AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 12, 1995

REGISTRATION NO. 33-77096

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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------

AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------

BDM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 7373 54-1561881
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification No.)

-------------------

1501 BDM WAY
MCLEAN, VIRGINIA 22102-3204
(703) 848-5000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
-------------------

PHILIP A. ODEEN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BDM INTERNATIONAL, INC.
1501 BDM WAY
MCLEAN, VIRGINIA 22102-3204
(703) 848-5000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------

WITH COPIES TO:

WILLIAM J. GRANT, JR., ESQ. ROBERT H. CRAFT, JR., ESQ.
WILLKIE FARR & GALLAGHER SULLIVAN & CROMWELL
ONE CITICORP CENTER 1701 PENNSYLVANIA AVENUE, N.W.
153 EAST 53RD STREET WASHINGTON, D.C. 20006
NEW YORK, NEW YORK 10022 (202) 956-7500
(212) 821-8000

-------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
-------------------

CALCULATION OF ADDITIONAL REGISTRATION FEE

PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE TO BE PRICE PER OFFERING REGISTRATION
REGISTERED REGISTERED SHARE(1) PRICE(1) FEE(2)(3)

Common Stock, par value
$.01 per share.......... 230,000 $19.00 $4,370,000 $1,507(3)

(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(a).

(2) Does not include registration fee of $13,682 for 2,645,000 shares of Common
Stock previously registered on March 30, 1994 with the initial filing of the
registration statement, which fee was paid at such time.

(3) Represents registration fee due on additional shares of Common Stock to be
offered by the Company.

-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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BDM INTERNATIONAL, INC.
CROSS REFERENCE SHEET

Cross-reference sheet furnished pursuant to Item 501(b) of Regulation S-K
showing location in the Prospectus of information required by Items of Form S-1.

ITEM IN FORM S-1 LOCATION IN PROSPECTUS
------------------------------------------ ------------------------------------------

1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus.............................. Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................. Inside Front and Outside Back Cover Pages
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges........ Prospectus Summary; Risk Factors
4. Use of Proceeds........................... Use of Proceeds
5. Determination of Offering Price........... Underwriting
6. Dilution.................................. Dilution
7. Selling Security Holders.................. Not Applicable
8. Plan of Distribution...................... Outside Front Cover Page; Underwriting
9. Description of Securities to be
Registered................................ Description of Capital Stock
10. Interests of Named Experts and Counsel.... Validity of Common Stock; Experts
11. Information with Respect to the
Registrant................................ Prospectus Summary; The Company; Risk
Factors; Use of Proceeds; Dividend
Policy; Capitalization; Selected
Consolidated Financial Information;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Certain Transactions; Security Ownership
of Certain Beneficial Owners and
Management; Description of Capital
Stock; Shares Eligible for Future Sale
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities............................... Not Applicable

SUBJECT TO COMPLETION, DATED MAY 12, 1995

[LOGO]

2,500,000 SHARES
BDM INTERNATIONAL, INC.

COMMON STOCK
(PAR VALUE $.01 PER SHARE)
-------------------

Of the 2,500,000 shares of Common Stock offered, 2,000,000 shares are being
offered in the United States and 500,000 shares are being offered in a
concurrent international offering outside the United States. The initial public
offering price and the aggregate underwriting discount per share will be
identical for both offerings. See "Underwriting".

Prior to this offering, there has been no public market for the Common Stock
of the Company. It is currently estimated that the initial public offering price
per share will be between $17.00 and $19.00. For factors to be considered in
determining the initial public offering price. See "Underwriting".

SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN
THE COMMON STOCK.

Application has been made for the Common Stock to be approved for quotation
and trading on the Nasdaq National Market under the symbol "BDMI".

-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------

INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ -----------

Per Share..................... $ $ $
Total(3)...................... $ $ $

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(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

(2) Before deducting estimated expenses of $650,000 payable by the Company.

(3) The Company has granted the Underwriters an option for 30 days to purchase
up to an additional 375,000 shares at the initial public offering price per
share, less the underwriting discount, solely to cover over-allotments. If
such options are exercised in full, the total initial public offering price,
underwriting discount and proceeds to the Company will be $ ,
$ and $ , respectively. See "Underwriting".

-------------------

The shares offered hereby are offered severally by the U.S. Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
right to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about
, 1995.

GOLDMAN, SACHS & CO. LEHMAN BROTHERS
-------------------

The date of this Prospectus is , 1995.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

Depicted here is a graphic with no images other than the following text:

BDM . . . a multinational information technology company that operates
primarily in:

- Systems and Software Integration

- Computer and Technical Services

- Enterprise Management and Operations

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "SEC"). Such reports and other information filed with the SEC
can be inspected and copied at prescribed rates at the public reference
facilities maintained by the SEC at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the SEC's Regional Offices in New
York (7 World Trade Center, New York, New York 10007) and Chicago (Suite 1400,
Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60611).

The Company intends to furnish to its stockholders annual reports containing
audited financial statements and quarterly reports containing unaudited interim
financial information for the first three fiscal quarters of each fiscal year of
the Company.

-------------------

IN CONNECTION WITH THE OFFERINGS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMMON STOCK AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NASDAQ NATIONAL MARKET, IN THE
OVER-THE-COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.

Depicted on a fold-out page behind the front cover of the prospectus
is a graphic introducing the Company and its four decentralized
subsidiaries which contains the following:

(1) five pictures portraying examples of the Company's operations.

(2) a box containing the following text:

Systems and Software Integration ("SSI")
* Software Development
* Systems Integration
* Computer Consolidation and Migration
* Enterprise Architecture Development
* Interoperability and Standardization
* Real-Time Controls (Air Traffic Systems)
* Environmental Information Management
* Logistics Computer Systems
* Education Information Systems
* Warehouse and Distribution Systems
* Health and Human Services Systems
* Transaction Management Systems
* Computer Network Design and Integration
* Manufacturing Automation and Modernization
* Re-engineering and Change Management

Computer and Technical Services ("CTS")
* Systems Engineering and Technical Assistance
* Modeling and Simulation
* Systems and Requirements Analysis
* Test and Evaluation
* Environmental and Energy Services
* Workforce Development and Training
* Engineering Design and Development
* Telecommunications Services
* Advanced Transportation Services
* Management Consulting

Enterprise Management and Operations ("EMO")
* R & D Management
* Test Center Management
* Training Center Management
* Data Center Management

(3) a graphic showing substantially the following information:

Primary Areas Primary
of Operations Clients Headquarters
------------- ------- ------------

BDM Federal SSI, CTS Defense and McLean, Virginia
and EMO Civil Government
Agencies

BDM Technologies SSI State and Local McLean, Virginia
Governments,
Commercial

BDM Europe SSI, CTS German Government, Ottobrun, Germany
and EMO Commercial
(European)

Vinnell Corporation CTS and EMO Defense (Foreign Fairfax, Virginia
Locations), U.S.
Civil Agencies

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless the context otherwise requires, references
herein to the "Company" or "BDM" include BDM International, Inc. and its
subsidiaries. Unless otherwise indicated, all information in this Prospectus
assumes that the Underwriters' over-allotment options are not exercised.

THE COMPANY

BDM is a multinational information technology company that operates in three
interrelated markets:

. SYSTEMS AND SOFTWARE INTEGRATION. The Company creates information and
other computer-based systems that are tailored to specific public and
private sector client needs. It does so by applying commercial
off-the-shelf hardware and software, purchased from multiple vendors, to
user-oriented system solutions with integrated software developed by the
Company. BDM's expertise includes consolidating computer operations and/or
migrating from older mainframe-based computer systems to newer, more
flexible, standardized open systems based on client/server architectures
linked by local and wide-area networks. Current multi-year contracts in
this market include development and delivery of client/server as well as
mainframe-based management information and transaction processing systems,
real time control systems (such as air traffic control), automated
distribution systems and computer networks. Systems and Software
Integration revenue in 1994 was approximately $197 million (26% of total
revenue) and has grown at a compound annual growth rate of 33% since 1991
(31% excluding acquisitions).

. COMPUTER AND TECHNICAL SERVICES. The Company provides a broad range of
scientific, engineering, technical assistance and consulting services
spanning the complete life-cycle of complex programs. Typical assignments
involve system concept development, requirements analysis, training and
systems testing. Specific examples include advanced modeling and
simulation services to help clients improve planning, testing and
training; the use of image technology to enhance security and
intelligence; numerous programs in command, control, communications,
computers and intelligence to assist the U.S. military services and other
clients; and environmental remediation and waste management services.
Through this work, BDM also gains insights into its clients' operations,
identifies potential cost-effective systems solutions and thereby
positions itself to capture complex systems and software integration
opportunities. Computer and Technical Services revenue in 1994 was
approximately $491 million (63% of total revenue) and has grown at a
compound annual growth rate of 36% since 1991 (4% excluding acquisitions).

. ENTERPRISE MANAGEMENT AND OPERATIONS. The Company manages and operates
research and development centers, test facilities and logistics and
training centers on behalf of its clients. Examples include managing and
operating the U.S. government's primary petroleum energy research
facility; various European test facilities for vehicles, aircraft and
spacecraft; and five Job Corps Centers. These activities, together with
the Company's capabilities in Systems and Software Integration and
Computer and Technical Services, enable BDM to provide the full range of
services that its clients often require. Enterprise Management and
Operations revenue in 1994 was approximately $86 million (11% of total
revenue) and has grown at a compound annual growth rate of 71% since 1991
(24% excluding acquisitions).

BUSINESS STRATEGIES AND STRENGTHS

BDM is pursuing a strategy of growth and diversification through its
decentralized subsidiaries--BDM Federal, BDM Technologies, BDM Europe and
Vinnell--to become a global information technology ("IT") company. Total revenue
has grown from $297 million in 1991 to $774 million in 1994, a compound annual
growth rate of 38% (14% excluding acquisitions). Building on its core
competencies developed over 35 years of serving the U.S. Department of Defense
(the "DOD") and its reputation for high quality professional work, BDM is
transferring its expertise to selected public and private sector clients in
targeted vertical markets. The following chart illustrates how BDM has
implemented its diversification program from 1991 through 1994:

Depicted here is a bar chart displaying substantially the following
information (revenue in thousands):

Commercial, Civil Government
and International U.S. Defense
----------------- ------------

Total
Revenue Revenue % Revenue %
------- ------- --- ------- ---

1991 $297 $ 98 33% $199 67%

1992 424 211 50 213 50

1993 558 297 53 261 47

1994 774 529 68 245 32

The aggregate stated award value of new contracts won by the Company in 1994
exceeded $1 billion for the second consecutive year. No single contract
represented more than 10% of total revenue in 1994. See "Business--Company
Operations" for a description of some of the Company's contracts.

BDM attributes much of its recent performance to the following strategies
and strengths:

EMPHASIS ON INFORMATION TECHNOLOGY SYSTEMS MARKETS. BDM has placed an
emphasis on strengthening its ability to compete in the fast-growing systems and
software integration marketplace, focusing on large multi-year contracts ranging
upward from $50 million. The Company has pursued its information systems
strategy through such actions as the establishment of BDM Technologies, an IT
company focused on commercial and state and local government clients, and the
acquisition of two European companies that possess significant IT systems
capabilities. To enhance the Company's ability to compete in targeted vertical
information systems markets, the Company is developing a common IT strategy,
standardized software methodologies, and a pool of systems professionals who can
be deployed across each of its subsidiaries. The Company believes that its
position and reputation in IT markets are reflected by its dollar-based
competitive win rate of 51% of the Company's bids on contracts awarded in 1994.

government business through systems development and integration contracts, such
as its Electronic Data Gathering, Analysis and Retrieval ("EDGAR") system for
the SEC, and has built a market position in health and welfare systems for state
governments and education systems for state and local school districts. BDM's
commercial and civil government business (both international and domestic)
increased from $83 million in 1991 to $336 million in 1994, representing
approximately 43% of the Company's 1994 revenue.

GLOBAL DIVERSIFICATION. In 1994, BDM generated more revenue from
international clients ($336 million) than from all sources in 1991 ($297
million). The Company believes that its ability to serve clients on a global
basis is a competitive differentiator in the marketplace. The Company's overseas
presence allows it to project its core competencies into less competitive IT
markets which the Company believes will afford significant growth and margin
expansion opportunities. BDM has expanded vigorously into European and Middle
Eastern markets, aided by two key acquisitions, and has begun marketing in the
Pacific Rim.

FOCUSED ACQUISITION PROGRAM. The Company is experienced in identifying and
consummating acquisitions and subsequently integrating acquired businesses into
existing operations. The Company intends to continue to pursue an acquisition
program, primarily focused on expanding its position in global information
technology markets. The Company will concentrate on identifying acquisition
targets, particularly those focusing on commercial clients, which have strong
existing management teams in place that can be integrated into BDM's
decentralized operating structure within a common overall strategy.

THE OFFERINGS

Common Stock offered hereby(1):
United States Offering................... 2,000,000
International Offering................... 500,000
Total.................................. 2,500,000
Total Common Stock to be outstanding after
the Offerings(1)(2)(3)....................... 11,975,656
Proposed Nasdaq National Market Symbol....... BDMI
Use of proceeds.............................. To repay a portion of the Company's
outstanding bank debt and certain acquisition
indebtedness.

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(1) Does not include 375,000 shares of Common Stock, par value $.01 per share
("Common Stock") of the Company that are subject to the over-allotment
options granted by the Company to the Underwriters. See "Underwriting."

(2) Includes 400,000 shares of outstanding Class B Common Stock, par value $.01
per share ("Class B Common Stock"), which shares are identical in almost all
respects to shares of Common Stock, except that shares of Class B Common
Stock only have voting rights to the extent required by the General
Corporation Law of the State of Delaware (the "DGCL"). There are currently
two holders of Class B Common Stock, which are both subject to independent
regulatory restraints on the ownership of voting securities. Shares of Class
B Common Stock are convertible into shares of Common Stock on a one-for-one
basis upon their disposition in connection with a public offering, in a sale
pursuant to Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"), following a public offering or in certain other
circumstances. See "Description of Capital Stock--Common Stock and Class B
Common Stock."

(3) For information regarding Common Stock issuable upon exercise of outstanding
options, see footnote 1 to "Capitalization." As used in this Prospectus,
references to the "U.S. Offering" shall mean the offering of shares of
Common Stock pursuant to this Prospectus in the United States, and
references to the "International Offering" shall mean the offering of such
shares outside the United States. The U.S. Offering and the International
Offering shall be referred to herein collectively as the "Offerings."

SUMMARY FINANCIAL INFORMATION

THREE MONTHS ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED DECEMBER 31,
------------------- -----------------------------------------
1995 1994 1994(1) 1993(1) 1992(2) 1991(3)
-------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

SUMMARY OF OPERATIONS DATA:
Revenue........................... $191,901 $165,163 $774,249 $558,292 $424,389 $296,798
Cost of sales..................... 156,989 135,334 643,728 460,186 348,191 236,165
Selling, general and
administrative.................. 19,385 19,373 82,950 63,847 41,940 32,328
Depreciation, amortization and
other........................... 5,622 4,899 20,627 12,089 14,802 18,650
-------- -------- -------- -------- -------- --------
Operating profit.................. 9,905 5,557 26,944 22,170 19,456 9,655
Interest expense, net............. 1,121 248 3,481 4,178 5,302 6,425
Equity in earnings of
affiliates...................... (332) (386) (1,841) (2,223) (1,852) --
Minority interest................. 2,227 582 2,526 1,555 -- --
-------- -------- -------- -------- -------- --------
Income before income taxes........ 6,889 5,113 22,778 18,660 16,006 3,230
Provision for income taxes........ 3,555 2,205 9,700 7,632 6,552 2,710
-------- -------- -------- -------- -------- --------
Income before extraordinary gain
and cumulative effect of
accounting change................. 3,334 2,908 13,078 11,028 9,454 520
Extraordinary gain, net of tax.... -- -- -- 413 -- --
Cumulative effect of accounting
change.......................... -- -- -- -- (115) --
-------- -------- -------- -------- -------- --------
Net income........................ $ 3,334 $ 2,908 $ 13,078 $ 11,441 $ 9,339 $ 520
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
EARNINGS PER SHARE:
Income before extraordinary gain
and cumulative effect of
accounting change................. $ 0.33 $ 0.24 $ 1.20 $ 0.92 $ 0.81 $ 0.05
Extraordinary gain................ -- -- -- 0.03 -- --
Cumulative effect of accounting
change.......................... -- -- -- -- (0.01) --
-------- -------- -------- -------- -------- --------
Net income........................ $ 0.33 $ 0.24 $ 1.20 $ 0.95 $ 0.80 $ 0.05
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------

AS OF MARCH 31,
(UNAUDITED) AS OF DECEMBER 31,
------------------- -----------------------------------------
1995(4) 1994 1994(4) 1993(1) 1992(2) 1991(3)
-------- -------- -------- -------- -------- --------
(IN THOUSANDS)

BALANCE SHEET DATA:
Current assets.................... $238,933 $210,519 $270,079 $242,800 $135,775 $105,220
Total assets...................... 304,778 271,883 335,551 303,436 174,816 133,577
Current liabilities............... 158,760 121,387 175,165 161,052 81,033 48,525
Long-term debt.................... 60,130 53,593 82,750 48,480 38,423 40,940
Stockholders' equity.............. 44,429 65,204 41,105 62,909 54,932 44,112

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(1) On November 16, 1993, the Company acquired a 45% interest in
Industrieanlagen-Betriebsgesellschaft mbH ("IABG"), a company formerly owned
indirectly by the German Government, and entered into an agreement which
gives the Company voting control of IABG and permits the Company to manage
IABG's operations. The Company's financial statements consolidate IABG's
financial position and results of operations and report the remaining
owners' 55% interest as a minority interest. This acquisition was accounted
for as a purchase, and the Company's consolidated results of operations
include IABG from the date of its acquisition through its subsidiary, BDM
Europe.

