,436    174,816    133,577
Current liabilities................................   178,530    175,165    161,052     81,033     48,525
Long-term debt.....................................    25,900     82,750     48,480     38,423     40,940
Stockholders' equity...............................   115,469     41,105     62,909     54,932     44,112
</TABLE>
------------
(1) On November 16, 1993, the Company acquired a 45% interest in IABG and
    entered into an agreement which gives the Company voting control of IABG and
    permits the Company to manage IABG's operations. The Company's financial
    statements consolidate IABG's financial position and results of operations
    and report the remaining owners' 55% interest as a minority interest. This
    acquisition was accounted for as a purchase, and the Company's consolidated
    results of operations include IABG from the date of its acquisition through
    its subsidiary, BDM Europe.
 
(2) On March 13, 1992, the Company acquired the outstanding common stock of
    Vinnell for approximately $29.6 million, including transaction expenses.
    This acquisition was accounted for as a purchase, and the Company's
    consolidated results of operations include Vinnell from the date of its
    acquisition.
 
(3) In October 1990, Carlyle invested $40.0 million in the equity securities of
    the Company. The acquisition was accounted for as a purchase, and $93.5
    million of indebtedness of the Company related to the buyout was incurred.
    The results of operations for the year ended December 31, 1991 reflect
    certain one-time acquisition-related expenses.
 
(4) The increase in stockholders' equity and the decrease in long-term debt
    reflect the impact of net proceeds of $49.4 million from the Company's
    initial public offering of 2.875 million shares of Common Stock on June 28,
    1995.
 
(5) The decline in stockholders' equity and the increase in long-term debt
    reflect the impact of the repurchase of 2.6 million shares of Common Stock
    and Class B Common Stock for $36.4 million on May 27, 1994.
 
                                       11
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.
 
    Overview. In 1995, BDM achieved its fourth consecutive year of double-digit
growth in revenue, net income and earnings per share. Revenue totaled $890.0
million, a 15% increase over 1994. Net income of $18.4 million represented a 41%
increase over the prior year, and earnings per share of $1.56 represented a 30%
increase. These results reflect the continuing progress the Company has made in
moving toward its goal of increasing its systems and software integration
business, which generally provides higher profit margins. This migration has
occurred in both the commercial and the U.S. Government business sectors.
 
    All of the Company's 1995 increases resulted from internal growth. Although
no acquisitions were made during 1995, the Company announced on February 20,
1996, the acquisition of three affiliated companies, CW Systems, Inc., IG
Systems, Inc. and Melco Systems, Inc., which specialize in providing information
technology systems and services in the oil and gas, telecommunications,
financial, insurance, health care, public utility and entertainment sectors. The
Company continues to pursue a growth and diversification strategy which places
emphasis on acquisitions, especially in the commercial information technology
("IT") area. Acquisitions of companies in the United States and abroad have been
integral to BDM's growth and diversification strategy since 1992. This includes
the acquisitions of Vinnell Corporation (1992), FACE and IABG (1993) and
Geoscience Consultants, Ltd. ("GCL") (1994).
 
    In June 1995, the Company completed a public offering of common stock which
provided net proceeds of $49.4 million. These proceeds were used to reduce
outstanding debt, resulting in lower interest expense and an improved
debt-to-equity ratio. The strengthened balance sheet provides available
borrowing capacity to continue the pursuit of business combinations for the
Company's growth and the development of strategically important areas of the
business.
 
RESULTS OF OPERATIONS
 
    The following table sets forth certain financial data, expressed as a
percentage of revenue:
 
<TABLE>
<CAPTION>
                                                                           FOR THE YEARS ENDED
                                                                              DECEMBER 31,
                                                                         -----------------------
                                                                         1995     1994     1993
                                                                         -----    -----    -----
<S>                                                                      <C>      <C>      <C>
Revenue...............................................................   100.0%   100.0%   100.0%
Cost of sales.........................................................    84.5     83.1     82.4
Selling, general and administrative...................................     9.1     10.7     11.4
Depreciation, amortization and other..................................     2.0      2.7      2.2
                                                                         -----    -----    -----
    Operating profit..................................................     4.4      3.5      4.0
Interest expense, net.................................................     0.2      0.4      0.7
Equity in earnings of affiliates......................................    (0.2)    (0.2)    (0.4)
Minority interest.....................................................     0.6      0.3      0.3
                                                                         -----    -----    -----
    Income before taxes...............................................     3.8      3.0      3.4
Provision for income taxes............................................     1.7      1.3      1.4
                                                                         -----    -----    -----
    Income before extraordinary gain, net of tax......................     2.1      1.7      2.0
Extraordinary gain, net of tax........................................      --       --      0.1
                                                                         -----    -----    -----
    Net income........................................................     2.1%     1.7%     2.1%
                                                                         -----    -----    -----
                                                                         -----    -----    -----
</TABLE>
 
    Revenue. Revenue increased 15% in 1995 compared to the preceding year. All
subsidiaries contributed to this growth, particularly BDM Federal, which
reported significant revenue growth for the year of 16%, and BDM Technologies,
which grew 48%. Revenue for 1994 was 39% higher compared
 
                                       12
<PAGE>
to the preceding year due primarily to the inclusion of the results of IABG in
BDM Europe for 12 months in 1994 versus six weeks in 1993.
<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                    -----------------------------------------------
                                                        1995             1994             1993
                                                    -------------    -------------    -------------
<S>                                                 <C>       <C>    <C>       <C>    <C>       <C>
CLIENTS SERVED                                             (IN MILLIONS, EXCEPT PERCENTAGES)
U.S. Department of Defense.......................   $331.6     37%   $244.6     32%   $261.0     47%
International Defense............................    222.8     25     193.5     25     122.2     22
Civil Governments................................    199.8     23     227.3     29     144.9     26
Commercial.......................................    135.8     15     108.8     14      30.2      5
                                                    ------    ---    ------    ---    ------    ---
      Total......................................   $890.0    100%   $774.2    100%   $558.3    100%
                                                    ------    ---    ------    ---    ------    ---
                                                    ------    ---    ------    ---    ------    ---
 
<CAPTION>
 
SERVICES PROVIDED
<S>                                                 <C>       <C>    <C>       <C>    <C>       <C>
Systems and Software Integration.................   $273.5     31%   $197.0     26%   $164.1     29%
Computer and Technical Services..................    505.0     57     490.9     63     345.3     62
Enterprise Management and Operations.............    111.5     12      86.3     11      48.9      9
                                                    ------    ---    ------    ---    ------    ---
      Total......................................   $890.0    100%   $774.2    100%   $558.3    100%
                                                    ------    ---    ------    ---    ------    ---
                                                    ------    ---    ------    ---    ------    ---
<CAPTION>
 
SUBSIDIARY
<S>                                                 <C>       <C>    <C>       <C>    <C>       <C>
BDM Federal(1)...................................   $475.5     53%   $411.6     53%   $386.9     69%
BDM Technologies.................................     57.5      7      38.8      5      17.7      3
BDM Europe(2)....................................    215.8     24     197.5     26      31.5      6
Vinnell Corporation..............................    141.2     16     126.3     16     122.2     22
                                                    ------    ---    ------    ---    ------    ---
      Total......................................   $890.0    100%   $774.2    100%   $558.3    100%
                                                    ------    ---    ------    ---    ------    ---
                                                    ------    ---    ------    ---    ------    ---
</TABLE>
 
------------
 
(1) BDM Federal's revenue includes revenue from GCL from its date of acquisition
    on February 1, 1994.
 
(2) BDM Europe's revenue includes revenue from IABG and FACE from their dates of
    acquisition, November 16, 1993 and January 1, 1993, respectively.
 
    The growth in 1995 for U.S. Department of Defense revenue was primarily
driven by increased systems and software integration services performed by BDM
Federal. One significant contributor to this growth was the Defense Enterprise
Integration Services program to support the Defense Information Systems Agency.
Due to the nature of the work, these services have been at higher profit margins
than other types of services provided to the U.S. Government in the past. In
addition, this type of work has been in a strategically important growth area
for the Company. BDM Federal also recognized higher defense equipment
procurement revenue compared to 1994, contributing to an increase in the revenue
for computer and technical services compared to the previous year.
 
    At the end of 1995 and the beginning of 1996, as a result of the failure to
enact certain appropriations bills to fund the operations of several U.S.
Government departments and agencies for fiscal year 1996, the U.S. Government
furloughed a portion of its work force. This furlough did not materially impact
BDM's operations and cash flow in 1995. Because three of BDM's largest U.S.
Government clients (Department of Defense, Department of Energy and Department
of Transportation), representing greater than 80% of BDM's 1995 U.S. Government
revenue, have their funding in place for fiscal year 1996, the Company does not
expect the current budget impasse to have a material impact on BDM's operations.
 
    Services provided to international defense clients in 1995 grew 15% while
remaining a level 25% of total revenue. This growth is reflective of the
continued expansion of Vinnell's international defense and technical training
efforts for each of the last two years. Also a factor in this growth was the
increase in
 
                                       13
<PAGE>
revenue reported by BDM Europe in support of the German Ministry of Defense,
although much of this increase was due to fluctuations in exchange rates.
 
    Civil government revenue declined in BDM Federal in the services provided to
the U.S. Department of Energy and NASA, as well as in BDM Europe as a result of
a reduction in pass-throughs of certain amounts collected by IABG on behalf of
the German government. The decline in civil government revenue was partially
offset by increases in systems integration and consulting services performed for
various state governments by BDM Technologies and growth in the Company's
education technologies business.
 
    Commercial revenue grew 25% from 1994 to 1995 as a result of the expansion
of systems and software integration services. This growth reflects increased
activity in the automation of warehouse and distribution operations,
manufacturing modernization, business process re-engineering and related IT
services performed mainly by BDM Technologies.
 
    Cost of Sales. Cost of sales, which includes salaries, employee benefits,
subcontractor expenses, material purchases and overhead costs, increased as a
percentage of revenue in each of 1995, 1994 and 1993. The increase in 1995 is
generally reflective of increased equipment purchases on behalf of clients which
tend to generate lower profit margins. Equipment purchases as a percent of
revenue were 11.6%, 10.3% and 12.5% for 1995, 1994 and 1993, respectively. The
increase in cost of sales as a percentage of revenue from 1993 to 1994 is due
largely to the acquisition and consolidation of IABG which has profit margins
lower than other sectors of BDM's business.
 
    Selling, General and Administrative. Selling, general and administrative
expense ("SG&A"), which includes the Company's research and development costs
("R&D"), decreased as a percentage of revenue for each of the years 1995, 1994
and 1993. These decreases are partially attributable to a single R&D project
which was started in 1993 and was discontinued in 1994. SG&A included $3.9
million and $5.3 million for such R&D activities in 1994 and 1993, respectively.
Excluding these nonrecurring costs, SG&A as a percentage of revenue was 9.1%,
10.2% and 10.5% in 1995, 1994 and 1993, respectively. In addition, the decrease
in SG&A as a percentage of revenue also reflects the growth of revenue of BDM
Technologies in relation to its infrastructure that was created in 1993 when BDM
Technologies was formed. Cost controls at several of the Company's subsidiaries
also contributed to the decrease in SG&A as a percentage of revenue.
 
    Depreciation, Amortization and Other. There were no significant changes to
fixed assets of the Company; accordingly, depreciation expense was relatively
flat in 1995 compared to 1994. Depreciation expense increased $5.1 million in
1994 over 1993 due primarily to the inclusion of a full year of operations of
BDM Europe.
 
    Amortization expense increased in 1995 reflecting the write-off of the
unamortized goodwill for FACE totaling $1.6 million, as it was determined to be
no longer recoverable. Several factors contributed to this change in
recoverability. The acquired company's anticipated utilization of its technology
for other industries was not realized, and synergies between BDM technologies
and acquired technologies did not result in an expansion of the customer base as
expected. In addition, an economic downturn in the Netherlands contributed to a
deterioration in the revenue base. These factors resulted in a negative cash
flow projection for this particular business. Amortization expense increased
from 1993 to 1994 as a result of goodwill associated with acquisitions.
 
    Other expenses consist largely of certain indirect non-cash charges incurred
by the Company which are typically not allocable to government contracts,
including pension charges required by Statement of Financial Accounting
Standards No. 87--Employers' Accounting for Pensions (FAS 87) in excess of
funding. In 1995, other expenses decreased as a result of a decrease in the
Company's unallocable pension charge of $2.7 million. In addition, approximately
$0.6 million was expensed in 1994 as a result of the Company's decision to delay
its initial public offering until 1995.
 
                                       14
<PAGE>
    Interest Expense, Net. Interest expense in 1995 decreased substantially
compared to the preceding year primarily as a result of applying the $49.4
million net proceeds from the public offering to reduce outstanding borrowings.
Slightly offsetting this reduction of interest expense was a one-time charge of
$0.5 million related to the write-off of capitalized financing costs on the
credit facility which was replaced during the year. A new revolving credit
agreement, executed with more favorable terms, also contributed to the lower
interest expense in 1995 compared to 1994. Net interest expense also declined
from 1993 to 1994. While debt balances increased during 1994, lower interest
rates and the inclusion of a full year of interest income from BDM Europe more
than offset higher interest expense.
 
    Minority Interest. The Company began deducting minority interest from
earnings with the acquisition of 45% of IABG in November of 1993. Minority
interest increased $1.0 million in 1994 reflecting a full year of IABG minority
interest and approximately $0.6 million from a new 60% owned Vinnell joint
venture that began performance on a contract in May 1994. Minority interest
continued to increase in 1995 due to improved IABG profitability, the full-year
effect of the 60% Vinnell joint venture and Vinnell's contract with the Saudi
Arabian National Guard ("SANG"), which was converted to a 51% owned joint
venture in July 1995.
 
    Provision for Income Tax Expense. The provision for income tax expense
increased as a percentage of income before income taxes to 44.9% in 1995 from
42.6% in 1994. The higher effective tax rate in 1995 reflects the write-off of
$1.6 million in goodwill from the FACE acquisition which is not deductible for
income tax purposes. In addition, an increase in the provision for income taxes
was recognized for the write-off of a deferred tax benefit relating to net
operating loss carryforwards at FACE which are no longer expected to provide a
future tax benefit. The effective tax rate also increased in 1994 to 42.6% from
40.9% in 1993 as a result of the effects of certain acquisitions which resulted
in non-deductible goodwill. Additionally, certain tax benefits derived from the
acquisition of IABG were fully realized in the 1993 income tax provision.
Historically, the Company has been able to offset the effects of income
generated in high tax rate foreign jurisdictions with income earned in low tax
rate foreign jurisdictions, so that the overall effect of foreign earnings on
the Company's tax provision has been minimal. However, to the extent that the
Company's growth in international operations occurs in high tax rate
jurisdictions, the portion of the income tax provision which is attributable to
foreign earnings is likely to increase.
 
