UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, DC 20549
      Form 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended
    March 31, 2008.   Commission File Number 333 - 89756
      
  Alion Science and Technology
    Corporation
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

54 - 2061691(State or Other Jurisdiction
    of
    Incorporation of Organization)

(I.R.S. Employer
    Identification No.)10 West
    35th Street
    Chicago, IL  60616
    (312) 567  4000

1750 Tysons Boulevard, Suite 1300
    McLean, VA  22102
    (703) 918 - 4480  (Address, including Zip Code and
    Telephone Number with
 Area Code, of Principal
    Executive Offices)
      (Former name, former address and
    former fiscal year, if changed since last report)
  o þ
  12b-2
  Large
    accelerated
    filer o
    Accelerated
    filer o
    Non-accelerated
    filer þ
    Smaller
    reporting
    company o   Rule 12b-2 o þ




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  FORM 10-Q
  FOR THE
    QUARTER ENDED MARCH 31, 2008
  PART I  FINANCIAL INFORMATION


2Item 1.


Financial Statements (unaudited)


2Condensed Consolidated Balance Sheets (unaudited)


2Condensed Consolidated Statements of Operations (unaudited)


3Condensed Consolidated Statements of Cash Flows (unaudited)


4Notes to Condensed Consolidated Financial Statements (unaudited)


5Item 2.


Managements Discussion and Analysis of Financial Condition
    and Results of Operations


30Item 3.


Quantitative and Qualitative Disclosures About Market Risk


47Item 4.


Controls and Procedures


47Item 4T.


Controls and Procedures


48PART II  OTHER INFORMATION


49Item 1.


Legal Proceedings


49Item 1A.


Risk Factors


49Item 2.


Unregistered Sales of Equity Securities and Use of Proceeds


49Item 3.


Defaults Upon Senior Securities


49Item 4.


Submission of Matters to a Vote of Security Holders


49Item 5.


Other Information


49Item 6.


Exhibits


49  1




---



##### 



PART I 
    FINANCIAL INFORMATION  Item 1.
    Financial
    Statements (unaudited)  ALION
    SCIENCE AND TECHNOLOGY CORPORATION
 CONDENSED
    CONSOLIDATED BALANCE SHEETS
    As of March 31, 2008 and September 30, 2007  March 31,


September 30,2008


2007(In thousands, except share and per share information)(Unaudited)Current assets:Cash and cash equivalents

$
3,178


$
11,684Accounts receivable, net


236,014



186,660Stock subscriptions receivable


1



3,378Prepaid expenses and other current assets


3,875



3,634Total current assets


243,068



205,356Property, plant and equipment, net


19,531



19,552Intangible assets, net


48,290



55,659Goodwill


398,816



395,926Other assets


7,299



7,477Total assets


717,004



683,970Current liabilities:Interest payable


7,412



12,111Current portion, Term B senior term loan payable


2,430



2,430Interest rate swap liability


5,422



Current portion, acquisition obligations


6,939



4,832Trade accounts payable


69,640



46,104Accrued liabilities


42,248



33,238Accrued payroll and related liabilities


44,640



43,702Billings in excess of costs and estimated earnings on
    uncompleted contracts


2,384



2,059Total current liabilities


181,115



144,476Notes payable to bank


22,850



9,250Term B senior term loan payable, excluding current portion


237,567



238,356Senior unsecured notes


243,919



243,483Subordinated note payable


53,562



51,313Accrued compensation, excluding current portion


10,715



15,483Accrued postretirement benefit obligations


1,201



1,175Non-current portion of lease obligations


6,261



6,203Redeemable common stock warrants


33,909



33,610Redeemable common stock, $0.01 par value,
    8,000,000 shares authorized, 5,105,008 and
    5,012,934 shares issued and outstanding at March 31,
    2008 and September 30, 2007


209,305



200,768Accumulated deficit


(283,400
)


(260,147
)Total liabilities, redeemable common stock and accumulated
    deficit

$
717,004


$
683,970    2




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
 CONDENSED
    CONSOLIDATED STATEMENTS OF OPERATIONS  Three Months Ended


Six Months EndedMarch 31,


March 31,2008


2007


2008


2007(In thousands, except share and per share information)(Unaudited)Contract revenue

$
189,243


$
187,899


$
372,388


$
369,038Direct contract expense


143,030



141,512



283,412



281,613Gross profit


46,213



46,387



88,976



87,425Operating expenses:Indirect contract expense


11,076



11,697



20,959



21,172Research and development


295



647



456



1,301General and administrative


16,965



15,047



32,706



31,968Rental and occupancy expense


7,742



8,211



15,413



16,476Depreciation and amortization


5,333



5,684



10,360



11,339Total operating expenses


41,411



41,286



79,894



82,256Operating income


4,802



5,101



9,082



5,169Other income (expense):Interest income


117



26



272



142Interest expense


(13,831
)


(14,691
)


(27,107
)


(29,049
)Loss on extinguishment of debt






(6,170
)






(6,170
)Other


(893
)


46



(747
)


120Total other income (expenses)


(14,607
)


(20,789
)


(27,582
)


(34,957
)Loss before income taxes


(9,805
)


(15,688
)


(18,500
)


(29,788
)Income tax expense






(6
)


(11
)


(18
)Net loss

$
(9,805
)

$
(15,694
)

$
(18,511
)

$
(29,806
)Basic and diluted loss per share


(1.96
)


(3.07
)


(3.69
)


(5.77
)Basic and diluted weighted average common shares outstanding


5,012,671



5,119,838



5,012,753



5,165,179    3




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
 CONDENSED
    CONSOLIDATED STATEMENTS OF CASH FLOWS  Six Months Ended March 31,2008


2007(In thousands)(Unaudited)Cash flows from operating activities:Net loss

$
(18,511
)

$
(29,806
)Adjustments to reconcile net loss to net cash used in operating
    activities:Depreciation and amortization


10,360



11,339Accretion of debt to face value


503



479Amortization of debt issuance costs


884



1,899Loss on extinguishment of debt






6,170Decrease in value of interest rate cap






164Loss on interest rate swap


933



Change in fair value of redeemable common stock warrants


298



2,309Stock-based compensation


4,324



6,447Gain on disposal of assets






(18
)Gain on sale of investments, net






(10
)Changes in assets and liabilities, net of effect of acquisitions:Accounts receivable, net


(49,352
)


(33,996
)Other assets


(63
)


(1,516
)Trade accounts payable


23,537



11,170Accrued liabilities


5,839



4,629Interest payable


(4,699
)


4,195Other liabilities


2,155



2,152Net cash used in operating activities


(23,792
)


(14,393
)Cash flows from investing activities:Cash paid for acquisition related obligations


(980
)


(8,073
)Capital expenditures


(2,714
)


(4,493
)Net cash used in investing activities


(3,694
)


(12,566
)Cash flows from financing activities:Proceeds from Term B Senior Credit Facility note payable






15,000Proceeds from Senior Unsecured Notes






250,000Cash received from interest rate swap


4,488



Repayment of Term B Credit Facility note payable


(1,237
)


