##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the three months ended April 3, 2010
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 333-145355
 
 VANGENT, INC.
 Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    20-1961427
(IRS Employer
Identification No.)
 4250 North Fairfax Drive
Suite 1200
Arlington, Virginia 22203
 (703) 284-5600
 YES þ NO o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o
 YES o NO þ




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##### 



VANGENT, INC.
Table of Contents
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets as of April 3, 2010 and December 31, 2009 (Unaudited)
    
    
    3Condensed Consolidated Statements of Operations for the three months ended
April 3, 2010 and March 28, 2009 (Unaudited)
    
    
    4Condensed Consolidated Statements of Stockholders Equity and Comprehensive
Income (Loss) for the three months ended April 3, 2010 and March 28, 2009 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the three months ended
April 3, 2010 and March 28, 2009 (Unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    22Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    32Item 4T. Controls and Procedures
    
    
    32PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    33Item 1A. Risk Factors
    
    
    33Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    33Item 3. Defaults Upon Senior Securities
    
    
    33Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    33Signature
    
    
    34Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  Forward-Looking Statements
 Risk Factors
  2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 Vangent, Inc.
 
 Condensed Consolidated Balance Sheets 
(Unaudited)
  April 3,
    
    
    December 31,2010
    
    
    2009AssetsCurrent assets:Cash and cash equivalents
    
    $
    10,718
    
    
    $
    44,638Trade receivables, net
    
    
    141,867
    
    
    
    109,846Prepaid expenses and other assets
    
    
    9,089
    
    
    
    7,424Deferred contract costs
    
    
    2,607
    
    
    
    2,929Assets of discontinued operations
    
    
    17,229
    
    
    
    15,036Total current assets
    
    
    181,510
    
    
    
    179,873Property and equipment, net
    
    
    24,210
    
    
    
    25,124Intangible assets, net
    
    
    146,328
    
    
    
    151,860Goodwill
    
    
    267,983
    
    
    
    268,212Deferred debt financing costs and other
    
    
    7,943
    
    
    
    8,433Assets of discontinued operations
    
    
    4,513
    
    
    
    6,727Total assets
    
    $
    632,487
    
    
    $
    640,229Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    
    
    
    $
    13,534Accounts payable and accrued liabilities
    
    
    68,107
    
    
    
    64,849Accrued interest payable
    
    
    3,363
    
    
    
    8,186Deferred tax liability
    
    
    4,948
    
    
    
    5,628Deferred revenue
    
    
    5,328
    
    
    
    3,976Liabilities of discontinued operations
    
    
    7,455
    
    
    
    7,521Total current liabilities
    
    
    89,201
    
    
    
    103,694Long-term debt, net of current portion
    
    
    406,754
    
    
    
    406,832Other long-term liabilities
    
    
    4,925
    
    
    
    7,194Deferred tax liability
    
    
    14,046
    
    
    
    12,144Liabilities of discontinued operations
    
    
    565
    
    
    
    502Total liabilities
    
    
    515,491
    
    
    
    530,366Commitments and contingencies (Note 10)Stockholders equity:Common stock, $0.01 par value, 1,000
shares authorized, and 100 shares
issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    207,638
    
    
    
    207,376Accumulated other comprehensive loss
    
    
    (13,677
    )
    
    
    (14,949
    )Accumulated deficit
    
    
    (76,965
    )
    
    
    (82,564
    )Total stockholders equity
    
    
    116,996
    
    
    
    109,863Total liabilities and stockholders equity
    
    $
    632,487
    
    
    $
    640,229
   3




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##### Table of Contents



Vangent, Inc.
 
 Condensed Consolidated Statements of Operations 
(Unaudited)
  Three Months EndedApril 3,
    
    
    March 28,2010
    
    
    2009Revenue
    
    $
    194,197
    
    
    $
    132,873Cost of revenue
    
    
    158,226
    
    
    
    107,365Gross profit
    
    
    35,971
    
    
    
    25,508General and administrative expenses
    
    
    12,190
    
    
    
    9,691Selling and marketing expenses
    
    
    5,675
    
    
    
    4,143Operating income
    
    
    18,106
    
    
    
    11,674Interest expense, net
    
    
    8,236
    
    
    
    8,351Income from continuing operations
before income taxes
    
    
    9,870
    
    
    
    3,323Provision for income taxes
    
    
    1,834
    
    
    
    1,744Income from continuing operations
    
    
    8,036
    
    
    
    1,579Loss from discontinued operations
(net of tax)
    
    
    (2,437
    )
    
    
    (615
    )Net income
    
    $
    5,599
    
    
    $
    964
   4




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##### Table of Contents



Vangent, Inc.
 
 Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss) 
(Unaudited)
  AccumulatedAdditional
    
    
    Other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Comprehensive
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Income (Loss)
    
    
    Deficit
    
    
    EquityBalance, December 31, 2008
    
    
    100
    
    
    $
    
    
    
    $
    206,328
    
    
    $
    (13,135
    )
    
    $
    (48,556
    )
    
    $
    144,637Effect of hedging activities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    552
    
    
    
    
    
    
    
    552Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (339
    )
    
    
    
    
    
    
    (339
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    964
    
    
    
    964Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,177Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    253
    
    
    
    
    
    
    
    
    
    
    
    253Balance, March 28, 2009
    
    
    100
    
    
    $
    
    
    
    $
    206,581
    
    
    $
    (12,922
    )
    
    $
    (47,592
    )
    
    $
    146,067Balance, December 31, 2009
    
    
    100
    
    
    $
    
    
    
    $
    207,376
    
    
    $
    (14,949
    )
    
    $
    (82,564
    )
    
    $
    109,863Effect of hedging activities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,331
    
    
    
    
    
    
    
    1,331Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,599
    
    
    
    5,599Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,871Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    262
    
    
    
    
    
    
    
    
    
    
    
    262Balance, April 3, 2010
    
    
    100
    
    
    $
    
    
    
    $
    207,638
    
    
    $
    (13,677
    )
    
    $
    (76,965
    )
    
    $
    116,996
   5




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##### Table of Contents



Vangent, Inc.
 