    Extraordinary Items. In 1993, the Company recognized two extraordinary items
having the net effect of increasing net income by approximately $0.4 million, or
$.03 per share. In connection with the negotiation of the credit facility, the
Company expensed the carrying value of debt issue costs incurred with the prior
credit agreement of $2.3 million less a related income tax benefit of $1.0
million. In addition, the Company recognized an extraordinary gain related to
the elimination of a liability recognized at the time of the 1990 Acquisition,
resulting in a benefit of $3.0 million less a related income tax expense of $1.3
million.
 
                                       15
<PAGE>
SELECTED QUARTERLY OPERATING RESULTS
 
    The following table sets forth certain unaudited consolidated statement of
operations data expressed in dollars and as a percentage of total revenue for
the eight most recently ended fiscal quarters. This data has been derived from
unaudited consolidated financial statements of the Company that, in the opinion
of management, include all adjustments necessary for a fair presentation in
accordance with generally accepted accounting principles. The Company's results
of operations for a particular quarter are not necessarily indicative of the
results of operations for any future period. The Company's quarterly results
have varied considerably in the past and are likely to vary from quarter to
quarter in the future.
 
<TABLE>
<CAPTION>
                                                                     QUARTERS ENDED
                                -----------------------------------------------------------------------------------------
                                                   1995                                          1994
                                -------------------------------------------   -------------------------------------------
                                DEC. 31,   SEPT. 30,   JUNE 30,   MARCH 31,   DEC. 31,   SEPT. 30,   JUNE 30,   MARCH 31,
                                --------   ---------   --------   ---------   --------   ---------   --------   ---------
                                                  (IN MILLIONS, EXCEPT PERCENTAGES AND PER SHARE DATA)
<S>                             <C>        <C>         <C>        <C>         <C>        <C>         <C>        <C>
STATEMENT OF OPERATIONS DATA:
 Revenue......................   $269.1     $ 215.9     $213.1     $ 191.9     $239.2     $ 195.5     $174.4     $ 165.2
 Operating profit.............     10.9         9.3        8.8         9.9        8.3         7.3        5.8         5.6
 Net income...................      5.9         5.3        3.9         3.3        4.1         3.1        3.0         2.9
 Earnings per share...........   $ 0.44     $  0.40     $ 0.38     $  0.33     $ 0.41     $  0.31     $ 0.26     $  0.24
 Weighted average shares
   outstanding................     13.6        13.4       10.2        10.0        9.9         9.9       11.4        12.3
 
AS A PERCENTAGE OF REVENUE:
 Revenue                          100.0%      100.0%     100.0%      100.0%     100.0%      100.0%     100.0%      100.0%
 Operating profit.............      4.0         4.3        4.1         5.2        3.5         3.8        3.3         3.4
 Net income...................      2.2         2.5        1.8         1.7        1.7         1.6        1.7         1.8
</TABLE>
 
VARIABILITY OF QUARTERLY RESULTS
 
    Fluctuations in the Company's quarterly revenue depend on a number of
factors, some of which are beyond the Company's control. These factors include,
among others, the timing of contracts, the timing of equipment shipments, delays
in client acceptance of the Company's services, the length of the revenue cycle
and client budget changes.
 
IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS 123 (FAS 123)
 
    The Financial Accounting Standards Board has issued FAS 123, "Accounting for
Stock-Based Compensation." FAS 123 encourages, but does not require, companies
to recognize compensation expense for grants of stock, stock options, and other
equity instruments to employees based on new fair value accounting rules.
Companies that choose not to adopt the new accounting rules will continue to
apply the existing rules, but will be required to disclose in the footnotes to
the financial statements the pro forma net income and earnings per share as if
the new rules had been adopted. As permitted by FAS 123, BDM will adopt the new
standard in 1996, choose to continue the current accounting for stock-based
compensation and disclose in the footnotes to the financial statements the pro
forma net income and earnings per share calculated using the new accounting
rules.
 
INTERNATIONAL OPERATIONS
 
    In connection with its international operations, the Company is subject to
various risks inherent in foreign activities. These risks may include unstable
economic and political conditions, changes in trade policies and regulations of
countries involved, fluctuations in currency exchange rates and requirements for
letters of credit or bank guarantees. Certain of the Company's contracts are
foreign military sales, which mitigate such risks because the contracts are
governed by U.S. Government procurement regulations. Much of the Company's other
international operations are in Western European countries, mainly in Germany
and The Netherlands, which have experienced relatively stable political
conditions
 
                                       16
<PAGE>
and regulatory environments. The Company is exposed to risks associated with
fluctuations in exchange rates, including the German Mark, the Saudi Riyal, the
Kuwaiti Dinar, the Turkish Lira and the Dutch Guilder. The Company limits its
exposure to these risks by incurring and paying for its expenses in the same
currencies as those of its revenue. In addition, certain contracts performed
overseas have provisions which provide for reimbursement of losses arising from
currency fluctuations. It is the Company's policy not to enter into derivative
financial instruments for speculative purposes. There were no derivative
financial instruments outstanding as of December 31, 1995.
 
EFFECTS OF INFLATION
 
    The Company's contract mix includes cost-reimbursable contracts which
represented 39%, 43% and 68% of total contract revenue in 1995, 1994 and 1993,
respectively, under which inflationary increases are passed on to the customer.
The decline in the percentage of cost-reimbursable contracts reflects higher
levels of work at BDM Federal performed under time-and-material contracts. In
addition, the companies that comprise BDM Europe have a contract portfolio
consisting of primarily time-and-material contracts. Total 1995 revenue from
time-and-material contracts increased to 33% compared to 27% in 1994 and only 3%
in 1993. These time-and-material contracts, as well as the Company's long-term
fixed price contracts, expose BDM to the risks of inflationary pressures on its
costs. The Company believes the percentage of fixed-price contracts will
increase as it shifts to serving more commercial and state government clients.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    Over the past several years BDM's operations have provided a positive cash
flow which, along with maintaining an available credit facility, has provided
adequate liquidity and working capital to fully meet the Company's operational
needs and support the acquisition program. In addition, the Company received net
proceeds of $49.4 million in mid-1995 from a public offering of common stock.
These proceeds were applied to reduce outstanding borrowings under the credit
facility and to extinguish the $3.7 million of subordinated debt.
 
    The Company generated $30.5 million, $5.9 million, $34.1 million, $26.2
million and $30.2 million of cash from operating activities for the years ended
December 31, 1995, 1994, 1993, 1992 and 1991, respectively. This has provided
funding for internal growth and contributed to the reduction of debt
outstanding. Specifically, the Company repaid $93.5 million of debt assumed as
part of the 1990 Acquisition in two years rather than the originally planned
five years. In addition, the Vinnell acquisition debt of $25.0 million, which
was incurred in 1992, was repaid in less than three years. Cash flow from credit
facilities has been utilized to fund other non-operating activities, including
capital expenditures, acquisitions, a dividend and a stock buyback.
 
    Related to the IABG transaction, significant advance payments, customary for
that operation, continue to be received from a large percentage of IABG's
customer base, which have been partially offset by severance payments and a
rental deposit made pursuant to the privatization plan have reduced cash flow
from operating activities.
 
    Other factors impacting cash flow from operations included increased income
tax payments in 1995 and 1994 due to the use of the remaining net operating loss
carryforwards in 1993. Cash flow from operations may fluctuate from period to
period based on the timing of payments from clients and payments to suppliers.
 
    Cash flow provided by investing activities has been primarily related to
amounts received in accordance with the IABG acquisition agreement. In March
1995, based on 23% of the shares held in trust, IABG received 23% of a required
capital infusion of $1.9 million. In addition, BDM received $1.1 million for the
reimbursement of 23% of the transaction costs incurred by the Company in
acquiring IABG. The terms of the original acquisition also required the owners
to provide IABG with three
 
                                       17
<PAGE>
guaranteed equity infusions. The final equity guarantee of approximately $8.9
million was paid on November 16, 1995, of which BDM paid its 45% share.
 
    On February 16, 1994, the Company acquired GCL for $4.3 million. Financing
for the acquisition and a covenant not-to-compete, totaling $4.5 million, was
obtained from the working capital credit facility and is expected to be repaid
from cash generated by the acquired company's operations.
 
    Other investing cash flow activities included fluctuations in the timing of
working capital infusions to and earnings distributions from Vinnell's
unconsolidated joint ventures, as well as planned capital expenditures. Included
in 1995 capital expenditures was approximately $4.8 million related to a new
financial and program management system (SAP) to be implemented at BDM Federal
in 1996. Expenditures for capital equipment increased in 1994 over 1993
primarily due to the full year effect of consolidating BDM Europe's activities.
 
    Financing activities in 1995 included the replacement of the Company's
credit facility with a new revolving credit agreement and an initial public
offering of the Common Stock. The new credit agreement provides an unsecured
multicurrency revolving credit line of $150 million for a term of five years, at
an interest rate based on LIBOR plus margins. The agreement includes covenants
which limit the amount of the Company's debt compared to total capitalization
and compared to earnings before interest, taxes, depreciation and amortization.
In addition, dividends can only be paid after September 1, 1996, and are not to
exceed 20% of the cumulative net income subsequent to July 1, 1996. As of
December 31, 1995, the Company had $113.4 million available for borrowing under
this new credit agreement. The Company had $137.9 million available for
borrowing as of February 29, 1996.
 
    On May 27, 1994, the Company repurchased 2,250,000 shares of its outstanding
Common Stock and 350,000 shares of its outstanding Class B Common Stock, from
its institutional investors at $14.00 per share. To effect the purchase, the
Company borrowed a total of $36.4 million from its working capital credit
facility.
 
    Other financing activities principally relate to employee benefits. The
Company has continued the employee benefit of enabling employees to purchase
shares of common stock through stock option exercise and an employee stock
purchase plan. On June 28, 1995, the Company established a new qualified
non-compensatory employee stock purchase plan (the "Plan") which has reserved
750,000 shares of common stock for issuance under the Plan. The Plan allows all
employees of the Company's domestic subsidiaries to purchase a limited amount of
common stock at a discount during the offering period of July 1, 1995 to June
30, 1996. The purchase price of the Company's common stock is the lesser of
$15.725, which is 85% of the initial offer price of $18.50 per share in the
public offering, or 85% of the market value at the end of each month. During
1995, the Company received $5.0 million from shares purchased under the Plan.
 
    The Company paid a dividend on December 15, 1993 of $.50 per share to all
holders of record as of November 15, 1993. Pursuant to the Company's credit
facility, dividends can only be paid after September 1, 1996 and are not to
exceed 20% of the Company's cumulative net income subsequent to July 1, 1996.
The payment of future dividends by the Company should not be assumed.
 
    During 1995, the fluctuation in the value of the German Mark relative to the
U.S. dollar resulted in a $3.0 million increase in cash as reported in U.S.
dollars in the accompanying financial statements due to the significant balance
of cash maintained by IABG.
 
    The Company's existing sources of liquidity and cash flow should continue to
provide sufficient funds for the Company's operations, debt service
requirements, planned investments and capital expenditures for the foreseeable
future.
 
                                       18
<PAGE>
ITEM 8. INDEX TO FINANCIAL STATEMENTS.
 
<TABLE>
<CAPTION>
                                                                                        PAGES
                                                                                        -----
 
<S>                                                                                     <C>
BDM International, Inc.
 
  Report of Independent Accountants..................................................     20
 
  Consolidated Balance Sheets as of December 31, 1995 and 1994.......................     21
 
  Consolidated Statements of Operations for the years ended December 31, 1995, 1994
    and 1993.........................................................................     22
 
  Consolidated Statements of Stockholders' Equity for the years ended December 31,
    1995, 1994 and 1993..............................................................     23
 
  Consolidated Statements of Cash Flow for the years ended December 31, 1995, 1994
    and 1993.........................................................................     24
 
  Notes to Consolidated Financial Statements.........................................     25
</TABLE>
 
                                       19
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
The Board of Directors and Stockholders
  BDM International, Inc.
 
    We have audited the accompanying consolidated balance sheets of BDM
International, Inc. and
Subsidiaries (the Company) as of December 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity and cash flow for
each of the three years in the period ended December 31, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
BDM International, Inc. and Subsidiaries as of December 31, 1995 and 1994, and
the consolidated results of their operations and their cash flow for each of the
three years in the period ended December 31, 1995, in conformity with generally
accepted accounting principles.
 



