##### Table of Contents

---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---



FORM 10-Q



---



(Mark One)



|x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------



For the quarterly period ended March 31, 2004



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from
 to



Commission File No. 000-49604



---



ManTech International Corporation

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 22-1852179                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                         |  |           
|---------------------------------------- |  | ----------
|12015 Lee Jackson Highway, Fairfax, VA   |  | 22033     
|(Address of principal executive offices) |  | (Zip Code)



(703) 218-6000

(Registrants telephone number, including area code)



---



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ̈No



Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). x Yes ̈No



As of May 6, 2004, there were issued and outstanding 17,103,718 shares of our
Class A Common Stock and 15,075,293 shares of our Class B Common Stock.



---



1



---

##### Table of Contents

MANTECH INTERNATIONAL CORPORATION



INDEX



|                              |  |                                                                                       |  |         
|----------------------------- |  | ------------------------------------------------------------------------------------- |  | --------
|                              |  |                                                                                       |  | Page No.
|PART I
FINANCIAL INFORMATION |  | 3                                                                                    
|                              |  |                                                                                      
|Item 1.                       |  | Condensed Consolidated Financial Statements and Notes                                 |  | 3       
|                              |  |                                                                                      
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 11      
|                              |  |                                                                                      
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 15      
|                              |  |                                                                                      
|Item 4.                       |  | Controls and Procedures                                                               |  | 15      
|                              | 
|PART II
OTHER INFORMATION    |  | 16                                                                                   
|                              |  |                                                                                      
|Item 1.                       |  | Legal Proceedings                                                                     |  | 16      
|                              |  |                                                                                      
|Item 6.                       |  | Exhibits and Reports on Form 8-K                                                      |  | 16      



2



---

##### Table of Contents

PART I  FINANCIAL INFORMATION



|Item 1. | Condensed Consolidated Financial Statements and Notes
|------- | -----------------------------------------------------



MANTECH INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)



|                                           |  |               |         |   |                  |   |         |  
|------------------------------------------ |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                           |  | (unaudited)   |        
|                                           |  | March 31,2004 |         |   | December 31,2003 |  
|ASSETS                                     |  |               |         |   |                  |   |         |  
|CURRENT ASSETS:                            |  |               |         |   |                  |   |         |  
|Cash and cash equivalents                  |  | $             | 4,547   |   |                  | $ | 9,166   |  
|Cash in escrow                             |  |               | 830     |   |                  |   | 829     |  
|Receivablesnet                            |  |               | 212,959 |   |                  |   | 204,539 |  
|Prepaid expenses and other                 |  |               | 17,457  |   |                  |   | 17,527  |  
|Assets held for sale                       |  |               | 1,326   |   |                  |   | 1,332   |  
|                                           |  |               |         |   |                  |   |         |  
|Total current assets                       |  |               | 237,119 |   |                  |   | 233,393 |  
|Property and equipmentnet                 |  |               | 10,887  |   |                  |   | 10,920  |  
|Goodwill                                   |  |               | 151,047 |   |                  |   | 149,548 |  
|Other intangibles                          |  |               | 21,534  |   |                  |   | 15,741  |  
|Investments                                |  |               | 5,983   |   |                  |   | 5,560   |  
|Employee supplemental savings plan assets  |  |               | 11,496  |   |                  |   | 10,594  |  
|Other assets                               |  |               | 10,823  |   |                  |   | 10,378  |  
|                                           |  |               |         |   |                  |   |         |  
|TOTAL ASSETS                               |  | $             | 448,889 |   |                  | $ | 436,134 |  
|                                           |  |               |         |   |                  |   |         |  
|LIABILITIES AND STOCKHOLDERS EQUITY       |  |               |         |   |                  |   |         |  
|CURRENT LIABILITIES:                       |  |               |         |   |                  |   |         |  
|Current portion of debt                    |  | $             | 78      |   |                  | $ | 77      |  
|Accounts payable and accrued expenses      |  |               | 40,384  |   |                  |   | 45,157  |  
|Accrued salaries and related expenses      |  |               | 26,344  |   |                  |   | 30,548  |  
|Deferred income taxes                      |  |               | 26,300  |   |                  |   | 20,092  |  
|Billings in excess of revenue earned       |  |               | 5,880   |   |                  |   | 4,514   |  
|Liabilities held for sale                  |  |               | 1,128   |   |                  |   | 1,164   |  
|                                           |  |               |         |   |                  |   |         |  
|Total current liabilities                  |  |               | 100,114 |   |                  |   | 101,552 |  
|Debtnet of current portion                |  |               | 25,500  |   |                  |   | 25,184  |  
|Accrued retirement                         |  |               | 12,833  |   |                  |   | 11,914  |  
|Other long-term liabilities                |  |               | 5,660   |   |                  |   | 5,178   |  
|Deferred income taxes                      |  |               | 5,221   |   |                  |   | 4,553   |  
|Minority interest                          |  |               | 51      |   |                  |   | 49      |  
|                                           |  |               |         |   |                  |   |         |  
|TOTAL LIABILITIES                          |  |               | 149,379 |   |                  |   | 148,430 |  
|                                           |  |               |         |   |                  |   |         |  
|COMMITMENTS AND CONTINGENCIES              |  |               |         |   |                  |   |         |  
|STOCKHOLDERS EQUITY:                      |  |               |         |   |                  |   |         |  
|Common stock, Class A                      |  |               | 171     |   |                  |   | 170     |  
|Common stock, Class B                      |  |               | 151     |   |                  |   | 151     |  
|Additional paid in capital                 |  |               | 212,859 |   |                  |   | 212,564 |  
|Retained earnings                          |  |               | 87,342  |   |                  |   | 76,003  |  
|Accumulated other comprehensive loss       |  |               | (1,013  | ) |                  |   | (1,184  | )
|Deferred compensation                      |  |               | 640     |   |                  |   | 640     |  
|Shares held in grantor trust               |  |               | (640    | ) |                  |   | (640    | )
|                                           |  |               |         |   |                  |   |         |  
|TOTAL STOCKHOLDERS EQUITY                 |  |               | 299,510 |   |                  |   | 287,704 |  
|                                           |  |               |         |   |                  |   |         |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY |  | $             | 448,889 |   |                  | $ | 436,134 |  
|                                           |  |               |         |   |                  |   |         |  



See notes to condensed
consolidated financial statements.



