1333142--6/20/2007--DynCorp_International

related topics

{debt, indebtedness, cash}

{regulation, government, change}

{cost, contract, operation}

{personnel, key, retain}

{cost, operation, labor}

{financial, litigation, operation}

{competitive, industry, competition}

{cost, regulation, environmental}

{operation, natural, condition}

{control, financial, internal}

{stock, price, operating}

{customer, product, revenue}

We rely on sales to U.S. government entities. A loss of contracts with the U.S. government, a failure to obtain new contracts or a reduction of sales under existing contracts could adversely affect our operating performance and our ability to generate cash flow to fund our operations. Our U.S. government contracts may be terminated by the U.S. government at any time prior to their completion and contain other unfavorable provisions, which could lead to unexpected loss of revenues and reduction in backlog. Our U.S. government contracts are subject to competitive bidding, both upon initial issuance and re-competition. If we are unable to successfully compete in the bidding process or if we fail to receive renewal, it could adversely affect our operating performance and lead to an unexpected loss of revenue. Our operations involve considerable risks and hazards. An accident or incident involving our employees or third parties could harm our reputation, affect our ability to compete for business, and if not adequately insured or indemnified against, could adversely affect our results of operations and financial condition. Political destabilization or insurgency in the regions in which we operate may have a material adverse effect on our operating performance. Our IDIQ contracts are not firm orders for services, and we may never receive revenues from these contracts, which could adversely affect our operating performance. Our cost of performing under time-and-materials and fixed-price contracts may exceed our revenues which would result in a recorded loss on the contracts. A negative audit or other actions by the U.S. government could adversely affect our operating performance. We are subject to investigation by the U.S. government, which could result in our inability to receive government contracts and could adversely affect our future operating performance. The expiration of our collective bargaining agreements could result in increased operating costs or work disruptions, which could potentially affect our operating performance. Proceedings against us in domestic and foreign courts could result in legal costs and adversely affect our operating performance. Competition in our industry could limit our ability to attract and retain customers or employees, which could result in a loss of revenue and/or a reduction in margins, which could adversely affect our operating performance. Loss of our skilled personnel, including members of senior management, may have an adverse effect on our operations and/or our operating performance until we find suitable replacements. If our subcontractors fail to perform their contractual obligations, our prime contract performance and our ability to obtain future business could be materially and adversely impacted. Environmental laws and regulations may subject us to significant costs and liabilities that could adversely affect our operating performance. Our ability to comply with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 is dependent upon our implementation of effective internal controls. Our substantial outstanding indebtedness and the restrictive covenants in the agreements governing our indebtedness limit our operating and financial flexibility. Our substantial level of indebtedness may make it difficult for us to satisfy our debt obligations and may adversely affect our ability to obtain financing for working capital, capitalize on business opportunities or respond to adverse changes in our industry. Servicing our indebtedness requires a significant amount of cash. Our ability to generate sufficient cash depends on numerous factors beyond our control, and we may be unable to generate sufficient cash flow to service our debt obligations, which could adversely affect our financial condition. Despite our current indebtedness level, we and our subsidiaries may still be able to incur substantially more debt, which could exacerbate the risks associated with our substantial leverage. Our ability to make payments under the notes and to service our other debt may depend on cash flow from our subsidiaries. We are controlled by affiliates of Veritas Capital, whose interests may not be aligned with yours.

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1333142--6/20/2007--DynCorp_International_LLC