Washington, D.C.
February 15, 1996, except for Notes 3
  and 12, for which the date is                         COOPERS & LYBRAND L.L.P.
  February 23, 1996
                                       20
<PAGE>
                            BDM INTERNATIONAL, INC.
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>
<CAPTION>
                                                                      DECEMBER 31,    DECEMBER 31,
                                                                          1995            1994
                                                                      ------------    ------------
<S>                                                                   <C>             <C>
    ASSETS
Current assets:
    Cash and cash equivalents......................................     $ 69,143        $ 45,314
    Accounts receivable, net.......................................      219,354         215,923
    Prepaid expenses and other.....................................        6,157           8,842
                                                                      ------------    ------------
        Total current assets.......................................      294,654         270,079
Property and equipment, net........................................       45,722          40,569
Intangible assets, net.............................................        9,615          13,814
Deposits and other.................................................        8,580           5,896
Equity in and advances to affiliates...............................        5,222           5,193
                                                                      ------------    ------------
        Total assets...............................................     $363,793        $335,551
                                                                      ------------    ------------
                                                                      ------------    ------------
    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable and accrued expenses..........................     $168,253        $166,298
    Debt currently payable.........................................          449             426
    Income taxes payable...........................................        3,465           3,000
    Deferred tax liability.........................................        6,363           5,441
                                                                      ------------    ------------
        Total current liabilities..................................      178,530         175,165
Deferred tax liability.............................................        3,638           5,243
Long term debt.....................................................       25,900          82,750
Severance and other................................................       12,099          17,248
Minority interest..................................................       28,157          14,040
                                                                      ------------    ------------
        Total liabilities..........................................      248,324         294,446
                                                                      ------------    ------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; 500,000 shares authorized, none
  issued...........................................................       --              --
Common stock, $.01 par value; 12,962,342 shares issued and
  outstanding at December 31, 1995; 9,473,275 shares issued and
  outstanding at December 31, 1994.................................          130              95
Additional paid in capital.........................................       68,535          12,336
Retained earnings..................................................       46,790          28,398
Deferred compensation..............................................         (395)           (279)
Cumulative translation adjustment..................................          409             555
                                                                      ------------    ------------
        Total stockholders' equity.................................      115,469          41,105
                                                                      ------------    ------------
        Total liabilities and stockholders' equity.................     $363,793        $335,551
                                                                      ------------    ------------
                                                                      ------------    ------------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       21
<PAGE>
                            BDM INTERNATIONAL, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)
 
<TABLE><CAPTION>
                                                                 1995        1994        1993
                                                               --------    --------    --------
<S>                                                            <C>         <C>         <C>
Revenue.....................................................   $889,974    $774,249    $558,292
                                                               --------    --------    --------
Cost of sales...............................................    752,107     643,728     460,186
Selling, general and administrative.........................     80,804      82,950      63,847
Depreciation, amortization and other........................     18,154      20,627      12,089
                                                               --------    --------    --------
Operating profit............................................     38,909      26,944      22,170
 
Interest expense, net.......................................      1,474       3,481       4,178
Equity in earnings of affiliates............................     (1,835)     (1,841)     (2,223)
Minority interest...........................................      5,863       2,526       1,555
                                                               --------    --------    --------
Income before taxes.........................................     33,407      22,778      18,660
Provision for income taxes..................................     15,015       9,700       7,632
                                                               --------    --------    --------
Income before extraordinary gain............................     18,392      13,078      11,028
Extraordinary gain, net of tax..............................      --          --            413
                                                               --------    --------    --------
Net income..................................................   $ 18,392    $ 13,078    $ 11,441
                                                               --------    --------    --------
                                                               --------    --------    --------
Earnings per common share:
Income before extraordinary gain............................   $   1.56    $   1.20    $   0.92
Extraordinary gain..........................................      --          --           0.03
                                                               --------    --------    --------
Net income per share........................................   $   1.56    $   1.20    $   0.95
                                                               --------    --------    --------
                                                               --------    --------    --------
Weighted average shares outstanding.........................     11,818      10,941      11,983
                                                               --------    --------    --------
                                                               --------    --------    --------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       22
<PAGE>
                            BDM INTERNATIONAL, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                           CLASS B                                          
                                                            COMMON          COMMON      ADDITIONAL                          
                                                        --------------  --------------   PAID IN    RETAINED    DEFERRED    
                                                        SHARES  AMOUNT  SHARES  AMOUNT   CAPITAL    EARNINGS  COMPENSATION  
                                                        ------  ------  ------  ------  ----------  --------  ------------  
<S>                                                     <C>     <C>     <C>     <C>     <C>         <C>       <C>           
Balance at January 1, 1993............................. 10,590   $106     750     $7     $ 46,731   $  9,859    $ (1,771)   
 Issuance of common stock..............................    709      7    --      --         1,205      --         --        
 Deferred compensation.................................   --     --      --      --           131      --            955    
 Tax benefits applicable to stock option plans.........   --     --      --      --           793      --         --        
 Cancellation of deferred stock options................   --     --      --      --           (11)     --             11    
 Purchase of treasury stock............................   --     --      --      --        --          --         --        
 Cash dividend of $.50 per share.......................   --     --      --      --        --         (5,980)     --        
 Foreign currency translation adjustments..............   --     --      --      --        --          --         --        
 Net Income............................................   --     --      --      --        --         11,441      --        
                                                        ------  ------  ------  ----    ----------  --------      ------    
Balance at December 31, 1993........................... 11,299    113     750      7       48,849     15,320        (805)   
 Issuance of common stock..............................    251      3    --      --         2,262      --         --        
 Deferred compensation.................................   --     --      --      --        --          --            497    
 Tax benefits applicable to stock option plans.........   --     --      --      --            11      --         --        
 Cancellation of deferred stock options................   --     --      --      --           (29)     --             29    
 Purchase of treasury stock............................   --     --      --      --        --          --         --        
 Cancellation of treasury stock........................ (2,478)   (25)   (350)    (3)     (38,757)     --         --        
 Foreign currency translation adjustments..............   --     --      --      --        --          --         --        
 Income tax provision on translation adjustment........   --     --      --      --        --          --         --        
 Net income............................................   --     --      --      --        --         13,078      --        
                                                        ------  ------  ------  ----    ----------  --------      ------    
Balance at December 31, 1994...........................  9,072     91     400      4       12,336     28,398        (279)   
 Issuance of common stock..............................  3,581     36    --      --        56,880      --         --        
 Costs of stock issuance...............................   --     --      --      --          (774)     --         --        
 Deferred compensation.................................    (12)  --      --      --           501      --           (116)   
 Tax benefits applicable to stock option plans.........   --     --      --      --           688      --         --        
 Purchase of treasury stock............................   --     --      --      --        --          --         --        
 Cancellation of treasury stock........................    (79)    (1)   --      --        (1,096)     --         --        
 Foreign currency translation adjustments..............   --     --      --      --        --          --         --        
 Net income............................................   --     --      --      --        --         18,392      --        
                                                        ------  ------  ------  ----    ----------  --------      ------    
Balance at December 31, 1995........................... 12,562   $126     400     $4     $ 68,535   $ 46,790    $   (395)   
                                                        ------  ------  ------  ----    ----------  --------      ------    
                                                        ------  ------  ------  ----    ----------  --------      ------    
 
<CAPTION>
                                                             TREASURY
                                                              STOCK         CUMULATIVE      TOTAL
                                                              ------        TRANSLATION STOCKHOLDERS'
                                                         SHARES    AMOUNT   ADJUSTMENT     EQUITY
                                                         ------    -------  ----------  -------------
<S>                                                      <C>      <C>       <C>         <C>
Balance at January 1, 1993.............................    --      $ --       $--         $  54,932
 Issuance of common stock..............................    --        --        --             1,212
 Deferred compensation.................................    --        --        --             1,086
 Tax benefits applicable to stock option plans.........    --        --        --               793
 Cancellation of deferred stock options................    --        --        --             --
 Purchase of treasury stock............................    (100)      (800)    --              (800)
 Cash dividend of $.50 per share.......................    --        --        --            (5,980)
 Foreign currency translation adjustments..............    --        --        225              225
 Net Income............................................    --        --        --            11,441
                                                         ------    -------     ---     -------------
Balance at December 31, 1993...........................    (100)      (800)    225           62,909
 Issuance of common stock..............................    --        --        --             2,265
 Deferred compensation.................................    --        --        --               497
 Tax benefits applicable to stock option plans.........    --        --        --                11
 Cancellation of deferred stock options................    --        --        --             --
 Purchase of treasury stock............................  (2,728)   (37,985)    --           (37,985)
 Cancellation of treasury stock........................   2,828     38,785     --             --
 Foreign currency translation adjustments..............    --        --        643              643
 Income tax provision on translation adjustment........    --        --       (313)            (313)
 Net income............................................    --        --        --            13,078
                                                         ------    -------    ----     -------------
Balance at December 31, 1994...........................    --        --        555           41,105
 Issuance of common stock..............................    --        --        --            56,916
 Costs of stock issuance...............................    --        --        --              (774)
 Deferred compensation.................................    --        --        --               385
 Tax benefits applicable to stock option plans.........    --        --        --               688
 Purchase of treasury stock............................     (79)    (1,097)    --            (1,097)
 Cancellation of treasury stock........................      79      1,097     --            --
 Foreign currency translation adjustments..............    --        --       (146)            (146)
 Net income............................................    --        --        --            18,392
                                                         ------   -------      ---     -------------
Balance at December 31, 1995...........................    --      $ --       $409        $ 115,469
                                                         ------   -------      ---     -------------
                                                         ------   -------      ---     -------------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.

                                        23
<PAGE>
                                  BDM INTERNATIONAL, INC.
                             CONSOLIDATED STATEMENTS OF CASH FLOW
                     FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
                                       (IN THOUSANDS)
 
<TABLE><CAPTION>
                                                              1995         1994         1993
                                                            ---------    ---------    ---------
<S>                                                         <C>          <C>          <C>
Cash flow from operating activities:
  Cash received from clients.............................   $ 889,900    $ 746,335    $ 530,785
  Cash paid to suppliers and employees...................    (846,920)    (725,312)    (486,465)
  Income taxes paid......................................     (11,514)     (11,204)      (5,584)
  Interest received......................................       2,689        1,142          223
  Interest paid..........................................      (3,641)      (5,087)      (4,824)
                                                            ---------    ---------    ---------
  Net cash provided by operating activities..............      30,514        5,874       34,135
                                                            ---------    ---------    ---------
Cash flow from investing activities:
  Additions to property and equipment....................     (17,754)      (9,641)      (7,046)
  Proceeds from disposals of equipment...................      --               21          328
  Purchases of new businesses............................      --           (4,479)      (9,038)
  Cash acquired in business combination..................      --           --           20,165
  Reimbursement of acquisition costs.....................       1,535        1,362       --
  Contributions from minority owners.....................       7,097        2,482        4,171
  Distributions from unconsolidated affiliates...........       2,850        2,775        3,216
  Investment in unconsolidated affiliates................      (1,589)      (1,936)        (500)
                                                            ---------    ---------    ---------
  Net cash (used in) provided by investing activities....      (7,861)      (9,416)      11,296
                                                            ---------    ---------    ---------
Cash flow from financing activities:
  Net (repayments of) proceeds from borrowings...........     (53,169)      31,835       35,451
  Repayment of term debt.................................      (3,700)      --          (25,972)
  Proceeds from issuance of common stock.................      56,142        2,265        1,061
  Payment of debt issuance costs.........................      --             (234)        (580)
  Payment of dividend....................................      --           --           (5,980)
  Acquisition of common stock............................      (1,097)     (37,985)        (800)
                                                            ---------    ---------    ---------
  Net cash (used in) provided by financing activities....      (1,824)      (4,119)       3,180
                                                            ---------    ---------    ---------
Effect of exchange rate changes on cash and cash
  equivalents............................................       3,000        4,100          179
                                                            ---------    ---------    ---------
Net increase (decrease) in cash and cash equivalents.....      23,829       (3,561)      48,790
Cash and cash equivalents, beginning of period...........      45,314       48,875           85
                                                            ---------    ---------    ---------
Cash and cash equivalents, end of period.................   $  69,143    $  45,314    $  48,875
                                                            ---------    ---------    ---------
                                                            ---------    ---------    ---------
</TABLE>
 
   The accompanying notes are an integral part of these financial statements.
 
                                       24
<PAGE>
                            BDM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. ORGANIZATION
 
    BDM International, Inc. ("BDM" or "the Company") was privately owned from
its inception in 1959 until 1980, when it became a publicly owned company. BDM
was purchased by and became a wholly-owned subsidiary of Ford Aerospace
Corporation ("Ford Aerospace") in June 1988. BDM remained a wholly-owned
subsidiary of Ford Aerospace until members of senior management and an investor
group led by The Carlyle Group, L.P. ("Carlyle"), a Washington, D.C.-based
private merchant bank, acquired substantially all of the assets, liabilities and
business of BDM on October 23, 1990. On June 28, 1995, BDM completed a public
offering of common stock in which 2.875 million shares were sold at $18.50 per
share. BDM's stock has since been traded on the National Association of
Securities Dealers Automated Quotation System ("Nasdaq").
 
    BDM is a multinational information technology company that operates
primarily in three interrelated markets: systems and software integration,
computer and technical services and enterprise management and operations. The
Company provides its services through four decentralized subsidiaries. The
Company operates principally in the United States, Europe and the Middle East.
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
  Principles of Consolidation
 
    The consolidated financial statements include all majority-owned or
controlled subsidiaries and joint ventures of the Company. All significant
intercompany accounts and transactions have been eliminated. The Company's
earnings in unconsolidated joint ventures are accounted for using the equity
method.
 
  Revenue Recognition
 
    The Company's revenue is derived primarily from long-term contracts of
various types. Revenue on cost reimbursable contracts is recognized to the
extent of costs incurred plus a proportionate amount of the fee. Revenue on
fixed-price contracts is recognized using the percentage-of-completion method
based on the relationship of actual costs incurred to total costs estimated to
be incurred over the duration of the contract. Revenue on time-and-material
contracts is recognized based on actual hours delivered at the contracted hourly
rate plus the cost of any materials incurred. The fees under certain government
contracts may be increased or decreased in accordance with cost or performance
incentive provisions which measure actual performance against established
targets or other criteria. Such incentive fee awards or penalties are included
in revenue at the time the amounts can be reasonably determined. Provisions for
anticipated contract losses are recognized at the time they become known.
 
    Progress payments received in advance from customers are applied first to
any amount of unbilled accounts receivable on the related contracts. Any excess
of the payments received in advance over the related unbilled accounts
receivable is recorded as an advance payment liability.
 
  Foreign Currency Translation
 
    The results of operations from foreign subsidiaries are translated to U.S.
dollars using the average exchange rates during the period. Assets and
liabilities are translated to U.S. dollars at the exchange rate in effect at the
balance sheet date. The resulting cumulative translation adjustments are
reflected in stockholders' equity.
 
                                       25
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

  Statements of Cash Flow
 
    Cash flow from the operations of the Company's foreign subsidiaries are
calculated based on their reporting currencies. The effect of exchange rate
changes on the cash balances held in foreign currencies is reported separately
in the Statements of Cash Flow.
 
    The Company considers all highly liquid financial instruments with purchased
maturities of three months or less to be cash equivalents.
 
  Property and Equipment
 
    Property, equipment and furniture are recorded at cost, or assigned fair
value if acquired through an acquisition. Furniture and equipment are
depreciated over their estimated useful lives, ranging from three to ten years,
primarily using the declining balance method. Leasehold improvements are
amortized over their estimated useful lives or lease terms, whichever is
shorter, using the straight-line method. Maintenance and repairs are charged to
expense as incurred.
 