3



---

##### Table of Contents

MANTECH INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in Thousands Except Per
Share Amounts)



|                                                               |  |                              |            |   |      |   |            |  
|-------------------------------------------------------------- |  | ---------------------------- | ---------- | - | ---- | - | ---------- | -
|                                                               |  | (unaudited)                  |           
|                                                               |  | Three months ended March 31, |           
|                                                               |  | 2004                         |            |   | 2003 |  
|REVENUES                                                       |  | $                            | 202,769    |   |      | $ | 148,123    |  
|COST OF SERVICES                                               |  |                              | 163,574    |   |      |   | 119,782    |  
|                                                               |  |                              |            |   |      |   |            |  
|GROSS PROFIT                                                   |  |                              | 39,195     |   |      |   | 28,341     |  
|                                                               |  |                              |            |   |      |   |            |  
|COSTS AND EXPENSES:                                            |  |                              |            |   |      |   |            |  
|General and administrative                                     |  |                              | 18,536     |   |      |   | 14,739     |  
|Depreciation and amortization                                  |  |                              | 1,298      |   |      |   | 935        |  
|                                                               |  |                              |            |   |      |   |            |  
|Total costs and expenses                                       |  |                              | 19,834     |   |      |   | 15,674     |  
|                                                               |  |                              |            |   |      |   |            |  
|INCOME FROM OPERATIONS                                         |  |                              | 19,361     |   |      |   | 12,667     |  
|Interest expense                                               |  |                              | 542        |   |      |   | 334        |  
|Other (income) expense                                         |  |                              | (302       | ) |      |   | 622        |  
|                                                               |  |                              |            |   |      |   |            |  
|INCOME BEFORE PROVISION FOR INCOME TAXES AND MINORITY INTEREST |  |                              | 19,121     |   |      |   | 11,711     |  
|Provision for income taxes                                     |  |                              | (7,779     | ) |      |   | (4,748     | )
|Minority interest                                              |  |                              | (2         | ) |      |   | (1         | )
|                                                               |  |                              |            |   |      |   |            |  
|NET INCOME                                                     |  | $                            | 11,340     |   |      | $ | 6,962      |  
|                                                               |  |                              |            |   |      |   |            |  
|BASIC EARNINGS PER SHARE                                       |  | $                            | 0.35       |   |      | $ | 0.22       |  
|                                                               |  |                              |            |   |      |   |            |  
|Weighted average common shares outstanding                     |  |                              | 32,129,949 |   |      |   | 31,915,814 |  
|                                                               |  |                              |            |   |      |   |            |  
|DILUTED EARNINGS PER SHARE                                     |  | $                            | 0.35       |   |      | $ | 0.22       |  
|                                                               |  |                              |            |   |      |   |            |  
|Weighted average common shares outstanding                     |  |                              | 32,358,250 |   |      |   | 31,935,340 |  
|                                                               |  |                              |            |   |      |   |            |  



See notes to condensed
consolidated financial statements.



4



---

##### Table of Contents

MANTECH INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in
Thousands)



|                                   |  |                             |        |      |   |       |  
|---------------------------------- |  | --------------------------- | ------ | ---- | - | ----- | -
|                                   |  | (unaudited)                 |       
|                                   |  | Three months endedMarch 31, |       
|                                   |  | 2004                        |        | 2003 |  
|NET INCOME                         |  | $                           | 11,340 |      | $ | 6,962 |  
|OTHER COMPREHENSIVE INCOME (LOSS): |  |                             |        |      |   |       |  
|Cash flow hedge                    |  |                             | 104    |      |   | 86    |  
|Translation adjustments            |  |                             | 67     |      |   | (35   | )
|                                   |  |                             |        |      |   |       |  
|Total other comprehensive income   |  |                             | 171    |      |   | 51    |  
|                                   |  |                             |        |      |   |       |  
|COMPREHENSIVE INCOME               |  | $                           | 11,511 |      | $ | 7,013 |  
|                                   |  |                             |        |      |   |       |  



See notes to condensed
consolidated financial statements.



5



---

##### Table of Contents

MANTECH INTERNATIONAL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)



|                                                                                           |  |                             |        |   |      |   |         |  
|------------------------------------------------------------------------------------------ |  | --------------------------- | ------ | - | ---- | - | ------- | -
|                                                                                           |  | (unaudited)                 |       
|                                                                                           |  | Three months endedMarch 31, |       
|                                                                                           |  | 2004                        |        |   | 2003 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                      |  |                             |        |   |      |   |         |  
|Net income                                                                                 |  | $                           | 11,340 |   |      | $ | 6,962   |  
|Adjustments to reconcile net income to net cash used in operating activities:              |  |                             |        |   |      |   |         |  
|Equity in (earnings) losses of affiliates                                                  |  |                             | (115   | ) |      |   | 874     |  
|Increase (Decrease) in deferred income taxes                                               |  |                             | 6,900  |   |      |   | (570    | )
|Minority interest in income of consolidated subsidiaries                                   |  |                             | 1      |   |      |   | 1       |  
|Loss on disposals of property and equipment                                                |  |                             | 4      |   |      |   |        |  
|Depreciation and amortization                                                              |  |                             | 1,710  |   |      |   | 1,412   |  
|Change in assets and liabilitiesnet of effects from acquired and discontinued businesses: |  |                             |        |   |      |   |         |  
|(Increase) in contract receivables                                                         |  |                             | (8,412 | ) |      |   | (9,627  | )
|(Increase) in prepaid expenses and other                                                   |  |                             | (1,279 | ) |      |   | (2,278  | )
|(Decrease) in accounts payable and accrued expenses                                        |  |                             | (6,253 | ) |      |   | (3,019  | )
|(Decrease) Increase in accrued salaries and related expenses                               |  |                             | (4,165 | ) |      |   | 3,079   |  
|Increase in billings in excess of revenue earned                                           |  |                             | 1,362  |   |      |   | 1,582   |  
|Increase in deferred rent                                                                  |  |                             | 49     |   |      |   | 9       |  
|Increase in accrued retirement                                                             |  |                             | 919    |   |      |   | 121     |  
|                                                                                           |  |                             |        |   |      |   |         |  
|Net cash provided by (used in) operating activities of operations                          |  |                             | 2,061  |   |      |   | (1,454  | )
|                                                                                           |  |                             |        |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                      |  |                             |        |   |      |   |         |  
|Investment in property and equipment                                                       |  |                             | (793   | ) |      |   | (879    | )
|Proceeds from sales of property and equipment                                              |  |                             | 1      |   |      |   |        |  
|Investment in capitalized software products                                                |  |                             | (111   | ) |      |   | (504    | )
|Acquisition of Businesses                                                                  |  |                             | (6,509 | ) |      |   | (66,691 | )
|                                                                                           |  |                             |        |   |      |   |         |  
|Net cash used in investing activities of operations                                        |  |                             | (7,412 | ) |      |   | (68,074 | )
|                                                                                           |  |                             |        |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                      |  |                             |        |   |      |   |         |  
|Payment of not-to-compete financings                                                       |  |                             |       |   |      |   | (1,000  | )
|Proceeds from exercise of stock options                                                    |  |                             | 256    |   |      |   |         |  
|Net increase in borrowings under lines of credit                                           |  |                             | 501    |   |      |   |        |  
|                                                                                           |  |                             |        |   |      |   |         |  
|Net cash provided by (used in) financing activities of operations                          |  |                             | 757    |   |      |   | (1,000  | )
|                                                                                           |  |                             |        |   |      |   |         |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS                               |  |                             | 4      |   |      |   | 33      |  
|                                                                                           |  |                             |        |   |      |   |         |  
|NET CASH (USED IN) PROVIDED BY DISCONTINUED OPERATIONS                                     |  |                             | (29    | ) |      |   | 2,050   |  
|                                                                                           |  |                             |        |   |      |   |         |  
|NET (DECREASE) IN CASH AND CASH EQUIVALENTS                                                |  |                             | (4,619 | ) |      |   | (68,445 | )
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                             |  |                             | 9,166  |   |      |   | 81,096  |  
|                                                                                           |  |                             |        |   |      |   |         |  
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                   |  | $                           | 4,547  |   |      | $ | 12,651  |  
|                                                                                           |  |                             |        |   |      |   |         |  