 Condensed Consolidated Statements of Cash Flows 
(Unaudited)
  Three Months      EndedApril 3,
    
    
    March 28,2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    5,599
    
    
    $
    964Less: Loss from discontinued operations (net of tax)
    
    
    (2,437
    )
    
    
    (615
    )Income from continuing operations
    
    
    8,036
    
    
    
    1,579Adjustments to reconcile net income from continuing operations
net cash used in operating activities:Amortization of intangible assets
    
    
    5,272
    
    
    
    5,294Depreciation and amortization
    
    
    3,085
    
    
    
    2,819Amortization of deferred debt financing costs
    
    
    563
    
    
    
    563Equity-based compensation expense
    
    
    262
    
    
    
    253Deferred income taxes
    
    
    1,656
    
    
    
    1,541Changes in operating assets and liabilities:Trade receivables
    
    
    (32,066
    )
    
    
    (4,094
    )Prepaid expenses and other assets
    
    
    (3,538
    )
    
    
    364Accounts payable and other liabilities
    
    
    4,540
    
    
    
    (13,249
    )Accrued interest payable
    
    
    (4,823
    )
    
    
    (4,957
    )Continuing operations, net
    
    
    (17,013
    )
    
    
    (9,887
    )Discontinued operations, net
    
    
    (1,994
    )
    
    
    61Net cash used in operating activities
    
    
    (19,007
    )
    
    
    (9,826
    )Cash flows from investing activitiesCapital
expenditures, continuing operations
    
    
    (1,304
    )
    
    
    (1,195
    )Discontinued operations, net
    
    
    (123
    )
    
    
    (1,114
    )Net cash used in investing activities
    
    
    (1,427
    )
    
    
    (2,309
    )Cash flows from financing activitiesRepayment of senior secured term loan
    
    
    (13,612
    )
    
    
    Other
    
    
    (29
    )
    
    
    (82
    )Net cash
used in financing activities, continuing operations
    
    
    (13,641
    )
    
    
    (82
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (146
    )
    
    
    (109
    )Net decrease in cash and cash equivalents
    
    
    (34,221
    )
    
    
    (12,326
    )Total cash and cash equivalents, beginning of period
    
    
    45,584
    
    
    
    21,134Total cash and cash equivalents, end of period
    
    $
    11,363
    
    
    $
    8,808Less: Cash
and cash equivalents, discontinued operations
    
    $
    645
    
    
    $
    2,239Cash and
cash equivalents, continuing operations
    
    $
    10,718
    
    
    $
    6,569Supplemental cash flow informationInterest paid, continuing operations
    
    $
    12,709
    
    
    $
    12,891Income taxes paid (refund):Continuing operations
    
    
    (14
    )
    
    
    367Discontinued operations
    
    
    68
    
    
    
    89
   6




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##### Table of Contents



Vangent, Inc.
 
 Notes to Condensed Consolidated Financial Statements
  1. Organization and Basis of Presentation
 Basis of Presentation
    Nature of Operations
  Variable Interest Entities
  Fiscal Year and Quarterly Periods
   7




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##### Table of Contents



2. Discontinued Operations
   April 3,
    
    
    December 31,2010
    
    
    2009Balance Sheet DataCash
    
    $
    645
    
    
    $
    946Trade receivables
    
    
    10,992
    
    
    
    9,323Other assets
    
    
    5,592
    
    
    
    4,767Total current assets
    
    
    17,229
    
    
    
    15,036Property and equipment, net
    
    
    4,407
    
    
    
    4,744Deferred income taxes and other
    
    
    106
    
    
    
    1,983Total assets
    
    
    21,742
    
    
    
    21,763Current liabilities
    
    
    7,455
    
    
    
    7,521Long-term liabilities
    
    
    565
    
    
    
    502Net assets of discontinued operations
    
    $
    13,722
    
    
    $
    13,740
 Three Months EndedApril 3,
    
    
    March 28,2010
    
    
    2009Statements of Operations DataRevenue
    
    $
    7,135
    
    
    $
    4,599Costs and expenses
    
    
    7,500
    
    
    
    5,313Expected loss on disposal
    
    
    2,618
    
    
    
    Other (income) expense, net
    
    
    (753
    )
    
    
    20Loss from discontinued operations
before income taxes
    
    
    (2,230
    )
    
    
    (734
    )Provision (benefit) for income taxes
    
    
    207
    
    
    
    (119
    )Loss from discontinued operations (net of tax)
    
    $
    (2,437
    )
    
    $
    (615
    )
    8




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##### Table of Contents



Discontinued Operations in Venezuela  Designation of Venezuelan Economy as Highly Inflationary
   Discontinued Operations in Argentina  Variable Interest Entity
  3. Recent Accounting Pronouncements
 Multiple-Deliverable Revenue Arrangements,
 Certain Revenue Arrangements that Include Software
Elements
 Improving Disclosures about Fair Value
Measurements,
   9




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##### Table of Contents



4. Trade Receivables
  April 3,
    
    
    December 31,2010
    
    
    2009Billed trade receivables
    
    $
    104,957
    
    
    $
    74,929Billable trade receivables
    
    
    30,317
    
    
    
    26,798Unbilled trade receivables pending completion of milestones,
contract authorizations, or retainage
    
    
    6,018
    
    
    
    7,432Other
    
    
    739
    
    
    
    840142,031
    
    
    
    109,999Allowance for doubtful accounts
    
    
    (164
    )
    
    
    (153
    )Trade receivables, net
    
    $
    141,867
    
    
    $
    109,846Trade accounts receivable from major customersDepartment of Health and Human Services
    
    
    28
    %
    
    
    34
    %Department of Commerce
    
    
    26
    %
    
    
    *
    %Department of Education
    
    
    19
    %
    
    
    16
    %
 
 *
    
    Less than 10%. 5. Intangible Assets
  WeightedAverage Life
    
    April 3,
    
    
    December 31,(in years)
    
    2010
    
    
    2009Indefinite-life intangible assetsIntellectual property
    
    Indefinite
    
    $
    10,328
    
    
    $
    10,328Definite-life intangible assetsCustomer relationships
    
    10.7
    
    
    201,101
    
    
    
    201,101Other
    
    4
    
    
    658
    
    
    
    658201,759
    
    
    