  Goodwill and Intangible Assets
 
    Goodwill represents the excess of the cost of acquiring businesses over the
fair value of identifiable net tangible and intangible assets acquired. Goodwill
is amortized on a straight-line basis over the period for which the Company
estimates it will benefit directly from the acquisition. Although the period of
benefit from goodwill can be difficult to estimate, the Company considers
goodwill to be recoverable as long as the acquisition generates positive cash
flow from operations after implementation of the Company's strategic plan or
completion of reorganization efforts, if any. Recoverability of goodwill is
evaluated quarterly based on current undiscounted cash flow projections of each
specific acquired business. To date, the Company has limited the period of
amortization of goodwill to fifteen years, even though most of the Company's
acquisitions would project positive cash flows from operations for a much longer
period. Goodwill is amortized over periods ranging from ten to fifteen years.
 
    Intangible assets are recorded at cost, or assigned fair value if acquired
through a business acquisition. Intangible assets are amortized on a
straight-line basis over the term of the underlying asset or the estimated
period of benefit, currently ranging from three to five years, or in the case of
contract backlog, over the remaining terms of the acquired contracts in relation
to the recognition of related contract revenue.
 
  Research and Development Costs
 
    Research and development costs are expensed as incurred and are included in
selling, general and administrative costs. Research and development costs
amounted to $2.0 million, $7.1 million and $7.8 million for the years ended
December 31, 1995, 1994 and 1993, respectively.
 
  Income Taxes
 
    The Company recognizes deferred tax assets and liabilities for the expected
future tax consequences of events that have been recorded in the financial
statements or tax returns. Deferred tax assets and liabilities represent the tax
effects of differences between the financial statement carrying amounts and the
tax basis carrying amounts of the Company's assets and liabilities. These
differences are calculated based upon the statutory tax rates in effect in the
years in which the differences are expected
 
                                       26
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

to reverse. The effect of subsequent changes in tax rates on deferred tax
balances is recognized in the period in which a tax rate change is enacted.
 
    Foreign income taxes that are reimbursable pursuant to the related contract
terms are classified as contract costs rather than as a component of the
Company's provision for income taxes.
 
  Earnings Per Share
 
    Earnings per share is computed by dividing net income by the sum of the
weighted average number of common and common equivalent shares outstanding. The
Company's common equivalent shares, consisting entirely of options to purchase
common stock, are calculated using the treasury stock method which assumes the
exercise of all outstanding stock options with the hypothetical proceeds being
used to repurchase shares for treasury.
 
  Financial Instruments
 
    The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash equivalents and accounts receivable. The
carrying value of financial instruments approximates fair value since all such
instruments are either short-term in nature or bear interest at rates which are
indexed to current market interest rates.
 
    The Company's cash management policy is to use available cash balances,
primarily of its domestic subsidiaries, to reduce the outstanding balance of the
revolving line of credit. To mitigate exposures to foreign currency risks
associated with using the available cash of foreign subsidiaries or joint
ventures, only the portion of available cash balances deemed not to be needed
for short-term operations of the foreign subsidiary are considered eligible for
inclusion in the centralized cash management activities of the Company. The
majority of the cash balance at December 31, 1995, belongs to IABG (the
Company's German subsidiary) (See Note 3). At December 31, 1995, approximately
$36 million was invested primarily in deposits with various German banks of high
credit ratings, with purchased maturities of one month or less. These
investments are insured up to amounts prescribed by German law. Although there
were no other investments as of December 31, 1995, significant excess cash
balances of domestic subsidiaries not used to extinguish debt are routinely
invested in high quality commercial paper for periods ranging from overnight to
one week. It is the Company's policy to hold such investments to maturity.
 
    In connection with its international operations, the Company is exposed to
risks associated with fluctuations in currency exchange rates, including the
German Mark, the Saudi Riyal, the Kuwaiti Dinar, the Turkish Lira and the Dutch
Guilder. The Company limits its exposure to these risks by incurring and paying
for its expenses in the same currencies as those of its revenue. In addition,
certain contracts performed overseas have provisions which provide for
reimbursement of losses arising from currency fluctuations. It is the Company's
policy not to enter into derivative financial instruments for speculative
purposes. There were no derivative financial instruments outstanding as of
December 31, 1995.
 
    The Company generally provides uncollateralized credit to its customers.
Advance payments are secured from a large portion of foreign government
customers pursuant to the appropriation practices of the related governments.
The Company also continually assesses the financial strength of commercial
companies for whom significant subcontracts are performed.
 
                                       27
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

  Reclassifications
 
    Certain reclassifications have been made to the prior year financial
statements and disclosures to conform them to the current year presentation.
 
  Use of Estimates
 
    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingencies as of the dates of the financial statements, and the
reported amounts of revenue and expenses during the reporting periods. Actual
results could differ from management's estimates.
 
3. ACQUISITIONS
 
  Geoscience Consultants, Ltd.
 
    On February 16, 1994, the Company acquired Geoscience Consultants, Ltd., an
environmental services consulting business, for an acquisition price of
approximately $4.3 million. The acquisition was financed with borrowings from
the Company's working capital facility. Goodwill resulting from the transaction,
accounted for as a purchase, approximated $3.2 million and is being amortized on
a straight-line basis over ten years. A three year covenant not-to-compete for
$150,000 was also issued in connection with the acquisition.
 
  Industrieanlagen-Betriebsgesellschaft mbH
 
    On November 16, 1993, the Company acquired management control, through a 45%
ownership interest, in Industrieanlagen-Betriebsgesellschaft mbH ("IABG"),
located in Ottobrunn, Germany. The interest was acquired primarily from IVG, a
company then owned by the German government, pursuant to a privatization plan
initiated by the German government. IABG performs diversified technical services
in the areas of defense technology, information systems, organizational
analysis, structural analysis and testing and environmental programs on behalf
of ministries of the German government as well as other governmental and private
sector clients.
 
    On the original acquisition date, IVG retained a 15% ownership interest in
IABG and held the remaining 40% ownership interest in trust, for sale to
employees and other investors, subject to the Company's approval. In October
1994, 12% of the trust was sold to Buck Werke GmbH & Co. KG, a German services
company, and an additional 5% was acquired by IVG. The Company has completed the
privatization of the remaining 23% trust balance through a sale to IABG's
employees and other investors at the original cost of the acquisition in 1993.
 
    The Company and IVG had originally entered into a voting rights agreement,
which gave the Company control of IVG's 15% voting authority enabling the
Company to exercise 60% in total voting authority. In connection with the sale
of an additional 5% of IABG to IVG in October 1994, the original voting rights
agreement was revised to provide IVG with direct control of 12% of IABG's total
voting authority while ensuring that the Company would retain the right to vote
IVG's remaining 8% ownership for a total voting authority by the Company of 53%.
IVG cannot unilaterally terminate the voting rights agreement. In the event that
BDM and IVG cannot agree on a vote, BDM will be required to acquire the 8%
portion of IABG at a price based on a previously accepted valuation method
contained
 
                                       28
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
3. ACQUISITIONS--(CONTINUED)

in the original acquisition agreement. The Company's majority voting authority
enables it to manage the operations of IABG; therefore, the accompanying
financial statements consolidate the financial statements of IABG and present
the 55% ownership as minority interest. No owner other than BDM will ever have
voting authority exceeding their ownership percentage.
 
    The total consideration paid for the acquisition included the purchase price
of $1.7 million, a finders fee of $2.1 million and transaction costs of
approximately $2.1 million. The transaction, accounted for as a purchase,
generated an excess of the purchase price over the book value of net assets
acquired of approximately $10.6 million. Due to the unique nature of certain
acquired equipment, additional time subsequent to the acquisition was needed for
extensive analysis by technical experts to appropriately ascertain a fair value
of this equipment. This subsequent valuation, completed in September 1994,
resulted in the allocation of the entire excess purchase price to certain
acquired technical equipment and buildings with fair values exceeding their
respective acquisition date carrying values. Effective January 1, 1994, the
allocated excess purchase price is being depreciated over the estimated useful
lives of the specific underlying assets averaging nine years, and ranging from
three to thirteen years.
 
    In addition to the purchase price consideration, the privatization plan
required the owners to guarantee equity infusions in IABG of $22.7 million
during the first two years of ownership. Installment payments against this
requirement were made by the owners at the acquisition date and on the first
anniversary thereof totaling $6.5 million and $6.2 million, respectively,
representing 100% and 77% of the equity infusions actually required as of those
dates. The remaining 23% portion of the second infusion, $1.9 million, was made
in March 1995 when the trust ownership transfer was completed. The third
installment commitment of $8.9 million, was made from all of the owners in
November of 1995. The above dollar amounts have been calculated at the then
prevailing exchange rates. The Company's share of all of the above acquisition
costs and equity guarantees was 45%.
 
  Subsequent Event--Acquisition
 
    On February 20, 1996, the Company completed the acquisition of three
affiliated companies--CW Systems, Inc., IG Systems, Inc. and Melco Systems,
Inc.--for $18.5 million, which was paid out of existing cash balances. The
acquired companies specialize in providing information technology systems and
services to Fortune 1000 companies and other large organizations in the oil and
gas, telecommunications, financial, insurance, health care, public utility and
entertainment sectors. They have also served state government agencies in Texas,
Florida, California, Georgia and Oklahoma. The firms had aggregate 1995 revenue
of approximately $35.2 million.
 
                                       29
<PAGE>
                                   BDM INTERNATIONAL, INC.
                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
4. SUPPLEMENTAL CASH FLOW INFORMATION
 
    The following is a reconciliation of net income to net cash provided by
operating activities for the years ended December 31, (dollars in thousands):
 
<TABLE><CAPTION>
                                                                   1995       1994       1993
                                                                  -------    -------    -------
<S>                                                               <C>        <C>        <C>
Net income.....................................................   $18,392    $13,078    $11,441
  Non cash adjustments to net income:
    Extraordinary items........................................     --         --           413
    Depreciation and amortization..............................    17,761     16,466     10,488
    Loss on disposal of property...............................       376      --           208
    Equity in earnings of affiliates...........................    (1,835)    (1,841)    (2,223)
    Minority interest..........................................     3,797      2,526      1,555
    Deferred taxes.............................................      (684)     2,563      5,261
    Provision for contract losses..............................     4,400      5,138      1,633
    Deferred compensation expense..............................       349        497      1,086
    Other......................................................        89       (749)       691
  Cash effect of changes in current assets and liabilities:
    Accounts receivable........................................    (9,525)   (36,543)   (28,674)
    Prepaid expenses and other.................................         1    (10,265)     2,579
    Accounts payable...........................................    (3,072)    13,204     28,477
    Income taxes payable.......................................       465      1,800      1,200
                                                                  -------    -------    -------
Net cash provided by operating activities......................   $30,514    $ 5,874    $34,135
                                                                  -------    -------    -------
                                                                  -------    -------    -------
</TABLE>
 
5. ACCOUNTS RECEIVABLE
 
    Accounts receivable consisted of the following at December 31, (dollars in
thousands):
 
<TABLE>
<CAPTION>
                                                                            1995        1994
                                                                          --------    --------
<S>                                                                       <C>         <C>
U.S. Government contracts:
  Billed...............................................................   $134,847    $118,727
  Unbilled:
    Retention..........................................................     16,866      28,642
    Other..............................................................      3,841      20,173
                                                                          --------    --------
  Total................................................................    155,554     167,542
 
Other contracts:
  Billed...............................................................     52,570      42,597
  Unbilled:
    Retention..........................................................      5,402       4,598
    Other..............................................................     22,338      10,962
                                                                          --------    --------
  Total................................................................     80,310      58,157
 
  Other................................................................      4,220       7,760
  Allowance for possible contract losses and uncollectible amounts.....    (20,730)    (17,536)
                                                                          --------    --------
  Net accounts receivable..............................................   $219,354    $215,923
                                                                          --------    --------
                                                                          --------    --------
</TABLE>
 
                                       30
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
5. ACCOUNTS RECEIVABLE--(CONTINUED)

    As of December 31, 1995 and 1994, approximately $7.8 million and $12.1
million, respectively, in advance payments from customers had been applied
against the unbilled portion of applicable contract receivables.
 
    Unbilled retention balances are billable at contract completion or upon
attainment of other specified contract milestones. Other unbilled amounts
consisted primarily of: contractually earned
services not yet billable because of stipulated installment billing provisions,
approximately $19.4 million and $8.4 million at December 31, 1995 and 1994,
respectively; revenue recognized pursuant to customer authorizations prior to
the execution of contractual documentation, approximately $1.7 million and $2.4
million at December 31, 1995 and 1994, respectively; and a specific receivable
related to a contract performed in Saudi Arabia whereby the Company will owe
severance to terminated employees at contract completion, approximately $1.9
million and $7.8 million at December 31, 1995, and 1994, respectively. This
liability is included in accrued severance. Management anticipates that
substantially all unbilled receivables as of December 31, 1995, exclusive of
retention balances, will be billed and collected in 1996. Based on the Company's
experience with similar contracts in recent years, retention balances of
approximately $9.1 million at December 31, 1995, are not expected to be
collected within the coming year. It is common industry practice to include such
amounts in working capital.
 
6. PROPERTY AND EQUIPMENT
 
    Property and equipment consisted of the following at December 31, (dollars
in thousands):
 
                                                             1995        1994
                                                           --------    --------
Equipment and office furniture..........................   $ 58,563    $ 52,492
Leasehold improvements..................................      9,559      10,965
                                                           --------    --------
                                                             68,122      63,457
Accumulated depreciation and amortization...............    (22,400)    (22,888)
                                                           --------    --------
Net property and equipment..............................   $ 45,722    $ 40,569
                                                           --------    --------
                                                           --------    --------
 
    Depreciation expense was $13.4 million, $12.5 million and $7.3 million for
the years ended December 31, 1995, 1994 and 1993, respectively (See Note 7
regarding IABG).
 
