##### 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 June 27, 2009
 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
    
    20-1961427(State or other jurisdiction of 
incorporation or organization)
    
    (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 June 27, 2009 and
December 31, 2008 (unaudited)
    
    
    3Condensed Consolidated Statements of Operations for the three
and six months ended June 27, 2009 and June 28 2008 (unaudited)
    
    
    4Condensed Consolidated Statements of Stockholders Equity and
Comprehensive Income (Loss) for the six months ended June 27,
2009 and June 28, 2008 (unaudited)
    
    
    5Condensed Consolidated Statements of Cash Flows for the six
months ended June 27, 2009 and June 28, 2008 (unaudited)
    
    
    6Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    31Item 4T. Controls and Procedures
    
    
    32PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    32Item 1A. Risk Factors
    
    
    32Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    32Item 3. Defaults Upon Senior Securities
    
    
    32Item 4. Submission of Matters to a Vote of Security Holders
    
    
    32Item 5. Other Information
    
    
    33Item 6. Exhibits
    
    
    33Signature
    
    
    33Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
  Forward-Looking Statements
   2




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1.
    
    FINANCIAL STATEMENTS
 Vangent, Inc.
 
 Condensed Consolidated Balance Sheets
   June 27,
    
    
    December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    21,765
    
    
    $
    21,134Trade receivables, net
    
    
    124,755
    
    
    
    129,859Prepaid expenses
    
    
    8,831
    
    
    
    6,134Deferred contract costs
    
    
    4,693
    
    
    
    Other current assets
    
    
    6,476
    
    
    
    6,279Total current assets
    
    
    166,520
    
    
    
    163,406Property and equipment, net
    
    
    29,390
    
    
    
    27,152Intangible assets, net
    
    
    167,336
    
    
    
    177,999Goodwill
    
    
    286,866
    
    
    
    286,866Deferred debt financing costs, net
    
    
    9,106
    
    
    
    10,197Other assets
    
    
    1,081
    
    
    
    654Total assets
    
    $
    660,299
    
    
    $
    666,274Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    67,369
    
    
    $
    73,172Accrued
interest payable
    
    
    7,896
    
    
    
    8,304Deferred tax liability
    
    
    3,721
    
    
    
    3,962Advance payments on contracts
    
    
    2,282
    
    
    
    2,695Total current liabilities
    
    
    81,268
    
    
    
    88,133Long-term debt
    
    
    420,366
    
    
    
    420,366Other long-term liabilities
    
    
    7,728
    
    
    
    7,879Deferred tax liability
    
    
    8,782
    
    
    
    5,259Total liabilities
    
    
    518,144
    
    
    
    521,637Commitments and contingencies (Note 7)Stockholders equity:Common stock, $0.01 par value, 1,000 shares
authorized,
and 100 shares issued and outstanding
    
    
    
    
    
    
    Additional paid-in capital
    
    
    206,839
    
    
    
    206,328Accumulated other comprehensive loss
    
    
    (10,980
    )
    
    
    (13,135
    )Accumulated deficit
    
    
    (53,704
    )
    
    
    (48,556
    )Total stockholders equity
    
    
    142,155
    
    
    
    144,637Total liabilities and stockholders equity
    
    $
    660,299
    
    
    $
    666,274
   3




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##### Table of Contents



Vangent, Inc.
 
 Condensed Consolidated Statements of Operations
   Three Months Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    141,010
    
    
    $
    123,934
    
    
    $
    278,482
    
    
    $
    267,409Cost of revenue
    
    
    122,271
    
    
    
    105,934
    
    
    
    234,175
    
    
    
    223,100Gross profit
    
    
    18,739
    
    
    
    18,000
    
    
    
    44,307
    
    
    
    44,309General and administrative expenses
    
    
    10,544
    
    
    
    12,473
    
    
    
    20,835
    
    
    
    26,257Selling and marketing expenses
    
    
    4,565
    
    
    
    4,075
    
    
    
    8,882
    
    
    
    8,206Operating income
    
    
    3,630
    
    
    
    1,452
    
    
    
    14,590
    
    
    
    9,846Interest expense
    
    
    8,559
    
    
    
    8,958
    
    
    
    16,959
    
    
    
    18,176Interest income
    
    
    (64
    )
    
    
    (181
    )
    
    
    (93
    )
    
    
    (449
    )Loss before income taxes
    
    
    (4,865
    )
    
    
    (7,325
    )
    
    
    (2,276
    )
    
    
    (7,881
    )Provision for income taxes
    
    
    1,247
    
    
    
    1,228
    
    
    
    2,872
    
    
    
    3,096Net loss
    
    $
    (6,112
    )
    
    $
    (8,553
    )
    
    $
    (5,148
    )
    
    $
    (10,977
    )
   4




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##### Table of Contents



Vangent, Inc.
 
 Condensed Consolidated Statements of Stockholders Equity and Comprehensive Income (Loss)
   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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    905
    
    
    
    
    
    
    
    905Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,250
    
    
    
    
    
    
    
    1,250Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,148
    )
    
    
    (5,148
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,993
    )Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    511
    
    
    
    
    
    
    
    
    
    
    
    511Balance, June 27, 2009
    
    
    100
    
    
    $
    
    
    
    $
    206,839
    
    
    $
    (10,980
    )
    
    $
    (53,704
    )
    
    $
    142,155Balance, December 31, 2007
    
    
    100
    
    
    $
    
    
    
    $
    205,275
    
    
    $
    (2,937
    )
    
    $
    (22,049
    )
    
    $
    180,289Effect of hedging activities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,334
    
    
    
    
    
    
    
    1,334Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    313
    
    
    
    
    
    
    
    313Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,977
    )
    
    
    (10,977
    )Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,330
    )Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    592
    
    
    
    
    
    
    
    
    
    
    
    592Balance, June 28, 2008
    
    
    100
    
    
    $
    
    
    
    $
    205,867
    
    
    $
    (1,290
    )
    
    $
    (33,026
    )
    
    $
    171,551
   5




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##### Table of Contents



Vangent, Inc.
 