    201,759Accumulated amortization
    
    
    
    
    (65,759
    )
    
    
    (60,227
    )Definite-life intangible assets, net
    
    
    
    
    136,000
    
    
    
    141,532Intangible assets, net
    
    
    
    $
    146,328
    
    
    $
    151,860
  Years Ending December 312010 (remaining nine months)
    
    $
    15,7692011
    
    
    20,7102012
    
    
    20,5472013
    
    
    20,5472014
    
    
    11,905Thereafter
    
    
    46,522$
    136,000
  10




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##### Table of Contents



6. Long-Term Debt
  April 3,
    
    
    December 31,2010
    
    
    2009Term loan, due February 14, 2013, with interest at variable rates (2.51% at April 3, 2010)
    
    $
    216,754
    
    
    $
    230,3669 5/8% Senior subordinated fixed rate notes, due February 15, 2015
    
    
    190,000
    
    
    
    190,000406,754
    
    
    
    420,366Less: current portion of term loan
    
    
    
    
    
    
    (13,534
    )Long-term debt, net of current portion
    
    $
    406,754
    
    
    $
    406,832Scheduled maturities of long-term debt follow:2011
    
    
    
    
    
    $
    2012
    
    
    
    
    
    
    1,7112013
    
    
    
    
    
    
    215,0432014
    
    
    
    
    
    
    2015
    
    
    
    
    
    
    190,000$
    406,754
 Senior Secured Credit Facility
       11




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##### Table of Contents



9 5/8% Senior Subordinated Notes
   7. Accumulated Other Comprehensive Loss
  April 3,
    
    
    December 31,2010
    
    
    2009Accumulated other comprehensive lossEffect of hedging activities, net of tax:Continuing operations  Interest rate swap agreements
    
    $
    (3,599
    )
    
    $
    (4,634
    )Discontinued operations  Foreign currency forward contracts
    
    
    (96
    )
    
    
    (392
    )(3,695
    )
    
    
    (5,026
    )Foreign currency cumulative translation adjustments:Continuing operations
    
    
    (5,605
    )
    
    
    (5,287
    )Discontinued operations
    
    
    (4,377
    )
    
    
    (4,636
    )(9,982
    )
    
    
    (9,923
    )Total accumulated other comprehensive loss
    
    $
    (13,677
    )
    
    $
    (14,949
    )
 Hedging ActivitiesContinuing
    
    
    DiscontinuedOperations
    
    
    OperationsForeignInterest
    
    
    CurrencySummary of changes in accumulated other
    
    Rate
    
    
    Forwardcomprehensive loss for hedging activities
    
    Swaps
    
    
    Contracts
    
    
    TotalBalance, December 31, 2009
    
    $
    (4,634
    )
    
    $
    (392
    )
    
    $
    (5,026
    )Change in fair value
    
    
    (631
    )
    
    
    (8
    )
    
    
    (639
    )Reclassification of loss to interest expense
    
    
    1,666
    
    
    
    
    
    
    
    1,666Reclassification of loss to discontinued
operations  cost of revenue
    
    
    
    
    
    
    304
    
    
    
    304Balance, April 3, 2010
    
    $
    (3,599
    )
    
    $
    (96
    )
    
    $
    (3,695
    )
  12




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##### Table of Contents



8. Derivative Instruments, Hedging Activities and Financial Instruments
   Interest Rate Swap Agreements on Variable-Rate Term Loan
   Discontinued Operations  Foreign Currency Contracts
    13




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##### Table of Contents



Derivative Instruments and Hedging Activities
  Balance Sheet DataFair Value ofLiability DerivativesApril 3,
    
    
    December 31,Derivative Contracts
    
    Balance Sheet Location
    
    2010
    
    
    2009Derivatives that qualify
as cash flow hedgesInterest rate swap agreements
    
    Accrued liabilities
    
    $
    3,599
    
    
    $
    4,657Foreign currency forward contracts
    
    Discontinued operations  Accrued liabilities
    
    
    
    
    
    
    251Derivatives that do not
qualify as cash flow hedgesForeign currency forward contracts
    
    Discontinued operations  Accrued liabilities
    
    
    
    
    
    
    88
 Statements of Operations DataLocation of
    
    Amount of
    
    
    Location ofGain (Loss)Recognized in
    
    Amount ofGain (Loss)Recognized inGain (Loss)
    
    Gain (Loss)
    
    
    Income on
    
    Income onAmount of
    
    
    Reclassified
    
    Reclassified
    
    
    Derivative
    
    DerivativeGain (Loss)
    
    
    from
    
    from
    
    
    (Ineffective
    
    (IneffectiveRecognized in
    
    
    Accumulated
    
    Accumulated
    
    
    Portion and
    
    Portion andOCI on
    
    
    OCI into
    
    OCI into
    
    
    Amount
    
    AmountDerivative
    
    
    Income
    
    Income
    
    
    Excluded from
    
    Excluded from(Effective
    
    
    (Effective
    
    (Effective
    
    
    Effectiveness
    
    EffectivenessDerivative Contracts
    
    Portion)
    
    
    Portion)
    
    Portion)
    
    
    Testing)
    
    Testing)Three Months Ended
April 3, 2010Derivatives that
qualify as cash
flow hedgesInterest rate swap agreements
    
    $
    (631
    )
    
    Interest expense
    
    $
    (1,666
    )
    
    Interest expense
    
    $
    23Foreign currency forward contracts
    
    $
    (8
    )
    
    Discontinued operations  Cost of revenue
    
    $
    (304
    )
    
    Discontinued operations  Cost of revenue
    
    $
    Derivatives that
do not qualify as
cash flow hedgesForeign currency forward contracts
    
    $
    
    
    
    
    
    $
    
    
    
    Discontinued operations  Cost of revenue
    
    $
    (89
    )Three Months Ended March 28, 2009Derivatives that
qualify as cash
flow hedgesInterest rate swap agreements
    
    $
    (374
    )
    
    Interest expense
    
    $
    (1,209
    )
    
    Interest expense
    
    $
    25Foreign currency forward contracts
    
    $
    (283
    )
    
    Cost of revenue
    
    $
    
    
    