                                       31
<PAGE>
                                   BDM INTERNATIONAL, INC.
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
   
7. INTANGIBLE ASSETS
   
    Intangible assets consisted of the following at December 31, (dollars in
thousands):
   
<TABLE><CAPTION>
                                                                             1995       1994
                                                                            -------    -------
<S>                                                                         <C>        <C>
Goodwill.................................................................   $11,480    $13,326
  Less: Accumulated amortization.........................................    (2,695)    (2,124)
                                                                            -------    -------
                                                                              8,785     11,202
                                                                            -------    -------
Intangible Assets:
  Covenant not-to-compete................................................     3,850      3,850
  Debt issue costs.......................................................     --           814
  Contract backlog.......................................................     3,752      3,752
  Software licenses......................................................     1,770      1,309
                                                                            -------    -------
                                                                              9,372      9,725
  Less: Accumulated amortization.........................................    (8,542)    (7,113)
                                                                            -------    -------
                                                                                830      2,612
                                                                            -------    -------
  Total..................................................................   $ 9,615    $13,814
                                                                            -------    -------
                                                                            -------    -------
</TABLE>
 
    Goodwill recorded in connection with the IABG acquisition in 1993 of $10.9
million was reallocated to the excess of the fair values over the acquisition
date carrying values of certain acquired technical equipment and test facilities
as a result of a valuation of all acquired assets and liabilities, completed in
September 1994.
 
    Unamortized goodwill for the acquisition of FACE totaling $1.6 million was
expensed during 1995, as it was determined to be no longer recoverable. Several
factors contributed to this change in recoverability. The acquired company's
anticipated utilization of its technology for other industries was not realized,
and synergies between BDM technologies and acquired technologies did not result
in an expansion of the customer base as expected. In addition, an economic
downturn in the Netherlands contributed to a deterioration in the revenue base.
These factors resulted in negative cash flow projected for this particular
business.
 
    In addition, unamortized goodwill from a separate acquisition totaling
$440,000 was expensed during 1994 as it was determined to be no longer
recoverable. The change in recoverability was driven primarily by the loss of a
significant contract performed by the acquired company, which resulted in
negative cash flow projected for that particular business.
 
                                       32
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
 
    The components of accounts payable and accrued expenses were as follows at
December 31, (dollars in thousands):
 
                                                              1995        1994
                                                            --------    --------
Accounts payable.........................................   $ 63,567    $ 74,357
Accrued expenses:
  Advance payments.......................................     31,876      24,096
  Accrued salaries/benefits..............................     39,967      33,131
  Accrued vacation.......................................     18,838      15,548
  Restructuring/severance................................     10,245      12,030
  Environmental matters..................................      1,356       2,381
  Other..................................................      2,404       4,755
                                                            --------    --------
                                                            $168,253    $166,298
                                                            --------    --------
                                                            --------    --------
 
  Restructuring/Severance Liability/Debt Forgiveness
 
    Prior to the Company's acquisition of IABG (See Note 3), IABG found it
necessary to reduce its reliance on the German government for the majority of
its revenue. In addition to redirecting marketing efforts in non-defense areas,
IABG sought means to reduce operating costs. IABG therefore determined that it
would be necessary to reduce its workforce through involuntary terminations. As
prescribed by German law and pursuant to the German government's plan for
privatization of IABG, a severance plan was developed by IABG providing for the
estimated number of involuntary employee reductions, the conditions for
termination and the method for determining the amount of severance due to the
terminating employees. IABG's workforce reductions began in 1994 and will
continue through 1997. In connection with the approval of the plan by the German
government and prior to acquisition of IABG by the Company, an estimate for the
severance totaling $34.2 million was accrued. Benefits paid through 1995
totaling $13.7 million have been applied against the original accrual.
Management believes the remaining liability will be adequate to cover future
benefits claimed pursuant to the plan. The remaining liability as of December
31, 1995 has been classified among current and long-term liabilities according
to IABG's plan for effecting the actual employee reductions.
 
    As an incentive to investors acquiring IABG, the German government
privatization plan agreed to fund a portion of the above severance liability in
an amount equal to the principal balance of two notes held by IABG payable to
the German government's Ministry of Defense (MOD), for a total amount of $10
million. As payments for the severance liability were made to terminated
employees, the MOD forgave an equivalent amount of the debt, all of which has
been satisfied. The balance due on these notes was included as part of the
accrued severance liability.
 
                                       33
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
9. DEBT
 
    Long-term debt consisted of the following at December 31, (dollars in
thousands):
 
                                                              1995       1994
                                                             -------    -------
Revolving line of credit..................................   $25,830    $79,000
Subordinated seller note..................................     --         3,700
Other.....................................................       519        476
                                                             -------    -------
                                                              26,349     83,176
Less: current portion.....................................      (449)      (426)
                                                             -------    -------
Total long-term debt......................................   $25,900    $82,750
                                                             -------    -------
                                                             -------    -------
 
    Revolving Line of Credit. In July 1993, the Company entered into a credit
agreement which provided for a working capital facility of up to $100 million
for an original term of three years with two options to extend the term for one
additional year. The facility was amended in May 1994, increasing the borrowing
capacity to $125 million and extending the term of the facility for one of the
option years. The aggregate amount of borrowing was limited to a percentage of
the Company's eligible receivables as defined in the agreement. The Company had
the option to borrow principal at interest rates based either on the bank's
prime rate or the LIBOR rate plus margins, with unused credit also accruing a
standard interest charge. The outstanding borrowings were collateralized by a
security interest in the Company's accounts receivable. Costs incurred to obtain
the facility were capitalized and were being amortized over the term of the
agreement.
 
    During 1995, the Company replaced the credit agreement with a new revolving
credit agreement. The new agreement provides an unsecured multicurrency
revolving credit line of $150 million for a term of five years, at an interest
rate based on LIBOR plus margins. The agreement includes covenants which limit
the amount of the Company's debt compared to total capitalization and compared
to earnings before interest, taxes, depreciation and amortization. In addition,
dividends can only be paid after September 1, 1996, and are not to exceed 20% of
the cumulative net income subsequent to July 1, 1996. Conditions also exist
which limit the investments which can be made in existing subsidiaries and non-
subsidiaries. As of December 31, 1995, the Company had $113.4 million available
for borrowing under this new credit agreement and was in compliance with all
covenants. In connection with the replacement of the previous facility, the
Company expensed $0.5 million of capitalized financing costs.
 
    In connection with the early termination of a previous credit facility, the
Company recorded an extraordinary loss, net of the related tax benefit, of $1.3
million during the year ended December 31, 1993, in connection with the
expensing of unamortized debt issuance costs incurred in obtaining the
predecessor facility.
 
    The Company had also entered into an interest rate swap agreement to reduce
exposure to changes in interest rates. This agreement, which matured on October
23, 1993, required the payment of interest on a $30 million notional amount at
the spread between the prevailing LIBOR interest rate and 8.01%.
 
    Subordinated Seller Note. In connection with the acquisition of Vinnell in
1992, the Company issued a subordinated promissory note to the former owner in
the amount of $3.7 million. The note had an interest rate of 10% per annum, and
was payable semi-annually. The principal balance and unpaid accrued interest was
due the earlier of: (1) the fourth anniversary of the acquisition date on March
13, 1996, or (2) six months after the death of the former owner. However, this
note was repaid in July 1995 using a portion of the proceeds from the public
offering of stock.
 
                                       34
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
9. DEBT--(CONTINUED)

    FACE Acquisition Note. Effective January 1, 1993, the Company acquired FACE
Holding BV (a Netherlands Company). To finance the acquisition, the Company
executed a line of credit arrangement in April 1993 with a Netherlands bank for
up to $2.7 million. The outstanding balance incurred interest at 2% above the
prime rate of the Dutch Central Bank. In August 1994, this amount was repaid
with borrowings from the Company's credit facility.
 
    Subordinated Conditional Note. In connection with the acquisition of the
Company in 1990, in exchange for $3 million in consideration, the Company issued
the right to additional future consideration based upon the Company's actual
earnings before interest and taxes (EBIT) for the years 1991 through 1993. The
Company reflected the $3 million consideration as an estimate for this
liability, thereafter termed the Subordinated Conditional Note. At the
conclusion of 1993, it became evident that the EBIT level necessary to trigger
the additional purchase price consideration would not be attained for any of the
years 1991 through 1993. The Subordinated Conditional Note included a provision
that if the EBIT levels were not met, the Company would not be liable for any
conditional amount, or interest thereon, including the amount paid as
consideration. Accordingly, during the year ended December 31, 1993, the Company
recognized an extraordinary gain of $1.7 million, net of related income tax
expense, on the reversal of the amount initially assigned to the conditional
principal liability. Interest expense had not been accrued on the assigned value
of the right to the conditional principal amount.
 
    Maturities. Maturities of debt outstanding at December 31, 1995, were as
follows: 1996--$0.5 million; 1997--$0.1 million; 2000--$25.8 million.
 
    Interest Expense. Total interest expense incurred during 1995, 1994 and 1993
was $4.4 million, $5.1 million and $4.6 million, respectively. The weighted
average interest rate incurred for the years ended December 31, 1995, 1994 and
1993, was 9.25%, 7.04% and 10.33%, respectively.
 
10. INCOME TAXES
 
    The components of income before taxes were as follows for the years ended
December 31, (dollars in thousands):
 
                                                    1995       1994       1993
                                                   -------    -------    -------
Domestic........................................   $25,890    $12,335    $10,648
Foreign.........................................     7,517     10,443      8,012
                                                   -------    -------    -------
  Income before taxes...........................   $33,407    $22,778    $18,660
                                                   -------    -------    -------
                                                   -------    -------    -------
 
                                       35
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
10. INCOME TAXES--(CONTINUED)

    The provision for income taxes included the following for the years ended
December 31, (dollars in thousands):

<TABLE><CAPTION>
                                                                       1995       1994      1993
                                                                      -------    ------    ------
<S>                                                                   <C>        <C>       <C>
Current provision:                                                 
  Federal.........................................                    $ 9,530    $3,193    $  138
  State...........................................                      1,634       942     1,033
  Foreign.........................................                      4,535     3,000     1,200
                                                                      -------    ------    ------
      Total current provision.....................                     15,699     7,135     2,371
                                                                      -------    ------    ------
                                                                   
Deferred (benefit) provision:                                      
  Federal...........................................................   (3,745)    1,629     3,365
  State.............................................................     (642)      223        97
  Foreign...........................................................    3,703       713     1,799
                                                                      -------    ------    ------
      Total deferred (benefit) provision............................     (684)    2,565     5,261
                                                                      -------    ------    ------
      Total provision for income taxes..............................  $15,015    $9,700    $7,632
                                                                      -------    ------    ------
                                                                      -------    ------    ------
                                                                      
    The actual provision for income taxes as a percentage of pre-tax income
varies from the U.S. Federal statutory income tax rate for the following
reasons:
 

</TABLE>
<TABLE><CAPTION>
                                                                         1995     1994     1993
                                                                         ----     ----     ----
<S>                                                                      <C>      <C>      <C>
U.S. Federal statutory income tax rate...............................    35.0%    35.0%    35.0%
State income taxes, net of federal income tax benefits...............     6.0      6.0      6.0
Tax effect relating to non-deductible goodwill amortization..........     2.7      1.6      1.6
Tax effect relating to write off of tax benefits on foreign
  subsidiary.........................................................     1.2      --       --
Differences between U.S. Federal statutory and foreign income
  tax rates..........................................................     --       --      (2.8)
Effect of U.S. Federal tax rate increase on cumulative deferred tax
  liability..........................................................     --       --       1.1
                                                                         ----     ----     ----
Effective income tax rate............................................    44.9%    42.6%    40.9%
                                                                         ----     ----     ----
                                                                         ----     ----     ----
</TABLE>
 
                                       36
<PAGE>
                                   BDM INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
10. INCOME TAXES--(CONTINUED)

    The sources and tax effects of temporary differences which result in a net
deferred income tax liability were as follows as of December 31, (dollars in
thousands):
 
<TABLE><CAPTION>
                                                                             1995       1994
                                                                            -------    -------
<S>                                                                         <C>        <C>
Financial reporting basis of net assets acquired.........................   $ 5,532    $ 4,725
Other....................................................................       308        480
Revenue recognition......................................................    23,251     26,531
                                                                            -------    -------
  Gross deferred tax liability...........................................    29,091     31,736
                                                                            -------    -------
Financial reporting depreciation in excess of tax depreciation...........       735        646
Accrued expenses.........................................................     9,215      7,994
Foreign operating loss carryforward......................................       669      4,400
Accruals in excess of deductible write-offs..............................     5,981      3,797
Tax credit carryforwards.................................................     2,490      4,215
                                                                            -------    -------
  Gross deferred tax asset...............................................    19,090     21,052
                                                                            -------    -------
    Net deferred liability...............................................   $10,001    $10,684
                                                                            -------    -------
                                                                            -------    -------
</TABLE>
 
    As of December 31, 1995, the Company had foreign tax credit carryforwards
(FTC's) of $2.5 million expiring in various years through 1999. Utilization of
the FTC's is subject to certain limitations, including the future amount of
taxable foreign source income, the effective tax rate on such income and the
amount of future U.S. taxable income. The Company also has a net operating loss
carryforward of $1.6 million generated by IABG prior to its acquisition in 1993
by the Company to offset future taxable income in Germany. The temporary
differences between depreciation expense for financial reporting purposes and
income tax reporting purposes resulting from the fixed asset write-up for the
IABG acquisition provides assurance of future taxable income sufficient to
utilize the remaining net operating loss carryforward. Accordingly, no valuation
allowance is necessary. The term of the net operating loss carryforward is not
limited.
 
11. STOCKHOLDERS' EQUITY
 
  Description of Capital Stock
 
    The Company is authorized to issue a total of 52,500,000 shares of capital
stock, consisting of 500,000 shares of Preferred Stock, 50,000,000 shares of
Common Stock and 2,000,000 shares of Class B Common Stock, all shares with $.01
par value. The Preferred Stock may be issuable in one or more series from time
to time at the discretion of the Board of Directors. The Board of Directors is
authorized to fix the respective designation, relative rights, preferences,
qualifications, restrictions and limitations of each series.
 
    Each share of Common Stock is entitled to one vote in elections of directors
and all other matters required or permitted to be submitted to a vote of the
stockholders. The holders of Class B Common Stock have no voting rights. Holders
of both Common Stock and Class B Common Stock are entitled to receive dividends,
when and if declared by the Board of Directors of the Company. The shares of
Class B Common Stock are convertible into the same number of shares of Common
Stock upon their dispostion in connection with the occurrence of certain events
including a sale of all or substantially all of the Common Stock of the Company;
a merger or consolidation of the Company in which the
 
                                       37
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
11. STOCKHOLDERS' EQUITY--(CONTINUED)

stockholders of the Company receive cash and/or marketable securities in
exchange for their stock; and an underwritten public offering of Common Stock of
the Company.
 