(52,338
)Repayment of Bridge Loan






(170,000
)Payment of debt issuance costs






(10,154
)Net borrowings/(repayments) under revolving credit facility


13,600



(9,600
)Loan to ESOP Trust


(3,369
)


ESOP loan repayment


3,369



Purchase of redeemable common stock from ESOP Trust


(1,248
)


(6,660
)Cash received from sale of redeemable common stock to ESOP Trust


3,377



8,990Net cash provided by financing activities


18,980



25,238Net decrease in cash and cash equivalents


(8,506
)


(1,721
)Cash and cash equivalents at beginning of period


11,684



2,755Cash and cash equivalents at end of period

$
3,178


$
1,034Supplemental disclosure of cash flow information:Cash paid for interest


28,291



18,068Cash paid for taxes


11



30    4




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)
  (1)
    Description
    and Formation of the Business      (2)
    Summary
    of Significant Accounting Policies  Basis
    of Presentation and Principles of Consolidation
  Form 10-K/A
    Fiscal
    and Quarter Periods
    Use of
    Estimates
    Reclassifications
    Revenue
    Recognition
  time-and-material
 5




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  time-and-material
        SOP 81-1, Accounting for Performance on Construction-Type and Certain
    Production-Type Contracts
  Income
    Taxes
   6




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Cash
    and Cash Equivalents
    Accounts
    Receivable and Billings in Excess of Costs and Estimated
    Earnings on Uncompleted Contracts
    Property,
    Plant and Equipment
    Goodwill
    and Other Intangibles
  Goodwill and Other Intangible
    Assets
  Purchased contracts


1-13 yearsInternal use software and engineering designs


5-6 yearsNon-compete agreements


2-3 years   Postretirement
    Benefits
  Employers Accounting for Postretirement Benefits Other
    Than Pension Employers
    Accounting for Defined Benefit Pension and Other Postretirement
    Plans
 7




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    Redeemable
    Common Stock
    Concentration
    of Credit Risk and Fair Value of Financial
    Instruments
      Recently
    Issued Accounting Pronouncements
  Fair Value Measurements,
  The Fair Value Option for Financial
    Assets and Liabilities  including an amendment of
    FASB Statement No. 115,
 8




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    Business Combinations,
  Noncontrolling Interests in Consolidated Financial
    Statements,
    Disclosures
    about Derivative Instruments and Hedging Activities, Accounting for Derivative Instruments and Hedging Activities
  (3)
    Employee
    Stock Ownership Plan (ESOP) and Stock Ownership Trust   9




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  (4)
    Postretirement
    Benefits      (5)
    Loss Per
    Share    (6)
    Redeemable
    common stock owned by ESOP Trust       10




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  (7)
    Accounts
    Receivable  March 31,


September 30,2008


2007(In thousands)Billed receivables

$
148,806


$
126,430Unbilled receivables:Amounts currently billable


50,369



40,539Revenues recorded in excess of milestone billings on fixed price
    contracts


2,757



2,059Revenues recorded in excess of estimated contract value or
    funding


28,475



17,661Retainages and other amounts billable upon contract completion


10,700



5,243Allowance for doubtful accounts


(5,093
)


(5,272
)Total Accounts Receivable

$
236,014


$
186,660     (8)
    Property,
    Plant and Equipment  March 31,


September 30,2008


2007(In thousands)Leasehold improvements

$
7,499


$
7,212Equipment and software


33,815



31,388Total cost


41,314



38,600Less: accumulated depreciation and amortization


(21,783
)


(19,048
)Net fixed assets

$
19,531


$
19,552    11




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  (9)
    Goodwill
    and Intangible Assets    Total(In thousands)Balance as of October 1, 2007

$
395,926Adjustment to initial allocation made during the six months
    ended March 31, 2008 (includes earn-out obligations)


2,890Balance as of March 31, 2008

$
398,816     March 31, 2008


September 30, 2007Accumulated








AccumulatedGross


Amortization


Net


Gross


Amortization


Net(In thousands)Purchased contracts

$
111,519


$
(64,457
)

$
47,062


$
111,519


$
(57,296
)

$
54,223Internal use software and engineering designs


2,155



(985
)


1,170



2,155



(790
)


1,365Non-compete agreements


725



(667
)


58



725



(654
)


71Total

$
114,399


$
(66,109
)

$
48,290


$
114,399


$
(58,740
)

$
55,659     (In thousands)For the remaining six months:

2008

$
7,115For the year ending September 30:

2009


12,4952010


10,9852011


6,8432012


5,7672013


3,247and thereafter


1,840Total:

$
48,292   (10)
    Long-Term
    Debt  Term B
    Senior Credit Facility
   12




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    Interest and Fees.
  Financial Covenants.
  Senior
    Unsecured Notes
    Interest and Fees.
  Interest
    Payable
    March 31,


September 30,2008


2007(In thousands)Senior Unsecured Notes

$
4,271


$
4,271Term B Senior Credit Facility


3,141



7,840Total

$
7,412


$
12,111   Subordinated
    Note
  payment-in-kind
 13




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    2008


2009


2010


2011


2012


2013


Thereafter


Total(In thousands)Senior Secured Term B Loan(1)

$
1,237


$
2,474


$
2,474


$
2,474


$
2,474


$
233,134


$



$
244,267Senior Unsecured Notes


























250,000



250,000Subordinated Seller Note






19,950



19,950



















39,900Subordinated Paid in Kind Note






7,402



7,402



















14,804Total Principal Payments

$
1,237


$
29,826


$
29,826


$
2,474


$
2,474


$
233,134


$
250,000


$
548,971     (1)
    
    The table does not reflect any prepayments of the senior term
    loan based on excess cash flow or other conditions as the timing
    and amount of any such payments are uncertain.  (11)
    Interest
    Rate Swap        (12)
    Redeemable
    Common Stock Warrants  No. 00-19, Accounting for Derivative Financial Instruments Indexed to,
    and Potentially Settled in, a Companys Own Stock.
 14




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
    (13)
    Leases    Future
    Minimum Lease Payments
  Fiscal Years Ending

(In thousands)2008 (for the remainder of fiscal year)

$
12,5912009


23,3752010


19,7402011


16,9402012


13,3922013


12,278and thereafter


23,747Gross lease payments


122,063Less: non-cancelable subtenant receipts


(6,411
)Net lease payments

$
115,652   Composition
    of Total Rent Expense
  March 31,2008


2007(In thousands)Minimum rentals

$
12,365


$
13,007Less: Sublease rental income


(1,755
)


(1,282
)Total rent expense, net

$
10,610


$
11,725   (14)
    Stock
    Appreciation Rights   15




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Share-Based Payment
 16




---



##### 





ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Alion
    Science and Technology Corporation
    Stock-based Compensation Disclosures per FAS 123 and
    FAS 123R
    Stock Appreciation Rights
    As of March 31, 2008
  Shares