    Cost of revenue
    
    $
    
  14




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##### Table of Contents



Fair Value Measurements
  April 3,
    
    
    December 31,2010
    
    
    2009LiabilitiesLevel 1  Quoted prices in active markets for identical items
    
    $
    
    
    
    $
    Level 2  Significant other observable inputs:Interest rate swap agreements
    
    
    3,599
    
    
    
    4,657Foreign currency forward contracts
    
    
    
    
    
    
    339Level 3  Significant unobservable inputs
    
    
    
    
    
    
    
 Financial Instruments
  CarryingAmount
    
    
    Fair ValueLong-term debtVariable-rate term loan under the senior secured credit facility
    
    $
    216,754
    
    
    $
    216,7549 5/8% senior subordinated notes, due February 15, 2015
    
    
    190,000
    
    
    
    178,838$
    406,754
    
    
    $
    395,592Interest rate swap agreements to pay fixed and receive variableAccrued liabilities
    
    $
    3,599
    
    
    $
    3,599
  9. Income Taxes
      15




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##### Table of Contents



10. Commitments and Contingencies
  11. Equity-Based Compensation
    Class B
    
    
    
    
    
    
    Fair Value ofMembership
    
    
    
    
    
    
    Class BInterests
    
    
    Class B
    
    
    MembershipAvailable for
    
    
    Interests
    
    
    Interests atGrant
    
    
    Outstanding
    
    
    Date of GrantBalance, December 31, 2009
    
    
    2.0
    %
    
    
    5.6
    %
    
    
    $5,602Granted
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    Balance, April 3, 2010
    
    
    2.0
    %
    
    
    5.6
    %
    
    $
    5,602At April 3, 2010:Vested
    
    
    
    
    
    
    2.6
    %Not yet vested
    
    
    
    
    
    
    3.05.6
    %
  16




---



##### Table of Contents



Years Ending December 312010 (remaining nine months)
    
    $
    7862011
    
    
    1,0482012
    
    
    3292013
    
    
    1212014
    
    
    14$
    2,298
 12. Related Party Transactions
      13. Business Segments and Major Customers
    17




---



##### Table of Contents



Three Months EndedApril 3,
    
    
    March 28,2010
    
    
    2009Revenue by business segmentGovernment Group
    
    $
    177,237
    
    
    $
    117,766International Group
    
    
    11,825
    
    
    
    9,719Human Capital Group
    
    
    6,135
    
    
    
    6,493Elimination
    
    
    (1,000
    )
    
    
    (1,105
    )Total revenue
    
    $
    194,197
    
    
    $
    132,873Operating income (loss) by business segmentGovernment Group
    
    $
    18,869
    
    
    $
    12,294International Group
    
    
    62
    
    
    
    1Human Capital Group
    
    
    (820
    )
    
    
    (616
    )Corporate
    
    
    (5
    )
    
    
    (5
    )Total operating income
    
    $
    18,106
    
    
    $
    11,674Depreciation and amortizationGovernment Group
    
    $
    7,305
    
    
    $
    7,014International Group
    
    
    727
    
    
    
    727Human Capital Group
    
    
    325
    
    
    
    372Total depreciation and amortization
    
    $
    8,357
    
    
    $
    8,113Revenue from major customers as a percent of total revenueDepartment of Health and Human Services
    
    
    34
    %
    
    
    46
    %Department of Commerce
    
    
    26
    %
    
    
    *Department of Education
    
    
    15
    %
    
    
    19
    %
 *
    
    Less than 10%. 14. Condensed Issuer and Non-Guarantor Financial Information
   18




---



##### Table of Contents



Issuer and Non-Guarantor Financial Information
Condensed Combining Balance Sheets (Unaudited)
 April 3, 2010
    
    
    December 31, 2009Non-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Guar-
    
    
    Elimin-
    
    
    
    
    
    
    
    
    
    
    Guar-
    
    
    Elimin-Issuer
    
    
    antors
    
    
    ations
    
    
    Total
    
    
    Issuer
    
    
    antors
    
    
    ations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    7,580
    
    
    $
    3,138
    
    
    $
    
    
    
    $
    10,718
    
    
    $
    41,098
    
    
    $
    3,540
    
    
    $
    
    
    
    $
    44,638Trade receivables, net
    
    
    133,472
    
    
    
    8,395
    
    
    
    
    
    
    
    141,867
    
    
    
    101,410
    
    
    
    8,436
    
    
    
    
    
    
    
    109,846Prepaid expenses and other
    
    
    9,223
    
    
    
    2,473
    
    
    
    
    
    
    
    11,696
    
    
    
    8,594
    
    
    
    1,759
    
    
    
    
    
    
    
    10,353Assets of discontinued operations
    
    
    
    
    
    
    17,229
    
    
    
    
    
    
    
    17,229
    
    
    
    
    
    
    
    15,036
    
    
    
    
    
    
    
    15,036Total current assets
    
    
    150,275
    
    
    
    31,235
    
    
    
    
    
    
    
    181,510
    
    
    
    151,102
    
    
    
    28,771
    
    
    
    
    
    
    
    179,873Property and equipment, net
    
    
    22,136
    
    
    
    2,074
    
    
    
    
    
    
    
    24,210
    
    
    
    22,499
    
    
    
    2,625
    
    
    
    
    
    
    
    25,124Intangible assets, net
    
    
    139,607
    
    
    
    6,721
    
    
    
    
    
    
    
    146,328
    
    
    
    144,764
    
    
    
    7,096
    
    
    
    
    
    
    
    151,860Goodwill
    
    
    258,905
    
    
    
    9,078
    
    
    
    
    
    
    
    267,983
    
    
    
    258,905
    
    
    
    9,307
    
    
    
    
    
    
    
    268,212Deferred debt financing costs and other
    
    
    7,886
    
    
    
    57
    
    
    
    
    
    
    
    7,943
    
    
    
    8,379
    
    
    
    54
    
    
    
    
    
    
    
    8,433Investment in and advances to
Non-Guarantor subsidiaries
    
    
    36,530
    
    
    
    
    
    
    
    (36,530
    )
    
    
    
    
    
    
    37,299
    
    
    
    
    
    
    
    (37,299
    )
    
    
    Discontinued operations
    
    
    