(2) On March 13, 1992, the Company acquired the outstanding common stock of
Vinnell Corporation ("Vinnell") for approximately $29.6 million, including
transaction expenses. This acquisition was accounted for as a purchase and
the Company's consolidated results of operations include Vinnell from the
date of its acquisition.

(3) The Company was acquired in an investor and management led buyout on October
23, 1990. The acquisition was accounted for as a purchase and $93.5 million
of indebtedness of the Company related to the buyout was incurred. The
results of 1991 and 1990 reflect certain one-time acquisition-related
expenses.

(4) The decline in stockholders' equity and increase in long-term debt reflects
the impact of the repurchase of 2.6 million shares of Common Stock and Class
B Common Stock for $36.4 million on May 27, 1994.

RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be carefully considered when evaluating an
investment in the shares of Common Stock offered hereby.

CONCENTRATION OF REVENUE

Approximately 49%, 69%, 76% and 90% of the Company's total revenue in 1994,
1993, 1992 and 1991, respectively, was derived from contracts or subcontracts
funded by the U.S. Government, which includes contracts funded by the DOD that
accounted for approximately 32%, 47%, 50% and 67% of the Company's total revenue
in such years, respectively. Although the percentage of the Company's revenue
that is derived from U.S. Government contracts has decreased, the Company
believes that the success and development of its business will continue to be
dependent upon its ability to participate in U.S. Government contract programs.
Accordingly, the Company's financial performance may be directly affected by
changes in U.S. Government contracting policies. Among the factors that could
materially adversely affect the Company's government contracting business are
budgetary constraints, changes in fiscal policies or available funding, changes
in government programs or requirements, including proposals to abolish certain
government agencies or departments, curtailment of the U.S. Government's use of
technology services firms, the adoption of new laws or regulations,
technological developments and general economic conditions. These factors could
cause U.S. Government agencies to exercise their right to terminate existing
contracts for convenience or not to exercise options to renew.

Certain of the Company's contracts individually contribute a significant
percentage of the Company's revenue. In 1994, the Company's largest contract (by
revenue) generated approximately 9% of the Company's total revenue, and the ten
largest and 30 largest contracts (by revenue) generated approximately 37% and
53% of the Company's total revenue, respectively. Termination of such contracts,
or the Company's inability to renew or replace such key contracts when they
expire, could have a material adverse effect on the Company.

Approximately 16% and 14% of the Company's revenue in 1994 was derived from
contracts funded by the Saudi and the German governments, respectively. See
"--International Operations".

CONTRACTS WITH U.S. FEDERAL, STATE AND LOCAL GOVERNMENTS

U.S. Government contracts, by their terms, generally can be terminated at
any time by the U.S. Government, without cause, for the convenience of the U.S.
Government. If a U.S. Government contract is so terminated, the Company would be
entitled to receive compensation for the services provided or costs incurred
through the time of termination and a negotiated amount of profit on the
contract. Government contractors who fail to comply with applicable government
procurement-related statutes and regulations may also be subject to potential
contract termination, suspension or debarment from contracting with the
Government, or other remedies. Most U.S. Government contracts are also subject
to modification in the event of changes in funding, and the Company's
contractual costs and revenue are subject to adjustment as a result of audits by
the Defense Contract Audit Agency ("DCAA") and other U.S. Government auditors.
Further, U.S. Government contract awards may be protested by competitors.

The Company in the ordinary course of its business occasionally performs
services for U.S. Government clients in advance of receiving a funded
contractual document. The Company does so with the expectation that such
contractual authorization will be obtained. As of December 31, 1994, the Company
had recognized no material amounts of revenue for U.S. Government clients for
which

funding had not been obtained; however, no assurance can be given that the
Company will not experience material losses relating to this practice in the
future.

Approximately $45 million in revenue (6% of total revenue) in 1994 was
derived from subcontracts with prime contractors on U.S. Government contracts.
Accordingly, the Company may be adversely affected if a prime contractor fails
to perform satisfactorily or is unable or unwilling, for financial or other
reasons, to meet its obligations to the Company.

Many of the types of provisions governing U.S. Government contracts
described above also apply to the Company's contracts with state and local
governments and their agencies. In addition, with respect to state and local
government clients, budgeting pressures and other financial constraints may
result in reductions in funding of various state and local government programs,
which may affect the ability of the Company to obtain new contracts with state
and local governments, cause state and local governments to exercise their right
to terminate existing contracts for convenience or not to exercise their options
thereunder and may result in the extension of the procurement and contract
funding process over a longer period of time.

INTERNATIONAL OPERATIONS

The Company has recently increased its efforts to build its presence in
international markets. The Company recognized approximately $336 million in
revenue (43% of total revenue) in 1994 from contracts funded by international
clients. While management believes that BDM's experience serving the domestic
market translates into an ability to serve international markets, no assurance
can be given that the Company's efforts will succeed.

The Company recognized approximately $194 million in revenue (25% of total
revenue) in 1994 from contracts with foreign defense agencies and approximately
$54 million in revenue (7% of total revenue) in 1994 from contracts with other
foreign government agencies. A significant amount of this revenue was derived
from contracts funded by foreign governments under the U.S. Government's Foreign
Military Sales ("FMS") program. FMS contracts involve the provision of services
to certain foreign governments, procured through U.S. Government contracting
mechanisms, but funded by the foreign governments themselves. The Company could
be materially adversely affected as a result of any political instability or
financial constraints experienced, or decisions to decrease funding, by such
foreign governments.

In 1993, the Company acquired a 45% interest in IABG pursuant to a plan of
privatization by the German Government. In connection with the acquisition, the
Company entered into an agreement by which the Company votes 53% of the shares
of IABG except in those instances in which the German Federal Ministry of
Defense determines that an issue before the shareholders affects German national
security interests. In addition, BDM has received an informal commitment from
the German Government to use its best efforts to continue to direct business to
IABG through 1996, although there can be no assurance that IABG will receive
such business. This commitment will terminate at the end of 1996.

ENTRY INTO NEW MARKETS

The Company has continued to diversify into new markets. These markets for
services offered by the Company are highly competitive, with numerous
competitors having substantially greater experience, market presence and
resources than the Company. There can be no assurance that the Company will be
successful in future efforts to enter into these markets.

CONTRACT PROFIT EXPOSURES

The Company's services are provided primarily through three types of
contracts: fixed-price, time-and-material and cost-reimbursable contracts.
Approximately 30% of the Company's total revenue in 1994 was attributable to
fixed-price contracts which require the Company to perform services under a
contract at a stipulated price. The Company derived approximately 27% of its
total revenue during the same period from time-and-material contracts which
reimburse the Company for the number of labor hours expended at established
hourly rates negotiated in the contract, plus the cost of materials incurred.
The balance of the Company's contracts (approximately 43%) are cost-reimbursable
contracts under which the Company is reimbursed for all actual costs incurred in
performing the contract to the extent that such costs are within the contract
ceiling and allowable under the terms of the contract, plus a fee or profit.

The Company assumes greater financial risk on fixed-price type contracts
than on either time-and-material or cost-reimbursable contracts. As the Company
increases its commercial business, it believes that an increasing percentage of
its contracts will be fixed-price. Failure to anticipate technical problems,
estimate costs accurately or control costs during performance of a fixed-price
contract may reduce the Company's profit or cause a loss. Greater risks are
involved under time-and-material contracts than under cost-reimbursable
contracts because the Company assumes the responsibility for the delivery of
specified skills at a fixed hourly rate. Although management believes that
adequate provision for its fixed-price and time-and-material contracts is
reflected in the Company's financial statements, no assurance can be given that
this provision is adequate or that losses on fixed-price and time-and-material
contracts will not occur in the future.

COMPETITION

The markets for the Company's services are highly competitive. The Company's
competitors include large, diversified firms with substantially greater
financial resources and larger technical staffs than the Company as well as
firms which receive preferences under government set-aside programs. The U.S.
Government's in-house capabilities, federal (nonprofit) contract research
centers, and universities are also competitors of the Company because they
perform certain types of services that might otherwise be performed by the
Company. For commercial and state and local clients, the Company also faces
competition from in-house capabilities resident in client organizations.

ACQUISITIONS AND STRATEGIC ALLIANCES

The Company has made several acquisitions since its formation and may make
additional acquisitions in areas related to its current lines of business.
Although the Company is not currently engaged in any material acquisitions, the
Company's strategy is to grow through acquisition as well as internally.
However, no assurance can be given that the Company will make additional
acquisitions, that past or future acquisitions will prove to be successful or
that the Company will successfully manage the growth attributable to such
acquisitions. Moreover, the Company has incurred, and may incur, substantial
debt and non-cash amortization expenses in making acquisitions.

The Company has formed strategic alliances in the form of joint ventures to
gain access to markets in Oman, Saudi Arabia, Turkey and Egypt. As the Company
seeks to expand internationally, it may be necessary to form new strategic
alliances to gain access to particular foreign markets. No assurance can be
given, however, that the Company will be able to maintain its existing alliances
or form new desirable alliances in the future. See "Business--Joint Ventures in
the Middle East."

ENVIRONMENTAL MATTERS

One of the Company's subsidiaries, Vinnell, along with another potentially
responsible party ("PRP"), entered into a consent decree with the Environmental
Protection Agency ("EPA") in 1992, by which Vinnell and the other PRP are
obligated to reimburse the EPA for costs incurred in its assessment and
monitoring and to undertake work to address the environmental exposure as
defined in the consent decree relating to an asbestos mine owned by Vinnell
prior to the time Vinnell was acquired by the Company. Operations at such mine
ceased in May 1974. Although management believes that its accrual for this
contingency is sufficient to cover costs to be incurred related to the
subsidiary's performance pursuant to the consent decree, there can be no
assurance that additional costs will not be incurred. Another of the Company's
subsidiaries was previously notified by the Massachusetts Department of
Environmental Protection that it is also one of several PRP's in an
environmental matter arising as a result of work performed on a contract with
the United States Air Force ("USAF") in 1986. The Company has been, and
management believes the Company will continue to be, reimbursed by the USAF for
all costs incurred in connection with addressing the claimed environmental
hazard associated with the former contract. See Note 17 of the Notes to
Consolidated Financial Statements. In addition, the Company anticipates
increasing its environmental consulting activity which includes work related to
environmental remediation. Such business may expose the Company to additional
environmental risks in the future.

STAFFING REQUIREMENTS

The Company's business is dependent on its ability to attract, retain and
mobilize a highly trained technical staff. An inability to maintain a sufficient
number of trained personnel or to relocate or position such personnel on certain
contracts performed at remote locations could have a material adverse effect on
the Company's contract performance or its ability to capitalize on market
opportunities.

PROPRIETARY INFORMATION

The Company believes that its business is dependent on its technical and
organizational knowledge, practices and procedures. The Company claims a
proprietary interest in certain of its work products, software programs,
methodologies and know-how. Some of the proprietary information is protected by
confidentiality agreements and other means. There can be no assurance, however,
that these measures will prevent the unauthorized disclosure or use of the
Company's technical knowledge, practices and procedures or that others may not
independently develop similar knowledge, practices or procedures.

The U.S. Government has certain proprietary rights to software programs and
other products that result from the Company's services under U.S. Government
contracts or subcontracts. The U.S. Government may disclose such information to
third parties, including competitors of the Company. In the case of
subcontracts, the prime contractors may also have certain rights to such
programs and products.

CONTROL BY CURRENT STOCKHOLDERS

Upon completion of the Offerings, The Carlyle Partners Leveraged Capital
Fund I, L.P. ("The Carlyle Fund"), BDM Acquisition Partners II, L.P. ("BDM
Acquisition II") and BDM Acquisition Partners, L.P. ("BDM Partners"), three
limited partnerships controlled by The Carlyle Group, L.P. ("Carlyle"), will
have, in the aggregate, approximately 50% of the Company's voting power (or
48% if the Underwriters' over-allotment options are exercised in full).
Consequently, since it will have approximately 50% of the Company's voting
power upon completion of the Offerings, Carlyle will be able to elect all of
the directors of the Company. Further, Carlyle will be able to control the
outcome of all matters submitted to a vote of the Company's stockholders, as
well as the Company's management, operations and policies. See "Certain
Transactions--Stockholders Agreement."

Certain agreements to which the Company is a party contain provisions that
may have the effect of deterring a change in control of the Company. Options
granted under the 1990 and 1994 Stock Option Plans will immediately vest upon a
merger in which the Company is not the surviving entity or upon a sale of
substantially all the assets or more than 80% of the then outstanding capital
stock of the Company. In addition, an Investor Stock Purchase Agreement, dated
October 23, 1990, between the Company and certain stockholders, as amended (the
"Investor Agreement") restricts the transferability of the Company's securities
held by Carlyle and such stockholders. See "Certain Transactions--Stockholders
Agreement" and "--Investor Agreement."

ABSENCE OF A PUBLIC MARKET AND POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Offerings, there has been no regular public market for the
Common Stock, and there can be no assurance that a regular trading market will
develop or be sustained after the Offerings. The initial public offering price
for the Common Stock will be determined through negotiations between the Company
and the Underwriters based on factors described under the caption "Underwriting"
and may not be indicative of the market price after the Offerings. Additionally,
while there has been no material trading in the Common Stock, the Common Stock
has been subject to periodic independent valuation by an independent appraisal
company for the purpose of determining fair market value for the issuance of
incentive stock options. According to the most recent such valuation, the Common
Stock was valued at $17.25 per share as of March 9, 1995 based on the number of
shares outstanding at such time. This valuation reflects an illiquidity discount
due to the absence of a public market.

The market price for the Common Stock may be highly volatile. The Company
believes that factors such as announcements by it, or its competitors or
suppliers, or quarterly variances in financial results could cause the market
price of the Common Stock to fluctuate substantially. In addition, the stock
market may experience extreme price and volume fluctuations which often are
unrelated to the operating performance of specific companies. Market
fluctuations or perceptions regarding the Company's industry, as well as general
economic or political conditions, may adversely affect the market price of the
Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

under the 1994 Stock Option Plan pursuant to which options to purchase 188,282
shares have been granted. If registered, such shares will be freely tradable as
described above. An additional 360,000 shares of Common Stock are reserved for
issuance under the Company's Employee Stock Purchase Plan (the "Employee Stock
Purchase Plan") of which 231,748 shares have been issued as of March 31, 1995,
and are freely tradable without restriction under the Securities Act. The
remaining 7,653,515 shares of issued and outstanding Common Stock and Class B
Common Stock were acquired in transactions that were exempt from registration
under the Securities Act and consequently may not be resold unless they are
registered under the Securities Act or are sold pursuant to an applicable
exemption from registration, including Rule 144 under the Securities Act. See
"Shares Eligible For Future Sale."

Pursuant to the Investor Agreement, the stockholders who are subject thereto
have certain demand and piggy-back registration rights. See "Shares Eligible for
Future Sale--Registration Rights."

DILUTION

Purchasers of the shares of Common Stock offered hereby will incur immediate
and substantial dilution in the net tangible book value of their investment. See
"Dilution."

THE COMPANY

BDM is a multinational information technology company that operates in three
interrelated markets:

BUSINESS STRATEGIES AND STRENGTHS

BDM is pursuing a strategy of growth and diversification through its
decentralized subsidiaries--BDM Federal, BDM Technologies, BDM Europe and
Vinnell--to become a global IT company. Total revenue has grown from $297
million in 1991 to $774 million in 1994, a compound annual growth rate of 38%
(14% excluding acquisitions). Building on its core competencies developed over
35 years of serving the DOD and its reputation for high quality professional
work, BDM is transferring its expertise to selected public and private sector
clients in targeted vertical markets.

BDM attributes much of its recent performance to the following strategies
and strengths:

EXPANSION INTO TARGETED MARKETS. The Company has successfully transitioned
its expertise gained from work with the DOD into such vertical markets as
environmental/waste management, energy research and development, air traffic
control, work force development and training, education technologies, health and
human services information management, and manufacturing and distribution
automation for civil government and commercial clients. BDM has penetrated the
civil government business through systems development and integration contracts,
such as its EDGAR system for the SEC, and has built a market position in health
and welfare systems for state governments and education systems for state and
local school districts. BDM's commercial and civil government business (both
international and domestic) increased from $83 million in 1991 to $336 million
in 1994, representing approximately 43% of the Company's 1994 revenue.