Shares


TotalGranted to


Granted to


Shares


Exercise


Outstanding


Outstanding











Vested


ExercisableDate of Grant

Employees


Directors


Granted


Price


at 9/30/07


at 3/31/08


Forfeited


Exercised


Expired


at 3/31/08


at 3/31/08December 2002


64,450







64,450


$
10.00



38,705



14,500



1,740



22,465







14,500



14,500December 2002






29,400



29,400


$
10.00



























May 2003


300







300


$
11.13



90











90











June 2003


300







300


$
11.13



























November 2003


129,550







129,550


$
14.71



81,721



72,655



1,426



7,640







55,050



9,677November 2003






12,600



12,600


$
14.71



























November 2004






12,600



12,600


$
19.94



8,400











8,400











February 2005


164,750







164,750


$
19.94



109,800



104,400



2,025



3,375







75,400



March 2005


2,000







2,000


$
19.94



2,000



2,000















1,500



April 2005


33,000







33,000


$
29.81



24,000



22,500



500



1,000







9,000



June 2005


2,000







2,000


$
29.81



2,000



2,000















1,000



December 2005


276,675







276,675


$
35.89



229,288



217,896



6,567



4,825







109,881



February 2006


13,000







13,000


$
35.89



10,250



9,625



625











5,125



February 2006


7,500







7,500


$
35.89



5,000



4,375



625











2,500



May 2006


7,000







7,000


$
37.06



7,000



7,000















1,750



July 2006


15,000







15,000


$
37.06



15,000



12,750



2,250











3,750



August 2006


1,250







1,250


$
37.06



1,250







938



313











October 2006


2,500







2,500


$
41.02



2,500



2,500















625



December 2006


239,290







239,290


$
41.02



225,600



215,700



9,075



825







54,713



February 2007


33,450







33,450


$
41.02



31,700



29,263



2,437











7,925



May 2007


2,000







2,000


$
43.37



2,000



2,000



















September 2007


2,000







2,000


$
43.37



2,000



2,000



















December 2007


232,385







232,385


$
40.05







223,835



8,550















Total


1,228,400



54,600



1,283,000







798,304



944,999



36,758



48,933







342,719



24,177Wtd Avg Exercise Price

$
31.93


$
13.38


$
31.14






$
31.61


$
34.30


$
35.56


$
16.78


$



$
28.60


$
11.89  17




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)


Alion
    Science and Technology Corporation
    Stock-based Compensation Disclosures per FAS 123 and
    123R
    Stock Appreciation Rights
    As of March 31, 2008
  Risk Free








Remaining LifeDate of Grant

Interest Rate


Volatility


Expected Life


(months)December 2002


4.06
%


-



4.49
%


60
%


5 yrs



0.0December 2002


4.06
%


-



4.49
%


60
%


3 yrs



0.0May 2003


2.70
%


-



3.30
%


55
%


5 yrs



1.3June 2003


2.70
%


-



3.30
%


55
%


5 yrs



2.1November 2003


4.06
%


-



4.49
%


60
%


5 yrs



7.7November 2003


4.06
%


-



4.49
%


60
%


3 yrs



0.0November 2004


3.10
%


-



3.60
%


45
%


3 yrs



0.0February 2005


3.10
%


-



3.60
%


45
%


4 yrs



10.1March 2005


3.10
%


-



3.60
%


45
%


4 yrs



11.2April 2005


4.10
%


-



4.20
%


45
%


4 yrs



12.0June 2005


4.10
%


-



4.20
%


45
%


4 yrs



14.2December 2005


4.20
%


-



4.20
%


40
%


4 yrs



20.7February 2006


4.20
%


-



4.20
%


40
%


4 yrs



22.4February 2006


4.20
%


-



4.20
%


40
%


4 yrs



22.8May 2006


4.82
%


-



4.83
%


35
%


4 yrs



25.6July 2006


4.82
%


-



4.83
%


35
%


4 yrs



27.0August 2006


4.82
%


-



4.83
%


35
%


4 yrs



28.9October 2006


4.82
%


-



4.83
%


35
%


4 yrs



30.8December 2006


4.54
%


-



4.58
%


35
%


4 yrs



32.7February 2007


4.54
%


-



4.58
%


35
%


4 yrs



34.8May 2007


4.54
%


-



4.58
%


35
%


4 yrs



37.6September 2007


4.54
%


-



4.54
%


35
%


4 yrs



44.1December 2007


4.23
%


-



4.23
%


35
%


4 yrs



44.8Wtd Avg Remaining Life (months)






















27.1   (15)
    Phantom
    Stock Plans     18




---



##### 






ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Alion
    Science and Technology Corporation
    Stock-based Compensation Disclosures per FAS 123 and
    FAS 123R
    Phantom Stock
    as of March 31, 2008
  GrantShares


Shares


Total


DateGranted to


Granted to


Shares


Price per


Outstanding


Outstanding











Vested


ExercisableDate of Grant

Employees


Directors


Granted


Share


at 9/30/07


at 3/31/08


Forfeited


Exercised


Expired


at 3/31/08


at 3/31/08February 2003


171,000







171,000


$
10.00



26,000



26,000















26,000



26,000November 2003


52,685







52,685


$
14.71



19,715



13,256







6,459







5,438



5,438February 2005


213,215







213,215


$
19.94



188,140



188,140















188,140



151,990February 2005


98,399







98,399


$
19.94



98,399



98,399















98,399



98,399February 2005


5,015







5,015


$
19.94



5,015



5,015















3,761



August 2005


2,960







2,960


$
33.78



2,960



2,960















1,974



November 2005


66,592







66,592


$
35.89



62,413



62,413



















November 2005






7,808



7,808


$
35.89



6,181



5,531







651







3,253



3,253November 2005


55,726







55,726


$
35.89



55,726



55,726



















November 2006






5,978



5,978


$
41.02



5,978



5,409







569







1,423



1,423November 2006


65,456







65,456


$
41.02



60,580



60,580



















November 2007






6,993



6,993


$
40.05







6,993



















November 2007


42,447







42,447


$
40.05







42,447



















January 2008


2,497







2,497


$
40.05







2,497



















Total


775,993



20,779



796,772







531,107



575,366







7,676







328,388



286,503Wtd Avg Grant Date Fair Value Price per Share

$
22.90


$
38.77


$
23.32






$
25.71


$
27.10


$



$
18.46


$



$
19.40


$
19.22  19




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)


Alion
    Science and Technology Corporation
    Stock-based Compensation Disclosures per FAS 123 and
    FAS 123R
    Phantom Stock
    as of March 31, 2008
  Risk Free