 Condensed Consolidated Statements of Cash Flows
   Six Months EndedJune 27,
    
    
    June 28,2009
    
    
    2008Cash flows from operating activitiesNet loss
    
    $
    (5,148
    )
    
    $
    (10,977
    )Adjustments to reconcile net loss to net cash
provided by operating activities:Amortization of intangibles
    
    
    10,663
    
    
    
    10,519Depreciation and amortization
    
    
    6,116
    
    
    
    6,846Equity-based compensation expense
    
    
    511
    
    
    
    592Deferred income taxes
    
    
    3,030
    
    
    
    2,913Changes in operating assets and liabilities:Trade receivables
    
    
    6,480
    
    
    
    13,493Prepaid
expenses and other assets
    
    
    (6,617
    )
    
    
    (3,856
    )Accounts
payable and accrued expenses
    
    
    (8,403
    )
    
    
    1,336Accrued
interest payable
    
    
    (408
    )
    
    
    (540
    )Advance payments on contracts
    
    
    (413
    )
    
    
    (341
    )Other
    
    
    1,264
    
    
    
    1,191Net cash provided by operating activities
    
    
    7,075
    
    
    
    21,176Cash flows from investing activitiesAcquisition, net of cash acquired
    
    
    
    
    
    
    (3,936
    )Capital expenditures
    
    
    (6,539
    )
    
    
    (5,041
    )Net cash used in investing activities
    
    
    (6,539
    )
    
    
    (8,977
    )Cash flows from financing activitiesRepayment of senior secured term loan
    
    
    
    
    
    
    (7,834
    )Capital lease payments
    
    
    (163
    )
    
    
    (138
    )Net cash used in financing activities
    
    
    (163
    )
    
    
    (7,972
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    258
    
    
    
    106Net increase in cash and cash equivalents
    
    
    631
    
    
    
    4,333Cash and cash equivalents, beginning of period
    
    
    21,134
    
    
    
    26,093Cash and cash equivalents, end of period
    
    $
    21,765
    
    
    $
    30,426Supplemental noncash investing and financing activitiesLeasehold improvements provided by lessor under operating leases
    
    $
    347
    
    
    $
    2,503Supplemental cash flow informationInterest paid
    
    $
    16,446
    
    
    $
    17,553Income taxes paid
    
    
    624
    
    
    
    337
   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
  Fiscal Year and Quarterly Periods
  Variable Interest Entities
   7




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##### Table of Contents



2. Recent Accounting Pronouncements
 Interim Disclosures about Fair Value of Financial Instruments
 FASB Accounting Standards Codification TM
 Subsequent Events.
 Amendments to FASB Interpretation No. 46 R, Consolidation of Variable Interest Entities.
 3. Intangible Assets
  WeightedAverage Life
    
    June 27,
    
    
    December 31,(in years)
    
    2009
    
    
    2008Customer relationships
    
    10.7
    
    $
    205,724
    
    
    $
    205,724Intellectual property
    
    Indefinite
    
    
    11,178
    
    
    
    11,178Other
    
    4
    
    
    658
    
    
    
    658217,560
    
    
    
    217,560Accumulated amortization
    
    
    
    
    (50,224
    )
    
    
    (39,561
    )$
    167,336
    
    
    $
    177,999
  8




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##### Table of Contents



Years Ending December 312009 (six months)
    
    $
    10,6632010
    
    
    21,3262011
    
    
    20,9542012
    
    
    20,7912013
    
    
    20,791Thereafter
    
    
    61,633$
    156,158
 4. Long-Term Debt
  June 27,
    
    
    December 31,2009
    
    
    2008Senior secured credit facilityTerm loan, due February 14, 2013, with interest at variable rates
    
    $
    230,366
    
    
    $
    230,3669 5/8% Senior subordinated fixed rate notes, due February 15, 2015
    
    
    190,000
    
    
    
    190,000$
    420,366
    
    
    $
    420,366Scheduled maturities of long-term debt2009
    
    
    
    
    
    $
    2010
    
    
    
    
    
    
    1,7812011
    
    
    
    
    
    
    2,3752012
    
    
    
    
    
    
    2,3752013
    
    
    
    
    
    
    223,8352014
    
    
    
    
    
    
    2015
    
    
    
    
    
    
    190,000$
    420,366
 Senior Secured Credit Facility
     9




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##### Table of Contents



9 5/8% Senior Subordinated Notes
    5. Derivative Instruments, Hedging Activities and Financial Instruments
    NotionalDerivative Financial Instruments
    
    Amount
    
    
    DescriptionInterest rate swap agreements
    
    $
    185,000
    
    
    Pay fixed and receive variableForeign currency forward contracts
    
    $
    5,005
    
    
    Purchase U.S. Dollars and
exchange Mexican Pesos
  10




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##### Table of Contents



Interest Rate Swap Agreements on Variable-Rate Term Loan
  Fixed
    
    
    VariableNotional
    
    
    Interest Rate
    
    
    Interest RateDate Entered
    
    Amount
    
    
    to be Paid
    
    
    to be Received

    
    Period CoveredFebruary 2007
    
    $
    140,000
    
    
    
    5.215
    %
    
    3-month LIBOR
    
    February 2007 to February 2008120,000
    
    
    
    5.215
    %
    
    3-month LIBOR
    
    February 2008 to February 2009110,000
    
    
    
    5.215
    %
    
    3-month LIBOR
    
    February 2009 to February 2010April 2008
    
    $
    75,000
    
    
    
    3.280
    %
    
    3-month LIBOR
    
    April 2008 to February 2010150,000
    
    
    
    3.280
    %
    
    3-month LIBOR
    
    February 2010 to February 2011
  Foreign Currency Contracts
   Fair Value Measurements
 Fair Value Measurements
 
    
    Level 1
    
    Observable inputs such as quoted prices (unadjusted) in active markets
for identical assets
or liabilities.
    
    Level 2
    
    Inputs, other than quoted prices that are observable for the asset or
liability, either directly or indirectly, including quoted prices for similar assets
or liabilities in active markets; quoted prices for identical or similar assets or
liabilities in markets that are not active; inputs other than quoted prices that are
observable for the asset or liability; and inputs that are derived principally from
or corroborated by observable market data by correlation or other means.
    