See notes to condensed
consolidated financial statements.



6



---

##### Table of Contents

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Three Months Ended March 31, 2004 and 2003 (unaudited)



1. Introduction and Overview



ManTech is a leading provider of innovative technologies and solutions for mission-critical national security programs for the intelligence community, the Department of
Defense, Department of State and other U.S. federal government customers. The Companys expertise includes software development, enterprise security architecture, information assurance, intelligence operations support, network and critical
infrastructure protection, information technology, communications integration and engineering support. With more than 5,000 highly qualified employees, the Company operates in the United States and over 30 countries worldwide.



2. Basis of Presentation



The accompanying unaudited condensed consolidated financial statements of the Company have
been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in the annual financial statements, prepared in accordance with accounting principles generally
accepted in the United States of America, have been condensed or omitted pursuant to those rules and regulations. We recommend that you read these unaudited condensed consolidated financial statements in conjunction with the financial statements and
related notes included in our annual report on Form 10-K, for the fiscal year ended December 31, 2004, previously filed with the SEC. We believe that the unaudited condensed consolidated financial statements in this Form 10-Q reflect all adjustments
(consisting of normal recurring adjustments and some non-recurring adjustments discussed elsewhere herein) that are necessary to present fairly the financial position, results of operations and cash flows for the interim periods. The results of
operations for such interim periods are not necessary indicative of the results for the full year.



Stock-Based CompensationAs permitted under Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation,the Company accounts for stock-based
compensation plans using the intrinsic value method under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees,and related Interpretations. No
stock-based employee compensation cost is reflected in the net income, as all options granted under the Companys stock-based compensation plans had an exercise price equal to the market value of the underlying common stock on the date of
grant. In accordance with the provisions of SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure, the following table illustrates the effect on net income and earnings per share if the Company had applied
the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation (in thousands, except per share data).



|                                                                                                                                            |  |                             |        |   |      |   |       |  
|------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ---- | - | ----- | -
|                                                                                                                                            |  | Three Months EndedMarch 31, |       
|                                                                                                                                            |  | 2004                        |        |   | 2003 |  
|Net income, as reported                                                                                                                     |  | $                           | 11,340 |   |      | $ | 6,962 |  
|Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax
effects |  |                             | (122   | ) |      |   | (755  | )
|                                                                                                                                            |  |                             |        |   |      |   |       |  
|Pro forma net income                                                                                                                        |  | $                           | 11,218 |   |      | $ | 6,207 |  
|                                                                                                                                            |  |                             |        |   |      |   |       |  
|Earnings per share:                                                                                                                         |  |                             |        |   |      |   |       |  
|Basic  as reported                                                                                                                         |  | $                           | 0.35   |   |      | $ | 0.22  |  
|Basic  pro forma                                                                                                                           |  |                             | 0.35   |   |      |   | 0.19  |  
|Diluted  as reported                                                                                                                       |  |                             | 0.35   |   |      |   | 0.22  |  
|Diluted  pro forma                                                                                                                         |  |                             | 0.35   |   |      |   | 0.19  |  



The Company typically issues 10-year
options that vest annually over a three-year period from the date of grant. For disclosure purposes, the fair value of each option is estimated on the date of grant using the Black-Scholes (Minimum Value) option-pricing model. The following
weighted-average assumptions were used for option grants during the three months ended March 31, 2004 and 2003, respectively: dividend yield of zero percent; expected volatility of 33.4% and 33.6%; expected average lives of 3 years; and, risk-free
interest rates of 2.17% and 2.07%.



3. Earnings Per Share



Basic earnings per share has been computed by dividing net income by the weighted average
number of common shares outstanding during each period. Shares issued during the period and shares re-acquired during the period, if any, are weighted for



7



---

##### Table of Contents

the portion of the period for which they were outstanding. Diluted earnings per share have been computed in a manner consistent with that of basic earnings
per share while giving effect to all potentially dilutive common shares that were outstanding during each period. The weighted average number of common shares outstanding is computed as follows:



|                                                   |  |                              |  |           
|-------------------------------------------------- |  | ---------------------------- |  | ----------
|                                                   |  | Three months ended March 31,
|                                                   |  | 2004                         |  | 2003      
|Basic weighted average common shares outstanding   |  | 32,129,949                   |  | 31,915,814
|Effect of potential exercise of stock options      |  | 228,301                      |  | 19,526    
|                                                   |  |                              |  |           
|Diluted weighted average common shares outstanding |  | 32,358,250                   |  | 31,935,340
|                                                   |  |                              |  |           



4. Goodwill and Other Intangibles



Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS 142 requires, among other things, the discontinuance of goodwill amortization. In addition, SFAS 142 required the Company to perform a transitional goodwill impairment test within six months from the date of
adoption. In accordance with the standard, in the second quarter of 2002, the Company completed the transitional goodwill impairment test and determined that a $57,000 goodwill impairment charge was required. Under SFAS 142, goodwill is to be
reviewed at least annually for impairment; the Company has elected to perform this review annually on June 30 of each calendar year.