Remaining LifeDate of Grant

Interest Rate


Volatility


Expected Life


(months)February 2003


4.06
%


-



4.49
%


60
%


5 yrs



November 2003


4.06
%


-



4.49
%


60
%


5 yrs



7.3February 2005


3.10
%


-



3.60
%


45
%


3 yrs



February 2005


3.10
%


-



3.60
%


45
%


3 yrs



February 2005


3.10
%


-



3.60
%


45
%


4 yrs



10.1August 2005


3.72
%


-



3.77
%


45
%


3 yrs



4.1November 2005


4.20
%


-



4.20
%


40
%


3 yrs



7.3November 2005


4.20
%


-



4.20
%


40
%


3 yrs



7.3November 2005


4.20
%


-



4.20
%


40
%


5 yrs



31.3November 2006


4.54
%


-



4.58
%


35
%


3 yrs



19.5November 2006


4.54
%


-



4.58
%


35
%


3 yrs



19.5November 2007


4.23
%


-



4.23
%


35
%


3 yrs



31.4November 2007


4.23
%


-



4.23
%


35
%


3 yrs



31.4November 2007


4.23
%


-



4.23
%


35
%


3 yrs



33.5Total Wtd Avg Remaining Life (months)






















9.3   (16)
    Segment
    Information and Customer Concentration      (17)
    Guarantor/Non-guarantor
    Condensed Consolidated Financial Information   20




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Balance Sheet Information at March 31,
    2008
  Non-Guarantor


GuarantorParent


Companies


Companies


Eliminations


Consolidated(In thousands)Current assets:Cash and cash equivalents

$
3,173


$
(16
)

$
21


$



$
3,178Accounts receivable


226,446



6,192



3,376







236,014Stock subscriptions receivable


1















1Prepaid expenses and other current assets


3,744



113



18







3,875Total current assets


233,364



6,289



3,415







243,068Property, plant and equipment, net


19,249



234



48







19,531Intangible assets, net


48,290















48,290Goodwill


398,816















398,816Investment in subsidiaries


9,307











(9,307
)


Intercompany receivables






6,513







(6,513
)


Other assets


7,283



16











7,299Total assets


716,309



13,052



3,463



(15,820
)


717,004Current liabilities:Interest payable


7,412















7,412Current portion, Term B Senior Credit Facility note payable


2,430















2,430Interest rate swap liability


5,422















5,422Current portion, acquisition obligations


6,939















6,939Trade accounts payable


68,339



885



416







69,640Accrued liabilities


40,097



1,404



747







42,248Accrued payroll and related liabilities


43,640



775



225







44,640Billings in excess of costs and estimated earnings on
    uncompleted contracts


2,384















2,384Total current liabilities


176,663



3,064



1,388







181,115Intercompany payables


3,835



839



1,839



(6,513
)


Notes payable to bank


22,850















22,850Term B Senior Credit Facility note payable, excluding current
    portion


237,567















237,567Senior Unsecured Notes


243,919















243,919Subordinated note payable


53,562















53,562Accrued compensation, excluding current portion


10,715















10,715Accrued postretirement benefit obligations


1,201















1,201Non-current portion of lease obligations


6,183



64



14







6,261Redeemable common stock warrants


33,909















33,909Common stock of subsidiaries






2,799



1



(2,800
)


Redeemable Common stock


209,305















209,305Accumulated surplus (deficit)


(283,400
)


6,286



221



(6,507
)


(283,400
)Total liabilities, redeemable common stock and accumulated
    deficit

$
716,309


$
13,052


$
3,463


$
(15,820
)

$
717,004  21




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Balance Sheet Information at September 30,
    2007
  Non-Guarantor


GuarantorParent


Companies


Companies


Eliminations


Consolidated(In thousands)Current assets:Cash and cash equivalents

$
11,718


$
(33
)

$
(1
)

$



$
11,684Accounts receivable


180,431



6,224



5







186,660Stock subscriptions receivable


3,378















3,378Prepaid expenses and other current assets


3,569



64



1







3,634Total current assets


199,096



6,255



5







205,356Property, plant and equipment, net


19,350



202











19,552Intangible assets, net


55,659















55,659Goodwill


395,926















395,926Investment in subsidiaries


7,679











(7,679
)


Intercompany receivables






5,996







(5,996
)


Other assets


7,461



16











7,477Total assets


685,171



12,469



5



(13,675
)


683,970Current liabilities:Interest payable


12,111















12,111Current portion, Term B Senior Credit Facility note payable


2,430















2,430Current portion, acquisition obligations


4,832















4,832Trade accounts payable


45,124



980











46,104Accrued liabilities


31,638



1,594



6







33,238Accrued payroll and related liabilities


42,582



968



152







43,702Billings in excess of costs and estimated earnings on
    uncompleted contracts


2,059















2,059Total current liabilities


140,776



3,542



158







144,476Intercompany payables


5,760







236



(5,996
)


Notes payable to bank


9,250















9,250Term B Senior Credit Facility note payable, excluding current
    portion


238,356















238,356Senior Unsecured Notes


243,483















243,483Subordinated note payable


51,313















51,313Accrued compensation, excluding current portion


14,733



750











15,483Accrued postretirement benefit obligations


1,175















1,175Non-current portion of lease obligations


6,094



109











6,203Redeemable common stock warrants


33,610















33,610Common stock of subsidiaries






2,799







(2,799
)


Redeemable common stock


200,768















200,768Accumulated surplus (deficit)


(260,147
)


5,269



(389
)


(4,880
)


(260,147
)Total liabilities, redeemable common stock and accumulated
    deficit

$
685,171


$
12,469


$
5


$
(13,675
)

$
683,970  22




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Statement of Operations
    for the Three Months Ended March 31, 2008
  Non-Guarantor


GuarantorParent


Companies


Companies


Eliminations


Consolidated(In thousands)Contract revenue

$
180,487


$
6,422


$
2,334


$



$
189,243Direct contract expense


136,744



4,544



1,742







143,030Gross profit


43,743



1,878



592







46,213Operating expenses:Indirect contract expense


9,830



1,011



235







11,076Research and development


291







4







295General and administrative


16,794



190



(19
)






16,965Rental and occupancy expense


7,737







5







7,742Depreciation and amortization


5,278



52



3







5,333Total operating expenses


39,930



1,253



228







41,411Operating income (loss)


3,813



625



364







4,802Other income (expense):Interest income


117















117Interest expense


(13,831
)














(13,831
)Other


(954
)


61











(893
)Equity in net income of subsidiaries


1,050











(1,050
)


Total other income (expense)


(13,618
)


61







(1,050
)


(14,607
)Income/(Loss) before income taxes


(9,805
)


686



364



(1,050
)


(9,805
)Income tax benefit (expense)


















Net income (loss)

$
(9,805
)

$
686


$
364


$
(1,050
)

$
(9,805
)  23




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Statement of Operations
    for the Three Months Ended March 31, 2007
  Non-Guarantor


GuarantorParent


Companies


Companies


Eliminations


Consolidated(In thousands)Contract revenue

$
181,032


$
6,814


$
53


$



$
187,899Direct contract expense


136,489



4,995



28







141,512Gross profit


44,543



1,819



25







46,387Operating expenses:Indirect contract expense


10,317



1,276



104







11,697Research and development


636



2



9







647General and administrative


14,748



344



(45
)






15,047Rental and occupancy expense


8,202







9







8,211Depreciation and amortization


5,650



34











5,684Total operating expenses


39,553



1,656



77







41,286Operating income (loss)


4,990



163



(52
)