    Level 3
    
    Unobservable inputs that reflect the reporting entitys own assumptions.
  11




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##### Table of Contents



June 27,
    
    
    December 31,2009
    
    
    2008Total assets
    
    $
    
    
    
    $
    Liabilities:Level 1  Quoted prices in active markets for identical items
    
    $
    
    
    
    $
    Level 2  Significant other observable inputs
    
    
    8,481
    
    
    
    9,342Level 3  Significant unobservable inputs
    
    
    
    
    
    
    Total liabilities
    
    $
    8,481
    
    
    $
    9,342
 Derivative Instruments and Hedging Activities
 Disclosures about Derivative Instruments and
Hedging Activities,
 Statements of Operations DataLocation of Gain(Loss)Recognized in
    
    
    Amount of GainLocation of
    
    
    
    
    
    
    Income on
    
    
    (Loss) RecognizedGain (Loss)
    
    
    
    
    
    
    Derivative
    
    
    in Income onReclassified
    
    
    
    
    
    
    (Ineffective
    
    
    DerivativeDerivatives in
    
    
    
    
    from
    
    
    Amount of Gain (Loss)
    
    
    Portion and
    
    
    (IneffectiveSFAS No. 133
    
    Amount of Gain (Loss)
    
    
    Accumulated
    
    
    Reclassified from
    
    
    Amount
    
    
    Portion andCash Flow
    
    Recognized in OCI on
    
    
    OCI into
    
    
    Accumulated OCI into
    
    
    Excluded from
    
    
    Amount ExcludedHedging
    
    Derivative
    
    
    Income
    
    
    Income
    
    
    Effectiveness
    
    
    from EffectivenessRelationships
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    (Effective Portion)
    
    
    Testing)
    
    
    Testing)Three Months Ended
    
    
    
    
    
    
    Three Months Ended
    
    
    
    
    
    
    Three Months EndedJune 27, 2009
    
    
    
    
    
    
    June 27, 2009
    
    
    
    
    
    
    June 27, 2009Interest rate swap agreements
    
    $
    806
    
    
    Interest expense
    
    $
    (1,585
    )
    
    Interest expense
    
    $
    23Foreign currency contracts
    
    
    (480
    )
    
    Cost of revenue
    
    
    (27
    )
    
    Cost of revenue
    
    
    $
    326
    
    
    
    
    
    
    $
    (1,612
    )
    
    
    
    
    
    $
    23Six Months Ended
    
    
    
    
    
    Six Months Ended
    
    
    
    
    
    Six Months EndedJune 27, 2009
    
    
    
    
    
    June 27, 2009
    
    
    
    
    
    June 27, 2009Interest rate swap
agreements
    
    
    (1,152
    )
    
    Interest expense
    
    $
    (2,793
    )
    
    Interest expense
    
    
    48Foreign currency
contracts
    
    
    (763
    )
    
    Cost of revenue
    
    
    (27
    )
    
    Cost of revenue
    
    
    $
    (1,915
    )
    
    
    
    
    
    $
    (2,820
    )
    
    
    
    
    
    $
    48
  12




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##### Table of Contents



Balance Sheet DataDerivatives Designated
    
    Balance
    
    
    Fair Value of Liability Derivativesas Hedging Instruments under
    
    Sheet
    
    
    June 27,
    
    
    December 31,SFAS No.133
    
    Location
    
    
    2009
    
    
    2008Interest rate swap agreementsCurrent portion
    
    Accrued expenses
    
    $
    5,627
    
    
    $
    6,063Non-current portion
    
    Other long-term liabilities
    
    
    2,176
    
    
    
    3,2797,803
    
    
    
    9,342Foreign currency forward
contracts
    
    Accrued expenses
    
    
    678
    
    
    
    $
    8,481
    
    
    $
    9,342
 Financial Instruments
  Carrying Amount
    
    
    Fair ValueLong-term debtVariable-rate term loan under the senior secured
credit facility
    
    $
    230,366
    
    
    $
    230,3669 5/8% senior subordinated notes, due February 15, 2015
    
    
    190,000
    
    
    
    158,413$
    420,366
    
    
    $
    388,779Interest rate swap agreements to pay fixed and
receive variableShort-term liabilities
    
    $
    5,627
    
    
    $
    5,627Long-term liabilities
    
    
    2,176
    
    
    
    2,176$
    7,803
    
    
    $
    7,803Foreign currency forward contractsShort-term liabilities
    
    $
    678
    
    
    $
    678
  6. Income Taxes
  Business Combinations,
  13




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##### Table of Contents



Accounting for Uncertainty in Income Taxesan Interpretation of
FASB Statement No. 109
  7. Commitments and Contingencies
 Loss of Data
  Other
   8. Equity-Based Compensation
    14




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##### Table of Contents



Class B
    
    
    
    
    
    
    Fair Value ofMembership
    
    
    Class B
    
    
    Class BInterests
    
    
    Membership
    
    
    MembershipAvailable for
    
    
    Interests
    
    
    Interests at Date ofGrant
    
    
    Outstanding
    
    
    GrantBalance, December 31, 2008
    
    
    1.9
    %
    
    
    5.6
    %
    
    $
    5,679Granted
    
    
    (0.3
    )
    
    
    0.3
    
    
    
    238Forfeited
    
    
    0.5
    
    
    
    (0.5
    )
    
    
    (406
    )Balance, June 27, 2009
    
    
    2.1
    %
    
    
    5.4
    %
    
    $
    5,511At June 27, 2009:Vested
    
    
    
    
    
    
    1.9
    %Not yet vested
    
    
    
    
    
    
    3.55.4
    %
 , Share-Based Payments
 Years Ending December 312009 (remaining six months)
    
    $
    5242010
    
    
    1,0482011
    
    
    1,0482012
    
    
    3102013
    
    
    972014
    
    
    11$
    3,038
 9. Related Party Transactions
    15




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##### Table of Contents



10. Accumulated Other Comprehensive Income (Loss)
  June 27,
    
    
    December 31,2009
    
    
    2008Accumulated other comprehensive lossEffect of hedging activities, net of tax:Interest rate swap agreements
    
    $
    (7,133
    )
    
    $
    (8,774
    )Foreign currency contracts
    
    
    (736
    )
    
    
    (7,869
    )
    
    
    (8,774
    )Foreign currency cumulative translation
adjustment
    
    
    (3,111
    )
    
    
    (4,361
    )Accumulated other comprehensive loss
    
    $
    (10,980
    )
    
    $
    (13,135
    )
 Interest
    
    
    ForeignRate
    
    
    CurrencySummary of hedging activity
    
    Swaps
    
    
    Contracts
    
    
    TotalBalance, December 31, 2008
    
    $
    (8,774
    )
    
    $
    
    
    
    $
    (8,774
    )Change in fair value
    
    
    (1,152
    )
    
    
    (763
    )
    
    
    (1,915
    )Reclassification to interest expense
    
    
    2,793
    
    
    