CORPORATE HISTORY

The Company was formed in 1959 by Drs. Joseph V. Braddock, Bernard J. Dunn
and Daniel F. McDonald as "Braddock, Dunn & McDonald, Incorporated," which was
later reorganized as BDM International, Inc. (the "Predecessor Company"). The
Predecessor Company was a public company from 1980 until 1988, when Ford
Aerospace, then a wholly owned subsidiary of Ford Motor Company ("Ford"),
acquired all of the outstanding stock of the Predecessor Company.

In October 1990, on behalf of certain investors, Carlyle, a private
merchant banking firm, formed BDM Holdings, Inc. ("Holdings"), a Delaware
corporation, and a wholly owned subsidiary corporation named New BDM, Inc.
("New BDM"), which acquired substantially all of the assets of the
Predecessor Company (the "1990 Acquisition"). See "Certain Transactions--1990
Acquisition." Shortly after the 1990 Acquisition, New BDM changed its name
to BDM International, Inc. In December 1992, Holdings and BDM International,
Inc. changed their names to BDM International, Inc. and BDM Federal, Inc.
("BDM Federal"), respectively.

In February 1991, the Company sold 1,339,217 shares of Common Stock at a
purchase price of $4.00 per share to certain employees, directors and
consultants of the Company in an offering (the "1991 Offering") registered under
the Securities Act, and sold an additional 1,500,000 shares of Common Stock to
Carlyle at a purchase price of $4.00 per share. Since the 1991 Offering, the
Company has filed reports under the Exchange Act; however, there has been no
public market for the Common Stock. See "Available Information."

In March 1992, the Company acquired the outstanding common stock of Vinnell,
a company that provides training and logistics services largely in the Middle
East. In January 1993, the Company began operating a new subsidiary, BDM
Technologies, Inc. ("BDM Technologies"), to focus on commercial and state and
local government clients. Effective January 1, 1993, a new subsidiary, BDM
Europe BV ("BDM Europe"), acquired two European businesses, FACE Industrial
Automation BV and Logisticon BV, and merged them into a single entity called
FACE Holding BV ("FACE"), located in Eindhoven, The Netherlands. FACE provides
systems integration and technical services to industrial clients, primarily in
the areas of automated distribution and advanced manufacturing systems. In
November 1993, BDM Europe acquired management control, through a 45% ownership
interest, in IABG, a German company that provides test and evaluation and
information services, principally to the German Government. The interest was
acquired primarily from Industrieverwaltungsgesellschaft AG ("IVG") under a
privatization plan approved by the relevant ministries of the German Government,
the principal owner of IVG. In February 1994, the Company acquired Geoscience
Consultants, Ltd. ("GCL"), a company that provides environmental assessment and
engineering services to industrial and governmental clients, which is reported
under BDM Federal.

The Company's headquarters and executive offices are located at 1501 BDM
Way, McLean, Virginia 22102-3204, and its telephone number is (703) 848-5000.

USE OF PROCEEDS

The Company intends to use the net proceeds from the sale of the 2,500,000
shares of Common Stock offered by the Company, estimated to be approximately
$41,200,000 (based on an assumed initial public offering price of $18.00 per
share, the midpoint of the range stated on the cover page hereof, and after
deduction of the underwriting discounts and commissions and estimated expenses
payable by the Company), to repay outstanding debt under a credit agreement
dated July 20, 1993, among the Company, certain subsidiaries of the Company and
the banking institutions named therein, with CoreStates Bank, N.A. as Agent, as
amended (the "Credit Facility") and under a subordinated promissory note given
in connection with the acquisition of Vinnell (the "Vinnell Note"). Pending
application of the net proceeds, the Company will invest such net proceeds in
short-term marketable securities.

As of March 31, 1995, borrowings under the Credit Facility, totalled $60
million. The Credit Facility bears interest at a variable rate, which, as of
March 31, 1995, was approximately 8.4% per annum, and matures on July 20, 1998.
Borrowings under the Credit Facility during 1994 were used to repurchase
2,600,000 shares of Common Stock and Class B Common Stock from certain
shareholders and for general working capital purposes. The aggregate principal
amount outstanding under the Vinnell Note, as of March 31, 1995, was $3.7
million. The Vinnell Note bears interest at the rate of 10% per annum and
matures on March 13, 1996. See "Certain Transactions--1990 Acquisition,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Dividend Policy" and Note 9 of
the Notes to Consolidated Financial Statements.

DIVIDEND POLICY

The Company does not have a policy of paying regular dividends and has no
present intention of paying any dividends. The payment of dividends is subject
to the discretion of the Board of Directors of the Company and will depend on
the Company's results of operations, financial position and capital
requirements; general business conditions; restrictions imposed by financing
arrangements, if any; legal and regulatory restrictions on the payment of
dividends; and other factors, such as continued growth opportunities in which to
invest, which the Board of Directors deem relevant. The Company paid a dividend
on December 15, 1993, of $.50 per share of Common Stock and Class B Common
Stock. The payment of future dividends by the Company should not be assumed.

DILUTION

The net tangible book value of the Company at March 31, 1995, was $31.8
million, or $3.35 per share. Net tangible book value per share represents the
amount of total tangible assets less total liabilities, divided by the number of
shares of Common Stock and Class B Common Stock outstanding. As the following
table demonstrates, after giving effect to the sale of 2,500,000 shares of
Common Stock by the Company in the Offerings, at an assumed initial public
offering price of $18.00 per share, the midpoint of the range stated on the
cover page hereof, and after deducting anticipated offering expenses and
underwriting discounts and commissions, the pro forma net tangible book value of
the Company at March 31, 1995, would have been $73.0 million, or $6.09 per
share, representing an immediate $11.91 per share dilution to new investors
purchasing shares of Common Stock at the assumed initial public offering price.

Assumed initial public offering price per share..................... $18.00
Net tangible book value per share before the Offerings............ 3.35
Increase per share attributable to new investors.................. 2.74
----
Pro forma net tangible book value per share after the Offerings..... 6.09
------

Dilution per share to new investors(1)(2)........................... $11.91
------
------

- ------------

(1) As of March 31, 1995, there were outstanding options to purchase 81,979
shares of Common Stock at an average exercise price of $.01 per share under
the Management Incentive Stock Purchase Program and 1,499,606 shares of
Common Stock at exercise prices of $4.00-- $17.25 per share under the 1990
and 1994 Stock Option Plans. See "Management--Management Incentive Stock
Purchase Program" and "--1990 and 1994 Stock Option Plans." If all the
options outstanding as of March 31, 1995 under the Management Incentive
Stock Purchase Program and the 1990 and 1994 Stock Option Plans were to be
immediately converted to Common Stock, dilution per share to new investors
would be $12.62.

(2) On May 5, 1995, the Company granted additional options to purchase 57,500
shares of Common Stock. See "Management Incentive Stock Purchase Program"
and "--1990 and 1994 Stock Option Plans."

CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1995 and as adjusted to reflect the sale of the 2,500,000 shares of Common
Stock by the Company (at an assumed initial public offering price of $18.00 per
share, the midpoint of the range stated on the cover page hereof) and the
application of the net proceeds therefrom. See "Use of Proceeds." This table
should be read in conjunction with the Selected Consolidated Financial
Information, the Consolidated Financial Statements and the related notes
thereto included elsewhere in this Prospectus.

MARCH 31, 1995
(UNAUDITED)
-----------------------
AS
ACTUAL ADJUSTED(2)
-------- -----------
(IN THOUSANDS)

Current portion of Long-term debt............................ $ 4,183 $ 483
======== =========
Long-term debt............................................... $ 60,130 $ 22,630
Stockholders' equity
Preferred stock, $.01 par value; 500,000 shares
authorized, none issued.................................. -- --
Common stock, $.01 par value; 52,000,000 shares authorized;
9,475,656 issued and outstanding at March 31, 1995
(11,975,656 issued and outstanding as adjusted)(1)....... 95 120
Additional paid-in capital................................. 11,968 53,143
Retained earnings............................................ 32,366 32,366
-------- -----------
Total stockholders' equity............................. 44,429 85,629
-------- -----------
Total capitalization................................... $104,559 $ 108,259
-------- -----------
-------- -----------

- ------------

(1) Does not include, as of March 31, 1995, 81,979 shares of Common Stock
issuable in connection with outstanding options granted to certain members
of management under the Management Incentive Stock Purchase Program and
1,499,606 shares of Common Stock issuable in connection with outstanding
options granted to certain officers and key employees under the 1990 and
1994 Stock Option Plans. On May 5, 1995, the Company granted additional
options to purchase 57,500 shares of Common Stock. See
"Management--Management Incentive Stock Purchase Program" and "--1990 and
1994 Stock Option Plans."

(2) Adjusted to reflect the sale by the Company of 2,500,000 shares in the
Offerings, at the initial public offering price of $18.00 per share net of
underwriters' fees and other expenses, and the anticipated use of the net
proceeds to pay a portion of the Company's outstanding bank debt and certain
acquisition indebtedness.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

The consolidated statement of operations data set forth below with respect
to the calendar years ended December 31, 1994, 1993, 1992, 1991 and 1990 and the
consolidated balance sheet data at December 31, 1994, 1993, 1992, 1991 and 1990
have been derived from, and are qualified by reference to, the Company's
consolidated financial statements and notes thereto audited by Coopers & Lybrand
L.L.P., independent accountants. The consolidated statement of operations data
for the nine months ended September 30, 1990 reflect operations of the
Predecessor Company. See "The Company--Corporate History." The consolidated
statement of operations data for the three months ended March 31, 1995 and 1994
and the consolidated balance sheet data at March 31, 1995 are unaudited but have
been prepared on the same basis as the audited consolidated financial statements
and, in the opinion of management, contain all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the results
of operations for such periods. The consolidated results of operations for the
three months ended March 31, 1995 are not necessarily indicative of results to
be expected for any future period. The selected consolidated financial data set
forth below should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and notes thereto included elsewhere in this Prospectus.

THREE NINE
MONTHS MONTHS
THREE MONTHS ENDED ENDED
ENDED DECEMBER SEPTEMBER
MARCH 31, 31, 30,
(UNAUDITED) YEAR ENDED DECEMBER 31, 1990 1990
------------------- ----------------------------------------- -------- ----------
1995 1994 1994(1) 1993(1) 1992(2) 1991(3) 1990(3) 1990(3)(4)
-------- -------- -------- -------- -------- -------- -------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
SUMMARY OF OPERATIONS DATA:

Revenue............... $191,901 $165,163 $774,249 $558,292 $424,389 $296,798 $74,048 $232,216
Cost of sales......... 156,989 135,334 643,728 460,186 348,191 236,165 58,076 193,272
Selling, general and
administrative........ 19,385 19,373 82,950 63,847 41,940 32,328 8,769 27,660
Depreciation,
amortization and
other................. 5,622 4,899 20,627 12,089 14,802 18,650 3,959 14,401
-------- -------- -------- -------- -------- -------- -------- ----------
Operating profit...... 9,905 5,557 26,944 22,170 19,456 9,655 3,244 (3,117)
Interest expense,
net................... 1,121 248 3,481 4,178 5,302 6,425 1,723 (1,540)
Equity in earnings of
affiliates............ (332) (386) (1,841) (2,223) (1,852) -- -- --
Minority interest..... 2,227 582 2,526 1,555 -- -- -- --
-------- -------- -------- -------- -------- -------- -------- ----------
Income before income
taxes................. 6,889 5,113 22,778 18,660 16,006 3,230 1,521 (1,577)
Provision for income
taxes................. 3,555 2,205 9,700 7,632 6,552 2,710 1,190 2,717
-------- -------- -------- -------- -------- -------- -------- ----------
Income before
extraordinary gain
and cumulative effect
of accounting
change................ 3,334 2,908 13,078 11,028 9,454 520 331 (4,294)
Extraordinary gain,
net of tax........... -- -- -- 413 -- -- -- --
Cumulative effect of
accounting change..... -- -- -- -- (115) -- -- --
-------- -------- -------- -------- -------- -------- -------- ----------
Net income............ $ 3,334 $ 2,908 $ 13,078 $ 11,441 $ 9,339 $ 520 $ 331 $ (4,294)
-------- -------- -------- -------- -------- -------- -------- ----------
-------- -------- -------- -------- -------- -------- -------- ----------
EARNINGS PER SHARE:
Income before
extraordinary gain
and cumulative effect
of accounting
change................ $ 0.33 $ 0.24 $ 1.20 $ 0.92 $ 0.81 $ 0.05 $ 0.04 N/A
Extraordinary gain.... -- -- -- 0.03 -- -- --
Cumulative effect of
accounting change..... -- -- -- -- (0.01) -- --
-------- -------- -------- -------- -------- -------- -------- ----------
Net income............ $ 0.33 $ 0.24 $ 1.20 $ 0.95 $ 0.80 $ 0.05 $ 0.04 N/A
-------- -------- -------- -------- -------- -------- -------- ----------
-------- -------- -------- -------- -------- -------- -------- ----------

AS OF MARCH 31,
(UNAUDITED) AS OF DECEMBER 31,
------------------- ----------------------------------------------------
1995(5) 1994 1994(5) 1993(1) 1992(2) 1991(3) 1990(3)(6)
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
BALANCE SHEET DATA:

Current assets........ $238,933 $210,519 $270,079 $242,800 $135,775 $105,220 $115,890
Total assets.......... 304,778 271,883 335,551 303,436 174,816 133,577 153,087
Current liabilities... 158,760 121,387 175,165 161,052 81,033 48,525 45,406
Long-term debt........ 60,130 53,593 82,750 48,480 38,423 40,940 67,350
Stockholders'
equity................ 44,429 65,204 41,105 62,909 54,932 44,112 30,331

- ------------

(1) On November 16, 1993, the Company acquired a 45% interest in IABG, and
entered into an agreement which gives the Company voting control of IABG and
permits the Company to manage IABG's operations. The Company's financial
statements consolidate IABG's financial position and results of operations
and report the remaining owners' 55% interest as a minority interest. This
acquisition was accounted for as a purchase, and the Company's consolidated
results of operations include IABG from the date of its acquisition through
its subsidiary, BDM Europe.

(2) On March 13, 1992, the Company acquired the outstanding common stock of
Vinnell for approximately $29.6 million, including transaction expenses.
This acquisition was accounted for as a purchase and the Company's
consolidated results of operations include Vinnell from the date of its
acquisition.

(4) Per share data for the nine months ended September 30, 1990 are not
applicable because the Company was a wholly owned subsidiary of Ford
Aerospace Corporation ("Ford Aerospace") for that period.

(5) The decline in stockholders' equity and increase in long-term debt reflects
the impact of the repurchase of 2.6 million shares of Common Stock and Class
B Common Stock for $36.4 million on May 27, 1994.

(6) Balance sheet data for 1990 reflect purchase accounting adjustments made
relating to the sale of the Company in 1990. See "The Company--Corporate
History."

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

In 1994, the Company achieved significant growth in revenue and net income,
as well as success in its diversification strategy, strengthening its position
as a multinational information technology company. With revenue of $774.2
million and net income of $13.1 million, 1994 was the third consecutive year of
significant growth, from a revenue base of $296.8 million and a net income base
of $0.5 million in 1991. The Company is pursuing its strategic markets--Systems
and Software Integration, Computer and Technical Services, and Enterprise
Management and Operations--through both internal growth and acquisitions.

Internal growth has been focused on Systems and Software Integration
activities where the Company has transferred its core competencies developed in
connection with DOD programs to commercial, international and U.S. civil
government clients. In addition, the Company formed BDM Technologies in 1993 to
provide greater focus on commercial and state government clients by, in part,
using expertise developed historically within BDM Federal. In its two years of
existence, BDM Technologies has grown rapidly and built a solid, full-service IT
business.

Acquisitions have been integral to BDM's growth and diversification
strategy. The acquisition of Vinnell in 1992 increased the Company's presence in
the Middle East and its access to federal civil government opportunities. BDM
Europe was formed with the purchase of FACE in 1993 to provide access to
commercial clients in The Netherlands and other European countries that can
utilize the Company's capabilities in such areas as warehouse automation and
advanced manufacturing services. BDM Europe was significantly expanded with the
Company's acquisition of a 45% interest in IABG in 1993 providing access to
growing German and Central European markets. The Company believes that the
European IT markets are less mature and therefore offer significant
opportunities for growth.

BDM targets growing markets in which it can draw upon its broad range of IT
and related expertise to win business with both public and private sector
clients, while continuing to focus on its U.S. defense business. Through a
combination of internal growth and acquisitions, the Company's client base has
evolved from one in which contracts with the DOD accounted for approximately 67%
of total revenue in 1991 to a diversified client base in which DOD contracts
accounted for approximately 32% of total revenue in 1994.

The combination of internal growth and acquisitions has fundamentally
changed BDM into a much larger, international company offering a wide variety of
services targeted at growing vertical markets in the United States and abroad.
The Company's diversification has also enhanced its financial results and
condition and has helped generate contract awards in 1994 exceeding $1 billion
for the second year in a row. The Company finished 1994 with an awarded but
unperformed contract backlog exceeding $1.5 billion.

For information regarding the results of this diversification effort in
recent periods depicting total revenue for major clients served by the Company,
see Note 16 of the Notes to Consolidated Financial Statements.