    
    
    
    4,513
    
    
    
    
    
    
    
    4,513
    
    
    
    
    
    
    
    6,727
    
    
    
    
    
    
    
    6,727Total assets
    
    $
    615,339
    
    
    $
    53,678
    
    
    $
    (36,530
    )
    
    $
    632,487
    
    
    $
    622,948
    
    
    $
    54,580
    
    
    $
    (37,299
    )
    
    $
    640,229Liabilities and Stockholders EquityCurrent liabilities:Current portion of long-term debt
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    13,534
    
    
    $
    
    
    
    $
    
    
    
    $
    13,534Accounts payable and other liabilities
    
    
    73,390
    
    
    
    8,559
    
    
    
    (203
    )
    
    
    81,746
    
    
    
    74,655
    
    
    
    8,154
    
    
    
    (170
    )
    
    
    82,639Liabilities of discontinued operations
    
    
    1,230
    
    
    
    10,324
    
    
    
    (4,099
    )
    
    
    7,455
    
    
    
    1,230
    
    
    
    9,564
    
    
    
    (3,273
    )
    
    
    7,521Total current liabilities
    
    
    74,620
    
    
    
    18,883
    
    
    
    (4,302
    )
    
    
    89,201
    
    
    
    89,419
    
    
    
    17,718
    
    
    
    (3,443
    )
    
    
    103,694Long-term debt, net of current portion
    
    
    406,754
    
    
    
    
    
    
    
    
    
    
    
    406,754
    
    
    
    406,832
    
    
    
    
    
    
    
    
    
    
    
    406,832Other long-term liabilities
    
    
    4,871
    
    
    
    54
    
    
    
    
    
    
    
    4,925
    
    
    
    7,132
    
    
    
    62
    
    
    
    
    
    
    
    7,194Deferred tax liability
    
    
    12,098
    
    
    
    1,948
    
    
    
    
    
    
    
    14,046
    
    
    
    9,702
    
    
    
    2,442
    
    
    
    
    
    
    
    12,144Liabilities of discontinued operations
    
    
    
    
    
    
    565
    
    
    
    
    
    
    
    565
    
    
    
    
    
    
    
    502
    
    
    
    
    
    
    
    502Total liabilities
    
    
    498,343
    
    
    
    21,450
    
    
    
    (4,302
    )
    
    
    515,491
    
    
    
    513,085
    
    
    
    20,724
    
    
    
    (3,443
    )
    
    
    530,366Total stockholders equity
    
    
    116,996
    
    
    
    32,228
    
    
    
    (32,228
    )
    
    
    116,996
    
    
    
    109,863
    
    
    
    33,856
    
    
    
    (33,856
    )
    
    
    109,863Total liabilities and stockholders equity
    
    $
    615,339
    
    
    $
    53,678
    
    
    $
    (36,530
    )
    
    $
    632,487
    
    
    $
    622,948
    
    
    $
    54,580
    
    
    $
    (37,299
    )
    
    $
    640,229
  19




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##### Table of Contents



Issuer and Non-Guarantor Financial Information
Condensed Combining Statements of Operations (Unaudited)
 Three Months Ended April 3, 2010
    
    
    Three Months Ended March 28, 2009Non
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NonGuar-
    
    
    Elimin-
    
    
    
    
    
    
    
    
    
    
    Guar-
    
    
    Elimin-Issuer
    
    
    antors
    
    
    ations
    
    
    Total
    
    
    Issuer
    
    
    antors
    
    
    ations
    
    
    TotalRevenue
    
    $
    182,423
    
    
    $
    11,774
    
    
    $
    
    
    
    $
    194,197
    
    
    $
    123,237
    
    
    $
    9,636
    
    
    $
    
    
    
    $
    132,873Cost of revenue
    
    
    148,150
    
    
    
    10,076
    
    
    
    
    
    
    
    158,226
    
    
    
    98,909
    
    
    
    8,456
    
    
    
    
    
    
    
    107,365Gross profit
    
    
    34,273
    
    
    
    1,698
    
    
    
    
    
    
    
    35,971
    
    
    
    24,328
    
    
    
    1,180
    
    
    
    
    
    
    
    25,508General and administrative
expenses
    
    
    11,588
    
    
    
    602
    
    
    
    
    
    
    
    12,190
    
    
    
    9,332
    
    
    
    359
    
    
    
    
    
    
    
    9,691Selling and marketing expenses
    
    
    5,131
    
    
    
    544
    
    
    
    
    
    
    
    5,675
    
    
    
    3,652
    
    
    
    491
    
    
    
    
    
    
    
    4,143Operating income
    
    
    17,554
    
    
    
    552
    
    
    
    
    
    
    
    18,106
    
    
    
    11,344
    
    
    
    330
    
    
    
    
    
    
    
    11,674Interest expense, net
    
    
    8,285
    
    
    
    (49
    )
    
    
    
    
    
    
    8,236
    
    
    
    8,353
    
    
    
    (2
    )
    
    
    
    
    
    
    8,351Equity in net income (loss) of
Non-Guarantor subsidiaries
    
    
    (1,676
    )
    
    
    
    
    
    
    1,676
    
    
    
    
    
    
    
    (129
    )
    
    
    
    
    
    
    129
    
    
    
    Income from continuing
operations before income taxes
    
    
    7,593
    
    
    
    601
    
    
    
    1,676
    
    
    
    9,870
    
    
    
    2,862
    
    
    
    332
    
    
    
    129
    
    
    
    3,323Provision for income taxes
    
    
    1,715
    
    
    
    119
    
    
    
    
    
    
    
    1,834
    
    
    
    1,637
    
    
    
    107
    
    
    
    
    
    
    
    1,744Income from continuing
operations
    
    
    5,878
    
    
    
    482
    
    
    
    1,676
    
    
    
    8,036
    
    
    
    1,225
    
    
    
    225
    
    
    
    129
    
    
    
    1,579Loss from discontinued
operations (net of tax)
    
    
    (279
    )
    
    
    (2,158
    )
    
    
    
    
    
    
    (2,437
    )
    
    
    (261
    )
    
    
    (354
    )
    
    
    
    
    
    
    (615
    )Net income (loss)
    