    
    
    
    
    2,793Reclassification to cost of revenue
    
    
    
    
    
    
    27
    
    
    
    27Balance, June 27, 2009
    
    $
    (7,133
    )
    
    $
    (736
    )
    
    $
    (7,869
    )
 11. Business Segments and Major Customers
     16




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue by business segmentGovernment Group
    
    $
    115,581
    
    
    $
    95,764
    
    
    $
    233,347
    
    
    $
    212,896International Group
    
    
    16,434
    
    
    
    20,991
    
    
    
    30,752
    
    
    
    39,782Human Capital Group
    
    
    10,364
    
    
    
    7,179
    
    
    
    16,857
    
    
    
    14,731Elimination
    
    
    (1,369
    )
    
    
    
    
    
    
    (2,474
    )
    
    
    Total revenue
    
    $
    141,010
    
    
    $
    123,934
    
    
    $
    278,482
    
    
    $
    267,409Operating income (loss) by business segmentGovernment Group
    
    $
    6,057
    
    
    $
    1,285
    
    
    $
    18,360
    
    
    $
    9,527International Group
    
    
    (1,745
    )
    
    
    497
    
    
    
    (2,458
    )
    
    
    709Human Capital Group
    
    
    (669
    )
    
    
    (316
    )
    
    
    (1,285
    )
    
    
    (360
    )3,643
    
    
    
    1,466
    
    
    
    14,617
    
    
    
    9,876Corporate
    
    
    (13
    )
    
    
    (14
    )
    
    
    (27
    )
    
    
    (30
    )Total operating income by business segment
    
    
    3,630
    
    
    
    1,452
    
    
    
    14,590
    
    
    
    9,846Interest expense, net
    
    
    8,495
    
    
    
    8,777
    
    
    
    16,866
    
    
    
    17,727Loss before income taxes
    
    $
    (4,865
    )
    
    $
    (7,325
    )
    
    $
    (2,276
    )
    
    $
    (7,881
    )Depreciation and amortizationGovernment Group
    
    $
    6,890
    
    
    $
    7,294
    
    
    $
    13,904
    
    
    $
    14,071International Group
    
    
    1,175
    
    
    
    1,212
    
    
    
    2,135
    
    
    
    2,410Human Capital Group
    
    
    368
    
    
    
    440
    
    
    
    740
    
    
    
    884Total depreciation and amortization
    
    $
    8,433
    
    
    $
    8,946
    
    
    $
    16,779
    
    
    $
    17,365Revenue from major customers as a percent of total revenueDepartment of Health and Human Services
    
    
    41
    %
    
    
    43
    %
    
    
    43
    %
    
    
    46
    %Department of Education
    
    
    16
    %
    
    
    17
    %
    
    
    17
    %
    
    
    17
    %Department of Defense
    
    
    15
    %
    
    
    
    *
    
    
    
    *
    
    
    
    *
 
 *
    
    less than 10%.  17




---



##### Table of Contents



12. Condensed Company and Non-Guarantor Financial Information
  Issuer and Non-Guarantor Financial Information
Condensed Combining Balance Sheets
(Unaudited)
 June 27, 2009
    
    
    December 31, 2008Non-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Guar-
    
    
    Elimin-
    
    
    
    
    
    
    
    
    
    
    Guar-
    
    
    Elimin-Issuer
    
    
    antors
    
    
    ations
    
    
    Total
    
    
    Issuer
    
    
    antors
    
    
    ations
    
    
    TotalAssetsCurrent assets:Cash and cash equivalents
    
    $
    17,922
    
    
    $
    3,843
    
    
    $
    
    
    
    $
    21,765
    
    
    $
    15,519
    
    
    $
    5,615
    
    
    $
    
    
    
    $
    21,134Trade receivables, net
    
    
    110,673
    
    
    
    14,082
    
    
    
    
    
    
    
    124,755
    
    
    
    117,453
    
    
    
    12,406
    
    
    
    
    
    
    
    129,859Deferred tax asset
    
    
    
    
    
    
    546
    
    
    
    
    
    
    
    546
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Prepaid and other assets
    
    
    13,007
    
    
    
    6,447
    
    
    
    
    
    
    
    19,454
    
    
    
    9,116
    
    
    
    3,297
    
    
    
    
    
    
    
    12,413Total current assets
    
    
    141,602
    
    
    
    24,918
    
    
    
    
    
    
    
    166,520
    
    
    
    142,088
    
    
    
    21,318
    
    
    
    
    
    
    
    163,406Property and equipment, net
    
    
    21,957
    
    
    
    7,433
    
    
    
    
    
    
    
    29,390
    
    
    
    21,238
    
    
    
    5,914
    
    
    
    
    
    
    
    27,152Intangible assets, net
    
    
    155,903
    
    
    
    11,433
    
    
    
    
    
    
    
    167,336
    
    
    
    166,216
    
    
    
    11,783
    
    
    
    
    
    
    
    177,999Goodwill
    
    
    261,327
    
    
    
    25,539
    
    
    
    
    
    
    
    286,866
    
    
    
    261,327
    
    
    
    25,539
    
    
    
    
    
    
    
    286,866Deferred debt financing costs
    
    
    9,106
    
    
    
    
    
    
    
    
    
    
    
    9,106
    
    
    
    10,197
    
    
    
    
    
    
    
    
    
    
    
    10,197Deferred tax asset, non-current
    
    
    
    
    
    
    252
    
    
    
    
    
    
    
    252Other
    
    
    1,988
    
    
    
    86
    
    
    
    (1,245
    )
    
    
    829
    
    
    
    423
    
    
    
    231
    
    
    
    
    
    
    
    654Investment in and advances to Non-
Guarantor subsidiaries
    
    
    55,698
    
    
    
    
    
    
    
    (55,698
    )
    
    
    
    
    
    
    56,162
    
    
    
    
    
    
    
    (56,162
    )
    
    
    Total assets
    
    $
    647,581
    
    
    $
    69,661
    
    
    $
    (56,943
    )
    
    $
    660,299
    
    
    $
    657,651
    
    
    $
    64,785
    
    
    $
    (56,162
    )
    
    $
    666,274Liabilities and Stockholders EquityCurrent liabilities:Accounts payable and accrued
expenses
    
    $
    56,452
    
    
    $
    10,917
    
    
    $
    
    
    