  Fair Value of Common Stock
 
    Since the acquisition of the Company in October 1990, through June 28, 1995,
there was no public market for the Company's Common Stock. The fair value of the
Company's Common Stock was determined by the Board of Directors based primarily
on periodic valuations performed by an independent valuation company. On June
28, 1995, the Company's public offering was effective, and its Common Stock
began trading on June 29, 1995, on the Nasdaq. The fair value of the Company's
Common Stock has since been determined based on Nasdaq quotation systems.
 
  Stockholders Agreement
 
    At the time of the purchase of the Company in October 1990, certain members
of the Company's then senior management (the Management Group) and the outside
investors (the Investor Group) entered into a Stockholders Agreement. As
subsequently amended, the Stockholders Agreement required the Investor and
Management Groups to vote their shares to provide for a fourteen member Board of
Directors consisting of seven members designated by the Investor Group, four
members designated by the Management Group, and three members designated jointly
by both groups. The Stockholders Agreement terminated in accordance with its
terms following the 1995 offering, when at least 33% of the aggregate number of
the Company's outstanding shares of Common Stock were distributed publicly.
 
  Investor Stock Purchase Agreement
 
    An Investor Stock Purchase Agreement, also executed at the time of the
purchase of the Company in October 1990, provides the Company and members of the
Investor Group with the right of first refusal in the event any member of the
Investor Group desires to sell the shares purchased under the agreement, subject
to certain exceptions. The agreement also provides for anti-dilution, piggy-back
and demand registration rights. With the exception of the underwriters'
discount, most of the expenses incurred in connection with the exercise of such
registration rights by certain stockholders would be borne by the Company.
 
  Common Stock Purchase
 
    On May 27, 1994, the Company acquired 2,250,000 shares and 350,000 shares of
its outstanding Common Stock and Class B Common Stock, respectively, for its
then fair value of $14.00 per share from the Investor Group. Coincident with
this stock purchase, these common shares, as well as all previously acquired
treasury shares, were cancelled.
 
                                       38
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
12. EQUITY PARTICIPATION PROGRAMS

  Employee Stock Purchase Plans
 
    The Company implemented an Employee Stock Purchase Plan in March 1993. The
Plan allowed participants to buy Common Stock at the fair market value through
payroll deductions. Each participating employee was able to purchase up to 26
shares of Common Stock per month at the fair market value per share. On various
occasions since inception of the Plan, the Company has acquired 282,072 shares
of its outstanding Common Stock at its then fair market value ranging from $8.00
through $17.25. During the years ended December 31, 1995, 1994 and 1993, the
Plan participants purchased 51,174, 127,120 and 78,229 shares for an average of
$16.17, $12.75 and $8.00 per share, respectively.
 
    Effective July 1, 1995, the above plan was discontinued and replaced with
the 1995 Employee Stock Purchase Plan (the 1995 Plan). The 1995 Plan is a
qualified non-compensatory employee stock purchase plan which has reserved
750,000 shares of common stock for issuance under this plan. The 1995 Plan
allows all employees of the Company's domestic subsidiaries to purchase a
limited amount of common stock at a discount during the offering period of July
1, 1995 to June 30, 1996. The purchase price of the Company's stock is the
lesser of $15.725, which is 85% of the initial offer price of $18.50 per share
in the public offering, or 85% of the market value at the end of each month.
During 1995, participants in this plan purchased 317,699 shares at $15.725 per
share.
 
  1990 Stock Option Plan
 
    In 1990, the Company established a Stock Option Plan (the 1990 Plan) to
provide officers and key employees with up to 1,562,500 qualified or
non-qualified incentive stock options to purchase shares of Common Stock. The
1990 Plan provides that qualified incentive stock options (as defined in the
Internal Revenue Code) have an exercise price equal to the fair market value of
the Common Stock on the date of the option grant. Non-qualified incentive stock
options have exercise prices as determined by the Compensation Committee of the
Board of Directors. The 1990 Plan provides for adjustments in the number of
shares related to stock options and their respective exercise prices in the
event of stock dividends or stock splits, and for adjustments in the event that
the Company effects a recapitalization or other change in its capital structure.
Options granted pursuant to the 1990 Plan vest over periods ranging from one to
five years. All options pursuant to this plan have been granted. As of December
31, 1995, the Company had 1,068,846 shares of Common Stock reserved for issuance
upon exercise of this plan's remaining outstanding options and 41,314 shares of
Common Stock reserved for future option grants.
 
  1994 Stock Option Plan
 
    In 1994, the Company's Board of Directors reserved 1,000,000 shares of
Common Stock and established the 1994 Stock Option Plan to succeed the 1990
Plan. The continuation 1994 Plan has identical provisions as the predecessor
1990 Plan. At December 31, 1995, the Company had 208,950 shares of Common Stock
reserved for issuance upon exercise of outstanding options and 791,050 shares of
Common Stock reserved for future option grants.
 
  Management Incentive Stock Purchase Program
 
    In 1991, the Company established the Management Incentive Stock Purchase
Program (MIS Plan), which provides for the granting of up to 1,111,111
nonqualified options to purchase shares of Common Stock to certain senior
members of management. The option exercise price is $.01 per share. Intended to
serve as incentive compensation for management, a portion of each option grant
vested each year based on management's ability to meet defined minimum
performance criteria. The majority of
 
                                       39
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
12. EQUITY PARTICIPATION PROGRAMS--(CONTINUED)

remaining outstanding options became fully vested on March 31, 1995 as the
related performance criteria for 1994 was achieved. Upon option grant, the
Company records deferred compensation equal to the difference between the fair
market value of the Company's Common Stock on the date of grant and the option
exercise price. The deferred compensation is expensed over the vesting term of
the underlying options. As of December 31, 1995, the Company had 25,000 shares
of Common Stock reserved for issuance upon exercise of the outstanding options
and 4,442 shares of Common Stock reserved for future option grants.
 
    Stock option activity pursuant to these plans has been as follows:
<TABLE>
<CAPTION>
                                                     MIS PLAN                 NON-MIS PLAN
                                            --------------------------    ---------------------
                                                        EXERCISE PRICE                  EXERCISE PRICE
                                             SHARES       PER SHARE        SHARES         PER SHARE
                                            --------    --------------    ---------    ----------------
<S>                                         <C>         <C>               <C>          <C>     <C>
Balance,
  January 1, 1993........................    612,811         $.01           632,440      $4.00- $ 5.25
  Granted................................     25,000          .01           429,925       5.25-   8.00
  Exercised..............................   (506,147)         .01          (102,310)      4.00-   5.25
  Forfeited..............................     (2,811)         .01           (19,540)      4.00-   8.00
                                            --------                      ---------
Balance,
  December 31, 1993......................    128,853          .01           940,515       4.00-   8.00
  Granted................................      --          --               471,050       8.00-  14.00
  Exercised..............................    (17,291)         .01           (99,678)      4.00-   8.00
  Forfeited..............................    (20,208)         .01           (95,589)      4.00-  12.00
                                            --------                      ---------
Balance,
  December 31, 1994......................     91,354          .01         1,216,298       4.00-  14.00
  Granted................................     30,000          .01           392,950      14.00-  26.38
  Exercised..............................    (96,354)         .01          (238,892)      4.00-  12.00
  Forfeited..............................      --             .01           (92,560)      5.25-  14.00
                                            --------                      ---------
Balance,
  December 31, 1995......................     25,000         $.01         1,277,796      $4.00- $26.38
                                            --------          ---         ---------    ----------------
                                            --------          ---         ---------    ----------------
</TABLE>
 
    At December 31, 1995, 629,177 options were exercisable under the 1990 Plan,
and no options were exercisable under the 1994 Plan or the MIS Plan. On February
23, 1996, the Company granted options to purchase an aggregate of 401,950 shares
of Common Stock under the 1990 and 1994 Plans to certain employees at an
exercise price equal to the fair value of $35.50 per share at that date.
 
    The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards 123 (FAS 123), "Accounting for Stock-Based Compensation."
FAS 123 encourages, but does not require, companies to recognize compensation
expense for grants of stock, stock options, and other equity instruments to
employees based on new fair value accounting rules. Companies that choose not to
adopt the new accounting rules will continue to apply the existing rules, but
will be required to disclose in the footnotes to the financial statements the
pro forma net income and earnings per share as if the new rules had been
adopted. As permitted by FAS 123, BDM will adopt the new standard in 1996 and
will choose to continue the current accounting for stock-based compensation.
Beginning in 1996, the Company will disclose in the footnotes to the financial
statements the pro forma net income and earnings per share calculated using the
new accounting rules.



                                       40
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
12. EQUITY PARTICIPATION PROGRAMS--(CONTINUED)

  Directors' Stock Purchase Plan
 
    Members of the Company's Board of Directors are eligible to receive their
compensation in the form of Common Stock in lieu of cash. During 1995, 1994 and
1993, the Company issued 7,369, 14,296 and 23,018 shares, respectively, of
Common Stock for this purpose. During 1995 and 1994, the Company purchased 6,298
and 13,750 shares, respectively, of its outstanding Common Stock for $14.00 per
share for use by this plan. As of December 31, 1995, the Company had 10,318
shares of Common Stock reserved for issuance upon the exercise of the board
members' option to receive compensation in this form.
 
13. RETIREMENT PLANS
 
    The Company maintains a 401(k) plan covering substantially all full-time
employees of the Company's domestic subsidiaries. Employees may direct the
investment of their contributions among several mutual fund options. Employees
may contribute up to the maximum allowed by federal regulations, currently, 15%
of their monthly salary or a maximum of $9,240. The Company contributes an
amount equal to 25% of the first 4% of the employee's salary contributed to the
plan by the employee. For the years ended December 31, 1995, 1994 and 1993, the
Company's contribution was approximately $907,000, $842,000 and $719,000,
respectively. At the time of the Company's change in ownership in 1990,
employees were allowed a one-time option to purchase the Company's Common Stock
with balances in their plan. Effective July 1, 1995, the BDM Stock Fund became
an active fund option in BDM's 401(k) Savings Plan. A total of 303,661 common
shares were held by the participants of the plan as of December 31, 1995.
 
    The Company also sponsors several other defined contribution plans for
substantially all of the employees of IABG. Participation in the plans is
voluntary; however, participants are required to make contributions to the plans
equal to 50% of the amount of the Company contribution. Company contributions
are based on percentages of the employees' monthly salary up to maximum monthly
benefits. The plans are fully funded and assets of the plans are invested in
insurance company annuities. The Company incurred $3.8 million, $3.5 million and
$423,000 in plan contribution expense for the years ended December 31, 1995,
1994 and in 1993 since the November 16, 1993 acquisition date, respectively.
 
    The Company has a defined benefit pension plan (the Retirement Plan) and a
supplemental executive retirement plan (SERP) providing noncontributory
retirement benefits for eligible employees. Benefits are determined based upon
years of service and employee compensation. The Company's funding policy is to
contribute annually, at a minimum, amounts required by applicable laws and
regulations. Retirement Plan assets are invested principally in a group annuity
contract with an insurance company, as well as in a portfolio of diversified
equity securities and mutual funds. In addition, one of the Company's
subsidiaries, BDM Oklahoma, Inc. , has a defined benefit pension plan which
mirrors the Retirement Plan.
 
                                       41
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
13. RETIREMENT PLANS--(CONTINUED)

    The net periodic pension expense for these defined benefit plans included
the following components for the years ended December 31, (dollars in
thousands):
 
<TABLE>
<CAPTION>
                                                                          1995        1994       1993
                                                                        --------     -------    -------
<S>                                                                     <C>          <C>        <C>
Service cost...................................................         $  4,883     $ 4,975    $ 3,686
Interest cost on projected benefit obligation..................            5,153       5,752      4,385
Actual return on plan assets...................................          (11,978)       (526)    (5,864)
Net amortization and deferral..................................            7,681      (5,590)       521
                                                                        --------     -------    -------
Net periodic pension expense...................................         $  5,739     $ 4,611    $ 2,728
                                                                        --------     -------    -------
                                                                        --------     -------    -------
</TABLE>                                                              
                                                                      
    The funded status of the Company's defined benefit plans as well as other
disclosures required by Statement of Financial Accounting Standard No.
87--Accounting for Employee Benefit Plans (FAS 87) were as follows (dollars in
thousands):
<TABLE><CAPTION>
                                                             DECEMBER 31, 1995      DECEMBER 31, 1994
                                                            --------------------   --------------------
                                                            RETIREMENT             RETIREMENT
                                                               PLAN       SERP        PLAN       SERP
                                                            ----------   -------   ----------   -------
<S>                                                         <C>          <C>       <C>          <C>
Actuarial present value of vested benefit obligation......   $ 64,635    $ 1,804    $ 66,516    $ 1,593
                                                            ----------   -------   ----------   -------
                                                            ----------   -------   ----------   -------
Actuarial present value of accumulated benefit
  obligation..............................................   $ 68,216    $ 1,804    $ 68,774    $ 1,607
                                                            ----------   -------   ----------   -------
                                                            ----------   -------   ----------   -------
Plan assets at fair value.................................   $ 65,539    $ --       $ 66,073    $ --
Actuarial present value of projected benefit obligation...    (74,626)     1,896     (73,700)    (1,794)
                                                            ----------   -------   ----------   -------
Plan assets less than projected benefit obligation........     (9,087)    (1,896)     (7,627)    (1,794)
Unrecognized prior service cost...........................      2,761         54       3,588          6
Unrecognized net gain (loss)..............................        783         84      (1,331)       140
Adjustment required to recognize minimum liability........     --            (46)     --          --
                                                            ----------   -------   ----------   -------
Accrued pension cost......................................   $ (5,543)   $(1,804)   $ (5,370)   $(1,648)
                                                            ----------   -------   ----------   -------
                                                            ----------   -------   ----------   -------
</TABLE>
 
    The actuarial present values of the vested benefit obligations shown above
represent the amount to which employees are entitled based on the employees'
expected dates of separation or retirement. Assumptions, based on actual
historical results, used in accounting for the defined benefit plans were as
follows as of December 31,:
 
<TABLE>
<CAPTION>
                                                                             1995       1994      1993
                                                                            -----      -----     -----
<S>                                                                        <C>         <C>        <C>
Discount rate for projected benefits................................        7.75%       8.5%       7.5%
Average wage increases..............................................         4.0%       4.0%       4.0%
Expected long-term return on plan assets............................         9.5%      10.0%      10.0%
</TABLE>                                                                  
 
    On January 1, 1995, the Company made a disbursement of $16.7 million to
fully settle certain benefits of the Retirement Plan with the purchase of an
insurance contract. This resulted in a net loss of $349,000 recognized in 1995.
 