The components of goodwill and other intangibles are as follows (in thousands):



|                               |  |               |         |   |                  |   |         |  
|------------------------------ |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                               |  | March 31,2004 |         |   | December 31,2003 |  
|Goodwill                       |  | $             | 161,154 |   |                  | $ | 159,655 |  
|Other intangibles              |  |               | 33,312  |   |                  |   | 26,610  |  
|                               |  |               |         |   |                  |   |         |  
|                               |  |               | 194,466 |   |                  |   | 186,265 |  
|Less: Accumulated amortization |  |               | (21,885 | ) |                  |   | (20,976 | )
|                               |  |               |         |   |                  |   |         |  
|                               |  | $             | 172,581 |   |                  | $ | 165,289 |  
|                               |  |               |         |   |                  |   |         |  



As of March 31, 2004, we had
intangibles that consisted of the following (in thousands):



|                             |  |                     |        |                         |   |       
|---------------------------- |  | ------------------- | ------ | ----------------------- | - | ------
|                             |  | March 31, 2004     
|                             |  | GrossCarryingAmount |        | AccumulatedAmortization
|Amortized intangible assets: |  |                     |        |                         |   |       
|Contract rights              |  | $                   | 24,510 |                         | $ | 5,999 
|Capitalized software         |  |                     | 8,802  |                         |   | 5,779 
|                             |  |                     |        |                         |   |       
|                             |  | $                   | 33,312 |                         | $ | 11,778
|                             |  |                     |        |                         |   |       



For the three months ended March 31,
2004, we had aggregate amortization expense of $909,000. We estimate that we will have the following amortization expense for the future periods indicated below (in thousands):



|                                                       |  |   |      
|------------------------------------------------------ |  | - | -----
|For the remaining nine months ending December 31, 2004 |  | $ | 4,153
|For the year ending:                                   |  |   |      
|December 31, 2005                                      |  |   | 4,749
|December 31, 2006                                      |  |   | 3,625
|December 31, 2007                                      |  |   | 3,075
|December 31, 2008                                      |  |   | 2,756
|December 31, 2009                                      |  |   | 1,602



8



---

##### Table of Contents

5. Business Segment and Geographic Area Information



The Company operates as one segment, delivering a broad array of information technology and technical services solutions under contracts
with the U.S. Government, state and local governments, and commercial customers. The Companys federal government customers typically exercise independent contracting authority, and even offices or divisions within an agency or department may
directly, or through a prime contractor, use the Companys services as a separate customer, so long as that customer has independent decision-making and contracting authority within its organization. For example, under a blanket purchasing
agreement with one of the Armys contracting agencies, program managers throughout the Army and from other services and defense agencies are able to purchase a wide range of the Companys solutions. Even though task orders under this
agreement together accounted for 12.8% and 6.0% of the Companys revenues for the quarters ending March 31, 2004 and March 31, 2003 respectively, no one task order represented more than 5.3% and 4.5% of the Companys revenues during those
same periods. One customer accounted for 13.2% and 10.9% of the Companys accounts receivable as of March 31, 2004 and December 31, 2003 respectively. In addition, there were no sales to any customers within a single country (except for the
United States) where the sales accounted for 10% or more of total revenue. The Company treats sales to U.S. Government customers as sales within the United States regardless of where the services are performed. Substantially all assets of continuing
operations were held in the United States for the periods ended March 31, 2004 and 2003. Revenues by geographic customer and the related percentages of total revenues for the periods ended March 31, 2004 and 2003 were as follows (in thousands):



|              |  |                             |         |   |      |   |         |  
|------------- |  | --------------------------- | ------- | - | ---- | - | ------- | -
|              |  | Three months endedMarch 31, |        
|              |  | 2004                        |         |   | 2003 |  
|United States |  | $                           | 202,314 |   |      | $ | 147,046 |  
|International |  |                             | 455     |   |      |   | 1,077   |  
|              |  |                             |         |   |      |   |         |  
|              |  | $                           | 202,769 |   |      | $ | 148,123 |  
|              |  |                             |         |   |      |   |         |  
|United States |  |                             | 99.8    | % |      |   | 99.3    | %
|International |  |                             | 0.2     |   |      |   | 0.7     |  
|              |  |                             |         |   |      |   |         |  
|              |  |                             | 100.0   | % |      |   | 100.0   | %
|              |  |                             |         |   |      |   |         |  



6. Revenues and Receivables



The Company delivers a broad array of information technology and
technical services solutions under contracts with the U.S. Government, state and local governments, and commercial customers. Revenues from the U.S. Government under prime contracts and subcontracts, as compared to total contract revenues, were
approximately 98.6% and 97.1% for the periods ended March 31, 2004 and 2003, respectively. The components of contract receivables are as follows (in thousands):



|                                                                           |  |               |         |   |                  |   |         |  
|-------------------------------------------------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                                                           |  | March 31,2004 |         |   | December 31,2003 |  
|Billed receivables                                                         |  | $             | 134,570 |   |                  | $ | 140,858 |  
|Unbilled receivables:                                                      |  |               |         |   |                  |   |         |  
|Revenues recorded in excess of milestone billings on fixed price contracts |  |               | 42,344  |   |                  |   | 30,796  |  
|Amounts currently billable                                                 |  |               | 26,267  |   |                  |   | 21,652  |  
|Indirect costs incurred in excess of provisional billing rates             |  |               | 5,019   |   |                  |   | 7,438   |  
|Retainage                                                                  |  |               | 4,165   |   |                  |   | 3,396   |  
|Revenues recorded in excess of estimated contract value or funding         |  |               | 4,000   |   |                  |   | 3,473   |  
|Allowance for doubtful accounts                                            |  |               | (3,406  | ) |                  |   | (3,074  | )
|                                                                           |  |               |         |   |                  |   |         |  
|                                                                           |  | $             | 212,959 |   |                  | $ | 204,539 |  
|                                                                           |  |               |         |   |                  |   |         |  



Revenues recorded in excess of
milestone billings on fixed-price contracts consists of amounts not expected to be billed within the next month. Amounts currently billable consist principally of amounts to be billed within the next month. Indirect cost rates in excess of
provisional billing rates on U.S. government contracts are generally billable at actual rates less a reduction of 0.5% of the actual general and administrative rate base before a Defense Contract Audit Agency (DCAA) audit is completed. The balance
remaining, as well as any retainage, is billable upon completion of the DCAA audit. Revenues recorded in excess of contract value or funding are billable upon receipt of contractual amendments.



9



---

##### Table of Contents

7. Stockholders Equity



Follow-on Public OfferingThe Company closed its follow-on public offering on December 20, 2002. Net proceeds to the
Company were approximately $90.9 million, after deducting the estimated expenses related to the offering and the portion of the underwriting discount payable by the Company. Proceeds from the offering were used in 2003 to fund the Companys
acquisition of Integrated Data Systems Corporation and MSM Security Services, Inc., on February 28, 2003 and March 5, 2003, for $62.7 million and $4.9 million, respectively.