    $
    67,369
    
    
    $
    65,357
    
    
    $
    7,815
    
    
    $
    
    
    
    $
    73,172Accrued interest
    
    
    7,896
    
    
    
    
    
    
    
    
    
    
    
    7,896
    
    
    
    8,304
    
    
    
    
    
    
    
    
    
    
    
    8,304Deferred tax liability
    
    
    3,721
    
    
    
    
    
    
    
    
    
    
    
    3,721
    
    
    
    3,962
    
    
    
    
    
    
    
    
    
    
    
    3,962Advance payments on contracts
    
    
    1,156
    
    
    
    1,126
    
    
    
    
    
    
    
    2,282
    
    
    
    1,952
    
    
    
    743
    
    
    
    
    
    
    
    2,695Total current liabilities
    
    
    69,225
    
    
    
    12,043
    
    
    
    
    
    
    
    81,268
    
    
    
    79,575
    
    
    
    8,558
    
    
    
    
    
    
    
    88,133Long-term debt, net of current portion
    
    
    420,366
    
    
    
    
    
    
    
    
    
    
    
    420,366
    
    
    
    420,366
    
    
    
    
    
    
    
    
    
    
    
    420,366Other long-term liabilities
    
    
    7,053
    
    
    
    1,920
    
    
    
    (1,245
    )
    
    
    7,728
    
    
    
    7,814
    
    
    
    160
    
    
    
    (95
    )
    
    
    7,879Deferred tax liability
    
    
    8,782
    
    
    
    
    
    
    
    
    
    
    
    8,782
    
    
    
    5,259
    
    
    
    
    
    
    
    
    
    
    
    5,259Total liabilities
    
    
    505,426
    
    
    
    13,963
    
    
    
    (1,245
    )
    
    
    518,144
    
    
    
    513,014
    
    
    
    8,718
    
    
    
    (95
    )
    
    
    521,637Stockholders equity
    
    
    142,155
    
    
    
    55,698
    
    
    
    (55,698
    )
    
    
    142,155
    
    
    
    144,637
    
    
    
    56,067
    
    
    
    (56,067
    )
    
    
    144,637Total liabilities and stockholders
equity
    
    $
    647,581
    
    
    $
    69,661
    
    
    $
    (56,943
    )
    
    $
    660,299
    
    
    $
    657,651
    
    
    $
    64,785
    
    
    $
    (56,162
    )
    
    $
    666,274
  18




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##### Table of Contents



Issuer and Non-Guarantor Financial Information
Condensed Combining Statements of Operations
(unaudited)
 Three Months Ended June 27, 2009
    
    
    Three Months Ended June 28, 2008Non-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Guar-
    
    
    Elimin-
    
    
    
    
    
    
    
    
    
    
    Guar-
    
    
    Elimin-Issuer
    
    
    antors
    
    
    ations
    
    
    Total
    
    
    Issuer
    
    
    antors
    
    
    ations
    
    
    TotalRevenue
    
    $
    124,737
    
    
    $
    16,273
    
    
    $
    
    
    
    $
    141,010
    
    
    $
    103,017
    
    
    $
    20,917
    
    
    $
    
    
    
    $
    123,934Cost of revenue
    
    
    106,619
    
    
    
    15,652
    
    
    
    
    
    
    
    122,271
    
    
    
    87,903
    
    
    
    18,031
    
    
    
    
    
    
    
    105,934Gross profit
    
    
    18,118
    
    
    
    621
    
    
    
    
    
    
    
    18,739
    
    
    
    15,114
    
    
    
    2,886
    
    
    
    
    
    
    
    18,000General and administrative expenses
    
    
    9,328
    
    
    
    1,216
    
    
    
    
    
    
    
    10,544
    
    
    
    11,438
    
    
    
    1,035
    
    
    
    
    
    
    
    12,473Selling and marketing expenses
    
    
    3,945
    
    
    
    620
    
    
    
    
    
    
    
    4,565
    
    
    
    3,322
    
    
    
    753
    
    
    
    
    
    
    
    4,075Operating income (loss)
    
    
    4,845
    
    
    
    (1,215
    )
    
    
    
    
    
    
    3,630
    
    
    
    354
    
    
    
    1,098
    
    
    
    
    
    
    
    1,452Interest (income) expense, net
    
    
    8,554
    
    
    
    (59
    )
    
    
    
    
    
    
    8,495
    
    
    
    8,822
    
    
    
    (45
    )
    
    
    
    
    
    
    8,777Income (loss) before income taxes
    
    
    (3,709
    )
    
    
    (1,156
    )
    
    
    
    
    
    
    (4,865
    )
    
    
    (8,468
    )
    
    
    1,143
    
    
    
    
    
    
    
    (7,325
    )Provision (benefit) for income taxes
    
    
    1,645
    
    
    
    (398
    )
    
    
    
    
    
    
    1,247
    
    
    
    1,542
    
    
    
    (314
    )
    
    
    
    
    
    
    1,228Equity in net income (loss) of
Non-Guarantor subsidiaries
    
    
    (758
    )
    
    
    
    
    
    
    758
    
    
    
    
    
    
    
    1,457
    
    
    
    
    
    
    
    (1,457
    )
    
    
    Net income (loss)
    
    $
    (6,112
    )
    
    $
    (758
    )
    
    $
    758
    
    
    $
    (6,112
    )
    
    $
    (8,553
    )
    
    $
    1,457
    
    
    $
    (1,457
    )
    
    $
    (8,553
    )
 Six Months Ended June 27, 2009
    
    
    Six Months Ended June 28, 2008Non-
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-Guar-
    
    
    Elimin-
    
    
    
    
    
    
    
    
    
    
    Guar-
    
    
    Elimin-Issuer
    
    
    antors
    
    
    ations
    
    
    Total
    
    
    Issuer
    
    
    antors
    
    
    ations
    
    
    TotalRevenue
    
    $
    247,974
    
    
    $
    30,508
    
    
    $
    
    
    
    $
    278,482
    
    
    $
    227,799
    
    
    $
    39,610
    
    
    $
    
    
    
    $
    267,409Cost of revenue
    
    
    205,586
    
    
    
    28,589
    
    
    
    
    
    
    
    234,175
    
    
    
    189,028
    
    
    
    34,072
    
    
    
    
    
    
    
    223,100Gross profit
    
    
    42,388
    
    
    
    1,919
    
    
    
    
    
    
    
    44,307
    
    
    
    38,771
    
    
    