RESULTS OF OPERATIONS

THREE MONTHS
ENDED MARCH YEAR ENDED DECEMBER 31,
31,
-------------- -----------------------
1995 1994 1994 1993 1992
----- ----- ----- ----- -----

Revenue.............................................. 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales........................................ 81.8 81.9 83.1 82.4 82.0
Selling, general, and administrative................. 10.1 11.7 10.7 11.4 9.9
Depreciation, amortization, and other................ 2.9 3.0 2.7 2.2 3.5
----- ----- ----- ----- -----
Operating profit................................... 5.2 3.4 3.5 4.0 4.6
Interest expense, net................................ 0.6 0.2 0.4 0.7 1.2
Equity in earnings of affiliates..................... (0.2) (0.2) (0.2) (0.4) (0.4)
Minority interest.................................... 1.2 0.4 0.3 0.3 0.0
----- ----- ----- ----- -----
Income before income taxes......................... 3.6 3.0 3.0 3.4 3.8
Provision for income taxes........................... 1.9 1.3 1.3 1.4 1.5
----- ----- ----- ----- -----
Income before extraordinary gain and cumulative
effect of accounting change.......................... 1.7 1.7 1.7 2.0 2.3
Extraordinary gain, net of tax....................... 0.0 0.0 0.0 0.1 0.0
Cumulative effect of accounting change............... 0.0 0.0 0.0 0.0 *
----- ----- ----- ----- -----
Net income......................................... 1.7% 1.7% 1.7% 2.1% 2.3%
----- ----- ----- ----- -----
----- ----- ----- ----- -----

- ------------

* Less than 0.1%

REVENUE. Revenue increased 39% in 1994 over 1993, or $216.0 million. This
increase was due primarily to the inclusion of the results of IABG in BDM Europe
for 12 months in 1994 versus six weeks in 1993 and strong results at BDM Federal
and BDM Technologies. Vinnell's revenue was up slightly in 1994 versus 1993. In
1993, revenue for the Company increased $133.9 million, or 32%, over 1992. This
increase was due primarily to strong results at BDM Federal, the inclusion of
Vinnell for 12 months in 1993 versus nine and one half months in 1992, the
acquisition of IABG and the formation of BDM Technologies.

Revenue generated by subsidiary is identified in the following table
(dollars in millions):

THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
---------------------------- --------------------------------------------
SUBSIDIARY 1995 1994 1994 1993 1992
- --------------------------- ------------ ------------ ------------ ------------ ------------

BDM Federal(1)............. $ 97.5 51% $ 87.2 53% $411.6 53% $386.9 69% $338.2 80%
BDM Technologies........... 12.2 6 5.5 3 38.8 5 17.7 3 -- --
BDM Europe(2).............. 48.8 26 40.7 25 197.5 26 31.5 6 -- --
Vinnell(3)................. 33.4 17 31.8 19 126.3 16 122.2 22 86.2 20
------ --- ------ --- ------ --- ------ --- ------ ---
Total................ $191.9 100% $165.2 100% $774.2 100% $558.3 100% $424.4 100%
------ --- ------ --- ------ --- ------ --- ------ ---
------ --- ------ --- ------ --- ------ --- ------ ---

- ------------

(1) BDM Federal revenue in 1994 includes revenue from GCL from its date of
acquisition.

(2) BDM Europe revenue in 1993 includes IABG and FACE from their respective
dates of acquisition.

(3) Vinnell revenue in 1992 is reflected from its date of acquisition.

BDM Federal revenue increased by 6% and 14% in 1994 and 1993, respectively,
over the preceding year. The increase in each year reflected increased revenue
from the Company's professional services which grew 12% and 5% in 1994 and 1993,
respectively, over the preceding

year. Revenue includes sales of material consisting primarily of computer
hardware and software to clients. Such sales of material under large contracts
may fall disproportionately into one period rather than being spread evenly over
the term of a contract. Sales of material as a percentage of total revenue were
higher in 1993 than in 1994, accounting for the higher revenue growth in 1993.

BDM Technologies revenue increased 120% in 1994 over 1993. This increase was
attributable to contract awards exceeding $100 million in 1994 for systems
integration and consulting services from state government and commercial
clients.

BDM Europe revenue in 1993 reflected less than six weeks of IABG operations.
Revenue increased 4% in 1994 compared to 1993 when including IABG's revenue for
the full calendar year (including the period prior to its acquisition). IABG was
a government controlled not-for-profit entity, and the Company's objective is to
transition IABG's business base from one heavily dependent on German Government
defense spending to one with a more diversified governmental and commercial
client base.

Vinnell revenue increased by 3% in 1994 compared to 1993 and by 15% in 1993
compared to its revenue for the full calendar year of 1992 (including the period
prior to acquisition by the Company). Growth in 1994 resulted from net expansion
in Vinnell's international training efforts of $6.0 million, offset by a $3.0
million reduction in revenue from domestic training. The increase in Vinnell's
revenue in 1993 resulted from substantial additions to both its international
and domestic training programs.

For the three months ended March 31, 1995, revenue for the Company increased
$26.7 million or 16% over the same period in 1994. All subsidiaries contributed
to this growth. The increase in BDM Federal revenue reflected a 7% increase in
professional services and a 17% increase in sales of material. BDM Technologies
added significant revenue from the performance of two state government IT
contracts awarded subsequent to the first quarter of 1994. BDM Europe's increase
in revenue was due to exchange rate fluctuations.

COST OF SALES. Cost of sales, which includes salaries, benefits,
subcontractor expenses, material and overhead costs, increased slightly as a
percentage of revenue in each of 1994, 1993 and 1992. The increase for 1994 over
1993 is due largely to the development of business in BDM Technologies where a
large percentage of the cost of sales was attributable to purchases of computer
hardware sold to clients for lower margins than professional services. In
addition, the acquisition and consolidation of IABG, which has lower margins
than other sectors of BDM's business, contributed to the increase in 1994.

For the three months ended March 31, 1995, the cost of sales was 81.8% of
total revenue consistent with the cost of sales for the three months ended March
31, 1994, which was 81.9% of total revenue.

SELLING, GENERAL AND ADMINISTRATIVE. Selling, general and administrative
("SG&A") expense, including the Company's research and development ("R&D")
costs, decreased as a percentage of revenue in 1994 from 1993, but increased in
1993 from 1992. The increase in 1993 from 1992 was partially attributable to
$5.3 million in discontinued R&D activities and also to start-up costs related
to BDM Technologies. SG&A in 1994 included $3.9 million in such R&D activities.
As part of its R&D efforts, the Company incurred $3.9 million and $5.3 million
during 1994 and 1993, respectively, as part of a project to create an advanced
manufacturing capability. The Company's funding participation ceased in June
1994. In January 1995, the Company entered into an agreement in which it
exchanged a three year license to its developed technology for 36 monthly
installment payments of common stock of the licensee. Excluding these
discontinued activities, SG&A as a percentage of revenue were 10.2%, 10.5% and
9.9% for 1994, 1993 and 1992, respectively.

For the three months ended March 31, 1995, SG&A as a percentage of revenue
was 10.1%, down from 11.7% for the three months ended March 31, 1994, due to the
discontinuance of R&D activity (approximately $2.0 million in the three months
ended March 31, 1994) and improved cost controls.

DEPRECIATION, AMORTIZATION AND OTHER. Depreciation expense increased $5.1
million in 1994 over 1993 due primarily to the inclusion of a full year of
operations of BDM Europe. Amortization and other expenses consist largely of
certain indirect non-cash charges incurred by the Company which are typically
not allocable to government contracts, including amortization of intangibles and
the pension charges required by Statement of Financial Accounting Standards No.
87--Employers' Accounting for Pensions (SFAS 87). Amortization and other
expenses increased by $3.4 million in 1994 as a result of an increase in the
Company's unallocable pension charge of $2 million, a $0.8 million increase in
amortization expense associated with intangibles of recent acquisitions, and
approximately $0.6 million expensed as a result of the Company's decision to
delay its initial public offering.

For the three months ended March 31, 1995, depreciation, amortization and
other expenses increased to $5.6 million from $4.9 million for the three months
ended March 31, 1994. Included in the 1995 amount is a $1.6 million write-off of
the unamortized value of goodwill incurred as a result of the FACE acquisition
in 1993.

INTEREST EXPENSE. Net interest expense has declined steadily over the three
year period. While debt balances increased to $82.8 million as of year end 1994
from $48.5 million as of year end 1993, lower interest rates and the inclusion
of a full year of interest income from BDM Europe more than offset higher
interest expense. The debt balance in 1993 exceeded the 1992 balance by
approximately $10 million; however, interest expense was lower in 1993 compared
to 1992 due to the refinancing of 12% subordinated debt with floating rate debt.

For the three months ended March 31, 1995, interest expense increased due to
a weighted average debt balance of $80.7 million versus $58.9 million during the
same period in 1994. The increase in debt in 1995 was the result of the
Company's repurchase of 2.6 million outstanding shares of Common Stock and Class
B Common Stock from institutional investors in May 1994. In addition, the
weighted average interest rate incurred during the quarters ended March 31, 1995
and 1994 was 8.5% and 5.5%, respectively.

MINORITY INTEREST. The Company began deducting minority interest from
earnings with the acquisition of 45% of IABG in 1993. Minority interest
increased $1.0 million in 1994. This increase comes from a full year of IABG
minority interest and approximately $0.6 million from a new 60% owned Vinnell
joint venture, Saudi Strategic Services, Ltd., which began performance of a
contract in May 1994.

For the three months ended March 31, 1995, minority interest increased by
$1.6 million to $2.2 million compared to the same period in 1994. As noted,
Vinnell began performing on a large contract as a 60% joint venture partner with
a Saudi Arabian company in May 1994. Minority interest recognized on this
contract during the first quarter of 1995 was $0.9 million. Of this amount, $0.4
million represented the finalization in March 1995 of profit negotiations
applicable to services provided since contract inception.

Vinnell currently has a contract to provide training services to the Saudi
Arabian National Guard which represented 55% of its total revenue in 1994. The
contract was recompeted by the client in 1994 and in the spring of 1995, a joint
venture, in which the Company owns 51%, was awarded the three year follow-on
contract for $163 million beginning in July 1995. The contract's future results
of operations will be consolidated, and the other partner's minority ownership
interest

of 49% will be reflected as a minority interest. Accordingly, the Company
expects reduced profits from this program.

PROVISION FOR INCOME TAXES. The provision for income taxes increased as a
percentage of income before income taxes in 1994 to 42.6% from 40.9% in both
1993 and 1992 as a result of the effects of certain acquisitions which created
non-deductible goodwill. Additionally, certain tax benefits derived from the
acquisition of IABG were fully realized in the 1993 income tax provision.
Historically, the Company has been able to offset the effects of income
generated in high tax rate foreign jurisdictions with income earned in foreign
jurisdictions where favorable tax positions were negotiated. As a result the
overall effect of foreign earnings on the Company's tax provision has been
minimal. However, to the extent that any growth in the Company's international
operations occurs in high tax rate jurisdictions, the portion of the income tax
provision which is attributable to foreign earnings is likely to increase.

For the three months ended March 31, 1995, the provision for income taxes
increased as a percentage of income before taxes to 51.6% compared to 43.1% for
the comparable 1994 period. The effective rate increase is the result of the
Company's expensing of $1.6 million in goodwill in the first quarter of 1995
which is not deductible for income tax purposes.

EXTRAORDINARY ITEMS. In 1993, the Company recognized two extraordinary items
having the net effect of increasing net income by approximately $0.4 million, or
$.03 per share. In connection with the negotiation of the Credit Facility, the
Company expensed the carrying value of debt issue costs incurred with the prior
credit agreement of $2.3 million less a related income tax benefit of $1
million. In addition, the Company recognized an extraordinary gain related to
the elimination of a liability recognized at the time of the 1990 Acquisition,
resulting in a benefit of $3.0 million less a related income tax expense of $1.3
million.

EFFECTS OF INFLATION

The Company's contract mix includes cost-reimbursable contracts which
represented 43%, 68% and 74% of total contract revenue in 1994, 1993 and 1992,
respectively, under which inflationary increases are passed on to the client.
The decline in the percentage of cost-reimbursable contracts reflects the full
year of operation at BDM Europe whose contract portfolio is primarily
time-and-material contracts. Total 1994 revenue from time-and-material contracts
increased to 27% in 1994 compared to 3% and 5% in 1993 and 1992, respectively.
The Company performs many significant, long-term fixed-price and
time-and-material contracts which expose it to the risks of inflationary
pressures on its costs. The Company expects to increase the percentage of
fixed-price contracts as it shifts to serving more commercial clients. The
contract revenue mix for the three months ended March 31, 1995, did not change
significantly from 1994.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of liquidity and working capital continue to
be cash flow from operations and borrowings under the Credit Facility. In recent
years, the Company's cash flow from operations has been adequate to fund
internal growth. In addition, cash flow from operations has also contributed to
the reduction of outstanding debt, such as the retirement of $93.5 million of
debt assumed as part of the 1990 Acquisition in two years rather than the
originally planned five years and the retirement of the Vinnell acquisition debt
of $25 million in less than three years. Cash flow from the Credit Facility has
been utilized to fund other non-operating activities, including capital
expenditures, acquisitions, a stock buyback and a dividend.

Supplementing the cash flow from operations have been significant amounts of
advance payments for IABG contracts. As part of customary arrangements, IABG
continues to receive such

advance payments from a large percentage of its client base. Pursuant to the
privatization plan for IABG, the German Government has also indicated that it
will continue the practice of advance payments.

Investing activities providing cash flow include certain provisions of the
IABG acquisition agreement in which the owners have guaranteed additional equity
infusions of $16 million during the two years following the November 1993
acquisition date. In November 1994, the first anniversary of the acquisition,
installment payments of $6.2 million were made which represents 77% of the total
required equity infusion. The remaining 23% portion of the required infusion, or
$1.9 million, is due from the portion of IABG still held in trust for sale to
employees and other investors and will be paid upon the closing of such sale
anticipated in the first half of 1995. The Company has funded and will continue
to fund its 45% portion of these infusions using proceeds from its working
capital facility.

The Company's cash flow from investing activities consists of funding to and
earnings distributed to unconsolidated joint ventures, capital expenditures and
corporate acquisitions. Cash out flows to joint ventures are temporarily
financed from working capital borrowings until earning distributions are
received. Capital expenditures increased in 1994 over 1993 primarily due to the
full year effect of consolidating BDM Europe activities. In addition, the
Company expended funds to improve computer and business systems technology.

Financing activities have recently centered around the Company's Credit
Facility, which was amended in May 1994, increasing the borrowing capacity to
$125 million and extending the term of the facility for one of the option years.
In April 1995, the Company exercised its second one year option to extend the
Credit Facility through July 20, 1998. Through December 31, 1995, the Company
can borrow (including letters of credit) up to the total amount of the Credit
Facility. Effective January 1, 1996, the aggregate amount of borrowing,
including outstanding letters of credit, is limited to a percentage of the
Company's eligible receivables as defined in the agreement. The Company has the
option to borrow principal at interest rates based either on the agent bank's
prime rate or LIBOR plus a margin, with unused credit also accruing a standard
interest charge. The outstanding borrowings are collateralized by a security
interest in the Company's accounts receivable. As of March 31, 1995, the Company
was eligible to borrow an additional $58.6 million and was in full compliance
with all covenants.

The Company's existing sources of liquidity and working capital are expected
to continue to provide sufficient funds for the Company's operations, debt
service requirements, planned investments and capital expenditures for the
foreseeable future.

BUSINESS

COMPANY OPERATIONS

BDM is a multinational information technology company that operates in three
interrelated markets: Systems and Software Integration, Computer and Technical
Services, and Enterprise Management and Operations. The Company serves public
and private sector clients, including the DOD (approximately 32% of total
revenue in 1994), federal civil government clients (approximately 17% of total
revenue in 1994), foreign defense agencies (approximately 25% of total revenue
in 1994), foreign civil agencies (approximately 7% of total revenue in 1994),
state and local governments (approximately 5% of total revenue in 1994) and
commercial clients (approximately 14% of total revenue in 1994). The Company
provides its services through four decentralized subsidiaries. These
subsidiaries offer their services in specific markets using their specialized
expertise and market knowledge, while drawing upon the market access, technical
breadth and management capability of the entire BDM organization. BDM's
subsidiaries are:

BDM FEDERAL: represents the evolution of a core business that dates back
35 years, serving primarily U.S. Government clients. Included in BDM Federal
totals, for reporting purposes, are the results recognized by GCL, an
environmental services company acquired in 1994.

BDM TECHNOLOGIES: began operations in January 1993 as part of BDM's
evolution to a diversified company by applying its core competencies to
serve commercial and state and local government clients.

BDM EUROPE: largely consisting of a 45% interest in IABG, acquired in
November 1993 from a company principally owned by the German Government,
serves German and European governmental and industrial clients.

VINNELL: a 63-year old company that BDM acquired in March 1992,
specializes in international on-site operations and maintenance and training
services in the Middle East. Additionally, Vinnell operates certain Job
Corps Centers located in the United States for the Department of Labor.