5,101Other income (expense):Interest income


26















26Interest expense


(14,691
)














(14,691
)Loss on extinguishment of debt


(6,170
)














(6,170
)Other


426



(276
)


(104
)






46Equity in net income (loss) of subsidiaries


(270
)










270



Total other income (expense)


(20,679
)


(276
)


(104
)


270



(20,789
)Income/(Loss) before income taxes


(15,689
)


(113
)


(156
)


270



(15,688
)Income tax expense


(5
)


(1
)










(6
)Net income (loss)

$
(15,694
)

$
(114
)

$
(156
)

$
270


$
(15,694
)  24




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Statement of Operations
    for the Six Months Ended March 31, 2008
  Non-Guarantor


GuarantorParent


Companies


Companies


Eliminations


Consolidated(In thousands)Contract revenue


355,488



12,771



4,129






$
372,388Direct contract expense


271,313



9,093



3,006







283,412Gross profit


84,175



3,678



1,123







88,976Operating expenses:Indirect contract expense


18,186



2,279



494







20,959Research and development


452







4







456General and administrative


32,251



454



1







32,706Rental and occupancy expense


15,406







7







15,413Depreciation and amortization


10,281



73



6







10,360Total operating expenses


76,576



2,806



512







79,894Operating income (loss)


7,599



872



611







9,082Other income (expense):Interest income


272















272Interest expense


(27,107
)














(27,107
)Other


(891
)


145



(1
)






(747
)Equity in net income (loss) of subsidiaries


1,627











(1,627
)


Total other income (expenses)


(26,099
)


145



(1
)


(1,627
)


(27,582
)Income/(Loss) before income taxes


(18,500
)


1,017



610



(1,627
)


(18,500
)Income tax expense


(11
)














(11
)Net income (loss)


(18,511
)


1,017



610



(1,627
)


(18,511
)  25




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Statement of Operations
    for the Six Months Ended March 31, 2007
  Non-Guarantor


GuarantorParent


Companies


Companies


Eliminations


Consolidated(In thousands)Contract revenue

$
355,165


$
13,738


$
135


$



$
369,038Direct contract expense


271,532



9,991



90







281,613Gross profit


83,633



3,747



45







87,425Operating expenses:Indirect contract expense


18,696



2,348



128







21,172Research and development


1,240



2



59







1,301General and administrative


31,299



706



(37
)






31,968Rental and occupancy expense


16,460







16







16,476Depreciation and amortization


11,272



67











11,339Total operating expenses


78,967



3,123



166







82,256Operating income (loss)


4,666



624



(121
)






5,169Other income (expense):Interest income


142















142Interest expense


(29,049
)














(29,049
)Loss on extinguishment of debt


(6,170
)














(6,170
)Other


661



(537
)


(4
)






120Equity in net income (loss) of subsidiaries


(26
)










26



Total other income (expense)


(34,442
)


(537
)


(4
)


26



(34,957
)Income (loss) before income taxes


(29,776
)


87



(125
)


26



(29,788
)Income tax benefit/(expense)


(30
)


12











(18
)Net income (loss)

$
(29,806
)

$
99


$
(125
)

$
26


$
(29,806
)  26




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Statement of Cash Flows
    Six Months Ended March 31, 2008
  Non-Guarantor


GuarantorParent


Companies


Companies


Consolidated(In thousands)Net cash (used in)/provided by operating activities

$
(23,977
)

$
108


$
77


$
(23,792
)Cash flows from investing activities:Cash paid for acquisitions, net of cash acquired


(980
)










(980
)Capital expenditures


(2,568
)


(91
)


(55
)


(2,714
)Net cash used in investing activities


(3,548
)


(91
)


(55
)


(3,694
)Cash flows from financing activities:Cash received from interest rate swap


4,488











4,488Repayment of Term B Credit Facility note payable


(1,237
)










(1,237
)Net borrowings under revolving credit facility


13,600











13,600Loan to ESOP Trust


(3,369
)










(3,369
)ESOP Loan Repayment


3,369











3,369Purchase of shares of common stock from ESOP Trust


(1,248
)










(1,248
)Cash received from issuance of common stock to Trust


3,337











3,337Net cash provided by financing activities


18,980











18,980Net (decrease)/increase in cash and cash equivalents


(8,545
)


17



22



(8,506
)Cash and cash equivalents at beginning of year


11,718



(33
)


(1
)


11,684Cash and cash equivalents at end of year

$
3,173


$
(16
)

$
21


$
3,178  27




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
  Condensed
    Consolidating Statement of Cash Flows
    Six Months Ended March 31, 2007
  Non-Guarantor


GuarantorParent


Companies


Companies


Consolidated(In thousands)Net cash used in operating activities

$
(14,298
)

$
(31
)

$
(64
)

$
(14,393
)Cash flows from investing activities:Cash paid for acquisitions, net of cash acquired


(8,073
)










(8,073
)Capital expenditures


(4,493
)










(4,493
)Net cash used in investing activities


(12,566
)










(12,566
)Cash flows from financing activities:Proceeds from Term B Senior Credit Facility note payable


15,000











15,000Proceeds from Senior Unsecured Notes


250,000











250,000Repayment of Term B Credit Facility note payable


(52,338
)










(52,338
)Repayment of Bridge Loan


(170,000
)










(170,000
)Payment of debt issuance costs


(10,154
)










(10,154
)Net repayments under revolving credit facility


(9,600
)










(9,600
)Purchase of common stock from ESOP Trust


(6,660
)










(6,660
)Cash received from sale of common stock to ESOP Trust


8,990











8,990Net cash provided by financing activities


25,238











25,238Net decrease in cash and cash equivalents


(1,626
)


(31
)


(64
)


(1,721
)Cash and cash equivalents at beginning of year


2,728



(32
)


59



2,755Cash and cash equivalents at end of year

$
1,102


$
(63
)

$
(5
)

$
1,034   (18)
    Commitments
    and Contingencies  Earn-Out
    and Hold-Back Commitments
      Legal
    Proceedings
  Estate of Joseph Hudert vs. Alion Science and Technology
    Corporation; Estate of Frank Stotmeister vs. Alion Science and
    Technology Corporation.
   28




---



##### 



ALION
    SCIENCE AND TECHNOLOGY CORPORATION
  NOTES TO
    CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED)  (Continued)
            Government
    Audits
   29




---



##### 



Item 2.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K/A
  Overview
  time-and-material
  Six MonthsThree Months Ended March 31


Ended March 31,2008


2007


2008


2007(In millions)Revenue

$
189.2


$
187.9


$
372.4


$
369.0Net loss

$
(9.8
)

$
(15.7
)

$
(18.5
)

$
(29.8
)     For the Six Months Ended March 31,Revenue by Contract Type

2008


2007(In millions)Cost-reimbursement

$
262.2



70.4
%

$
243.6



66.0
%Fixed-price


39.3



10.6
%


69.2



18.8
%Time-and-material


70.9



19.0
%


56.2



15.2
%Total

$
372.4



100.0
%

$
369.0



100.0
%     For the Six Months Ended March 31,Revenue by Customer Type

2008


2007(In millions)U.S. Department of Defense (DoD)