    5,538
    
    
    
    
    
    
    
    44,309General and administrative expenses
    
    
    18,867
    
    
    
    1,968
    
    
    
    
    
    
    
    20,835
    
    
    
    24,204
    
    
    
    2,053
    
    
    
    
    
    
    
    26,257Selling and marketing expenses
    
    
    7,597
    
    
    
    1,285
    
    
    
    
    
    
    
    8,882
    
    
    
    6,603
    
    
    
    1,603
    
    
    
    
    
    
    
    8,206Operating income (loss)
    
    
    15,924
    
    
    
    (1,334
    )
    
    
    
    
    
    
    14,590
    
    
    
    7,964
    
    
    
    1,882
    
    
    
    
    
    
    
    9,846Interest (income) expense, net
    
    
    16,903
    
    
    
    (37
    )
    
    
    
    
    
    
    16,866
    
    
    
    17,814
    
    
    
    (87
    )
    
    
    
    
    
    
    17,727Income (loss) before income taxes
    
    
    (979
    )
    
    
    (1,297
    )
    
    
    
    
    
    
    (2,276
    )
    
    
    (9,850
    )
    
    
    1,969
    
    
    
    
    
    
    
    (7,881
    )Provision (benefit) for income taxes
    
    
    3,282
    
    
    
    (410
    )
    
    
    
    
    
    
    2,872
    
    
    
    3,054
    
    
    
    42
    
    
    
    
    
    
    
    3,096Equity in net income (loss) of
Non-Guarantor subsidiaries
    
    
    (887
    )
    
    
    
    
    
    
    887
    
    
    
    
    
    
    
    1,927
    
    
    
    
    
    
    
    (1,927
    )
    
    
    Net income (loss)
    
    $
    (5,148
    )
    
    $
    (887
    )
    
    $
    887
    
    
    $
    (5,148
    )
    
    $
    (10,977
    )
    
    $
    1,927
    
    
    $
    (1,927
    )
    
    $
    (10,977
    )
 Issuer and Non-Guarantor Financial Information
Condensed Combining Statements of Cash Flows
(unaudited)
 Six Months Ended June 27, 2009
    
    
    Six Months Ended June 28, 2008Non
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NonGuar-
    
    
    Elimin-
    
    
    
    
    
    
    
    
    
    
    Guar-
    
    
    Elimin-Issuer
    
    
    antors
    
    
    ations
    
    
    Total
    
    
    Issuer
    
    
    antors
    
    
    ations
    
    
    TotalNet cash provided by (used in)
operating activities
    
    $
    7,147
    
    
    $
    (72
    )
    
    $
    
    
    
    $
    7,075
    
    
    $
    16,607
    
    
    $
    4,569
    
    
    $
    
    
    
    $
    21,176Net cash used in investing
activities
    
    
    (3,369
    )
    
    
    (1,925
    )
    
    
    (1,245
    )
    
    
    (6,539
    )
    
    
    (8,590
    )
    
    
    (387
    )
    
    
    
    
    
    
    (8,977
    )Net cash used in financing
activities
    
    
    (130
    )
    
    
    (1,278
    )
    
    
    1,245
    
    
    
    (163
    )
    
    
    (7,972
    )
    
    
    
    
    
    
    
    
    
    
    (7,972
    )Effect of exchange rate changes
on cash and cash equivalents
    
    
    
    
    
    
    258
    
    
    
    
    
    
    
    258
    
    
    
    
    
    
    
    106
    
    
    
    
    
    
    
    106Net increase (decrease) in
cash and cash equivalents
    
    
    3,648
    
    
    
    (3,017
    )
    
    
    
    
    
    
    631
    
    
    
    45
    
    
    
    4,288
    
    
    
    
    
    
    
    4,333Cash and cash equivalents,
beginning of period
    
    
    15,519
    
    
    
    5,615
    
    
    
    
    
    
    
    21,134
    
    
    
    19,022
    
    
    
    7,071
    
    
    
    
    
    
    
    26,093Cash and cash equivalents,
end of period
    
    $
    19,167
    
    
    $
    2,598
    
    
    $
    
    
    
    $
    21,765
    
    
    $
    19,067
    
    
    $
    11,359
    
    
    $
    
    
    
    $
    30,426
  19




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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, 2008.
 Overview
      Nature of our Contracts
    20




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Cost-plus
    
    
    48
    %
    
    
    46
    %
    
    
    49
    %
    
    
    47
    %Fixed-price
    
    
    47
    %
    
    
    50
    %
    
    
    46
    %
    
    
    49
    %Time and materials
    
    
    5
    %
    
    
    4
    %
    
    
    5
    %
    
    
    4
    %100
    %
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 Contract Backlog
  June 27, 2009
    
    
    December 31, 2008Total
    
    
    Funded
    
    
    Total
    
    
    FundedGovernment Group
    
    $
    1,914.9
    
    
    $
    143.1
    
    
    $
    1,321.0
    (1)
    
    $
    243.3
    (1)International Group
    
    
    381.5
    
    
    
    277.9
    
    
    
    360.3
    
    
    
    262.8Human Capital Group
    
    
    13.2
    
    
    
    13.2
    
    
    
    16.7
    
    
    
    16.7$
    2,309.6
    
    
    $
    434.2
    
    
    $
    1,698.0
    (1)
    
    $
    522.8
    (1)
 (1)
    
    Reflects a revision to reduce total contract backlog and funded backlog by $70.1 million,
compared with amounts previously reported in our annual report on Form 10-K for the year ended
December 31, 2008.  21




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##### Table of Contents



Results of Operations
  Three Months Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    Increase
    
    
    June 27,
    
    
    June 28,
    
    
    Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    2009
    
    
    2008
    
    
    (Decrease)Statements of Operations DataRevenue
    
    $
    141,010
    
    
    $
    123,934
    
    
    $
    17,076
    
    
    $
    278,482
    
    
    $
    267,409
    
    
    $
    11,073Cost of revenue
    
    
    122,271
    
    
    
    105,934
    
    
    
    16,337
    
    
    
    234,175
    
    
    
    223,100
    
    
    
    11,075Gross profit
    
    
    18,739
    
    
    
    18,000
    
    
    
    739
    
    
    
    44,307
    
    
    
    44,309
    
    
    
    (2
    )General and administrative
expenses
    
    
    10,544
    
    
    
    12,473
    
    
    
    (1,929
    )
    