8. Commitments and Contingencies



Payments to the Company on cost-reimbursable contracts with the U.S. Government are provisional payments subject to adjustment upon audit by the DCAA. Audits through 2001
have been completed and resulted in no material adjustments. The audits for 2002 and 2003 are not expected to have a material effect on the results of future operations.



In the ordinary course of business, ManTech is involved in certain governmental and legal proceedings, claims and disputes, and has
litigation pending under several suits. Management believes that the ultimate resolution of these matters will not have a material effect on the Companys financial position or results of operations.



9. Acquisitions



Integrated Data Systems CorporationOn February 28, 2003, the Company acquired 100 percent of the outstanding common
stock of Integrated Data Systems Corporation (IDS). The results of operations for IDS have been included in the Companys consolidated financial statements since that date. Founded in 1990, IDS delivers technology solutions and products in four
core areas: software development, systems engineering/networking, information assurance, and government acquisition/procurement support software. IDS has developed secure, advanced messaging and collaboration applications and solutions in support of
a wide variety of national security networks and systems. IDS is also one of Microsofts leading certified partners supporting U.S. Government classified intelligence community programs. Most of the 230 IDS employees hold Top Secret security
clearances, with additional special accesses to compartmented programs.



The
cash purchase price was approximately $62.7 million, net of cash on hand, excluding $1.0 million of acquisition-related costs, and is subject to an earnout provision. The following table summarizes the estimated fair values of the assets acquired
and liabilities assumed at the date of acquisition (in thousands):



|                           |  |                  |        |  
|-------------------------- |  | ---------------- | ------ | -
|                           |  | February 28,2003 |       
|Current assets             |  | $                | 14,455 |  
|Property and equipmentnet |  |                  | 1,364  |  
|Goodwill                   |  |                  | 50,707 |  
|Intangible asset           |  |                  | 7,500  |  
|Other assets               |  |                  | 84     |  
|Other current liabilities  |  |                  | (7,353 | )
|Deferred rent              |  |                  | (199   | )
|                           |  |                  |        |  
|                           |  | $                | 66,558 |  
|                           |  |                  |        |  



$7.5 million of the acquired
intangible assets was assigned to contract rights and is being amortized on a straight-line basis over a period of eight years.



The following represents the unaudited pro forma results of operations as if the acquisition of IDS had been completed as of January 1, 2003 (in thousands, except per
share amounts):



|                           |  |                                            |        
|-------------------------- |  | ------------------------------------------ | -------
|                           |  | Pro FormaThree Months Ended March 31, 2003
|Revenues                   |  | $                                          | 158,446
|Income from operations     |  |                                            | 13,670 
|Net income                 |  |                                            | 7,390  
|Diluted earnings per share |  |                                            | 0.23   



MSM Security Services,
Inc.On March 5, 2003, the Company acquired 100 percent of the outstanding common stock of MSM Security Services, Inc. (MSM), a Maryland-based provider of Personnel Security Investigation (PSI) services to the U.S. Government. Pursuant
to the acquisition agreement, the Company was entitled to include the results of operations for MSM in its



10



---

##### Table of Contents

consolidated financial statements effective March 1, 2003. MSM specializes in PSI services for the U.S. Government, having completed over 250,000 background
investigations since its founding in 1978. MSM has active investigation contracts to support the United States Customs Service, Defense Security Service (DSS), the intelligence community, and other federal government agencies.



The cash purchase price was approximately $4.9 million, of which $2.2 million was paid to MSM
shareholders and $2.7 was used to repay existing MSM debt. The cash purchase price excludes $0.2 million of acquisition-related costs and an earnout provision.



Acquisition of Certain Assets from Affiliated Computer Services, Inc.  On February 8, 2004, the Company acquired certain assets from Affiliated
Computer Services, Inc. (ACS), a provider of systems engineering, network administration, program management, and communications systems support to Department of Defense customers. The assets acquired from ACS include contracts for providing support
to the U.S. Air Force Electronic Systems Centers Information Technology Services Program. Services provided through these contracts include information technology services, such as program management, systems engineering, network engineering
and administration, test and evaluation, and data management.



---



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



Introduction and Overview



ManTech is a leading provider of innovative technologies and solutions for mission-critical national security programs for the intelligence community, the
Department of Defense, Department of State and other U.S. federal government customers. Our expertise includes software development, enterprise security architecture, information assurance, intelligence operations support, network and critical
infrastructure protection, information technology, communications integration and engineering support. With more than 5,000 highly qualified employees, we operate in the United States and over 30 countries worldwide.



We derive revenue primarily from contracts with U.S. Government agencies that
are focused on national security. As a result, funding for our programs and services are generally linked to trends in U.S. Government spending in the areas of defense, intelligence and homeland security. Leading up to and following the terrorist
events of September 11, 2001, the U.S. Government substantially increased its overall defense, intelligence and homeland security budgets. Hence, our focus on national security corresponds with our customers objective to safeguard the nation.
Our business has also benefited from the U.S. Governments increased use of contractors in support of ongoing and mission-critical operations, due in part to the growing complexity of technology.



Three Months Ended March 31, 2004 Compared to the Three Months Ended March 31, 2003



We experienced a substantial increase in revenue in the
first quarter of 2004, compared to the first quarter of 2003, due to a surge in our defense system support for activities in Iraq, Europe and the United States and the overall increased spending for national and homeland security, as well as our
recent acquisitions. Operating profits for the quarter also grew substantially, benefiting from a decrease in our general and administrative expenses as a percentage of revenues.



Revenues



Revenues increased 36.9% to $202.8 million for the three months ended March 31, 2004, compared to $148.1 million for the same period in 2003. This
increase is partially attributable to a full quarter of revenues from the Integrated Data Systems Corporation (IDS) and MSM Security Services, Inc. (MSM) businesses that were acquired February 28, and March 5, 2003, respectively. Additionally,
technical services provided in connection with relocating an Army Special Operations Command of $4 million, and forward deployment support in Iraq and Afghanistan of $3 million, contributed to our increase in revenue for the first quarter of 2004.
We derived approximately 43.3% of our revenue for the three months ended March 31, 2004 from work under GSA schedule contracts, compared with approximately 36.4% for the same period in 2003. Subcontracts accounted for 12.9% of our revenue for the
three months ended March 31, 2004, compared with 10.8% for the same period in 2003. We anticipate that quarterly revenues will continue at this level, or slightly higher levels, largely because of the United States continuing efforts on the
war on terrorism.