BDM FEDERAL

The largest of BDM's subsidiaries, BDM Federal performs Systems and Software
Integration, Computer and Technical Services, and Enterprise Management and
Operations for both civil government and defense clients. Pursuing a balanced
strategic mix of traditional and new markets, BDM Federal has successfully
transitioned and transferred its growing expertise to target markets in
environmental remediation and waste management, energy research and development,
air traffic control and other transportation sectors, while continuing to serve
many sectors of national defense and security. Information systems is an area of
special emphasis, with such diverse clients as the SEC, the Defense Information
Systems Agency, various state and local school districts and a Kuwaiti civil
government agency. In representative contract and program areas, BDM Federal:

. Consolidates defense logistics computer systems for the USAF under the
$362 million DMRD-924 Program. The Company provides systems and software
integration services ranging from hardware acquisition to large-scale
systems integration, pursuant to a DOD directive mandating consolidation
of computer sites to enhance performance and reduce costs. 1994 revenue
was approximately $41.7 million.

. Provides systems and software integration services to the SEC as the
developer of EDGAR. This system permits publicly held companies to file
electronically with the SEC periodic reports, thus replacing paper
filings, and provides for immediate public dissemination of

financial filing and reporting data. EDGAR is now operational, and all
public companies will make the transition to filing via EDGAR by 1996.
1994 revenue was approximately $8.1 million.

. Modernizes the ways information is managed by both defense and civil
government agencies under the DEIS Program contract. The work includes
developing an overall enterprise architecture to integrate disparate
information systems, known as legacy systems, introducing modern
information technologies, and re-engineering information management
processes. BDM is one of six prime contractors named under the DEIS
contract, along with Computer Sciences Corporation, EDS Corp. and Unisys,
and received the second highest dollar volume of delivery order awards
among the six contractors in 1994 (more than $80 million). 1994 revenue
was approximately $12.3 million.

. Supports the Department of Energy ("DOE") in development of plans and
technologies and the implementation of strategies to advance its waste
management, technology development and environmental restoration programs.
The Company performs information systems support, technical assessments
and other services to help the DOE meet federally-mandated responsibility
for waste management and site cleanup under the Resource Conservation
Recovery Act, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, and other laws and regulations. 1994 revenue was
approximately $37.0 million.

. Provides logistic support services to the Royal Saudi Air Force
encompassing IT services, logistics and supply, training, engineering and
systems maintenance, administration and other areas. 1994 revenue was
approximately $28.8 million.

. Created what the Company believes is one of the world's largest on-line
distributed data bases for the USAF under the Requirements Data Bank
Program. The Company provided systems and software development services in
designing and integrating a worldwide USAF material requirements system
which substantially reduces query time and increases accuracy in tracking
and performing spare parts procurement and repair of material. 1994
revenue was approximately $9.7 million.

.Developed and implemented for the Federal Aviation Administration ("FAA")
and the DOD a Terminal Radar Approach Air Traffic Control ("TRACON") system
for the High Desert TRACON facility in Southern California. The Company
believes that this system, certified by the FAA in 1993, was the first new
system so certified since 1986, and represents a major technological step
forward in air traffic control. This system was honored in 1994 by R&D
Magazine as one of the 100 most technologically significant products of the
year. 1994 revenue from the Company's air traffic control and air space
management projects was approximately $5.6 million.

.Manages and operates elements of the Joint Readiness Training Center of the
U.S. Army Training and Doctrine Command, where approximately 50,000
soldiers a year are trained on integrated battlefields with near-real-time
performance feedback. Systems designed and operated by BDM collect data
through lasers, electronics and videos to provide the U.S. Army with the
most comprehensive experience and data feedback short of actual combat.
1994 revenue was approximately $13.4 million.

. Provides comprehensive systems integration services to various state and
local school districts in the areas of financial and administrative
software applications, instructional applications, system architectures
and network designs, teacher and administrator training and management
consulting. The Company is working to advance the productivity and
efficiency of administrative systems and improve student performance. A
recently awarded contract, the Company's largest in this area ($27.5
million), combines systems integration

with management (outsourcing) of the school district's information
services department. 1994 revenue in this area was $4.9 million.

. Provides the Ballistic Missile Defense Organization with comprehensive
senior-level engineering and technical systems assistance in areas such as
systems architecture and design, system simulation and modeling, command,
control, communications and intelligence, systems testing and logistics
planning. 1994 revenue was approximately $22.1 million.

.Manages and operates the DOE's National Institute for Petroleum and Energy
Research in Bartlesville, Oklahoma, oriented toward implementation of the
DOE's National Oil and Related Programs and the promotion of technology
transfer. BDM's charter also includes conducting petroleum energy-related
research for others in the U.S. Government and the private sector. 1994
revenue was approximately $20.4 million.

BDM TECHNOLOGIES

This subsidiary, established in 1993, has a dual strategic objective:
penetrating selected vertical markets in the commercial sector and building
business with state and local governments, primarily in information systems
integration. These include the automation of warehouse and distribution
operations, manufacturing modernization and business process re-engineering and
related IT services to strengthen companies and their management. BDM
Technologies provides both strategic business services and implementation and
integration services in which it leverages IT to achieve strategic and
operational benefits for its clients. BDM Technologies:

.Designs and integrates state-wide information systems aimed at
strengthening welfare and human services management and provides tested
solutions in such areas as child welfare and child support enforcement. In
Montana, the BDM-designed child support enforcement system was the nation's
first to achieve the federal certification that all such systems are
required to have. Contract awards totaling approximately $90 million were
received in 1994 for systems integration projects in Alabama, Missouri and
Puerto Rico; an Iowa system is also in progress. 1994 revenue in this area
was approximately $23.2 million.

. Automates warehouse distribution and control operations to improve
distribution process efficiencies for major national and international
clients including Merck and Co., Inc., Ortho-McNeil, Inc., Bell Canada,
Federal Express and Vitesse. Using the Company's proprietary MARCTM
system, BDM helps clients achieve increased inventory accuracy, improved
response time and other benefits. 1994 revenue in this area was
approximately $3.3 million.

. Performs application outsourcing, maintenance and support and develops
critical software enhancements to various information systems for
Ford Motor Company ("Ford"). BDM Technologies has been directly involved
in the development and implementation of Computer Integrated Manufacturing
applications for ELD. In addition, BDM Technologies has also designed,
developed and implemented several key client/server applications for Ford.
1994 revenue was approximately $2.2 million.

. Delivers business process re-engineering and project management services
to US West to implement process improvements in this client's large
project management systems. A current area of activity is focused on
strategies to use the Internet's World Wide Web for both internal and
customer support communications. 1994 revenue was approximately $2.0
million.

. Provides systems integration services under a new contract to Advanced
Micro Devices Corporation at its primary semiconductor fabrication
facilities. The purpose of the project is to provide an automated
interface between the semiconductor process equipment and the
manufacturing systems.

BDM EUROPE

Two 1993 acquisitions make up the principal elements of BDM Europe. The
acquisition of IABG, a key component of BDM's globalization strategy, brings
important strengths to the Company in IT, technical and environmental services
and test facilities management and operation. The Company believes IABG's
prospects and opportunities in Europe are similar in scope and potential to
those BDM enjoyed in the 1980s in the United States. Environmental services, an
area of IABG specialization, offers particular growth potential, with estimates
of future expenditures in Germany and nearby states for environmental clean-up
and restoration exceeding $225 billion. BDM Europe also includes FACE, a
Netherlands-based firm experienced in information systems integration and
advanced manufacturing services. BDM Europe:

. Performs environmental assessments in the former East Germany, both to
meet requirements at contaminated sites (site inventory, investigation,
assessment and remediation engineering) and to support environmental
planning and the development of improved remediation systems and
techniques. One project underway involves surveying and environmental risk
assessment for former Soviet military sites in the former East Germany.
1994 revenue was approximately $20.7 million.

. Performs comprehensive testing of satellites and other space structures,
space simulation, thermal vacuum testing, vibration and shock-testing and
project monitoring for the German Ministry of Research and Technology, the
European Space Agency and private clients at the Space Test Center in
Ottobrunn, Germany. 1994 revenue was approximately $21.8 million.

. Provides information technology and systems support in software
standardization, development and integration of management information
systems for government and commercial clients and strengthening of
command/control/communications and intelligence systems for the German
Ministry of Defense. 1994 revenue was approximately $24.6 million.

. Analyzes, tests, evaluates and simulates defense systems, missions and
operations for the German Ministry of Defense. Typical programs involve
engineering assessments of new weapons systems and platforms, support of
Battlefield Training Centers, fatigue testing of military aircraft, design
and simulation of camouflage measures and development and implementation
of computer-based models for operational analysis and training. 1994
revenue was approximately $62.0 million.

. Tests vehicles and their components for various German automobile
manufacturers and suppliers such as BMW, including climatic testing,
emissions testing and mechanical tests of suspension and steering
elements. 1994 revenue was approximately $8.7 million.

. Tests commercial and military aircraft structures, such as the Airbus
A330/340 airliners and the Tornado and new Eurofighter aircraft; programs
include testing of major assemblies, components and structural elements to
identify structural weaknesses and improve safety and service life. 1994
revenue was approximately $13.2 million.

. Operates the Magnetic Levitation ("MagLev") test facility in Elmsland,
Germany, including the performance of numerous technical investigations
and demonstration runs. The successful operation of this facility
contributed to the decision of the German Government to implement the
first MagLev service route in Germany connecting Hamburg and Berlin. 1994
revenue was approximately $16.1 million.

VINNELL

The acquisition of Vinnell in 1992 was an important building block in BDM's
strategy of international expansion and diversification. Vinnell has brought
important new strengths in training

and complementary capabilities in technical services, as well as a history of
successful large-scale enterprise management and operations, both in the Middle
East and the United States. Vinnell:

.Provides training, logistical support and comprehensive developmental,
advisory and operational services under the Saudi Arabian National Guard
("SANG") Modernization Program. In April 1995, Vinnell won a new three year
contract with the SANG to continue this effort through June 1, 1998. This
work will be performed by a joint venture, of which Vinnell owns 51%. 1994
revenue was approximately $70.2 million.

. Performs training, logistical support and comprehensive developmental,
advisory and operational services for FMC Arabia (an affiliate of FMC
Corporation) in connection with the fielding of the Bradley Fighting
Vehicle System for the Royal Saudi Land Forces. Effective in May 1994,
this work is being performed through an affiliate, of which Vinnell owns
60%. Aggregate 1994 revenue was approximately $25.2 million.

.Manages and operates Job Corps Centers in the United States for the
Department of Labor under a program designed to bring education and
vocational training to disadvantaged youth, in English, math, business and
clerical subjects, electricity and electronics, building and mechanical
trades and other subject areas. In March 1995, Vinnell was awarded a
contract to manage an additional Job Corps Center which should add
approximately $10 million in revenue annually. Aggregate 1994 revenue was
approximately $19.0 million.

. Manages and operates U.S. military facilities in Turkey and three USAF
facilities in Oman and provides personnel support services in Egypt under
joint ventures with Brown & Root Services Corporation ("Brown & Root"),
Airwork Ltd. ("Airwork") and SEACOR Services, Inc. ("SEACOR"),
respectively. Total 1994 revenue earned by these joint ventures was
approximately $72.0 million. As a 50% partner in these joint ventures,
Vinnell reports earnings using the equity method. Aggregate equity in
earnings from these joint ventures was approximately $1.8 million in 1994.

CONTRACTS

TYPES OF CONTRACTS

The Company's services are provided primarily through three types of
contracts: fixed-price, time-and-material and cost-reimbursable contracts.
Fixed-price contracts require the Company to perform services under the contract
at a stipulated price. Time-and-material contracts reimburse the Company for the
number of labor hours expended at established hourly rates negotiated in the
contract and the cost of materials incurred. Cost-reimbursable contracts
reimburse the Company for all actual costs incurred in performing the contract
to the extent that such costs are within the contract ceiling and allowable
under the terms of the contract, plus a fee or profit.

The Company assumes greater financial risk on fixed-price type contracts
than on either time-and-material or cost-reimbursable contracts. Commercial
contracts are generally fixed-price contracts. Failure to anticipate technical
problems, estimate costs accurately or control costs during contract performance
may reduce the Company's profit or cause a loss. Greater risks are involved
under time-and-material contracts than under cost-reimbursable contracts because
the Company assumes the responsibility for the delivery of specified skills at a
fixed hourly rate. Higher profit margins are generally negotiated with the
government for fixed-price and time-and-material contracts because the Company
bears the risk that increased or unexpected costs may reduce the Company's
profit or cause a loss, while lower than anticipated costs may result in
increased profit.

The following table shows the approximate percentage of revenue by contract
type recognized by the Company during the indicated periods:

YEAR ENDED DECEMBER 31,
--------------------------
TYPE OF CONTRACT 1994 1993 1992
- --------------------------------------------- ---- ---- ----
Cost-reimbursable............................ 43 % 68 % 74 %
Fixed-price.................................. 30 29 21
Time-and-material............................ 27 3 5
---- ---- ----
Total.................................... 100 % 100 % 100 %
---- ---- ----
---- ---- ----

AWARD OF CONTRACTS

The Company may obtain a government contract after the solicitation by the
relevant government agencies, in open and free competition, of sealed bids from
various suppliers or through the process of negotiation with the Government.
Under certain circumstances, most government agencies are authorized to enter
into contracts based on negotiation rather than sealed bids.

Negotiated contracts may or may not involve the solicitation of competitive
proposals. Generally, negotiated contracts are entered into without competitive
solicitation when the services or supplies desired by the government can be
obtained from only one available source. In most non-competitive procurements,
the government solicits a proposal from the contractor and then negotiates the
price and other terms in accordance with the applicable federal regulations.

GOVERNMENT CONTRACT OPERATIONS

Many of the government programs in which the Company participates as a
contractor or subcontractor may extend for several years, but they are normally
funded on an annual basis. The Company's government contracts and subcontracts
are subject to modification, curtailment and termination in the event of changes
in government funding. Accordingly, all of the Company's contracts and
subcontracts involving the U.S. Government may be terminated at any time by the
U.S. Government, without cause, for the convenience of the U.S. Government. If a
U.S. Government contract is terminated for convenience, the Company would be
entitled to receive compensation for the services provided or costs incurred at
the time of termination and a negotiated amount of the profit on the contract.

The Company's costs and revenue under government contracts are subject to
adjustment as a result of audits by the DCAA. Audits have been completed of
costs incurred on all years through 1987. Audits for 1988 through 1994 have not
been completed; however, management does not believe the results of these audits
will have a material effect on the Company's financial position or results of
future operations.

BACKLOG

The Company's backlog at December 31, 1994 was approximately $1.5 billion
compared to approximately $1.3 billion at December 31, 1993. Approximately 45%
of the Company's backlog at December 31, 1994 is expected to be converted to
revenue within the current fiscal year.

The Company's backlog amounts are composed of funded and unfunded
components. Funded backlog consists of the dollar portion of contracts that is
currently appropriated by the government client or other clients and allocated
to the contract by the purchasing government agency or otherwise authorized for
payment by the client upon completion of a specified portion of work. The
Company's funded backlog was approximately $535 million and $326 million as of
December 31, 1994 and December 31, 1993, respectively. Although unfunded backlog
can include up to the

stated award value of the contract including renewals or extensions that have
been priced but still remain at the discretion of the client whether to fund,
BDM, to be conservative, often recognizes only a portion of stated award values
on multi-year contracts into its backlog records. Because many of BDM's
contracts are multi-year contracts, total backlog may include revenue expected
to be realized several years into the future. The unfunded backlog may not be an
indicator of future contract revenue or earnings because there is no assurance
that the unfunded portion of the Company's backlog will be funded. In addition,
most of the contracts included in backlog are subject to termination for the
convenience of the government client.

BACKLOG SUMMARY

BACKLOG COMPONENT AS OF DECEMBER 31,
- -------------------------------------------------- ------------------------
1994 1993 1992
------ ------ ----
(IN MILLIONS)
Funded............................................ $ 535 $ 326 $201
Unfunded.......................................... 1,003 961 462
------ ------ ----
Total......................................... $1,538 $1,287 $663
------ ------ ----
------ ------ ----

MARKETING

The Company's marketing activities are conducted by its professional
managers who have technical expertise and whose efforts are supplemented by the
Company's staff of engineers, scientists and analysts. The Company supports the
marketing efforts of its personnel through the direct participation of senior
management and supervisory employees. These marketing efforts are further
supported by a corporate proposal center, organized team reviews of proposals
and a formal corporate training program. The Company believes that this
marketing approach enables it to anticipate and serve the needs of its clients
and ensures that those who are seeking to obtain business for the Company have
the necessary technical expertise and resources both to develop proposals that
satisfy clients' requirements and to participate in or supervise the performance
of services that ultimately may be provided.

COMPETITION

The information services industry in which the Company operates is highly
fragmented with no single company or small group of companies in a dominant
position. The Company's competitors include large, diversified firms with
substantially greater financial resources and larger technical staffs than the
Company as well as firms which receive preferences under set-aside programs.
Some of the Company's competitors also operate in international markets, along
with other concerns which operate exclusively or primarily outside the United
States. Some of the larger competitors offer services in a number of markets
which overlap many of the same areas in which the Company offers services, while
certain companies are focused on only one or a few of these markets. The firms
which compete with the Company are consulting firms, computer services firms,
applications software companies and accounting firms, as well as the computer
service arms of computer manufacturing companies and defense and aerospace
firms. In addition, the internal staffs of client organizations, non-profit
federal contract research centers and universities are, in effect, competitors
of the Company. The primary factors of competition in the business in which the
Company is engaged include technical, management and marketing competence, as
well as price.