$
328.9



88.3
%

$
332.9



90.2
%Other Federal Civilian Agencies


12.4



3.3
%


15.9



4.3
%Commercial/State/Local and International


31.1



8.4
%


20.2



5.5
%Total


372.4



100.0
%

$
369.0



100.0
%  30




---



##### 



Results
    of Operations
  Three
    Months Ended March 31, 2008 Compared to Three Months Ended
    March 31, 2007
  Consolidated Operations of AlionThree Months Ended March 31,2008


2007(Dollars in millions)%





%Selected Financial Information




revenue





revenueTotal Revenue

$
189.2






$
187.9Material and subcontract revenue


80.1



42.3
%


71.2



37.9
%Total direct contract expenses


143.0



75.6
%


141.5



75.3
%Major components of direct contract expensesDirect labor expense


60.3



31.9
%


65.5



34.9
%Material and subcontract expense


77.0



40.7
%


70.6



37.6
%Other direct expense


5.7



3.0
%


5.4



2.9
%Gross profit


46.2



24.4
%


46.4



24.7
%Total operating expense


41.4



21.9
%


41.3



22.0
%Major components of operating expenseIndirect personnel and facilities


18.8



9.9
%


19.9



10.6
%General and administrative (excluding stock- based compensation)


14.7



7.8
%


12.2



6.5
%Stock-based compensation


2.3



1.2
%


2.9



1.5
%Depreciation and amortization


5.3



2.8
%


5.7



3.0
%Income from operations

$
4.8



2.5
%

$
5.1



2.7
%   Revenue.
      Direct Contract Expenses.
  Gross Profit.
 31




---



##### 



Operating Expenses.
  Income from Operations.
  Other Expense.
  Three Months EndedMarch 31,2008


2007(In millions)Term B  Revolving facility

$
0.8


$
0.5Term B  Senior term loan


4.6



5.1- amortization of debt issuance costs


0.2



1.2Bridge loan






2.2Senior unsecured note


6.4



3.8- amortization of debt issuance costs


0.2



0.2Subordinated note  PIK interest


0.7



0.6-long-term deferred interest


0.2



0.2-amortization of debt issuance costs


0.3



0.3Accretion of warrants(a)


0.4



0.3Other


0.0



0.3Total

$
13.8


$
14.7     (a)
    
    Includes change in value assigned to the detachable warrants
    associated with the Subordinated Note based on the change in the
    value of Alion common stock and the number of warrants
    outstanding.  Income Tax Expense.
  Net Loss.
 32




---



##### 



Six
    Months Ended March 31, 2008 Compared to Six Months Ended
    March 31, 2007
  Consolidated Operations of AlionSix Months Ended March 31,2008


2007(Dollars in millions)%





%Financial Information




revenue





revenueTotal Revenue

$
372.4






$
369.0Material and subcontract revenue


159.6



42.9
%


149.8



40.6
%Total direct contract expenses


283.4



76.1
%


281.6



76.3
%Major components of direct contract expensesDirect labor expense


118.9



31.9
%


126.7



34.3
%Material and subcontract expense


153.6



41.2
%


144.6



39.2
%Other direct expense


10.9



2.9
%


10.3



2.8
%Gross profit


89.0



23.9
%


87.4



23.7
%Total operating expense


79.9



21.5
%


82.3



22.3
%Major components of operating expenseIndirect personnel and facilities


36.4



9.8
%


37.6



10.2
%General and administrative (excluding stock-based compensation)


28.4



7.6
%


25.5



6.9
%Stock-based compensation


4.3



1.2
%


6.4



1.7
%Depreciation and amortization


10.4



2.8
%


11.3



3.1
%Income from operations

$
9.1



2.4
%

$
5.1



1.4
%   Revenues.
      Direct Contract Expenses.
  Gross Profit.
 33




---



##### 



Operating Expenses.
  Income from Operations.
  Other Expense.
  Six Months EndedMarch 31,2008


2007(In millions)Term B  Revolving facility

$
1.5


$
1.3Term B  Senior term loan


9.3



11.9- amortization of debt issuance costs


0.5Bridge loan






6.8Senior unsecured note


12.8



4.0- amortization of debt issuance costs


0.4Subordinated note  PIK interest


1.3



1.2-long-term deferred interest


0.4



0.4-amortization of debt issuance costs


0.5



0.5Accretion of warrants(a)


0.3



2.3Other


0.1



0.6Total

$
27.1


$
29.0     (a)
    
    Reflects change in value assigned to the detachable warrants
    associated with the Subordinated Note based on the change in the
    value of Alion common stock and the number of warrants
    outstanding.  Income Tax Expense.
  Net Loss.
 34




---



##### 



Liquidity
    and Capital Resources
    Cash
    Flows.
           35




---



##### 



Cash
    flow effects and risks associated with equity-related
    obligations
            Discussion
    of Debt Structure
    Term
    B Senior Credit Facility
    
    a senior term loan in the approximate amount of
    $244.3 million
    a $50.0 million senior revolving credit facility of which
    approximately $23.4 million was unused . At March 31,
    2008, the Company had used approximately $3.7 million for
    letters of credit and had borrowed approximately
    $22.9 million.
    a $110.0 million uncommitted incremental term loan
    accordion facility 36




---



##### 




    In April 2005, the first amendment (Amendment One) made certain
    changes and added $72.0 million in senior term loans to the
    Companys total Term B Senior Credit Facility debt.
    In March 2006, the second amendment (Amendment Two) made certain
    changes, increased the senior term loan commitment by
    $68.0 million (drawn in full by the Company) and increased
    the revolving credit commitment from $30.0 million to
    $50.0 million.
    On June 30, 2006, the third amendment (Amendment Three)
    made certain changes and added $50.0 million in senior term
    loans to the Companys total Term B Senior Credit Facility
    debt.
    On January 4, 2007, the fourth increment (Increment Four)
    added $15.0 million in senior term loans to the
    Companys total Term B Senior Credit Facility debt.
    On February 6, 2007, the fourth amendment (Amendment Four)
    made certain changes, extended the maturity date of the senior
    term loans to February 6, 2013, adjusted the principal
    repayment schedule to require a balloon principal repayment at
    maturity, and added an incurrence test as an additional
    condition to the Companys ability to incur permitted
    indebtedness.
    On July 17, 2007, the Company entered into a fifth
    incremental term loan facility (Increment Five), which added
    $25.0 million in senior term loans to the Term B Senior
    Credit Facility.    Interest and Fees.
  Senior Term Loan.
 37




---



##### 



Senior Revolving Credit Facility.
  Federal Funds

Prime Rate ABREurodollar Spread

ABR Spread

SpreadLeverage Ratio

(in basis points)

(in basis points)

(in basis points)Category 1


250



225



150Greater than or equal to 3.00 to 1.00Category 2


250



200



150Greater than or equal to 2.50 to 1.00
    but less than 3.00 to 1.00Category 3