Cost of services



Cost of services increased 36.6% to $163.6 million for the three months
ended March 31, 2004, compared to $119.8 million for the same period in 2003. As a percentage of revenues, cost of services decreased 0.2%, to 80.7% for the three months ended March 31, 2004, compared to 80.9% for the same period in 2003. Direct
labor costs increased by 28.8% primarily due to an increase in personnel. For the three months ended March 31, 2004, other direct costs increased by 49.4% over first quarter 2003, from $43.3 million to $64.7 million. As a percentage of
revenues, other direct costs increased from 29.3% for the three months ended March 31, 2003 to 31.9% for the same period in 2004, due to increased pass-through sales during the period. This increase in other direct costs



11



---

##### Table of Contents

for the quarter was also related to one-time procurements and escalated procurements in support of the relocation and deployment items referenced above. For
the three months ended March 31, 2004, overhead personnel and facilities costs decreased 0.1% as a percentage of revenue, compared to the same period in 2003.



Gross profit



Gross profit increased 38.3% to $39.2 million for the three months ended March 31, 2004, compared to $28.3 million for the same period in 2003. Gross
profit margin was 19.3% for the three months ended March 31, 2004, compared to 19.1% for the same period in 2003. Profits for the first quarter 2004 include a one-time profit of $1.0 million on a fixed-price contract attributable to performance
improvements.



General and administrative



General and administrative expenses increased 25.8% to $18.5 million for the
three months ended March 31, 2004, compared to $14.7 million for the same period in 2003. The increased expenses reflect additional management personnel and infrastructure related to our acquisitions that are necessary to support the growth of our
business. As a percentage of revenues, general and administrative expenses decreased from 10.0% for the three months ended March 31, 2003 to 9.1% for the same period in 2004, as a result of operating efficiencies.



Depreciation and amortization



Depreciation and amortization expense increased 38.8% to $1.3 million for
the three months ended March 31, 2004, compared to $0.9 million for the same period in 2003. This increase resulted from an additional $0.3 million of amortization of intangible assets established in connection with our acquisitions, as well as $0.1
million of additional depreciation expense.



Income from operations



Income from operations increased 52.8% to $19.4 million
for the three months ended March 31, 2004, compared with $12.7 million for the same period in 2003. This increase was primarily a result of the increase in revenues relative to the cost of services and administrative costs, as well as the increase
in gross profit, as described above.



Interest Expense



Interest expense increased 62.3% to $542,000 for the three months ended
March 31, 2004, compared with $334,000 for the same period in 2003. We collected a significant portion of the quarters receivables in March. The increase in interest expense is a result of increased borrowing under lines of credit during the
quarter and changes in our borrowing rate. The average levels of indebtedness were approximately $29.5 million and $25 million, in the three months ended March 31, 2004 and March 31, 2003, respectively.



Other Income (Expense)



Other income for the first quarter of 2004 consisted primarily of income from an investment in a joint venture and foreign
currency conversion gain. Other expense in the first quarter of 2003 consisted of a $1 million net loss incurred by an affiliate (that was subsequently sold in October 2003) accounted for under the equity method of accounting. That loss was
partially offset by income from investment in a joint venture and foreign currency conversion gains.



Net income



Net income
increased 62.9% to $11.3 million for the three months ended March 31, 2004, compared to $7.0 million for the same period in 2003. The increase resulted from $6.7 million of additional operating income, offset by increased interest expense of $0.2
million. Other expense decreased by 148.6% compared to the same period in the prior year, primarily as a result of a first quarter 2003 net loss incurred by one of our affiliates, which was accounted for under the equity method of accounting. Our
effective tax rate for the three months ended March 31, 2004 and March 31, 2003 was 40.7% and 40.5%, respectively.



Backlog



At March 31, 2004 and December 31, 2003, our backlog was $1.4 billion and $1.5 billion, respectively, of which $352 million and $375 million, respectively, was funded backlog. At March 31, 2003, our backlog was $1.4
billion, of which $278 million was funded backlog. Backlog and funded backlog represent estimates that we calculate on a consistent basis.



Liquidity and Capital Resources



The Companys primary source of liquidity is cash provided by operations and our revolving credit facility. Generally, cash provided by operating
activities is adequate to fund our operations. Net proceeds of $67.6 million from our follow-on public offering in 2002 were used to fund our acquisitions and related expenses of IDS and MSM during the first quarter of 2003.



12



---

##### Table of Contents

Cash provided by (used in) operating activities



Cash provided by operating activities of operations for the three months ended March 31, 2004 was $2.1 million, compared to
$1.5 million of cash used in operating activities for the three months ended March 31, 2003. In the quarter ended March 31, 2004, cash provided by operating activities was primarily the result of an increase in net income of $11.3 million, deferred
income taxes of $6.9 million, and a decrease in accounts payable of $6.3 million, offset by an increase of contract receivables of $8.4 million, and a decrease of accrued salary and related expenses of $4.2 million.



Cash used in investing activities



Cash used in investing activities of operations was $7.4 million for the
three months ended March 31, 2004, compared to $68.1 million for the same period in 2003. Investing activities in the first quarter of 2004 included the acquisition of certain assets from Affiliated Computer Services, Inc. for $6.5 million, and
purchases of property of $0.8 million. Investing activities in the first quarter of 2003 included the acquisitions of IDS and MSM for $61.6 million and $5.1 million, respectively, purchases of property and equipment of $0.9 million, and investments
in intellectual property of $0.5 million. Investing activities have primarily consisted of investments in intellectual property, acquisitions of businesses, investments and loans to affiliates and purchases of property and equipment.



Cash provided by financing activities



Cash provided by financing activities of operations was $0.8 million for the
three months ended March 31, 2004, compared to cash used in financing activities of $1.0 million for the three months ended March 31, 2003. The net cash provided in the first quarter of 2004 resulted primarily from an increase in our borrowings of
$0.5 million and proceeds from the exercise of stock options of $0.3 million. The net cash used in the first quarter of 2003 resulted primarily from our payment of the final installment of a not-to-compete financing.



Credit Agreement



On February 25, 2004, we executed the Amended and Restated Credit and Security Agreement with Citizens Bank of Pennsylvania,
KeyBank National Association, Branch Banking and Trust Company of Virginia, Chevy Chase Bank, F.S.B., and Riggs Bank, N.A., in order to increase the capacity available under our prior loan agreement. The agreement initially provides for a $125.0
million revolving credit facility that can be increased to $200.0 million. The maturity date of the agreement is February 25, 2009. Under the agreement, we are required to maintain specified financial covenants relating to asset coverage, fixed
charge coverage, and debt coverage. The agreement also places limitations on additional borrowings, mergers, and related-party transactions, payment of dividends, and contains limitations with respect to capital expenditures. Borrowings under the
agreement are collateralized by our assets and bear interest at the London Interbank Offered Rate (LIBOR), or the lenders base rate, plus market-rate spreads that are determined based on a company leverage ratio calculation. To manage our
exposure to the fluctuations in these variable interest rates, we executed an interest swap in December 2001. The swap agreement has a notional principal amount of $25.0 million and currently has a fixed LIBOR rate of 6.83%. As of March 31, 2004, we
were in compliance with all material covenants under the Credit Agreement.