    $
    5,599
    
    
    $
    (1,676
    )
    
    $
    1,676
    
    
    $
    5,599
    
    
    $
    964
    
    
    $
    (129
    )
    
    $
    129
    
    
    $
    964
  20




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##### Table of Contents



Issuer and Non-Guarantor Financial Information
Condensed Combining Statements of Cash Flows (Unaudited)
 Three Months Ended April 3, 2010
    
    
    Three Months Ended March 28, 2009Non
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NonGuar-
    
    
    Elimin-
    
    
    
    
    
    
    
    
    
    
    Guar-
    
    
    Elimin-Issuer
    
    
    antors
    
    
    ations
    
    
    Total
    
    
    Issuer
    
    
    antors
    
    
    ations
    
    
    TotalCash flows from operating activitiesContinuing operations, net
    
    $
    (18,109
    )
    
    $
    1,096
    
    
    $
    
    
    
    
    (17,013
    )
    
    $
    (10,608
    )
    
    $
    721
    
    
    $
    
    
    
    $
    (9,887
    )Discontinued operations, net
    
    
    
    
    
    
    (1,994
    )
    
    
    
    
    
    
    (1,994
    )
    
    
    
    
    
    
    61
    
    
    
    
    
    
    
    61Net cash
provided by (used) in operating activities
    
    
    (18,109
    )
    
    
    (898
    )
    
    
    
    
    
    
    (19,007
    )
    
    
    (10,608
    )
    
    
    782
    
    
    
    
    
    
    
    (9,826
    )Cash flows from investing activitiesLoans from Vangent, Inc. to Vangent
Mexico, net
    
    
    (605
    )
    
    
    
    
    
    
    605
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital expenditures
    
    
    (1,163
    )
    
    
    (141
    )
    
    
    
    
    
    
    (1,304
    )
    
    
    (1,091
    )
    
    
    (104
    )
    
    
    
    
    
    
    (1,195
    )Continuing operations, net
    
    
    (1,768
    )
    
    
    (141
    )
    
    
    605
    
    
    
    (1,304
    )
    
    
    (1,091
    )
    
    
    (104
    )
    
    
    
    
    
    
    (1,195
    )Discontinued operations, net
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    (123
    )
    
    
    
    
    
    
    (1,114
    )
    
    
    
    
    
    
    (1,114
    )Net cash used in investing activities
    
    
    (1,768
    )
    
    
    (264
    )
    
    
    605
    
    
    
    (1,427
    )
    
    
    (1,091
    )
    
    
    (1,218
    )
    
    
    
    
    
    
    (2,309
    )Cash flows from financing activitiesRepayment of senior secured loan
    
    
    (13,612
    )
    
    
    
    
    
    
    
    
    
    
    (13,612
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    (29
    )
    
    
    (70
    )
    
    
    (12
    )
    
    
    
    
    
    
    (82
    )Continuing operations, net
    
    
    (13,641
    )
    
    
    
    
    
    
    
    
    
    
    (13,641
    )
    
    
    (70
    )
    
    
    (12
    )
    
    
    
    
    
    
    (82
    )Discontinued operations  Loans from
Vangent Inc. to Vangent Mexico
    
    
    
    
    
    
    605
    
    
    
    (605
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net cash
provided by (used in) financing
activities
    
    
    (13,641
    )
    
    
    605
    
    
    
    (605
    )
    
    
    (13,641
    )
    
    
    (70
    )
    
    
    (12
    )
    
    
    
    
    
    
    (82
    )Effect of exchange rate changes on
cash and cash equivalents
    
    
    
    
    
    
    (146
    )
    
    
    
    
    
    
    (146
    )
    
    
    
    
    
    
    (109
    )
    
    
    
    
    
    
    (109
    )Net decrease in cash and
cash equivalents
    
    
    (33,518
    )
    
    
    (703
    )
    
    
    
    
    
    
    (34,221
    )
    
    
    (11,769
    )
    
    
    (557
    )
    
    
    
    
    
    
    (12,326
    )Total cash and cash equivalents,
beginning of period
    
    
    41,099
    
    
    
    4,485
    
    
    
    
    
    
    
    45,584
    
    
    
    15,519
    
    
    
    5,615
    
    
    
    
    
    
    
    21,134Total cash
and cash equivalents, end of period
    
    
    7,581
    
    
    
    3,782
    
    
    
    
    
    
    
    11,363
    
    
    
    3,750
    
    
    
    5,058
    
    
    
    
    
    
    
    8,808Less: Cash
and cash equivalents, discontinued operations
    
    
    
    
    
    
    645
    
    
    
    
    
    
    
    645
    
    
    
    
    
    
    
    2,239
    
    
    
    
    
    
    
    2,239Cash and
cash equivalents, continuing operations
    
    $
    7,581
    
    
    $
    3,137
    
    
    
    
    
    
    $
    10,718
    
    
    $
    $3,750
    
    
    $
    2,819
    
    
    
    
    
    
    $
    6,569
  21




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 The following discussion and analysis of our consolidated financial condition and results of
operations should be read in conjunction with the unaudited condensed consolidated financial
statements contained elsewhere in this quarterly report on Form 10-Q and the Managements
Discussion and Analysis of Financial Condition and Results of Operations and the audited
consolidated financial statements and notes thereto, included in our annual report on Form 10-K for
the year ended December 31, 2009.
 Overview
      Discontinued Operations
   22




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##### Table of Contents



Nature of Our Contracts
   Three Months EndedApril 3,
    
    
    March 28,2010
    
    
    2009Cost-plus
    
    
    65
    %
    
    
    52
    %Fixed-price
    
    
    30
    %
    
    
    43
    %Time and materials
    
    
    5
    %
    
    
    5
    %100
    %
    
    
    100
    %
  Contract Backlog
  April 3, 2010
    
    
    December 31, 2009Total
    
    
    Funded
    
    
    Total
    
    
    FundedGovernment Group
    
    $
    1,591.4
    
    
    $
    203.5
    
    
    $
    1,782.6
    
    
    $
    313.4International Group
    
    
    271.6
    
    
    
    184.4
    
    
    
    291.2
    
    
    
    196.8Human Capital Group
    
    
    8.7
    
    
    