EMPLOYEES AND EMPLOYEE REPRESENTATION

As of March 31, 1995, the Company had approximately 7,000 full-time and
part-time employees. Joint ventures, in which the Company is a partner, employed
approximately 2,500 additional individuals as of this date. In addition, the
Company enters into agreements with a large number of consultants on a
project-specific basis who are engaged by the Company to perform specialized
work on contracts or to provide expertise in support of marketing and contract
activities. With the exception of approximately 95 Vinnell employees, no other
employees of the Company are represented by a union and, to the knowledge of the
Company, no union organizing activities are in progress.

As a corporation organized under the laws of and operating in Germany, IABG
is subject to the German Co-Determination Law. Under this law, certain German
workers have a right to representation on supervisory boards of a company and,
through Workers' Councils, have a say in issues relating to corporate
operations, particularly those having a direct impact on workers. Approximately
40% of IABG's employees are covered by the tariff agreements of the German metal
workers union, IG Metall. The tariff negotiations determine the annual raises
and weekly working hours for the people covered by this tariff agreement.
Negotiations have been completed to cover the period through December 31, 1996.

FACILITIES

The Company leases all of its offices and other facilities. The Company's
corporate headquarters are located in McLean, Virginia. The Company also leases
office buildings as principal offices in Fairfax, Virginia; Albuquerque, New
Mexico; Columbia, Maryland; Denver, Colorado; Germantown, Maryland; Kettering,
Ohio; Huntsville, Alabama; Eindhoven, The Netherlands; and Ottobrunn, Germany.

In addition to these principal offices, as of March 31, 1995, the Company
maintained offices or facilities in connection with the performance of its
contracts in over 60 other locations. A portion of these premises is subleased
to others. In addition to the Company's offices and facilities, Company
personnel are frequently assigned to client locations throughout the country and
overseas.

For additional information on the Company's leases and rental expenses
thereunder, see Note 17 of the Notes to Consolidated Financial Statements.

LEGAL PROCEEDINGS

The Company is a party to various legal actions, claims, government
inquiries and audits resulting from the normal course of business. Although the
total amount of liability with respect to these matters cannot be ascertained,
the Company believes that any resulting liability should not have a material
adverse effect on the Company.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company as of May 8, 1995.

NAME AGE POSITION
- --------------------------------------- --- -----------------------------------------------

Frank C. Carlucci...................... 64 Chairman of the Board and Director
William E. Conway, Jr.................. 45 Vice Chairman and Director
Philip A. Odeen........................ 59 President, Chief Executive Officer and Director
C. Thomas Faulders, III................ 45 Executive Vice President, Treasurer and Chief
Financial Officer
Dr. William E. Sweeney, Jr............. 56 Chairman of the Board, BDM Europe; General
Manager and Chairman of the Management
Board, IABG and Director
John A. Corsiglia...................... 46 President, BDM Technologies
Roy V. Woodle.......................... 59 President and Chief Executive Officer, Vinnell
Dr. Jeanette Grasselli Brown........... 66 Director
James A.D. Geier....................... 69 Director
Neil Goldschmidt....................... 54 Director
Walther Leisler Kiep................... 69 Director
Dr. Hans Mark.......................... 65 Director
Thomas G. Ricks........................ 41 Director
John M. Slosar......................... 56 Director
Helmut Sonnenfeldt..................... 68 Director
Earle C. Williams...................... 65 Director

The terms of all of the Directors expire upon the next annual meeting of
shareholders in 1996 or when their successors are elected and qualify or, if
earlier, until their retirement during the year in which they turn 70. All
directors are elected for a one-year term. Executive officers are appointed by
the Board and hold office until their successors are chosen and qualify or until
their death, resignation or removal.

Set forth below is certain information regarding the backgrounds of each of
the directors and executive officers of the Company.

Frank C. Carlucci has served as Chairman of the Board of Directors of the
Company since October 1990. Mr. Carlucci has been Chairman and a Managing
Director of Carlyle since 1993 and served as Vice Chairman of Carlyle from 1989
to 1993. Mr. Carlucci served as U.S. Secretary of Defense from 1987 to 1989 and
has served in a number of other government positions, including Ambassador to
Portugal, Deputy Secretary of Defense and Assistant to the President for
National Security Affairs.

Mr. Carlucci presently serves on the Board of Directors of the following
corporations: Ashland Oil, Inc., Bell Atlantic Corporation, East New York
Savings Bank, General Dynamics Corporation, Kaman Corporation, Neurogen
Corporation, Northern Telecom, Ltd., The Quaker Oats Company, SunResorts, Ltd.,
N.V., Texas Biotechnology Corporation, The Upjohn Company and Westinghouse
Electric Corporation. He also presently serves on the Board of Directors of
several privately-held companies controlled by Carlyle.

William E. Conway, Jr. has served as Vice Chairman of the Board of Directors
of the Company since October 1990. Mr. Conway has been a Managing Director of
Carlyle since 1987 and a Managing Director of TC Group, LLC, a merchant banking
firm, since January 1994. Mr. Conway

presently serves on the Board of Directors of GTS Duratek, Inc., Tracor, Inc.,
and several privately held companies controlled by Carlyle.

Philip A. Odeen has served as President, Chief Executive Officer and a
Director of the Company since May 1992. Mr. Odeen served with Coopers & Lybrand,
an international auditing and consulting company, as Vice Chairman, Management
Consulting Services from 1991 to 1992, and as Managing Partner from 1978 to
1991. Mr. Odeen has served in a number of government positions, including
Director, Program Analysis, National Security Council, and Principal Deputy
Assistant Secretary of Defense.

C. Thomas Faulders, III joined the Company as Executive Vice President,
Treasurer and Chief Financial Officer on April 24, 1995. Mr. Faulders served
with Comsat Corporation, a provider of international communications and
entertainment, as Vice President and Chief Financial Officer from 1992 to 1995.
From 1985 to 1992, he served in several senior management positions with MCI
Communications Corporation, a long distance service provider.

Dr. William E. Sweeney, Jr. has served as Executive Vice President and a
Director of the Company since October 1990 and as Chairman of the Board of BDM
Europe and General Manager and Chairman of the Management Board of IABG since
1993. Dr. Sweeney joined the Predecessor Company in 1977 and has held a number
of positions, including senior management positions in the Communications,
Command and Control Division, the Communications Technology Group and the
Systems Engineering and Development Organization.

John A. Corsiglia has served as President of BDM Technologies since March
1993. Prior to joining BDM Technologies, Mr. Corsiglia was a Principal of
McKinsey & Company, a management consulting firm, from 1990 to 1993. From 1988
to 1990, he was a partner and founder, as well as a Managing Director, of
Information Consulting Group, Inc., an information technology systems consulting
firm.

Roy V. Woodle has served as President and Chief Executive Officer of Vinnell
since June 1993 and January 1994, respectively. Mr. Woodle joined Vinnell in
1983 as Vice President, Program Development and from 1988 to 1993, he served as
Senior Vice President.

Dr. Jeanette Grasselli Brown was elected to serve as a Director of the
Company at the Annual Meeting of Shareholders in May 1995. Dr. Brown is a member
of the Ohio Board of Regents. She was a Distinguished Visiting Professor and
Director of Research Enhancement at Ohio University from 1989-1995. From 1950
until her retirement in 1988, she was employed by BP America (formerly The
Standard Oil Company) in various research positions. She retired as director of
corporate research, environmental and analytical sciences. She is a member of
the Board of Directors of AGA Gas, Inc., The BFGoodrich Company, Diatrac
Holdings, Inc., and USX Corporation.

James A. D. Geier has served as a Director of the Company since March 1991.
From 1970 through 1990, Mr. Geier served as Chief Executive Officer and Chairman
of the Board of Cincinnati Milacron, Inc., an advanced manufacturing technology
company, where he presently serves as a director and Chairman of the Executive
Committee. Mr. Geier presently serves on the Board of Directors of Clark
Equipment Company, USX Corporation and The Cincinnati Gear Company.

Neil Goldschmidt has served as a Director of the Company since July 1993.
Mr. Goldschmidt is currently President of Neil Goldschmidt, Inc., a company
focusing on strategic planning and problem solving for national and
international businesses. From 1987 to 1991, Mr. Goldschmidt was Governor of
Oregon. From 1981 to 1986, he served as Vice President of Nike International and
President of Nike Canada. Mr. Goldschmidt served as Secretary of Transportation
from 1979 to 1981 and as Mayor of Portland, Oregon, from 1972 to 1979.

Walther Leisler Kiep has served as a Director of the Company since January
1995. Mr. Kiep has been Managing General Partner of Gradmann & Holler, an
insurance brokerage firm based in Stuttgart, Germany, since 1968. He is
currently Chairman of the Supervisory Board of IABG and Zeneca GmbH. He is a
member of the Supervisory Board of Volkswagen AG, Glunz AG, CS-Interglass, AG,
and Bau Assekuranz-Vermittlungs GmbH. He is a member of the Advisory Council of
the Deutsche Bank AB and of Grunelius KG Privatbankiers, is Chairman of the
International Advisory Board of Marsh & McLennan Companies, and is a member of
the International European Advisory Board of Fuji-Wolfensohn International.

Dr. Hans Mark has served as a Director of the Company since August 1991. Dr.
Mark is a Professor in the Department of Aerospace Engineering and Engineering
Mechanics at the University of Texas at Austin and holder of the John J. McKetta
Centennial Energy Chair in Engineering. He served as Chancellor of The
University of Texas System from 1984 until 1992 and as Deputy Administrator of
NASA from 1981 until 1984. From 1977 until 1979, he was Undersecretary of the
USAF and was named Secretary of the USAF in 1979.

Thomas G. Ricks has served as a Director of the Company since December 1992.
Mr. Ricks has served as Vice Chancellor for Asset Management for The University
of Texas System since 1992. From 1988 to 1992, he served as Executive Director
of Finance and Private Investments for The University of Texas System. Mr. Ricks
is a member of the Board of Directors of Argus Pharmaceuticals, Inc., DTM
Corporation, LifeCell Corporation and Newfield Exploration Co.

John M. Slosar has served as a Director of the Company since March 1991. Mr.
Slosar is a Senior Vice President and Director of Canny, Bowen Inc., an
executive search firm. Previously, Mr. Slosar held key human resources and
business planning positions within Ford in a career which spanned nearly 35
years. He also served as Vice President--Administration for Rouge Steel Company,
a wholly owned subsidiary of Ford, and Vice President, Employee Relations and
Planning, at Ford Aerospace.

Helmut Sonnenfeldt has served as a Director of the Company since March 1991.
Mr. Sonnenfeldt is a Guest Scholar at the Brookings Institution and a recognized
researcher, author and commentator on East-West issues, national security and
other public policy concerns. Mr. Sonnenfeldt is a trustee of The Johns Hopkins
University and is a member of the International Institute of Strategic Studies
(London), The Council on Foreign Relations (New York) and various other
professional associations. As President of Helmut Sonnenfeldt, Inc., he has
provided consulting services on international political and economic issues
since 1978.

Earle C. Williams has served as a Director of the Company since October
1990. From 1990 until his retirement in 1992, Mr. Williams served as President
and Chief Executive Officer of the Company. From 1972 to 1990, Mr. Williams
served as President and Chief Executive Officer of the Predecessor Company. Mr.
Williams is presently a member of the Board of Directors of GAMMA-A
Technologies, GTS Duratek, Inc., Nortel Federal Systems, Inc. and the Parsons
Corporation.

BOARD COMMITTEES

The Board of Directors has established an Executive Committee, an Audit and
Ethics Committee, a Compensation Committee, and a Nominating Committee. The
By-laws of the Company (the "By-laws") permit the creation of additional
committees.

Messrs. Carlucci, Conway and Odeen are members of the Executive Committee.
The Executive Committee may act, subject to certain limitations, on all matters
concerning management of the business of the Company which may arise between
scheduled meetings of the Board of Directors.

Messrs. Conway, Geier and Ricks are members of the Audit and Ethics
Committee. The principal function of the Audit and Ethics Committee is to
oversee the performance and review the scope of the audit performed by the
Company's independent auditors. The Audit and Ethics Committee also reviews,
among other things, the audit report and related findings and recommendations by
the auditors and management's responses thereto, and the fees payable to the
independent accountants for their services. Additionally, the Audit and Ethics
Committee reviews and makes recommendations to the Board with respect to
accounting matters, including financial reporting systems and internal
accounting controls for the Company. In performing its duties, the Audit and
Ethics Committee consults with the financial and accounting officers and the
internal auditors of the Company, as well as the independent accountants.

Messrs. Carlucci, Conway and Slosar are members of the Compensation
Committee. The principal functions of the Compensation Committee are to
determine the compensation of the President and Chief Executive Officer of the
Company, review the compensation of all officers of the Company and officers of
subsidiaries at the position of Senior Vice President and above, determine the
aggregate cash bonus awards to key employees, administer the 1990 and 1994 Stock
Option Plans and select key employees who will receive stock option grants and
determine the terms of those grants.

Messrs. Carlucci, Geier, Goldschmidt and Williams are members of the
Nominating Committee. The principal functions of the Nominating Committee are to
review and determine the nominees for election as members of the Board of
Directors, recommend candidates for approval of the Board to fill any vacancies
in the Board, and evaluate the performance of each of the directors of the
Company. The Committee considers suggestions from shareholders and other sources
regarding possible candidates for director. Such suggestions, together with
appropriate biographical information, should be submitted to the Secretary of
the Company.

DIRECTOR COMPENSATION

The Chairman, the Vice Chairman and each director who is not an officer of
the Company are paid a director's fee at an annual rate of $24,000, plus $1,000
per day or any portion of a day for attendance at meetings of the Board of
Directors and any committees of the Board of Directors, and $250 per hour
(travel time excluded) for consulting services outside of such meetings and for
visits to the Company's offices or other locations on behalf of the Company for
any special purpose, at the request of the President of the Company. Directors
are reimbursed for out-of-pocket expenses incurred to attend such meetings and
to make such visits. Directors under the Director Stock Purchase Program have
the option to purchase shares of Common Stock from the Company at fair market
value, as determined from time to time by the Board of Directors, in lieu of
receiving all or any of the fees payable by the Company for services provided in
their capacities as directors. Following the Offerings, it is expected that
directors will have the option to acquire shares under the program in lieu of
fees at the fair market value on the date such fees are earned.

EXECUTIVE COMPENSATION

The following table contains information on compensation for the years ended
December 31, 1994, 1993, and 1992 paid to the Chief Executive Officer and the
four most highly compensated executive officers of the Company, other than the
Chief Executive Officer, whose aggregate cash compensation exceeded $100,000
during such years (collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

LONG TERM COMPENSATION
ANNUAL COMPENSATION -----------------------
-------------------------------------------- RESTRICTED
NAME AND OTHER ANNUAL STOCK ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) AWARDS(4) OPTIONS(5) COMPENSATION(6)
- ---------------------- ---- -------- -------- --------------- ---------- ---------- ---------------

Philip A. Odeen(1).... 1994 $400,000 $175,000 $ -0- $ -0- 10,000 $66,033
President and Chief 1993 400,000 175,000 -0- -0- 10,000 65,972
]Executive Officer 1992 263,636 200,000 -0- 524,000 25,000 6,498
John A. 1994 300,019 30,000 -0- -0- 10,000 7,106
Corsiglia(1).......... 1993 230,784 75,000 87,543 131,000 10,000 4,719
President, BDM 1992 N/A N/A N/A N/A N/A N/A
Technologies
Dr. William E. 1994 241,258 145,000 116,551 -0- 10,000 7,040
Sweeney............... 1993 215,747 125,000 46,084 -0- 5,000 6,999
General Manager, IABG 1992 177,152 125,000 31,991 -0- -0- 6,955
Roy V. Woodle(1)...... 1994 250,000 106,000 -0- -0- 5,000 60,834
President and Chief 1993 212,083 111,253 -0- -0- 12,000 68,657
Executive Officer, 1992 N/A N/A N/A N/A N/A N/A
Vinnell
Michael J. Mruz(1).... 1994 143,662 -0- -0- -0- 10,000 5,027
Former Executive Vice 1993 211,506 125,000 -0- -0- 5,000 6,999
President and 1992 177,151 125,000 -0- -0- -0- 6,955
Chief Financial and
Administrative
Officer

- ------------

(1) Mr. Odeen joined the Company in May 1992. The bonus award shown for Mr.
Odeen in 1992 includes a $75,000 bonus paid in connection with his
employment with the Company, effective May 1, 1992. Mr. Woodle became an
executive officer of the Company upon his promotion to President of Vinnell
in June 1993. Mr. Corsiglia joined BDM Technologies in February 1993. Mr.
Mruz resigned from the Company in August 1994.