We believe the capital resources available to us under our credit agreements and cash from our operations are adequate to fund our ongoing operations and to support the internal growth we expect to achieve for at
least the next 12 months. We anticipate financing our external growth from acquisitions and our longer-term internal growth through one or more of the following sources: cash from operations; additional borrowing; issuance of equity; use of the
existing revolving facility; or a refinancing of our credit facilities.



Off-Balance Sheet Arrangements



Effective June
20, 2003, our lenders issued two letters of credit to Fianzas Guardiana Inbursa, S.A. (FGI) on behalf of GSE Systems, Inc. (GSE). Prior to October 21, 2003, we held common and preferred stock in GSE and accounted for this investment using the equity
method. The first letter of credit supports an advance payment bond of approximately $1.8 million, issued by FGI to a customer of GSEs power business, and has a term of 30 months. The second letter of credit supports a performance bond of
approximately $1.3 million issued by FGI to the same customer, and has a term of 42 months. FGI can draw upon both letters of credit in the event that the performance bonds are drawn on by the customer, which would only occur in the event of a
contractual default by GSE. In the event that the letters of credit are drawn upon, we have entered into a collateral agreement with GSE whereby GSE has agreed to indemnify us from any and all costs, damages, claims, actions, demands, losses and
expenses (including the value of the letters of credit drawn upon, reasonable attorneys fees, collection fees or enforcement fees). In exchange for issuing the letters of credit, we received 100,000 warrants to purchase GSEs common stock
at the market price of GSEs common stock on the close of business on July 8, 2003, and will receive a 7% annual fee, payable on a quarterly basis, calculated on the total amount of the then-existing value of the letters of credit.



In accordance with Financial Accounting Standards Board (FASB)
Interpretation (FIN) No. 45, we have established a $3.1 million long-term liability for these guarantees and have increased the carrying value of our investment in GSE by an equivalent amount.



13



---

##### Table of Contents

Discontinued Operations



In September 2001, the Company decided to exit certain lines of business involving foreign operations or operations that primarily serve commercial
customers. Since then, we have disposed of several of our businesses and have classified them as discontinued operations in our consolidated financial statements. We concluded the disposal of all of these businesses prior to December 31, 2002,
except our Australia-based software solutions business, which we sold in February 2003.



Critical Accounting Estimates and Policies



Critical accounting policies are defined as those policies that reflect significant judgments and uncertainties, and can potentially result in materially different results under different assumptions and conditions. Application of these
policies is particularly important to the portrayal of our financial condition and results of operations.



Revenue Recognition and Cost Estimation



We recognize revenue when persuasive evidence of an arrangement exists, services have been rendered, the contract price is fixed or determinable, and
collectibility is reasonably assured. We have a standard internal process that we use to determine whether all required criteria for revenue recognition have been met. This standard internal process includes a monthly review of contract revenues and
expenses by several levels of management. This review covers, among other matters, progress against schedule, project staffing and levels of effort, risks and issues, subcontract management, incurred and estimated costs, and disposition of prior
action items, and is designed to determine whether the overall progress on a contract is consistent with the effort expended and revenue recognized to date.



Our revenues consist primarily of payments for the work of our employees, and to a lesser extent, the pass through of costs for materials and subcontract
efforts under contracts with the Companys customers. Cost of services consists primarily of compensation expenses for program personnel, the fringe benefits associated with this compensation, and other direct expenses incurred to complete
programs, including cost of materials and subcontract efforts.



We derive the majority of our revenue from cost-plus-fixed-fee, cost-plus-award-fee, firm-fixed-price, or time-and-materials contracts. Absent evidence to the contrary, we recognize revenue as follows: under cost-plus-fixed or award-fee
contracts, revenues are recognized as costs are incurred and include an estimate of applicable fees earned; under firm-fixed-price contracts, revenues are estimated on the percentage of completion method, on the basis of costs incurred in relation
to estimated total costs, or upon delivery of specific products or services, as appropriate; for time-and-material contracts, revenues are computed by multiplying the number of direct labor-hours expended in the performance of the contract by the
contract billing rates and adding other billable direct costs. Performance incentives are incorporated in certain contracts, which provide increased and decreased revenues based on actual performance compared to established targets. Incentives based
upon cost performance are recorded when earned and other incentives and awards are recorded when the amounts are earned and can be reasonably determined, or are awarded. In certain circumstances, revenues are recognized when contract amendments have
not been finalized. Prior to agreeing to commence work directed by the customer and before receipt of the written modification or amendment to the existing contract, we require the completion of an internal memo that assesses the probability of the
modification being executed in a timely fashion and our ability to subsequently collect payment from the customer.



Contract revenue recognition inherently involves estimation. Examples of estimates include the contemplated level of effort to accomplish the tasks under
contract, the cost of the effort, and an ongoing assessment of our progress toward completing the contract. From time to time, as part of our standard management processes, facts develop that require us to revise our estimated total costs or
revenues. In most cases, these revisions relate to changes in the contractual scope of our work. To the extent that a revised estimate affects contract profit or revenue previously recognized, we record the cumulative effect of the revision in the
period in which the facts requiring the revision become known. Anticipated losses are recognized in the accounting period in which they are first determined.



Goodwill



Goodwill represents the excess of cost over the fair value of net tangible and identifiable intangible assets of acquired companies. Effective January 1,
2002, we adopted SFAS No. 142, and no longer amortize goodwill; rather, we review goodwill at least annually for impairment. We have elected to perform this review annually on June 30 of each calendar year.



Other Matters



Our significant accounting policies, including the critical policies listed above, are described in the notes to the
consolidated financial statements for the year ended December 31, 2003, included in our Annual Report on Form 10-K filed with the SEC on March 15, 2004.



Forward-Looking Statements



This quarterly report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties, many of which are outside of our
control. ManTech believes these statements to be within the definition of the Private Securities



14



---

##### Table of Contents

Litigation Reform Act of 1995. You can identify these statements by forward-looking words such as may, will, expect,
intend, anticipate, believe, estimate, continue and other similar words. You should read statements that contain these words carefully because they discuss our future expectations, make
projections of our future results of operations or financial condition or state other forward-looking information.