225



175



125Greater than or equal to 2.00 to 1.00
    but less than 2.50 to 1.00Category 4


200



150



100Less than 2.00 to 1.00     Interest Rate Swap.
  Other Fees and Expenses.
    Financial Covenants.
 38




---



##### 




    incur additional indebtedness other than permitted additional
    indebtedness after satisfying a leverage based incurrence test;
    consolidate, merge or sell all or substantially all of the
    Companys assets;
    make certain loans and investments including acquisitions of
    businesses, other than permitted acquisitions;
    pay dividends or distributions other than distributions needed
    for the ESOP to satisfy its repurchase obligations and for
    certain payments required under the Companys equity based
    incentive plans;
    enter into certain transactions with the Companys
    shareholders and affiliates;
    enter into certain transactions not permitted under ERISA;
    grant certain liens and security interests;
    enter into sale and leaseback transactions;
    change lines of business;
    repay subordinated indebtedness before it is due and redeem or
    repurchase certain equity;
    pay certain earn-outs in connection with permitted
    acquisitions; or
    use the proceeds of the Companys borrowings other than as
    permitted by the Term B Senior Credit Facility.  Events of Default.
  
    payment default;
    breach of representations and warranties;
    uncured covenant breaches;
    default under certain other debt exceeding an agreed amount;
    bankruptcy and insolvency events;
    notice of debarment, suspension or termination under a material
    government contract;
    certain ERISA violations;
    unstayed judgments in excess of an agreed amount;
    failure of the subordinated note to be subordinated to the Term
    B Senior Credit Facility;
    failure of any guarantee of the Term B Senior Credit Facility to
    be in effect;
    failure of the security interests to be valid, perfected first
    priority security interests in the collateral;
    failure of the Company to remain an S-corporation;
    imposition on the ESOP Trust of certain taxes in excess of an
    agreed amount;
    final determination that the ESOP is not a qualified plan;
    incurrence of a civil or criminal liability in excess of
    $5 million of the Company or any subsidiary arising from a
    government investigation;
    the actual termination of a material contract due to alleged
    fraud, willful misconduct, negligence, default or any other
    wrongdoing; or
    change of control (as defined below). 39




---



##### 



Subordinated
    Note  Redeemable Common Stock Warrants
    payment-in-kind
  No. 00-19, Accounting for Derivative Financial Instruments Indexed to,
    and Potentially Settled in, a Companys Own Stock
  Senior
    Unsecured Notes
    Interest and Fees.
  Covenants.
  
    incur or guarantee additional indebtedness; 40




---



##### 




    pay dividends on capital stock or redeem, repurchase or retire
    capital stock or subordinated indebtedness, except in certain
    circumstances for the junior subordinated notes and junior
    warrants;
    repurchase or redeem shares of Company stock in connection with
    distributions and diversifications from the ESOP component of
    the KSOP;
    transfer or sell assets including shares of stock of certain
    subsidiaries of the Company outside the ordinary course of
    business;
    make investments other than certain permitted investments;
    engage in business unrelated to the Companys existing
    business;
    incur certain liens and enter into sale/leaseback transactions;
    enter into certain transactions with affiliates;
    pay dividends and make their distributions and loans to the
    Company; and
    merge or consolidate with other companies.  Events of Default.
  
    payment default;
    uncured covenant breaches;
    default under an acceleration of certain other debt exceeding
    $30 million;
    certain bankruptcy and insolvency events;
    a judgment for payment in excess of $30 million entered
    against the Company or any material subsidiary that remains
    outstanding for a period of 60 days and is not discharged,
    waived or stayed; and
    failure of any guarantee of the Senior Unsecured Notes to be in
    effect or the denial or disaffirmation by any subsidiary
    guarantor of its guaranty obligations.  Change of Control.
  
    subject to certain exceptions, a person, other than the ESOP
    Trust, is or becomes the beneficial owner, directly or
    indirectly, of more than 35% of the total voting power or voting
    stock of the Company;
    individuals who on the date of issuance of the Senior Unsecured
    Notes constituted the board of directors of the Company, cease
    for any reason to constitute a majority of the board of
    directors of the Company;
    the adoption of a plan relating to the liquidation or
    dissolution of the Company; and
    subject to certain exceptions, the merger or consolidation of
    the Company with or into another person or the merger of another
    person with or into the Company, or the sale of all or
    substantially all the assets of the Company to another person. 41




---



##### 



6-Fiscal Year Period2008*


2009


2010


2011


2012


2013


Thereafter($ In thousands)Bank revolving credit facility- Interest(1)

$
1,000


$
1,357


$
1,012


$
464


$
250


$
250


$
500Senior Term Loan- Interest(2)


6,610



14,114



15,525



16,471



17,571



6,628



- Principal(3)


1,237



2,474



2,474



2,474



2,474



233,134Interest Rate Swap(4)


(968
)


1,202



















Senior Unsecured Notes- Interest


12,813



25,625



25,625



25,625



25,625



25,625



38,438- Principal


























250,000Subordinated Note(5)- Interest






6,384



3,192















- Principal






27,352



27,352















Total cash  Pay interest


19,455



48,682



45,354



42,560



43,446



32,503



38,938Total cash  Pay principal


1,237



29,826



29,826



2,474



2,474



233,134



250,000Total

$
20,692


$
78,508


$
75,180


$
45,034


$
45,920


$
265,637



288,938     *
    
    Estimated interest and principal payments for the remainder of
    fiscal year 2008.(1)
    
    The Company anticipates continually accessing its
    $50.0 million revolving credit facility to finance the
    Companys ongoing working capital needs. The remaining term
    of the revolving credit facility is approximately
    18 months; however, the Company expects to access a
    revolving credit facility as an on-going requirement to fund
    working capital at least through 2013. For the remainder of
    fiscal year 2008, the average balance drawn on the
    Companys revolving credit facility is projected to be
    approximately $25.0 million. The current revolving credit
    facility matures in fiscal year 2009. The Company expects to
    replace it with a similar facility. For fiscal years 2009 and
    2010, the average balance is estimated to be $15.5 million
    and $5.3 million. For the fiscal years 2011 through 2012,
    the Company anticipates the balance drawn on its then revolving
    credit facility will be minimal. For the years 2008 through
    2013, the projected effective Credit Suisse prime interest rate
    is estimated to be approximately 8.5%. Interest expense value
    includes an estimate for the unused balance fee on the
    $50.0 million revolving credit facility.(2)
    
    The projected average annual senior term loan balance the
    Company estimates will be drawn under the Term B Senior Credit
    Facility is as follows: $244.3 million,
    $241.8 million, $239.3 million, $236.8 million,
    and $234.4 million for the remainder of fiscal year 2008
    and for fiscal years ending September 30, 2009 through
    2012, respectively. The Company expects it will need to
    refinance the Term B Senior term loan before the end of fiscal
    year 2012 and expects interest expense to continue at levels
    similar to prior years. Based on an estimated LIBOR rate plus
    the Credit Suisse Eurodollar spread, the effective annual
    interest rate for the remainder of fiscal year 2008, and for
    fiscal years ending September 30, 2009 through 2012 is
    estimated to be approximately 5.4%, 5.8%, 6.5%, 7.0%, and 7.5%,
    respectively. The senior term loan matures February 6,
    2013. Estimated interest expense includes an estimate for the
    commitment fee on the senior term loan.(3)
    