(2) Bonus awards are reflected in the year to which they are attributable and
not the year in which they are actually paid. The Company awarded cash
bonuses and incentive compensation in the form of cash or shares of Common
Stock to certain employees under a Cash and Stock Incentive Compensation
Plan which was discontinued in 1992. In 1993, the Company adopted the 1993
Executive Incentive Program (the "Executive Incentive Program"). Individual
bonuses under the Executive Incentive Program are determined based on an
assessment of the performance of the individual and the Company, with
ultimate approval residing with the President, except for Mr. Odeen's bonus
which is determined by the Compensation Committee.

(3) Fringe benefit amounts are omitted to the extent the aggregate value of such
benefits is less than 10% of salary and bonus, or $50,000. The amount shown
for Mr. Corsiglia reflects primarily reimbursement of relocation expenses.
The amount shown for Dr. Sweeney reflects reimbursement of relocation
expenses, and for 1994, also reflects a cost of living allowance, quarters
allowance, and exchange rate fluctuation allowance associated with his
overseas assignment.

(4) Restricted stock awards were issued pursuant to the MIS Program under which
certain members of management were granted options to purchase Common Stock
at an exercise price of $.01 per share. These options vest over a period
greater than three years. The options are subject to forfeiture in the event
certain tenure and, in part, certain Company performance criteria are not
met. The amounts shown represent the full dollar value of the shares of
Common Stock based on an appraised value on the date of grant, less the $.01
per share exercise price, regardless of whether the shares were actually
purchased. At December 31, 1994, Messrs.

Odeen and Corsiglia, Dr. Sweeney and Mr. Woodle held 100,000, 25,000,
87,500, and 5,000 shares of restricted Common Stock, respectively, worth
$1,399,000, $349,750, $1,224,125, and $69,950, respectively. The value of
the Common Stock ownership at year-end is based on a value per share
determined by the Board of Directors, less the $.01 per share exercise price
paid by the named executive officer upon purchase thereof. The shares of
restricted stock are entitled to the same dividends as all other outstanding
shares of Common Stock. See "Dividend Policy."

(5) The options listed for Mr. Odeen represent shares of Common Stock issuable
upon exercise of options granted under the 1990 Plan, of which 8,334 shares,
3,334 shares, 8,333 shares and 5,783 shares vested in December 1993, March
1994, December 1994 and March 1995, respectively. An additional 8,333
shares, 7,533 shares and 3,350 shares will vest in December 1995, March 1996
and March 1997. The options listed for Mr. Corsiglia represent shares of
Common Stock issuable upon exercise of options granted under the 1990 Plan,
of which 3,334 shares, 3,333 shares and 3,334 shares vested in February
1994, February 1995 and March 1995, respectively, and an additional 3,333
shares will vest in each of February 1996, March 1996 and March 1997. The
options for Dr. Sweeney represent shares of Common Stock issuable upon
exercise of options granted under the 1990 Plan, of which 5,667 shares,
1,667 shares, 5,667 shares and 5,001 shares vested in December 1993, March
1994, December 1994 and March 1995, respectively,and an additional 5,666
shares, 4,999 shares and 3,333shares will vest December 1995, March 1996 and
March 1997, respectively. The options listed for Mr. Woodle represent shares
of Common Stock issuable upon exercise of options granted under the 1990
Plan, of which 2,500 shares, 4,000 shares, 2,500 shares and 5,667 shares
vested in November 1993, March 1994, November 1994 and March 1995,
respectively, and an additional 2,500 shares, 5,667 shares and 1,666 shares
will vest in November 1995, March 1996 and March 1997, respectively.

(6) Amounts shown for 1994 include the dollar value of the life insurance
premiums paid on behalf of Messrs. Odeen and Corsiglia, Dr. Sweeney and
Messrs. Woodle and Mruz for the last fiscal year, which amounts are $6,500,
$5,980, $5,500, $4,128, and $3,667, respectively. Amounts shown for 1994
also include $2,310, $1,126, $1,540, $1,164, and $1,360 of employer matched
salary deferral contributions to the 401(k) Plus Plan for Messrs. Odeen and
Corsiglia, Dr. Sweeney and Messrs. Woodle and Mruz, respectively. The amount
shown for 1994 for Mr. Woodle includes a contribution of $11,542 on his
behalf to the Vinnell Corporation Retirement Plan (the "Vinnell Plan"), a
defined contribution money purchase plan. The amounts shown for 1994 for
Messrs. Odeen and Woodle also include a contribution of $57,223 and $44,000,
respectively, to a defined contribution supplemental executive retirement
plan ("SERP") on their behalf.

The following table sets forth information regarding grants of stock options
by the Company during the fiscal year ended December 31, 1994 to the Named
Executive Officers:

OPTION GRANTS IN LAST FISCAL YEAR

POTENTIAL
REALIZED
INDIVIDUAL GRANTS VALUE AT ASSUMED
--------------------------------------------------- ANNUAL RATES OF
NUMBER OF % OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OR OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5% 10%
- -------------------------------- --------- ------------ ----------- ---------- ------- -------

Philip A. Odeen................. 10,000 2% $ 12.00 3/7/04 $32,591 $51,916
John A. Corsiglia............... 10,000 2 12.00 3/7/04 32,591 51,916
Dr. William E. Sweeney.......... 10,000 2 12.00 3/7/04 32,591 51,916
Roy V. Woodle................... 5,000 1 12.00 3/7/04 16,295 25,958
Michael J. Mruz................. 10,000 2 12.00 3/7/04 32,591 51,916

- ------------

(1) All of the above options granted in 1994 were granted under the 1990 Plan.
All of these options vest and become exercisable at the rate of 33 1/3% per
year over the course of 3 years from the date of grant, except the options
granted to Mr. Odeen which become exercisable in 1995 for 2,450 shares of
Common Stock, in 1996 for 4,200 shares of Common Stock and in 1997 for 3,350
shares of Common Stock.

In March 1995, the Company granted options to purchase an aggregate of
30,000 shares of Common Stock to the Named Executive Officers.

The following table provides information regarding the exercise of options
during the fiscal year ended December 31, 1994 by the Named Executive Officers:

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES

NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END AT FY-END
ACQUIRED IN VALUE -------------------------- --------------------------
NAME EXERCISE REALIZED(3) UNEXERCISABLE EXERCISABLE UNEXERCISABLE EXERCISABLE
- -------------------------- ----------- ----------- ------------- ----------- ------------- -----------

Philip A. Odeen........... -- (1) $-- 24,999 20,001 $ 132,910 $ 165,840
John A. Corsiglia......... -- (1) -- 16,666 3,334 78,327 29,173
Dr. William E. Sweeney.... -- (1) -- 18,999 13,001 89,575 109,175
-- (2) -- 12,500 -- 174,875 --
----------- ----------- ------------- ----------- ------------- -----------
31,499 13,001 264,450 109,175
Roy V. Woodle............. -- (1) -- 15,500 9,000 79,875 67,750
2,500(2) 34,975 2,500 -- 34,975 --
----------- ----------- ------------- ----------- ------------- -----------
2,500 34,975 18,000 9,000 114,850 67,750
Michael J. Mruz........... 14,001(1) 117,925 -- -- -- --

- ------------

(1) Option activity and/or status of options granted under the 1990 Plan.

(2) Option activity and/or status of options granted under the MIS Program.

(3) Because there is no established public trading market for the Common Stock,
the Common Stock has been valued annually by an independent consulting firm
based on a number of factors including, among others, (i) the nature of the
business and history of the Company, the character and form of the Company's
business and the nature of growth opportunities, (ii) the economic outlook
in general and the condition and outlook for the specific industry in which
the

Company competes, (iii) the trend of earnings and cash flow, as recognized
and adjusted by the Company, and future prospects for earnings and cash flow
growth, (iv) the financial history of the Company as reflected in the
balance sheets and operating statements over recent years, (v) the market
history of securities and other companies in the same or similar industry,
with attention given to various financial ratios of such companies and (vi)
sales of the Company's stock. The values disclosed in this table are
reflective of this valuation and a determination as to the value of the
Common Stock by the Board of Directors.

MANAGEMENT INCENTIVE STOCK PURCHASE PROGRAM

The Company maintains a Management Incentive Stock Purchase Program (the
"MIS Plan") providing for the issuance of options to purchase up to 1,111,111
shares of Common Stock. Since 1990 and as of March 31, 1995, the Company has
granted options ("MISOs") to certain members of management to purchase, subject
to certain vesting dates and performance goals, 1,094,169 shares of Common Stock
(net of forfeitures) at a purchase price of $.01 per share. As of March 31,
1995, options to purchase a total of 1,012,190 shares of common stock had been
exercised and options to purchase a total of 81,979 shares were outstanding.
Options to purchase a total of 16,942 shares of Common Stock remain available
for grant under the Management Incentive Stock Purchase Program.

The remaining outstanding MISOs will vest on various dates between March 31,
1995 and March 31, 1997 based on tenure, and in part on the Company achieving a
specified earnings target ("Operating Profit"). Any shares that do not vest
because of the failure of the Company to achieve such Operating Profit will
subsequently vest on the first March 31 thereafter that follows a year in which
the Company achieves the target cumulative Operating Profit, provided that the
last such vesting date shall be March 31, 1997.

For each of the Named Executive Officers, information regarding grants of
MISOs is listed in the Restricted Stock Awards column of the Summary
Compensation Table and information regarding the exercise of MISOs and earnings
in respect of MISOs is listed in the Aggregate Option Exercises Table.

1990 AND 1994 STOCK OPTION PLANS

The 1990 and 1994 Stock Option Plans provide for the issuance to officers
and key employees of options to purchase up to 2,562,500 shares of Common Stock.
The options granted under the 1990 and 1994 Stock Option Plans may either
qualify as incentive stock options as defined in Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code"), or, subject to the approval of
the Compensation Committee, be non-qualified options. The 1990 and 1994 Stock
Option Plans are designed to promote the interests of the Company and its
stockholders by providing selected officers and key employees with additional
incentive and opportunity to increase their proprietary interest in the Company,
thereby increasing their personal interest in its continued progress and
success. The Board of Directors may suspend or terminate the 1990 and 1994 Stock
Option Plans at any time and, subject to certain limitations, amend the 1990 and
1994 Stock Plans or any option granted thereunder, except that no amendment
requiring stockholder approval under the provisions of Section 422A of the Code
and related regulations relating to incentive stock options will be effective
without approval of the stockholders.

Since 1990 and as of March 31, 1995, the Company has granted options to
purchase 1,750,782 shares of Common Stock (net of forfeitures) at an average
exercise price of $9.72 per share. As of March 31, 1995, options to purchase a
total of 251,176 shares of Common Stock had been exercised and options to
purchase a total of 1,499,606 shares of Common Stock were outstanding.

On May 5, 1995, the Company granted the remaining 16,942 options pursuant to
the MIS Plan and an additional 8,058 of options identical to those under the MIS
Plan at an exercise price of $.01 per share and 32,500 options pursuant to the
1994 Stock Option Plan at an exercise price of $17.25 per share.

Information regarding grants of stock options, the exercise of options and
earnings in respect of options is provided in the tables for Named Executive
Officers of the Company named in the Summary Compensation Table.

BDM RETIREMENT PLAN

The BDM Retirement Plan (the "Retirement Plan") is a defined benefit plan
funded entirely by the Company. The retirement benefit formula, coupled with
expected benefits from Social Security, is designed to provide a defined level
of income during retirement. All employees of BDM Federal and BDM Technologies
who complete a specified number of hours of employment in a plan year are
eligible to participate in the Retirement Plan. Under the Retirement Plan, the
normal retirement age is 60. Employees are eligible for early retirement at age
55 if they have completed 24 months of active, regular, full-time employment.
Participants in the Retirement Plan are generally entitled upon retirement to a
benefit equal to the sum of (a) for each year of benefit accrual service for
plan years after December 25, 1989, 1.4% of annual compensation up to the
35-year average of the social security-covered compensation (rounded to the
nearest $600) plus 1.82% of annual compensation in excess of the 35-year average
of the social security-covered compensation (rounded to the nearest $600), and
(b) 1.33% of average annual compensation up to the 35-year average of the social
security-covered compensation for 1989, plus 2% of the average annual
compensation in excess of the 35-year average of the social security-covered
compensation for 1989 multiplied by the number of years of benefit accrual
service for plan years prior to December 26, 1989. The maximum number of years
of benefit accrual service allowed in making the calculation is 20.

The Company intends to supplement the benefit payment under the Retirement
Plan on behalf of Messrs. Odeen and Woodle through a defined contribution SERP.
An annual contribution will be credited to accounts established in the Company
for Messrs. Odeen and Woodle in the amounts of $57,223 and $44,000,
respectively, which are expected to provide an actuarially determined benefit
when Messrs. Odeen and Woodle reach the age of 65, that, when combined with the
benefits from the Company's retirement plans, will equal $90,000.

The Company intends to supplement the benefit payment to Dr. Sweeney and Mr.
Corsiglia under the Retirement Plan through a defined benefit SERP to the extent
necessary to ensure that such individuals who retire on or after their normal
retirement age with 20 or more years of benefit service receive a stated target
retirement benefit of 45% of average compensation for the five highest
consecutive years of such individuals' employment.

The years of benefit accrual service under the Retirement Plan and the
estimated maximum anticipated annual benefits at normal retirement date for the
Named Executive Officers participating in the Retirement Plan, as of December
31, 1994, are presented in the table below. The estimated maximum anticipated
annual benefits at normal retirement date for each of such officers who are
participants in the SERP as of December 31, 1994 are also presented. In
calculating benefits at

retirement, annual earnings have been estimated based on no escalation of
current plan year earnings. Benefit payments may be subject to a legislated
ceiling at the time of retirement.

ESTIMATED ANNUAL
BENEFIT UNDER THE
CURRENT YEARS OF BDM RETIREMENT PLAN ESTIMATED ANNUAL
CURRENT BENEFIT ACCRUAL AT NORMAL BENEFIT UNDER THE
NAME AGE(1) SERVICE RETIREMENT (3) SERP (3)
- ------------------------------- ------- ---------------- ------------------- -----------------

Philip A. Odeen................ 59 3 $27,700 $62,300
John A. Corsiglia.............. 45 2 43,158 60,846
Dr. William E. Sweeney......... 56 18 60,295 94,045
Roy F. Woodle(2)............... 59 -- -- 47,464
Michael J. Mruz................ 49 20 51,463 --

- ------------

(1) As of December 31, 1994.

(2) Mr. Woodle does not participate in the Retirement Plan.

(3) Benefits for Messrs. Odeen and Woodle are calculated based on retirement at
age 65. Benefits for Mr. Corsiglia, Dr. Sweeney and Mr. Mruz are calculated
based on retirement at age 60.

EMPLOYMENT AGREEMENTS

Philip A. Odeen became President and Chief Executive Officer of the Company
on May 1, 1992. Pursuant to a letter agreement, dated March 4, 1992, Mr. Odeen
is paid a base annual salary of $400,000. Should Mr. Odeen's employment with the
Company be terminated prior to December 31, 1995, he will receive a separation
allowance in the amount of 24 months' salary.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

For fiscal years 1991 through 1994, the Compensation Committee of the Board
of Directors made all determinations with respect to executive officer
compensation. Messrs. Carlucci, Conway and Slosar, each a Director of the
Company, served as members of the Compensation Committee in 1994. The Company is
not aware of any Compensation Committee interlocks.

Messrs. Carlucci and Conway are Chairman and Vice Chairman of the Company,
respectively, stockholders of the Company and Managing Directors of Carlyle. Mr.
Conway owns more than 10% of the capital stock of the general partner of
Carlyle. Carlyle is the general partner of The Carlyle Fund, BDM Partners and
BDM Acquisition II, stockholders of the Company.

The Company has retained Carlyle to provide certain financial and
investor-relations services, to assist management in evaluating corporate
acquisition opportunities and financial strategies and to provide other similar
services. In consideration of such services, the Company will pay Carlyle an
annual fee of $500,000 plus expenses, a portion of which is offset by the amount
which ordinarily would be payable to Mr. Conway for services rendered in his
capacity as a Director of the Company. In addition, although no definitive
agreement has been executed, it is currently anticipated that Carlyle will serve
as a financial advisor to the Company in connection with any acquisition,
corporate reorganization, financing, stock offering or similar transaction by
the Company, and will receive fees commensurate with its services in connection
with any such transaction. However, Carlyle has waived its rights to receive a
financial advisory fee in connection with the Offerings. The Company paid
Carlyle approximately $505,000, $535,000, and $512,000 for the provision of
these services for the years ended December 31, 1994, 1993, and 1992,
respectively. In addition, in connection with the acquisition of Vinnell in
1992, Carlyle received from the Company an advisory fee of $250,000, plus
expenses.