    
    20,835
    
    
    
    26,257
    
    
    
    (5,422
    )Selling and marketing expenses
    
    
    4,565
    
    
    
    4,075
    
    
    
    490
    
    
    
    8,882
    
    
    
    8,206
    
    
    
    676Operating income
    
    
    3,630
    
    
    
    1,452
    
    
    
    2,178
    
    
    
    14,590
    
    
    
    9,846
    
    
    
    4,744Interest expense, net
    
    
    8,495
    
    
    
    8,777
    
    
    
    (282
    )
    
    
    16,866
    
    
    
    17,727
    
    
    
    (861
    )Loss before income taxes
    
    
    (4,865
    )
    
    
    (7,325
    )
    
    
    2,460
    
    
    
    (2,276
    )
    
    
    (7,881
    )
    
    
    5,605Provision for income taxes
    
    
    1,247
    
    
    
    1,228
    
    
    
    19
    
    
    
    2,872
    
    
    
    3,096
    
    
    
    (224
    )Net loss
    
    $
    (6,112
    )
    
    $
    (8,553
    )
    
    $
    2,441
    
    
    $
    (5,148
    )
    
    $
    (10,977
    )
    
    $
    5,829Statements of Operations Data
as a Percent of RevenueRevenue
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    
    
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenue
    
    
    86.7
    
    
    
    85.5
    
    
    
    
    
    
    
    84.1
    
    
    
    83.4Gross profit margin
    
    
    13.3
    
    
    
    14.5
    
    
    
    
    
    
    
    15.9
    
    
    
    16.6General and administrative
expenses
    
    
    7.5
    
    
    
    10.0
    
    
    
    
    
    
    
    7.5
    
    
    
    9.8Selling and marketing expenses
    
    
    3.2
    
    
    
    3.3
    
    
    
    
    
    
    
    3.2
    
    
    
    3.1Operating income margin
    
    
    2.6
    
    
    
    1.2
    
    
    
    
    
    
    
    5.2
    
    
    
    3.7Interest expense, net
    
    
    6.0
    
    
    
    7.1
    
    
    
    
    
    
    
    6.1
    
    
    
    6.6Loss before income taxes
    
    
    (3.4
    )
    
    
    (5.9
    )
    
    
    
    
    
    
    (0.9
    )
    
    
    (2.9
    )Provision for income taxes
    
    
    0.9
    
    
    
    1.0
    
    
    
    
    
    
    
    0.9
    
    
    
    1.2Net loss
    
    
    (4.3
    )%
    
    
    (6.9
    )%
    
    
    
    
    
    
    (1.8
    )%
    
    
    (4.1
    )%
 Three and Six Months Ended June 27, 2009 and June 28, 2008
 Revenue
      22




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##### Table of Contents



Cost of Revenue
   General and Administrative Expenses
   Selling and Marketing Expenses
  Operating Income
  Interest Expense, Net
   23




---



##### Table of Contents



Provision for Income Taxes
  Three Months Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    June 27,
    
    
    June 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Provision (benefit) for income taxes excluding tax valuation allowance
    
    $
    (441
    )
    
    $
    (1,074
    )
    
    $
    456
    
    
    $
    (1,622
    )Tax valuation allowance
    
    
    1,688
    
    
    
    2,302
    
    
    
    2,416
    
    
    
    4,718Total provision for income taxes
    
    $
    1,247
    
    
    $
    1,228
    
    
    $
    2,872
    
    
    $
    3,096
  Net Loss
   24




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##### Table of Contents



Business Segments
  Three Months Ended
    
    
    Six Months EndedJune 27,
    
    
    June 28,
    
    
    Increase
    
    
    June 27,
    
    
    June 28,
    
    
    Increase2009
    
    
    2008
    
    
    (Decrease)
    
    
    2009
    
    
    2008
    
    
    (Decrease)Revenue by business
segmentGovernment Group
    
    $
    115,581
    
    
    $
    95,764
    
    
    $
    19,817
    
    
    $
    233,347
    
    
    $
    212,896
    
    
    $
    20,451International Group
    
    
    16,434
    
    
    
    20,991
    
    
    
    (4,557
    )
    
    
    30,752
    
    
    
    39,782
    
    
    
    (9,030
    )Human Capital Group
    
    
    10,364
    
    
    
    7,179
    
    
    
    3,185
    
    
    
    16,857
    
    
    
    14,731
    
    
    
    2,126Elimination
    
    
    (1,369
    )
    
    
    
    
    
    
    (1,369
    )
    
    
    (2,474
    )
    
    
    
    
    
    
    (2,474
    )$
    141,010
    
    
    $
    123,934
    
    
    $
    17,076
    
    
    $
    278,482
    
    
    $
    267,409
    
    
    $
    11,073Business segment
revenue
as a percent
of total revenueGovernment Group
    
    
    82.0
    %
    
    
    77.3
    %
    
    
    4.7
    %
    
    
    83.8
    %
    
    
    79.6
    %
    
    
    4.2
    %International Group
    
    
    11.7
    
    
    
    16.9
    
    
    
    (5.2
    )
    
    
    11.0
    
    
    
    14.9
    
    
    
    (3.9
    )Human Capital Group
    
    
    7.3
    
    
    
    5.8
    
    
    
    1.5
    
    
    
    6.1
    
    
    
    5.5
    
    
    
    0.6Other
    
    
    (1.0
    )
    
    
    
    
    
    
    (1.0
    )
    
    
    (0.9
    )
    
    
    
    
    
    
    (0.9
    )100.0
    %
    
    
    100.0
    %
    
    

    
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    Operating income
(loss) by business segmentGovernment Group
    
    $
    6,057
    
    
    $
    1,285
    
    
    $
    4,772
    
    
    $
    18,360
    
    
    $
    9,527
    
    
    $
    8,833International Group
    
    
    (1,745
    )
    
    
    497
    
    
    
    (2,242
    )
    
    
    (2,458
    )
    
    
    709
    
    
    
    (3,167
    )Human Capital Group
    
    
    (669
    )
    
    
    (316
    )
    
    
    (353
    )
    
    
    (1,285
    )
    
    
    (360
    )
    
    
    (925
    )3,643
    
    
    
    1,466
    
    
    
    2,177
    
    
    
    14,617
    
    
    
    9,876
    
    
    
    4,741Corporate
    
    
    (13
    )
    
    
    (14
    )
    
    
    1
    
    
    