    The Term B Senior Credit Facility requires the Company to repay
    approximately 1.0 percent of the principal balance
    outstanding under the senior term loan annually. On a cumulative
    basis, approximately 5.0% of the remaining principal will be
    paid during the remainder of fiscal year 2008, during fiscal
    years 2009 through 2012 and the first quarter of fiscal year
    2013. The remaining principal balance will be repaid on
    February 6, 2013, the senior term loan maturity date. The
    table reflects the balance drawn of $244.3 million as of
    March 31, 2008, resulting in expected aggregate annual
    principal payments of approximately $1.2 million for the
    remainder of fiscal year 2008, approximately $2.5 million
    in each of fiscal years 2009 through 2012, approximately 42




---



##### 



$0.6 million for the first quarter of fiscal year 2013, and
    the remaining principal balance of approximately
    $232.5 million on February 6, 2013. The Term B Senior
    Credit Facility also requires the Company to make mandatory
    prepayments of principal if the Company generates certain excess
    cash flow in a given fiscal year, issues or incurs certain debt
    or sells certain assets. As of March 31, 2008, no mandatory
    prepayments are due.(4)
    
    The interest rate swap has net settlements on May 1, 2008
    and November 1, 2008. The $1.0 million net receipt on
    May 1, 2008 is based on the existing floating rate (LIBOR
    plus basis point spread) of 7.32%. The $1.3 million net
    payment on November 1, 2008 is based on a rate of 5.49%.(5)
    
    The Company has announced it has begun discussions to
    re-negotiate the terms of the Subordinated Note.  Contingent
    Obligations
  Earn-out
    and Hold-back Commitments
      Other
    Contingent obligations which will impact the Companys
    cash
    
    obligations related to the holders put rights associated
    with the Subordinated Note warrants;
    obligations relating to the Companys stock based
    compensation plans; and
    repurchase obligations under the KSOP.    43




---



##### 



Number ofShares





Total ValueDate

Repurchased


Share Price


Purchased(In thousands)June 2003


5,248


$
11.13


$
58July 2003


2,696


$
11.13



30December 2003


50,031


$
14.71



736May 2004


117


$
16.56



2June 2004


727


$
16.56



12June 2004


743


$
16.56



12July 2004


48,309


$
16.56



800December 2004


46,816


$
19.94



934March 2005


5,691


$
19.94



113June 2005


45,846


$
29.81



1,367August 2005


1,090


$
33.78



37September 2005


170,657


$
33.78



5,765December 2005


211,537


$
35.89



7,592June 2006


273,800


$
37.06



10,147July 2006


32,420


$
37.06



1,201August 2006


1,747


$
37.06



65December 2006


2,243


$
41.02



92January 2007


14


$
41.02



1February 2007


157,320


$
41.02



6,453March 2007


73


$
41.02



3May 2007


238


$
43.37



10June 2007


152


$
43.37



7July 2007


276,877


$
43.37



12,008August 2007


251,248


$
43.37



10,897September 2007


15


$
43.37



1October 2007


90


$
43.37



4December 2007


210


$
40.05



8February 2008


648


$
40.05



26March 2008


19,961


$
40.05



799March 2008


10,011


$
41.00



410Total









$
59,590      44




---



##### 



Recent
    Accounting Pronouncements
  Fair Value Measurements,
  The Fair Value Option for Financial
    Assets and Liabilities  including an amendment of
    FASB Statement No. 115,
  Business Combinations,
  Noncontrolling Interests in Consolidated Financial
    Statements,
 45




---



##### 



Disclosures
    about Derivative Instruments and Hedging
    Activities, Accounting for Derivative Instruments and Hedging Activities
  Forward
    Looking Statements
      
    changes to the ERISA laws related to the Alion Science and
    Technology Corporation Employee Ownership, Savings and
    Investment Plan;
    changes to the tax laws relating to the treatment and
    deductibility of goodwill, the Companys subchapter S
    status, or any change in the Companys effective tax rate;
    additional costs associated with compliance with provisions of
    the Sarbanes-Oxley Act of 2002, including any changes in the
    SECs rules, and other corporate governance requirements;
    failure of government customers to exercise options under
    contracts;
    funding decisions relating to U.S. Government projects;
    government contract procurement (such as bid protest) and
    termination risks;
    competitive factors such as pricing pressures
    and/or
    competition to hire and retain employees;
    results of current
    and/or
    future legal proceedings and government agency proceedings which
    may arise out of the Companys operations and the attendant
    risks of fines, liabilities, penalties, suspension
    and/or
    debarment;
    undertaking acquisitions that could increase costs or
    liabilities or be disruptive;
    taking on additional debt to fund acquisitions;
    failure to adequately integrate acquired businesses;
    material changes in laws or regulations applicable to the
    Companys businesses;
    other risk factors discussed in the Companys annual report
    on Form 10-K
    for the year ended September 30, 2007 filed with the SEC on
    December 28, 2007.   46




---



##### 



Item 3.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    rate risk
      Foreign
    currency risk
    Risk
    associated with the value of Alion common stock
      Item 4.
    Controls
    and Procedures  Disclosure Controls and Procedures.
 47




---



##### 



Internal Control Over Financial
    Reporting.
  Institution of internal controls in compliance with
    Section 404 of Sarbanes-Oxley.
  Item 4T.
    Controls
    and Procedures   48




---



##### 



PART II 
    OTHER INFORMATION  Item 1.
    Legal
    Proceedings      Item 1A.
    Risk
    Factors    Item 2.
    Unregistered
    Sales of Equity Securities and Use of Proceeds  Form 8-K.
  Item 3.
    Defaults
    Upon Senior Securities    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Other
    Information    Item 6.
    Exhibits  Exhibit No.

Description31
.1

Certification of Chief Executive Officer of Alion Science and
    Technology Corporation pursuant to
    Rule 15d-14(a)
    promulgated under the Securities Exchange Act of 1934, as
    amended.31
.2

Certification of Principal Financial Officer of Alion Science
    and Technology Corporation pursuant to 15d-14(a) promulgated
    under the Securities Exchange Act of 1934, as amended.32
.1

Certification of Chief Executive Officer of Alion Science and
    Technology Corporation, 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 Principal Financial Officer of Alion Science
    and Technology Corporation, pursuant to 18 U.S.C.
    Section 1350 as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.99
.1

February 28, 2008 Conference Call Transcript 
    Operations Update Teleconference(1)     (1)
    
    Incorporated by reference to Current Report on
    Form 8-K
    filed by the Company on February 29, 2008. 49




---



##### 



SIGNATURES
      /s/  Michael
    J. Alber   Title:
    Principal Financial Officer     50