    8.7
    
    
    
    7.1
    
    
    
    7.1Discontinued operations
    
    
    60.5
    
    
    
    60.5
    
    
    
    44.9
    
    
    
    44.9$
    1,932.2
    
    
    $
    457.1
    
    
    $
    2,125.8
    
    
    $
    562.2
 Critical Accounting Policies
   Recent Accounting Pronouncements
   23




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##### Table of Contents



Results of Operations
  Three Months EndedApril 3,
    
    
    March 28,
    
    
    Increase2010
    
    
    2009
    
    
    (Decrease)Statements of Operations DataRevenue
    
    $
    194,197
    
    
    $
    132,873
    
    
    $
    61,324Cost of revenue
    
    
    158,226
    
    
    
    107,365
    
    
    
    50,861Gross profit
    
    
    35,971
    
    
    
    25,508
    
    
    
    10,463General and administrative expenses
    
    
    12,190
    
    
    
    9,691
    
    
    
    2,499Selling and marketing expenses
    
    
    5,675
    
    
    
    4,143
    
    
    
    1,532Operating income
    
    
    18,106
    
    
    
    11,674
    
    
    
    6,432Interest expense, net
    
    
    8,236
    
    
    
    8,351
    
    
    
    (115
    )Income from continuing operations
before income taxes
    
    
    9,870
    
    
    
    3,323
    
    
    
    6,547Provision for income taxes
    
    
    1,834
    
    
    
    1,744
    
    
    
    90Income from continuing operations
    
    
    8,036
    
    
    
    1,579
    
    
    
    6,457Loss from discontinued operations
(net of tax)
    
    
    (2,437
    )
    
    
    (615
    )
    
    
    (1,822
    )Net income
    
    $
    5,599
    
    
    $
    964
    
    
    $
    4,635Statements of Operations Data as a Percent of RevenueRevenue
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenue
    
    
    81.5
    
    
    
    80.8Gross profit margin
    
    
    18.5
    
    
    
    19.2General and administrative expenses
    
    
    6.3
    
    
    
    7.3Selling and marketing expenses
    
    
    2.9
    
    
    
    3.1Operating income margin
    
    
    9.3
    
    
    
    8.8Interest expense, net
    
    
    4.2
    
    
    
    6.3Income from continuing operations
before income taxes
    
    
    5.1
    
    
    
    2.5Provision for income taxes
    
    
    0.9
    
    
    
    1.3Income from continuing operations
    
    
    4.2
    
    
    
    1.2Loss from discontinued operations
(net of tax)
    
    
    (1.3
    )
    
    
    (0.5
    )Net income
    
    
    2.9
    %
    
    
    0.7
    %
  24




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##### Table of Contents



Three Months Ended April 3, 2010 and March 28, 2009
 Overview
  Revenue
  Three Months EndedApril 3,
    
    
    March 28,
    
    
    Increase (Decrease)2010
    
    
    2009
    
    
    Amount
    
    
    PercentRevenue by business segmentGovernment Group
    
    $
    177,237
    
    
    $
    117,766
    
    
    $
    59,471
    
    
    
    50
    %International Group
    
    
    11,825
    
    
    
    9,719
    
    
    
    2,106
    
    
    
    22
    %Human Capital Group
    
    
    6,135
    
    
    
    6,493
    
    
    
    (358
    )
    
    
    (6
    )%Elimination
    
    
    (1,000
    )
    
    
    (1,105
    )
    
    
    105
    
    
    
    (10
    )%$
    194,197
    
    
    $
    132,873
    
    
    $
    61,324
    
    
    
    46
    %Business segment revenue as
a percent of total revenueGovernment Group
    
    
    91.3
    %
    
    
    88.6
    %International Group
    
    
    6.1
    
    
    
    7.3Human Capital Group
    
    
    3.2
    
    
    
    4.9Elimination
    
    
    (0.6
    )
    
    
    (0.8
    )100.0
    %
    
    
    100.0
    %
   
    
    Revenue from DoC contracts increased $48.8 million from the ramp up of
processing of census forms and data capture under the 2010 U.S. Census contract
that is expected to be substantially completed by the fourth quarter of 2010.
 
    
    Revenue from HHS contracts increased $5.6 million from higher volumes and
contract work for the Centers for Medicare and Medicaid Services (CMS) contract
and the Center for Disease Control (CDC) contract.
 
    
    Revenue from Department of Defense (DoD) contracts increased
$3.4 million principally from a new contract with the Military Health System.
 
    
    Revenue from DoED increased $3.1 million related to an increase in revenues earned
on Vangents contract with the Office of Federal Student Aid.
 
    
    Revenue from a contract with the Department of State (DoS) for the National
Passport Information Center increased $1.0 million.
  25




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##### Table of Contents



Cost of Revenue
   General and Administrative Expenses
  Selling and Marketing Expenses
   26




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##### Table of Contents



Operating Income
  Three Months EndedApril 3,
    
    
    March 28,
    
    
    Increase (Decrease)2010
    
    
    2009
    
    
    Amount
    
    
    PercentOperating income (loss) by business segmentGovernment Group
    
    $
    18,869
    
    
    $
    12,294
    
    
    $
    6,575
    
    
    
    53
    %International Group
    
    
    62
    
    
    
    1
    
    
    
    61
    
    
    
    
    %Human Capital Group
    
    
    (820
    )
    
    
    (616
    )
    
    
    (204
    )
    
    
    33
    %Corporate
    
    
    (5
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    %$
    18,106
    
    
    $
    11,674
    
    
    $
    6,432
    
    
    
    55
    %Operating margin by business segmentGovernment Group
    
    
    10.7
    %
    
    
    10.4
    %International Group
    
    
    0.5
    %
    
    
    
    %Human Capital Group
    
    
    (13.4)
    %
    
    
    (9.5)
    %
    Interest Expense, Net
  Provision for Income Taxes
  Three Months EndedApril 3,
    
    
    March 28,
    
    
    Increase2010
    
    
    2009
    
    
    (Decrease)Provision (benefit) for income taxes excluding
tax valuation allowance
    
    $
    2,904
    
    
    $
    1,016
    
    
    $
    1,888Tax valuation allowance
    
    
    (1,070
    )
    