    (27
    )
    
    
    (30
    )
    
    
    3$
    3,630
    
    
    $
    1,452
    
    
    $
    2,178
    
    
    $
    14,590
    
    
    $
    9,846
    
    
    $
    4,744Operating income (loss) marginGovernment Group
    
    
    5.2
    %
    
    
    1.3
    %
    
    
    
    
    
    
    7.9
    %
    
    
    4.5
    %International Group
    
    
    (10.6
    )%
    
    
    2.4
    %
    
    
    
    
    
    
    (8.0
    )%
    
    
    1.8
    %Human Capital Group
    
    
    (6.5
    )%
    
    
    (4.4
    )%
    
    
    
    
    
    
    (7.6
    )%
    
    
    (2.4
    )%
 Government Group
    25




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##### Table of Contents



International Group
    Human Capital Group
    26




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##### Table of Contents



Liquidity and Capital Resources
    Working Capital
  June 27,
    
    
    December 31,2009
    
    
    2008Cash and cash equivalents
    
    $
    21,765
    
    
    $
    21,134Trade receivables, net
    
    
    124,755
    
    
    
    129,859Prepaid
expenses and other assets
    
    
    20,000
    
    
    
    12,413Accounts payable and accrued expenses
    
    
    (67,369
    )
    
    
    (73,172
    )Accrued interest payable
    
    
    (7,896
    )
    
    
    (8,304
    )Deferred tax liability
    
    
    (3,721
    )
    
    
    (3,962
    )Advance payments on contracts
    
    
    (2,282
    )
    
    
    (2,695
    )Working capital
    
    $
    85,252
    
    
    $
    75,273
  Cash Flows
  Six Months EndedJune 27,
    
    
    June 28,2009
    
    
    2008Net cash flows provided by (used in)Operating activities
    
    $
    7,075
    
    
    $
    21,176Investing activities
    
    
    (6,539
    )
    
    
    (8,977
    )Financing activities
    
    
    (163
    )
    
    
    (7,972
    )
 Operating Activities
   27




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##### Table of Contents



Investing Activities
  Financing Activities
  Long-Term Debt
     28




---



##### Table of Contents



Interest Rate Swaps on Variable-Rate Term Loan under Senior Secured Credit Facility
  Fixed
    
    
    VariableNotional
    
    
    Interest Rate
    
    
    Interest RateDate Entered
    
    Amount
    
    
    to be Paid
    
    
    to be Received
    
    
    Period CoveredFebruary 2007
    
    $
    140.0
    
    
    
    5.215
    %
    
    3-month LIBOR
    
    February 2007 to February 2008120.0
    
    
    
    5.215
    %
    
    3-month LIBOR
    
    February 2008 to February 2009110.0
    
    
    
    5.215
    %
    
    3-month LIBOR
    
    February 2009 to February 2010April 2008
    
    $
    75.0
    
    
    
    3.280
    %
    
    3-month LIBOR
    
    April 2008 to February 2010150.0
    
    
    
    3.280
    %
    
    3-month LIBOR
    
    February 2010 to February 2011
   Credit Ratings
  Standard &Poors
    
    
    MoodysSenior secured credit facility
    
    BB
    
    Ba3Senior subordinated notes due 2015
    
    B-
    
    CaalCorporate credit
    
    B+
    
    B2Outlook
    
    Stable
    
    Negative
  29




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##### Table of Contents



Contractual Obligations
  Payments Due by Period2009(remaining
    
    
    2010 and
    
    
    2012 andTotal
    
    
    six months)
    
    
    2011
    
    
    2013
    
    
    ThereafterLong-term debt:Term loan under senior secured credit facility (1)
    
    
    230.4
    
    
    $
    
    
    
    $
    4.2
    
    
    
    
    
    
    $
    226.2
    
    
    $
    Senior subordinated notes due 2015
    
    
    190.0
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    190.0Interest relating to long-term debt (2)
    
    
    143.5
    
    
    
    16.3
    
    
    
    55.0
    
    
    
    
    
    
    
    44.8
    
    
    
    27.4Operating and capital leases
    
    
    76.5
    
    
    
    10.4
    
    
    
    33.1
    
    
    
    
    
    
    
    18.7
    
    
    
    14.3Purchase commitments (3)
    
    
    23.0
    
    
    
    8.8
    
    
    
    14.2
    
    
    
    
    
    
    
    
    
    
    
    $
    663.4
    
    
    $
    35.5
    
    
    $
    106.5
    
    
    
    
    
    
    $
    289.7
    
    
    $
    231.7
 (1)
    
    There were no borrowings under the revolving credit facility at June 27, 2009. Scheduled
payments for the term loan under the senior secured credit facility do not give effect to
possible future additional mandatory prepayments resulting from excess cash flow.(2)
    
    Future interest payments consist of interest on the variable-rate term loan under the senior
secured credit facility, the related interest rate swaps, and the fixed rate of 9 5/8% for
the senior subordinated notes.(3)
    
    Purchase commitments represent the minimum noncancelable obligations under service and other
agreements, primarily information technology and telecommunications services. Variable Interest Entities
  Off-Balance Sheet Arrangements
  Critical Accounting Policies
   Recent Accounting Pronouncements
   30




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Financial Instruments
  CarryingAmount
    
    
    Fair ValueLong-term debtVariable-rate term loan under senior secured credit facility
    
    $
    230.4
    
    
    $
    230.49 5/8% senior subordinated notes, due February 15, 2015
    
    
    190.0
    
    
    
    158.4$
    420.4
    
    
    $
    388.8Interest rate swap agreements to pay fixed and receive variableShort-term liabilities
    
    $
    5.6
    
    
    $
    5.6Long-term liabilities
    
    
    2.2
    
    
    
    2.2$
    7.8
    
    
    $
    7.8Foreign currency forward contractsShort-term liabilities
    
    $
    0.7
    
    
    $
    0.7
  Interest Rate Risk
   Foreign Currency Risk
    31




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##### Table of Contents



Inflation Risk
  
 ITEM 4T.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Financial Reporting
  
 PART II  OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  
 ITEM 1A.
    
    RISK FACTORS
  Our operations may suffer significant disruption as a
result of a serious pandemic.
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   32




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##### Table of Contents



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. 
 SIGNATURE
  Vangent, Inc.August  11, 2009
    /s/ James C. ReaganJames C. ReaganSenior Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)  33




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##### 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.
  34