    The Company also maintains another defined benefit pension plan covering
nine past and present members of the management board of IABG. Benefits are
determined based on the members' years of service and compensation. The Company
had an accrued balance of $5.9 million and $5.7 million for this pension
obligation as of December 31, 1995 and 1994, respectively. The contribution
expense amounted to $345,000 in 1995, $554,000 in 1994, and $128,000 for the
period of ownership in 1993. No
 
                                       42
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
13. RETIREMENT PLANS--(CONTINUED)

additional pension disclosures required by FAS 87 have been provided since the
majority of the members covered by the plan have retired and the liability
reflected in these financial statements for this plan will not increase
significantly in the future.
 
    The Company maintains a self-insurance plan to cover the costs of certain
employee health benefits. As of December 31, 1995 and 1994, the estimated
balance accrued for the cost of incurred but unreported claims was approximately
$2 million. The Company's annual liability for claims expense is contractually
limited pursuant to an agreement with an insurance company. The actual claims
expense for 1995 did not exceed the contractual maximum.
 
14. TRANSACTIONS WITH RELATED PARTIES
 
    The Chairman and Vice Chairman of the Company's Board of Directors are the
Chairman and a Managing Director, respectively, of Carlyle. The Company retains
Carlyle to provide certain advisory and consulting services for an annual fee of
$500,000 plus expenses. Total amounts incurred by the Company related to these
services for the years ended December 31, 1995, 1994 and 1993 were approximately
$506,000, $505,000 and $535,000, respectively.
 
    Prior to its privatization by the German government in 1993, IVG was
majority owned by the German government (See Note 3). Contract revenue derived
by IABG from the German government and its ministries totaled $120.4 million and
$118.5 million, respectively, for the years ended December 31, 1995 and 1994 and
$16.3 million for the period from November 16, 1993 through December 31, 1993.
The total amount receivable from the German government at December 31, 1995 and
1994 was $10.5 million and $3.3 million, respectively.
 
    IABG leases most of its facilities from IVG (a 20% owner of IABG). Total
rent expense incurred with IVG for the years ended December 31, 1995, 1994 and
1993 was $8.1 million, $7.3 million and $1.1 million, respectively. IABG earns a
market rate of interest on a related $5 million lease deposit with IVG. Interest
income earned during 1995 amounted to $254,000. Interest earned during 1994
since the installment payments of the lease deposit in 1994 totaled $20,000.
 
15. UNCONSOLIDATED AFFILIATES
 
    The Company has ownership interests ranging from 42% to 50% in certain
unconsolidated joint ventures. The Company's investments in and advances to the
unconsolidated joint ventures, as well as the location of the ventures'
operations, are summarized as follows (dollars in thousands):
 
<TABLE>
<CAPTION>
                                                                                    DECEMBER 31,
                                                               OWNERSHIP AT       ----------------
                                                             DECEMBER 31, 1995     1995      1994
                                                             -----------------    ------    ------
<S>                                                          <C>                  <C>       <C>
VBR, Turkey...............................................           50%          $1,556    $1,880
AWV, Sultanate of Oman....................................           50%           2,063     1,793
Seavin, Egypt.............................................           50%           1,153     1,174
Others....................................................           42%             450       346
                                                                                  ------    ------
                                                                                  $5,222    $5,193
                                                                                  ------    ------
                                                                                  ------    ------
</TABLE>
 
                                       43
<PAGE>
                                      BDM INTERNATIONAL, INC.
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
15. UNCONSOLIDATED AFFILIATES--(CONTINUED)

    Combined summarized financial information of all of the Company's joint
ventures was as follows as of December 31, or for the years then ended (dollars
in thousands):
 
<TABLE><CAPTION>                                                              1995        1994
                                                                            -------     -------
<S>                                                                          <C>         <C>               
Current assets...........................................................    $14,951     $14,943
Non-current assets.......................................................        966         775
Current liabilities......................................................      6,169       5,181
Non-current liabilities..................................................         56         245
Revenue..................................................................     75,092      72,946
Gross profit.............................................................      4,545       4,663
Net income...............................................................      2,995       3,681

</TABLE>
                                                                          
16. MAJOR CLIENTS AND GEOGRAPHIC OPERATIONS                               
                                                                          
  Major Clients                                                           
                                                                          
    Revenue from major clients was as follows for the years ended December 31,
(dollars in thousands):
 
<TABLE>
<CAPTION>
                                                                 1995        1994        1993
                                                               --------    --------    --------
<S>                                                            <C>         <C>         <C>
U.S. Government (including subcontract revenue from
government primes)..........................................   $449,504    $376,980    $383,661
International defense agencies..............................    222,755     193,523     122,227
Other government agencies...................................     81,878      94,966      22,332
Commercial..................................................    135,837     108,780      30,072
                                                               --------    --------    --------
      Total.................................................   $889,974    $774,249    $558,292
                                                               --------    --------    --------
                                                               --------    --------    --------
</TABLE>
 
    No contract individually represented more than 10% of total revenue in 1995
or 1994, while one contract individually represented more than 10% of total
revenue for the year ended December 31, 1993, totaling $74.8 million.
 
                                       44
<PAGE>
                                      BDM INTERNATIONAL, INC.
                       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
16. MAJOR CLIENTS AND GEOGRAPHIC OPERATIONS--(CONTINUED)

  Geographic Operations
 
    Revenue, operating profit and assets by geographic area of all consolidated
subsidiaries were as follows as of or for the years ended December 31, (dollars
in thousands):
 
<TABLE><CAPTION>
                                                                 1995        1994        1993
                                                               --------    --------    --------
<S>                                                            <C>         <C>         <C>
Revenue:
  United States.............................................   $547,660    $438,474    $414,528
  Europe....................................................    216,738     201,418      32,940
  Middle East...............................................    125,576     134,357     110,824
                                                               --------    --------    --------
      Total.................................................   $889,974    $774,249    $558,292
                                                               --------    --------    --------
                                                               --------    --------    --------
Operating profit:
  United States.............................................   $ 29,867    $ 16,559    $ 14,923
  Europe....................................................      1,838       2,064       2,965
  Middle East...............................................      7,204       8,321       4,282
                                                               --------    --------    --------
      Total.................................................   $ 38,909    $ 26,944    $ 22,170
                                                               --------    --------    --------
                                                               --------    --------    --------
Assets:
  United States.............................................   $221,488    $209,983    $167,851
  Europe....................................................    127,009     103,582      96,240
  Middle East...............................................     15,296      21,986      39,345
                                                               --------    --------    --------
      Total.................................................   $363,793    $335,551    $303,436
                                                               --------    --------    --------
                                                               --------    --------    --------
</TABLE>
 
    Europe's results for 1995 include a one-time write off of $1.6 million for
goodwill discussed in Note 7.
 
17. COMMITMENTS AND CONTINGENCIES
 
  Government Audits
 
    Payments to the Company on United States or foreign government contracts are
subject to adjustments upon audit by various agencies of the respective
governments. Audits currently in progress are in varying stages of completion;
however, management does not expect the results of these audits, or audits
related to any operations prior to December 31, 1995, subsequently initiated, to
have a material effect on the Company's financial position, results of
operations, or liquidity.
 
  Litigation and Claims
 
    The Company is a party to various legal actions, claims, government
inquiries and audits resulting from the normal course of business. The Company
believes that any resulting liability should not have a material effect on the
financial position, results of operations, or liquidity of the Company.
 
  Environmental Matters
 
    One of the Company's wholly owned subsidiaries was previously notified by
the United States Environmental Protection Agency (EPA) that is one of several
potentially responsible parties (PRPs) for remediation in connection with
asbestos present at two sites. The subsidiary, along with another PRP, entered
into a consent decree with the EPA in 1992, by which the subsidiary and the
other PRP are obligated to reimburse the EPA for costs incurred in its
assessment and monitoring of approximately
 
                                       45
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
17. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

$1.6 million and to undertake work to address the environmental exposure as
defined in the consent decree. The Company originally accrued $4.4 million which
management believed to be the best estimate of the liability for this claim.
Amounts paid and charged against this provision through 1995 totaled
approximately $3 million. Management believes that the remaining accrual for
this contingency of $1.4 million is sufficient to cover costs to be incurred
related to the subsidiary's performance pursuant to the consent decree.
 
    Another of the Company's subsidiaries was previously notified by the
Massachusetts Department of Environmental Protection that it is also one of
several PRPs in an environmental matter arising as a result of work performed on
a contract with the U.S. Air Force. The U.S. Air Force reimbursed the company
for all costs incurred to date in connection with this matter. No costs were
incurred by the Company in 1995 or 1994 relative to this contingency. No accrual
has been recorded as of December 31, 1995 as the risk of loss to the Company is
considered to be remote, and the remaining potential amounts involved are
considered to be immaterial.
 
  Lease Obligations
 
    The Company leases office space and equipment under various operating lease
agreements. Leases for principal office space typically have terms of five to
twenty years and carry optional renewal periods of five to twenty years. Most
leases include provisions for periodic rent escalations based on changes in
various economic indices. Amounts representing aggregate rent expense on all
operating leases, excluding equipment rented for use on specific contracts and
reimbursed pursuant to the terms of those contracts, totalled $31.7 million,
$35.4 million and $23.9 million for the years ended December 31, 1995, 1994 and
1993, respectively.
 
    Future minimum payments on non-cancellable operating leases were as follows
on December 31, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
                                                            WHOLLY-OWNED
                                                            SUBSIDIARIES                IABG
                                                        --------------------    --------------------
 YEAR ENDING                                            OFFICE                  OFFICE
DECEMBER 31,                                             SPACE     EQUIPMENT     SPACE     EQUIPMENT
------------                                            -------    ---------    -------    ---------
<S>                                                     <C>        <C>          <C>        <C>
1996.................................................   $17,866     $ 1,243     $ 9,633     $   722
1997.................................................    13,244         946       8,194         290
1998.................................................     9,046         489       8,064         160
1999.................................................     2,613          70       7,616         105
2000.................................................     1,373           8       7,512          51
  Thereafter.........................................     1,464       --         31,209       --
                                                        -------    ---------    -------    ---------
    Total............................................   $45,606     $ 2,756     $72,228     $ 1,328
                                                        -------    ---------    -------    ---------
                                                        -------    ---------    -------    ---------
</TABLE>
 
    The Company's share of the future minimum lease commitments of IABG is 45%.
The remaining 55% commitment is the responsibility of the subsidiary's other
owners.
 
    IABG is required to provide cash collateral of $6.4 million to the lessor
for its facilities which are leased through the year 2004. Approximately $4.8
million of this commitment was paid in 1994 and the remaining $1.6 million was
paid on November 16, 1995. The amount of the collateral balance will be reduced
by the landlord by $2.4 million prior to the end of the lease term in $600,000
increments paid every two years beginning on November 16, 1997. Cash on deposit
is interest-bearing and interest income will accrue at current market rates
payable quarterly.
 
                                       46
<PAGE>
                            BDM INTERNATIONAL, INC.
            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
 
17. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

    After the termination of certain of the leases for operating facilities of
IABG, the Company is liable for costs to be incurred, cumulatively up to $7
million adjusted for inflationary changes in a specified economic index, for any
removal or repair of buildings and facilities deemed necessary by the lessor.
For any year that the related lease is extended beyond the year 2013, the
commitment is reduced by 1/10th per year to a minimum commitment of $1 million.
The Company's share of the reclamation costs would be 45%. No amounts have been
accrued for this contingency.
 
  Sublease Commitments
 
    Sublease rental income earned was $2.5 million, $4.4 million and $2.6
million during the years ended December 31, 1995, 1994 and 1993, respectively.
Future minimum payments on non-cancellable subleases were as follows as of
December 31, 1995 (dollars in thousands):
 
     YEAR ENDING
     DECEMBER 31,
     ------------
         1996....................................................   $1,327
         1997....................................................      732
         1998....................................................      441
         1999....................................................       45
         2000....................................................     --
         Thereafter..............................................     --
                                                                    ------
           Total.................................................   $2,545
                                                                    ------
                                                                    ------
 
18. SELECTED QUARTERLY DATA (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA):

<TABLE><CAPTION>
                                                                        1994
                                                    --------------------------------------------
                                                     FIRST       SECOND      THIRD       FOURTH
                                                    --------    --------    --------    --------
<S>                                                 <C>         <C>         <C>         <C>
Revenue..........................................   $165,163    $174,421    $195,477    $239,188
Operating profit.................................      5,557       5,761       7,347       8,279
Net income.......................................      2,908       3,005       3,100       4,065
Earnings per share...............................       0.24        0.26        0.31        0.41
<CAPTION>
                                                                        1995
                                                    --------------------------------------------
                                                                 SECOND
                                                     FIRST        (1)        THIRD       FOURTH
                                                    --------    --------    --------    --------
<S>                                                 <C>         <C>         <C>         <C>
Revenue..........................................   $191,901    $213,064    $215,900    $269,109
Operating profit.................................      9,905       8,790       9,339      10,875
Net income.......................................      3,334       3,870       5,291       5,897
Earnings per share...............................       0.33        0.38        0.40        0.44
Sale prices of Common stock:
  High...........................................        n/a      21 1/2      28 1/2      30 1/2
  Low............................................        n/a      19 7/8      20 1/4      23 3/4
</TABLE>
 
------------
 
(1) Sale price of common stock commencing June 29, 1995.
 
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
 
    None
 
                                       47
<PAGE>
                                    PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
 
    Reference is made to Item 4A of Part I hereof for certain information
required by this Item 10. Additional information required by this item is hereby
incorporated by reference from the Company's definitive proxy statement to be
filed with the Commission under Section 14A of the Securities Exchange Act of
1934 on or before April 30, 1996, or shall be filed by amendment to this Form
10-K on or prior to such date.
 