We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able
to predict accurately or control. The factors that could cause actual results to differ materially from anticipated results include, but are not limited to, the following:



| |  | adverse changes in U.S. Government spending priorities;
| | - | -------------------------------------------------------



| |  | failure to retain existing U.S. Government contracts or win new contracts;
| | - | --------------------------------------------------------------------------



| |  | failure to obtain option awards, task orders or funding under contracts;
| | - | ------------------------------------------------------------------------



| |  | risk of contract performance or termination;
| | - | --------------------------------------------



| |  | adverse results of U.S. Government audits of our government contracts;
| | - | ----------------------------------------------------------------------



| |  | risks associated with complex U.S. Government procurement laws and regulations;
| | - | -------------------------------------------------------------------------------



| |  | failure to successfully integrate recently acquired companies or businesses into our operations or to realize any accretive or synergistic effects from such acquisitions;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | failure to identify, execute or effectively integrate future acquisitions; and
| | - | ------------------------------------------------------------------------------



| |  | additional costs associated with complying with new laws and regulations relating to corporate governance issues.
| | - | -----------------------------------------------------------------------------------------------------------------



These and other risk factors are more fully described and discussed in our
Annual Report on Form 10-K, filed with the SEC on March 15, 2004, and from time to time, in our other filings with the SEC. The statements in this quarterly report are made as of the date of this quarterly report, and we undertake no obligation to
update any of the forward looking statements made herein, whether as a result of new information, future events, changes in expectations or otherwise.



|Item 3. | Quantitative and Qualitative Disclosure about Market Risk
|------- | ---------------------------------------------------------



Our exposure to market risk relates to changes in interest rates for borrowings under our senior term loan and revolving credit facility. These borrowings
bear interest at variable rates. As of March 31, 2004, we had $25.5 million in borrowings outstanding under our revolving credit facility. A hypothetical 10% increase in interest rates would have increased our interest expense for the three months
ended March 31, 2004 by less than $0.1 million.



In December
2001, we entered into an interest swap agreement in order to reduce our exposure associated with the market volatility of fixed London Interbank Offered Rate (LIBOR) interest rates. This agreement has a notional principal amount of $25.0 million
and, as of March 31, 2004, had a rate of 6.83%. This agreement is a hedge against revolving debt of $25.0 million, which bears interest at monthly floating LIBOR plus 1.00%. At stated monthly intervals the difference between the interest on the
floating LIBOR-based debt and the interest calculated in the swap agreement are settled in cash. The value of the swap at March 31, 2004 was a negative $2.3 million.



We do not use derivative financial instruments for speculative or trading purposes. We invest our excess cash in short-term,
investment grade, interest-bearing securities. Our investments are made in accordance with an investment policy approved by the board of directors. Under this policy, no investment securities can have maturities exceeding one year, and the average
maturity of the portfolio cannot exceed 90 days.



|Item 4. | Controls and Procedures
|------- | -----------------------



As of March 31, 2004, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management evaluated
the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 of the Exchange Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer (our principal executive officer
and principal financial officer) have concluded that our disclosure controls and procedures were effective, as of March 31, 2004, such that the information relating to us that is required to be disclosed in our reports filed with the SEC (i) is
recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate
to allow timely decisions regarding required disclosure.



There
were no significant changes in our internal control over financial reporting during the three months ended March 31, 2004 that have materially affected, or are reasonable likely to materially affect, the internal control over financial reporting.



15



---

##### Table of Contents

PART II  OTHER INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------



From time to time, we are subject to legal proceedings, investigations, claims and disputes that arise in the ordinary course of its business. Although we
cannot predict the outcomes of these and other legal proceedings, investigations, claims and disputes, based on the information now available to us, we do not believe that the ultimate resolution of these matters, either individually or in the
aggregate, will have a material adverse effect on our business, prospects, financial condition or operating results.



|Item 6. | Exhibits and Reports on Form 8-K
|------- | --------------------------------



(a) Exhibits required by Item 601 of Regulation S-K:



|            |  |                                                                                                                                                                                                                                                
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT NO. |  | DESCRIPTION                                                                                                                                                                                                                                    
|            | 
|4.1         |  | Amended and Restated Credit and Security Agreement with Citizens Bank of Pennsylvania, KeyBank National Association, Branch Banking and Trust Company of Virginia, and Chevy Chase Bank,
F.S.B., and Riggs Bank, N.A., dated February 25, 2004.
|            | 
|31.1        |  | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.                                                                                                                        
|            | 
|31.2        |  | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.                                                                                                                        
|            | 
|32          |  | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended.                                                                                            



(b) Reports on Form 8-K



|              |  |                                                                                                                                                                                                                                                                                                                                                                                       
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|FILING DATE   |  | DESCRIPTION                                                                                                                                                                                                                                                                                                                                                                           
|              | 
|March10, 2004 |  | On March 10, 2004, the Company filed a report on Form 8-K dated March 10, 2004 containing a transcript of its earnings conference call held on March 3, 2004, announcing ManTech International
Corporations fourth quarter and year-end financial results for fiscal year 2003, as well as its earnings guidance for the first quarter of fiscal year 2004 and full fiscal year 2004.
|              | 
|March4, 2004  |  | On March 4, 2004, the Company filed a report on Form 8-K dated March 4, 2004 relating to the issuance of its earnings release announcing its fourth quarter and year-end financial results for
fiscal year 2003, as well as its earnings guidance for the first quarter of fiscal year 2004 and full fiscal year 2004.                                                                



16



---

##### Table of Contents

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.



|                   |  |  |  |                                   |  |                           |  |                                                                          
|------------------ |  |  |  | --------------------------------- |  | ------------------------- |  | -------------------------------------------------------------------------
|                   |  |  |  | MANTECH INTERNATIONAL CORPORATION
|                   |  |  | 
|Date: May 10, 2004 |  |  |  | By:                               |  | /s/    GEORGE J. PEDERSEN
|                   |  |  |  |                                   |  |                           | 
|                   |  |  |  |                                   |  | Name:                     |  | George J. Pedersen                                                       
|                   |  |  |  |                                   |  | Title:                    |  | Chairman of the Board of Directors, Chief
Executive Officer and President



|                   |  |  |  |     |  |                          |  |                                                               
|------------------ |  |  |  | --- |  | ------------------------ |  | --------------------------------------------------------------
|                   |  |  | 
|Date: May 10, 2004 |  |  |  | By: |  | /s/    RONALD R. SPOEHEL
|                   |  |  |  |     |  |                          | 
|                   |  |  |  |     |  | Name:                    |  | Ronald R. Spoehel                                             
|                   |  |  |  |     |  | Title:                   |  | Executive Vice President, Chief Financial
Officer and Director



17