    
    728
    
    
    
    (1,798
    )Total provision for income taxes
    
    $
    1,834
    
    
    $
    1,744
    
    
    $
    90
  27




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##### Table of Contents



Discontinued Operations
  Three Months EndedApril 3,
    
    
    March 28,
    
    
    Increase2010
    
    
    2009
    
    
    (Decrease)Revenue
    
    $
    7,135
    
    
    $
    4,599
    
    
    $
    2,536Costs and expenses
    
    
    7,500
    
    
    
    5,313
    
    
    
    2,187Expected loss on disposal
    
    
    2,618
    
    
    
    
    
    
    
    2,618Other (income) expense, net
    
    
    (753
    )
    
    
    20
    
    
    
    (773
    )Loss from discontinued operations
before income taxes
    
    
    (2,230
    )
    
    
    (734
    )
    
    
    (1,496
    )Provision (benefit) for income taxes
    
    
    207
    
    
    
    (119
    )
    
    
    326Loss from discontinued operations (net of tax)
    
    $
    (2,437
    )
    
    $
    (615
    )
    
    $
    (1,822
    )
       28




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##### Table of Contents



Liquidity and Capital Resources
   Long-Term Debt
  Risk Factors Credit Ratings
 Debt Covenants
   Interest Rate Swaps on Variable-Rate Term Loan under Senior Secured Credit Facility
    29




---



##### Table of Contents



Working Capital
  April 3,
    
    
    December 31,
    
    
    Effect on2010
    
    
    2009
    
    

Working CapitalCash and cash equivalents
    
    $
    10,718
    
    
    $
    44,638
    
    
    $
    (33,920
    )Trade receivables, net
    
    
    141,867
    
    
    
    109,846
    
    
    
    32,021Prepaid expenses and other
    
    
    11,696
    
    
    
    10,353
    
    
    
    1,343Current portion of long-term debt
    
    
    
    
    
    
    (13,534
    )
    
    
    13,534Accounts payable and accrued liabilities
    
    
    (68,107
    )
    
    
    (64,849
    )
    
    
    (3,258
    )Accrued interest payable
    
    
    (3,363
    )
    
    
    (8,186
    )
    
    
    4,823Other liabilities
    
    
    (10,276
    )
    
    
    (9,604
    )
    
    
    (672
    )Discontinued operations, net
    
    
    9,774
    
    
    
    7,515
    
    
    
    2,259Net working capital
    
    $
    92,309
    
    
    $
    76,179
    
    
    $
    16,130
 Cash Flows
  Three Months EndedApril 3,
    
    
    March 28,
    
    
    Increase2010
    
    
    2009
    
    
    (Decrease)Net cash provided by (used in)Operating activities:Continuing operations
    
    $
    (17,013
    )
    
    $
    (9,887
    )
    
    $
    (7,126
    )Discontinued operations
    
    
    (1,994
    )
    
    
    61
    
    
    
    (2,055
    )Investing activities:Continuing operations
    
    
    (1,304
    )
    
    
    (1,195
    )
    
    
    (109
    )Discontinued operations
    
    
    (123
    )
    
    
    (1,114
    )
    
    
    991Financing activities:Continuing operations
    
    
    (13,641
    )
    
    
    (82
    )
    
    
    (13,559
    )
 Net Cash Used in Operating Activities
     30




---



##### Table of Contents



Net Cash Used in Investing Activities
   Net Cash Used in Financing Activities
  Credit Ratings
  Standard& Poors
    
    MoodysSenior secured credit facility
    
    BB-
    
    B1Senior subordinated notes due 2015
    
    CCC+
    
    Caa2Corporate credit
    
    B
    
    B3Outlook
    
    Negative
    
    Negative
  31




---



##### Table of Contents



Contractual Obligations
  Payments Due by Year2010(remaining nine
    
    
    2011 and
    
    
    2013 andTotal
    
    
    months)
    
    
    2012
    
    
    2014
    
    
    2015
    
    
    ThereafterLong-term debt:Term loan under senior secured credit
facility due February 2013 (1)
    
    
    216.8
    
    
    
    
    
    
    $
    1.7
    
    
    $
    215.1
    
    
    $
    
    
    
    $
    Senior subordinated notes due 2015
    
    
    190.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190.0
    
    
    
    Interest relating to long-term debt (2)
    
    
    112.4
    
    
    
    16.7
    
    
    
    48.7
    
    
    
    37.8
    
    
    
    9.2
    
    
    
    Operating leases
    
    
    73.4
    
    
    
    15.1
    
    
    
    27.5
    
    
    
    13.7
    
    
    
    3.4
    
    
    
    13.7Purchase and other contractual commitments (3)
    
    
    20.2
    
    
    
    20.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    612.8
    
    
    $
    52.0
    
    
    $
    77.9
    
    
    $
    266.6
    
    
    $
    202.6
    
    
    $
    13.7
 
 (1)
    
    Scheduled payments for the term loan under the senior secured credit facility do not
give effect to possible future mandatory prepayments in March 2011 or March 2012 that could
result from excess cash flow from the prior calendar year.(2)
    
    Future interest payments consist of interest on the variable-rate term loan under the senior
secured credit facility based on the prevailing rate of 2.51% at April 3, 2010, the estimated
future payments based on fair value of the related interest rate swaps, and interest based on
the fixed rate of 9 5/8% for the senior subordinated notes.(3)
    
    Purchase and other contractual commitments represent the minimum noncancelable obligations
under service and other agreements, primarily information technology and telecommunications
services. Variable Interest Entities
  Off-Balance Sheet Arrangements
  
 ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Quantitative and Qualitative Disclosures about Market Risk
 
 ITEM 4T.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   32




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##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
 Risk
Factors
 
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 5.
    
    OTHER INFORMATION
  
 ITEM 6.
    
    EXHIBITS
 ExhibitNumber

    
    Description31.1
*
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
*
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
*
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
*
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Filed herewith.  33




---



##### Table of Contents



SIGNATURE
  Vangent, Inc.May 10, 2010
    /s/ James C. ReaganJames C. ReaganSenior Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)  34




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description31.1
    
    
    Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002.
  35