ITEM 11. EXECUTIVE COMPENSATION.
 
    The information required by this item is hereby incorporated by reference
from the Company's definitive proxy statement to be filed with the Commission
under Section 14A of the Securities Exchange Act of 1934 on or before April 30,
1996, or shall be filed by amendment to this Form 10-K on or prior to that date.
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
 
    The information required by this item is hereby incorporated by reference
from the Company's definitive proxy statement to be filed with the Commission
under Section 14A of the Securities Exchange Act of 1934 on or before April 30,
1996 or shall be filed by amendment to this Form 10-K on or prior to that date.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
    The information required by this item is hereby incorporated by reference
from the Company's definitive proxy statement to be filed with the Commission
under Section 14A of the Securities Exchange Act of 1934 on or before April 30,
1996, or shall be filed by amendment to this Form 10-K on or prior to that date.
 
                                       48
<PAGE>
                                    PART IV
 
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
 
    (a)1. Financial Statements:
 
       Report of Independent Accountants
 
       Consolidated Balance Sheets as of December 31, 1995 and 1994
 
       Consolidated Statements of Operations for the years ended December 31,
        1995, 1994 and 1993
 
       Consolidated Statements of Stockholders' Equity for the years ended
        December 31, 1995, 1994 and 1993
 
       Consolidated Statements of Cash Flows for the years ended December 31,
        1995, 1994 and 1993
 
       Notes to Consolidated Financial Statements
 
    (a)2. Financial Statement Schedules:
 
       All schedules are omitted because they are not applicable or the required
        information is shown in the Consolidated Financial Statements or the
        notes thereto under Item 8.
 
    (a)3. Exhibits:
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                         DESCRIPTION
-------                                       -----------
<C>       <S>
   3.1    Amended and Restated Certificate of Incorporation.++++
   3.2    Amended and Restated By-Laws.++++
   4.1    Specimen Common Stock certificate.#
   4.2    Investor Stock Purchase Agreement, dated October 23, 1990, among BDM Holdings,
          Inc., The Carlyle Partners Leveraged Capital Fund I, L.P., Equitable Partnership
          II, L.P., Equitable Deal Flow Fund, L.P., and the Richard King Mellon Foundation.+
   4.3    Amendment No. 1 to Investor Stock Purchase Agreement, dated May 31, 1995.#
  10.1    Transaction Agreement, dated October 2, 1990, among New BDM, Inc., BDM Holdings,
          Inc., The Carlyle Group, L.P., Loral Corporation and Loral Aerospace Corporation.+
  10.2    Amendment No. 1 to Transaction Agreement, dated October 23, 1990, by and among New
          BDM, Inc., BDM Holdings, Inc., The Carlyle Group, L.P., Loral Corporation and Loral
          Aerospace Corporation.+
  10.3    Non-Competition Agreement, dated March 13, 1992, by and among the selling
          shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
  10.4    Stock Purchase and Redemption Agreement, dated March 13, 1992, by and among the
          selling shareholder, Vinnell Corporation and BDM Holdings, Inc.++
  10.5    Subordinated Guaranty Agreement, dated March 13, 1992, by and among the selling
          shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
  10.6    Consulting Agreement, dated March 13, 1992, among BDM Holdings, Inc., the selling
          shareholder and Vinnell Corporation.++
  10.7    Agreement, dated November 16, 1993, among the Federal Republic of Germany,
          Industrieanlagen-Betriebsgesellschaft mbH, BDM International, Inc.,
          Industrieverwaltungsgesellschaft AG and IABG Holding GmbH.+++
  10.8    Voting Rights Agreement, dated November 16, 1993, between
          Industrieverwaltungsgesellschaft AG and BDM Europe BV.+++
  10.9    1990 Stock Option Plan.+*
</TABLE>
 
                                       49
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                         DESCRIPTION
-------                                       -----------
<C>       <S>
  10.10   Form of Management Incentive Stock Purchase Agreement.+*
  10.11   Form of Director Stock Purchase Plan Purchase Authorization.++++*
  10.12   BDM International, Inc. 401(k) Savings Plan.###
  10.13   The BDM Retirement Plan.###
  10.14   The BDM International, Inc. Supplemental Executive Retirement Plan, effective
          December 26, 1984.+*
  10.15   BDM International, Inc. Defined Contribution Supplemental Executive Retirement
          Plan, effective October 8, 1993.++++*
  10.16   The BDM Corporation Cash and Stock Incentive Compensation Plan.+*
  10.17   Letter Agreement, dated March 4, 1992, between BDM International, Inc. and Philip
          A. Odeen.++++*
  10.18   1994 Stock Option Plan.++++*
  10.19   Revolving Credit Agreement, dated as of September 7, 1995, among BDM International,
          Inc., the Lenders party thereto, Corestates Bank, N.A. as Co-Agent and The First
          National Bank of Chicago as Agent.###
  11      Statement of Computation of Earnings Per Share.###
  21      Subsidiaries of BDM International, Inc.++++++
  23.1    Consent of Coopers & Lybrand
  27      Financial Data Schedule.
</TABLE>
 
------------
 
    * Management contract or compensatory plan or arrangement.
 
    + Incorporated by reference to Registration Statement on Form S-1 (File No.
      33-38405) of BDM Holdings, Inc. filed with the SEC on February 14, 1991.
 
   ++ Incorporated by reference to Current Report on Form 8-K (File No.
      33-38405) of BDM International, Inc. filed with the SEC on March 13, 1992.
 
  +++ Incorporated by reference to Amendment No. 1 to Current Report on Form
      8-K/A (File No. 33-38405) of BDM International, Inc. filed with the SEC on
      January 31, 1994.
 
 ++++ Incorporated by reference to the Annual Report on Form 10-K for the year
      ended December 31, 1993 ( File No. 33-38405) filed with the SEC on March
      31, 1994.
 
+++++ Incorporated by reference to the Annual Report on Form 10-K for the year
      ended December 31, 1994 (File No. 000-23966) of BDM International, Inc.
      filed with the SEC on March 30, 1995.
 
     # Incorporated by reference to Amendment No. 3 to the Registration
       Statement on Form S-1 (File No. 33-77096) of BDM International, Inc.
       filed with the SEC on June 20, 1995.
 
     ## Incorporated by reference to Amendment No. 4 to the Registration
        Statement on Form S-1 (File No. 33-77096) of BDM International, Inc.
        filed with the SEC on June 26, 1995.
 
     ### Incorporated by reference to the Registration Statement on Form S-3
         (File No. 333-01513) of BDM International, Inc. filed with the SEC on
         March 6, 1996.
 
    (b) Reports on Form 8-K:
 
        No reports were filed by the Company on Form 8-K during the fourth
    quarter of 1995.
 
                                       50
<PAGE>
                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in McLean, Virginia on
March 10, 1996.
 
                                                BDM INTERNATIONAL, INC.




                                                By  /s/ PHILIP A. ODEEN
                                             ...................................
                                                      Philip A. Odeen
                                                         President
 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
 
<TABLE><CAPTION>
              SIGNATURE                           TITLE                           DATE
              ---------                           -----                           ----
<C>                                     <S>                                <C>
 (i) Principal executive officer:
 
         /s/ PHILIP A. ODEEN            President                          March 10, 1996
 ......................................
           Philip A. Odeen
 

  (ii) Principal financial officer:
 
     /s/ C. THOMAS FAULDERS, III        Executive Vice President           March 10, 1996
 ......................................    Treasurer
       C. Thomas Faulders, III            and Chief Financial Officer
 

  (iii) Principal accounting officer:
 
       /s/ JUDITH N. HUNTZINGER         Senior Vice President and          February 23, 1996
 ......................................    Controller
         Judith N. Huntzinger
 

  (iv) Directors:
 
     /s/ JEANETTE GRASSELLI BROWN       Director                           February 23, 1996
 ......................................
     Dr. Jeanette Grasselli Brown
 
        /s/ FRANK C. CARLUCCI           Director                           February 23, 1996
 ......................................
          Frank C. Carlucci
</TABLE>
 
                                       51
<PAGE>
<TABLE><CAPTION>
              SIGNATURE                           TITLE                          DATE
              ---------                           -----                          ----
<C>                                     <S>                                <C>
      /s/ WILLIAM E. CONWAY, JR.        Director                           February 23, 1996
 ......................................
        William E. Conway, Jr.
 
         /s/ NEIL GOLDSCHMIDT           Director                           March 5, 1996
 ......................................
           Neil Goldschmidt
 
       /s/ WALTHER LEISLER KIEP         Director                           February 23, 1996
 ......................................
         Walther Leisler Kiep
 
            /s/ HANS MARK               Director                           March 5, 1996
 ......................................
            Dr. Hans Mark
 
         /s/ PHILIP A. ODEEN            Director                           March 10, 1996
 ......................................
           Philip A. Odeen
 
         /s/ THOMAS G. RICKS            Director                           March 5, 1996
 ......................................
           Thomas G. Ricks
 
          /s/ JOHN M. SLOSAR            Director                           February 23, 1996
 ......................................
            John M. Slosar
 
        /s/ HELMUT SONNENFELDT          Director                           February 23, 1996
 ......................................
          Helmut Sonnenfeldt
 
   /s/ DR. WILLIAM E. SWEENEY, JR.      Director                           March 5, 1996
 ......................................
     Dr. William E. Sweeney, Jr.
 
        /s/ EARLE C. WILLIAMS           Director                           February 23, 1996
 ......................................
          Earle C. Williams
</TABLE>
 
                                       52
<PAGE>
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
EXHIBIT
  NO.                                         DESCRIPTION
-------                                       -----------
<C>       <S>
   3.1    Amended and Restated Certificate of Incorporation.++++
   3.2    Amended and Restated By-Laws.++++
   4.1    Specimen Common Stock certificate.#
   4.2    Investor Stock Purchase Agreement, dated October 23, 1990, among BDM Holdings,
          Inc., The Carlyle Partners Leveraged Capital Fund I, L.P., Equitable Partnership,
          II, L.P., Equitable Deal Flow Fund, L.P., the Richard King Mellon Foundation.+
   4.3    Amendment No. 1 to Investor Stock Purchase Agreement, dated May 31, 1995.##
  10.1    Transaction Agreement, dated October 2, 1990, among New BDM, Inc., BDM Holdings,
          Inc., The Carlyle Group, L.P., Loral Corporation and Loral Aerospace Corporation.+
  10.2    Amendment No. 1 to Transaction Agreement, dated October 23, 1990, New BDM, Inc.,
          BDM Holdings, Inc., The Carlyle Group, L.P., Loral Corporation and Loral Aerospace
          Corporation.+
  10.3    Non-Competition Agreement, dated March 13, 1992, by and among the selling
          shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
  10.4    Stock Purchase and Redemption Agreement, dated March 13, 1992, by and among the
          selling shareholder, Vinnell Corporation and BDM Holdings, Inc.++
  10.5    Subordinated Guaranty Agreement, dated March 13, 1992, by and among the selling
          shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
  10.6    Consulting Agreement, dated March 13, 1992, among BDM Holdings, Inc., the selling
          shareholder and Vinnell Corporation.++
  10.7    Agreement, dated November 16, 1993, among the Federal Republic of Germany,
          Industrieanlagen-Betriebsgesellschaft mbH, BDM International, Inc.,
          Industrieverwaltungsgesellschaft AG and IABG Holding GmbH.+++
  10.8    Voting Rights Agreement, dated November 16, 1993, between
          Industrieverwaltungsgesellschaft AG and BDM Europe BV.+++
  10.9    1990 Stock Option Plan.+*
  10.10   Form of Management Incentive Stock Purchase Agreement.+*
  10.11   Form of Director Stock Purchase Plan Purchase Authorization.++++*
  10.12   BDM International, Inc. 401(k) Savings Plan.###*
  10.13   The BDM Retirement Plan.###*
  10.14   The BDM International, Inc. Supplemental Executive Retirement Plan, effective
          December 26, 1984.+*
  10.15   BDM International, Inc. Defined Contribution Supplemental Executive Retirement
          Plan, effective October 8, 1993.++++*
  10.16   The BDM Corporation Cash and Stock Incentive Compensation Plan.+*
  10.17   Letter Agreement, dated March 4, 1992, between BDM International, Inc. and Philip
          A. Odeen.++++*
  10.18   1994 Stock Option Plan.+++++*
  10.19   Revolving Credit Agreement, dated as of September 7, 1995 among BDM International,
          Inc., the Lenders party thereto, CoreStates Bank, N.A., as Co-Agent and The First
          National Bank of Chicago as Agent.###
  11      Statement of Computation of Earnings Per Share.###
  21      Subsidiaries of BDM International, Inc.###
  23.1    Consent of Coopers & Lybrand
  27      Financial Data Schedule.
</TABLE>
 
                                                   (Footnotes on following page)
 
                                       53
<PAGE>
(Footnotes for preceding page)
 
------------
 
    * Management contract or compensatory plan or arrangement.
 
    + Incorporated by reference to Registration Statement on Form S-1 (File No.
      33-38405) of BDM Holdings, Inc. filed with the SEC on February 14, 1991.
 
   ++ Incorporated by reference to Current Report on Form 8-K (File No.
      33-38405) of BDM International, Inc. filed with the SEC on March 13, 1992.
 
  +++ Incorporated by reference to Amendment No. 1 to Current Report on Form
      8-K/A (File No. 33-38405) of BDM International, Inc. filed with the SEC on
      January 31, 1994.
 
 ++++ Incorporated by reference to Registration Statement on Form S-1 (File No.
      33-77096) of BDM International, Inc. (the "Registration Statement") filed
      with the SEC on March 30, 1994.
 
+++++ Incorporated by reference to the Annual Report on Form 10-K for the year
      ended December 31, 1994 (File No. 000-23966) of BDM International, Inc.
      filed with the SEC on March 31, 1995.
 
    # Incorporated by reference to Amendment No. 1 to the Registration
      Statement filed with the SEC on May 12, 1995.
 
   ## Incorporated by reference to Amendment No. 3 to the Registration
      Statement filed with the SEC on June 20, 1995.
 
  ### Incorporated by reference to the Registration Statement on Form S-3
      (File No. 333-01513) of BDM International, Inc. filed with the SEC on
      March 6, 1996.
 
                                       54