CERTAIN TRANSACTIONS

1990 ACQUISITION

An investor group led by Carlyle and certain members of management acquired
the business and assets of the Predecessor Company for a total cash
consideration of approximately $118 million, subject to the assumption of a
substantial portion of the liabilities of the Predecessor Company and to
adjustment based on an arbitration process instituted to determine the net worth
of the Predecessor Company on the acquisition date. In August 1991, the results
of the arbitration process determined an increase in net worth of the
Predecessor Company of approximately $8.5 million, for a final purchase price of
approximately $126.5 million, excluding approximately $7 million in transaction
expenses. The purchase price and related transaction expenses were financed by
the Company through various sources commonly relied on in leveraged transactions
led by management and outside investors, namely $30 million in cash provided in
exchange for Common Stock purchased by certain investors pursuant to the
Investor Agreement; senior secured borrowings of $80.5 million under a prior
credit facility; $10 million in cash received from Carlyle as the purchase price
of 100,000 shares of Series A Preferred Stock (the "Series A Preferred Stock");
and $13 million provided by Loral Aerospace Corporation ("LAC"), a subsidiary of
Loral, as the purchase price for a subordinated promissory note (the
"Subordinated Note") and a subordinated conditional note (the "Conditional
Note"), each due October 23, 1997, issued by the Company. The increase in the
final purchase price for the Predecessor Company was added to the amount due on
the subordinated promissory note, retroactive to October 23, 1990, with interest
at an annual rate of 12%. In July 1993, the Company repaid the Subordinated
Note. In October 1994, the Conditional Note expired.

In connection with the 1990 Acquisition, the Company paid a financial
advisory fee to Carlyle in the amount of approximately $1.6 million, which
amount is included in the transaction expenses of approximately $7 million
incurred by the Company.

The Company has retained Carlyle to provide certain financial and
investor-relations services, to assist management in evaluating corporate
acquisition opportunities and financial strategies and to provide similar other
services. In consideration of such services, the Company will pay Carlyle an
annual fee of $500,000 plus expenses, a portion of which is offset by the amount
which ordinarily would be payable to Mr. Conway for services rendered in his
capacity as a Director of the Company. In addition, although no definitive
agreement has been executed, it is currently anticipated that Carlyle will serve
as a financial advisor to the Company in connection with any acquisition,
corporate reorganization, financing, stock offering or similar transaction by
the Company, and will receive fees commensurate with its services in connection
with any such transaction. However, Carlyle has waived its rights to receive a
financial advisory fee in connection with the Offerings. The Company paid
Carlyle approximately $505,000, $535,000, and $512,000 for the provision of
these services for the years ended December 31, 1994, 1993, and 1992,
respectively. In addition, in connection with the acquisition of Vinnell in
1992, Carlyle received from the Company an advisory fee of $250,000, plus
expenses.

All future transactions (other than ordinary course transactions such as
fixing salaries or awarding employee benefits) and loans between the Company and
its directors, officers and principal stockholders will be ratified by a
majority of the members of the Board of Directors not having any interest in the
transactions and will be on terms believed to be no less favorable to the
Company than those generally available from unaffiliated third parties.

ACQUISITION OF VINNELL

In March 1992, the Company acquired the outstanding stock of Vinnell for
approximately $29.6 million. The seller of such stock is presently a member of
the Board of Directors of Vinnell. In connection with the acquisition of
Vinnell, the Company guaranteed a subordinated promissory note due March 13,
1996 issued by Vinnell to the seller in the principal amount of $3.7 million at
an annual rate of interest of 10%. Interest on the note is payable
semi-annually, and the principal amount is due on the earlier of March 13, 1996,
or six months after the death of the seller. The note was issued in
consideration for the seller's agreement not to engage in or associate with any
business in competition with Vinnell or employ any employee or consultant of
Vinnell until March 13, 1996 with respect to the United States and countries in
which Vinnell has entered into contracts to provide services or sell supplies
within three years prior to March 13, 1992 or in which Vinnell conducts or seeks
to conduct business. The Company intends to prepay this note with the proceeds
of the Offerings. The Company also entered into a consulting agreement with the
seller for a term of five years providing for the payment of $250,000 in 1992
and $200,000 in each of 1993 through 1996 for the performance of consulting
services by the seller in each of such years.

RECENT STOCKHOLDER TRANSACTIONS

In April 1991, The Carlyle Fund purchased 1,500,000 shares of Common Stock
from the Company at a purchase price of $4.00 per share. The Company used a
portion of the net proceeds of the 1991 Offering and the sale to the Carlyle
Fund to redeem the Series A Preferred Stock issued to Carlyle for $10 million
(representing the purchase price at the time of their issuance), plus accrued
dividends. The dividends payable upon redemption included an amount equal to the
expenses incurred by Carlyle in acquiring the Series A Preferred Stock plus
interest on such expenses at an annual rate of 12%.

In May 1991, the Company sold 500,000 additional shares of Common Stock at a
purchase price of $4.00 per share to The Carlyle Fund. The proceeds were used to
pay down the Company's outstanding revolving line of credit under a prior credit
facility.

The Company acquired from the Richard King Mellon Foundation ("Mellon")
100,000 shares of Common Stock at $8.00 per share in July 1993 and 100,000
shares of Common Stock at $12.00 per share in March 1994. The Company has
reserved such shares for issuance to employees under the Employee Stock Purchase
Plan.

On May 27, 1994, the Company acquired 2,250,000 shares and 350,000 shares of
its outstanding Common Stock and Class B Common Stock, respectively, from the
Investor Group (as defined herein) for its then fair value of $14.00 per share.

INVESTOR AGREEMENT

On October 23, 1990, The Carlyle Fund, Mellon, Equitable Capital Private
Income and Equity Partnership, II, L.P. ("Equitable Partnership") and Equitable
Deal Flow Fund, L.P. ("Equitable Fund") (collectively, the "Investor Group")
entered into the Investor Agreement with the Company which contains certain
provisions with respect to the transfer of shares of Common Stock by the
Investor Group. As a result of the sale of Common Stock by The Carlyle Fund to
BDM Acquisition II, BDM Partners, the Board of Regents of The University of
Texas System, as trustee of The University of Texas System Common Trust Fund
(the "Board of Regents") and the Permanent University Fund of The State of Texas
(the "Permanent University Fund"), such parties (together with the Investor
Group, the "Principal Stockholders") became subject to the Investors Agreement.

Pursuant to the terms of the Investor Agreement, if an Investor Group
member, or a transferee of a member pursuant to a transaction not involving a
public offering or an offering not made pursuant to Rule 144 under the
Securities Act (a "Transferee"), desires to sell any shares of Common Stock
purchased under the Investor Agreement other than (i) to another Investor Group
member, the Company or an affiliate, (ii) to a prospective purchaser in a
transaction made pursuant

to an effective registration statement or (iii) pursuant to Rule 144 under the
Securities Act or pursuant to certain pledges, grants of security interests or
other encumbrances effected by an Investor Group member or Transferee with
respect to its shares of Common Stock (an "Exempt Transaction"), then the
Company and the other Investor Group members have the right (a "first refusal"
right) to purchase all, but not less than all, of those shares on the same terms
and conditions as those offered by the prospective purchaser. Additionally, if
an Investor Group member desires to transfer shares purchased under the Investor
Agreement and such transfer, together with all previous transfers made by such
member (excluding Exempt Transactions), would exceed an aggregate of 20% of the
shares of Common Stock originally held by such member, then the other Investor
Group members have the right (a "tag-along right") to include in the proposed
transfer, at the same price and on the same terms and conditions, a certain
percentage of the shares then held by the other Investor Group members (on a
fully diluted basis). Further, if one or more Investor Group members and/or
other holders of Common Stock desire to transfer (other than in an Exempt
Transaction) 50% or more of the then outstanding Common Stock (on a fully
diluted basis), then such members and/or other holders have the right (a
"bring-along right") to require all Investor Group members to offer a certain
percentage of their Common Stock to the prospective purchaser on the same terms
as those that the proposed selling members and/or other holders are willing to
accept. Upon consummation of the Offerings, the tag-along and bring-along rights
will terminate.

Any transferee of shares of Common Stock held by the Investor Group pursuant
to the exercise of first refusal or tag-along rights (other than a transferee
pursuant to an Exempt Transaction) is required to agree to be subject to all of
the obligations under the Investor Agreement (including the first refusal
provisions contained therein) and the Stockholders Agreement. See
"--Stockholders Agreement." Such transferee is also entitled to all the various
rights of the Investor Group under the Investor Agreement, including the first
refusal, piggy-back and demand registration rights. For a discussion of the
piggy-back and demand registration rights of the parties subject to the Investor
Agreement, see "Shares Eligible for Future Sale--Registration Rights."

STOCKHOLDERS AGREEMENT

On October 23, 1990, the Company, Carlyle, the Investor Group and certain
Management Representatives entered into a Stockholders Agreement, dated October
23, 1990 (the "Stockholders Agreement"), which contains various provisions with
respect to the governance and operations of the Company. As a result of the sale
of Common Stock by The Carlyle Fund to BDM Acquisition II, BDM Partners, the
Board of Regents and the Permanent University Fund, such parties became subject
to the Stockholders Agreement.

The Stockholders Agreement, as amended, provides that the stockholders
subject thereto will vote their shares as follows: seven directors designated by
Carlyle, five directors designated by the Management Representatives and three
independent directors designated jointly by Carlyle and the Management
Representatives; however, by action of the Board of Directors, the number of
directors is currently fixed at 13. Such stockholders are therefore able to
control the outcome of all matters submitted to a vote of the Company's
stockholders, as well as the Company's management, operations and policies.
Actions taken to remove or replace a particular director may be taken only by
the particular stockholders entitled to nominate such director (and, in the case
of the independent directors, by both Carlyle and the Management
Representatives).

The Stockholders Agreement also imposes requirements for approval by at
least eight directors of the Company for certain fundamental corporate
transactions, amendments to the Certificate of Incorporation or By-laws
materially altering the rights of holders of Common Stock and the filing of a
registration statement under the Securities Act with respect to an underwritten
primary public offering of Common Stock of the Company.

Upon consummation of the Offerings, the Stockholders Agreement will
terminate.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth beneficial ownership of the Company's Common
Stock at March 31, 1995 by (i) each stockholder known by the Company to be the
beneficial owner of more than five percent of Common Stock, (ii) each Director
of the Company, (iii) each Named Executive Officerof the Company and (iv) all
executive officers and directors of the Company as a group. Unless otherwise
indicated, all shares are owned directly and the indicated owner has sole voting
and dispositive power with respect thereto. Unless otherwise indicated, the
address of each person is the Company's principal executive office.

SHARES OF
COMMON STOCK
OWNED PRIOR TO PERCENTAGE OF
OFFERINGS(1) COMMON STOCK
DIRECTORS, OFFICERS AND -------------------------- OWNED FOLLOWING
FIVE PERCENT STOCKHOLDERS NUMBER PERCENTAGE(2) OFFERINGS(1)(2)
- -------------------------------------------------- --------- ------------- ---------------

The Carlyle Group L.P.(3)......................... 5,750,000 62.8% 49.7%
The Board of Regents of the University of Texas
System(4)....................................... 1,000,000 10.9 8.6
c/o The University of Texas System
210 West 6th Street
Austin, TX 78701
Dr. William E. Sweeney, Jr.(5).................... 174,002 1.9 1.5
Philip A. Odeen(6)................................ 144,215 1.6 1.2
Earle C. Williams................................. 100,000 1.1 *
William E. Conway, Jr............................. 61,715 * *
John A. Corsiglia(7).............................. 40,001 * *
Frank C. Carlucci(8).............................. 35,934 * *
Roy V. Woodle(9).................................. 20,121 * *
James A. D. Geier................................. 9,767 * *
Neil Goldschmidt.................................. 5,260 * *
John M. Slosar(10)................................ 4,317 * *
Helmut Sonnenfeldt................................ 2,000 * *
Dr. Hans Mark..................................... 1,623 * *
Dr. Jeanette Grasselli Brown...................... 0 * *
Walther Leisler Kiep.............................. 0 * *
Thomas G. Ricks................................... 0 * *
All Directors and Executive Officers as a group
(total 15 persons)................................ 598,955 6.5 5.2

- ------------

* Less than 1% of the outstanding Common Stock.

(1) Pursuant to SEC regulations, shares are deemed to be "beneficially owned" by
a person if such person directly or indirectly has or shares the power to
vote or dispose of such shares whether or not such person has any pecuniary
interest in such shares or the right to acquire the power to vote or dispose
of such shares within 60 days, including any right to acquire through the
exercise of any option, warrant or right.

(2) Percentages are calculated based on the number of shares of Common Stock
outstanding as of March 31, 1995 and options exercisable within 60 days of
such date and do not include 400,000 shares of Class B Common Stock
outstanding as of such date.

(3) Includes 4,875,000 shares of Common Stock held by The Carlyle Fund, 750,000
shares of Common Stock held by BDM Acquisition II and 125,000 shares of
Common Stock held by BDM Partners. Carlyle is the sole General Partner of
The Carlyle Fund, BDM Acquisition II and BDM Partners. TWC Corporation is
the sole General Partner of Carlyle. Frank C. Carlucci is Chairman and a
Managing Director and William E. Conway, Jr. is a Managing Director of
Carlyle. Messrs. Carlucci and Conway are each directors and stockholders of
the Company.

(4) Includes 218,750 shares held by the Permanent University Fund, 31,250 shares
held by the Board of Regents and 750,000 shares held by BDM Acquisition II,
the sole limited partner of which is the Permanent University Fund and the
Board of Regents.

(5) Includes 143,500 shares held by the William E. Sweeney, Jr. & Elizabeth W.
Sweeney Revocable Trust, of which Dr. Sweeney and his wife are the sole
trustees. Also includes options to purchase 18,002 shares of Common Stock
granted under the 1990 Plan and 12,500 shares of stock under the MIS Plan
which are currently exercisable.

(6) Includes 5,000 shares held by The Philip and Marjorie Odeen Charitable
Remainder Unitrust, of which Mr. Odeen is the sole trustee. Also includes
options to purchase 25,784 shares of Common Stock granted under the 1990
Plan which are currently exercisable.

(7) Includes options to purchase 10,001 shares of Common Stock granted under the
1990 Plan which are currently exercisable.

(8) Voting power for 35,934 of these shares is shared with Mr. Carlucci's wife.

(9) Includes options to purchase 14,667 shares of Common Stock granted under the
1990 Plan which are currently exercisable.

(10) Voting power for 4,317 of these shares is shared with Mr. Slosar's wife.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized Common Stock of the Company consists of 50,000,000 shares of
Common Stock, 2,000,000 shares of Class B Common Stock and 500,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). As of March
31, 1995, there were 765 holders of record of Common Stock and two holders of
Class B Common Stock. Upon completion of the Offerings, there will be 11,575,656
shares of Common Stock outstanding and 400,000 shares of Class B Common Stock
outstanding. As of March 31, 1995, options were exercisable for 838,607 shares
of Common Stock.

Preferred Stock may be issuable in one or more series from time to time at
the discretion of the Board of Directors. The Board of Directors is authorized
to establish the number of shares to be included in each series and fix the
respective designations, powers, preferences, rights, qualifications,
restrictions and limitations of each series. The issuance of Preferred Stock
could be used as an "anti-takeover" device without requiring further action on
the part of the holders of the Common Stock or the Class B Common Stock. The
Company has no current plans to issue another series of the Preferred Stock.

The following is a summary of certain of the detailed provisions of the
Certificate of Incorporation regarding the capital stock of the Company. Such
summary is not complete and is qualified in its entirety by reference to the
Certificate of Incorporation and to the By-laws, copies of which are filed as
exhibits to the Registration Statement of which this Prospectus is a part.

COMMON STOCK AND CLASS B COMMON STOCK

The holders of Common Stock are entitled to one vote per share for each
share held of record in elections for directors and on all other matters
required or permitted to be approved by a vote of stockholders of the Company.
Each share of the Common Stock and each share of the Class B Common Stock are
equal in respect of rights in liquidation and rights to dividends or
distributions, except that in the case of dividends or other distributions
payable in securities of the Company, only non-voting securities will be
distributed with respect to the Class B Common Stock.

The Class B Common Stock is non-voting except with respect to matters for
which class voting is required by the DGCL. The Company is required to convert
any shares of Class B Common Stock into shares of Common Stock upon the
disposition of such shares by the holder thereof as part of: (1) a sale of all
or substantially all of the Common Stock of the Company; (2) a merger or
consolidation of the Company in which the stockholders of the Company receive
cash and/or marketable securities in exchange for their stock; (3) an
underwritten public offering of Common Stock of the Company pursuant to a
registration statement filed with, and declared effective by, the SEC (other
than a registration statement filed in connection with an employee benefit
offering or a merger or acquisition, or an offering of securities in connection
with an exchange offer or solely to existing security holders of the Company or
present and former employees of the Company or consultants or independent
contractors performing substantial services for the Company); (4) a sale
pursuant to Rule 144 under the Securities Act, following a public offering as
described above; or (5) any other transaction if the conversion of the Class B
Common Stock has been approved by a majority of the Board of Directors of the
Company.

Stockholders of the Company do not and will not have any preferential or
preemptive rights to subscribe for, purchase or receive additional shares of any
class of capital stock of the Company, or any options or warrants for such
shares, or any rights to subscribe for or purchase such shares, or any
securities convertible into or exchangeable for such shares, which may be
issued, sold or offered for sale by the Company.

PREFERRED STOCK

The Company's Board of Directors has the authority, without further
stockholder approval, to provide for the issuance of up to 500,000 shares of
Preferred Stock in one or more series, to establish the number and designation
of shares to be included in each series, and to determine the dividend rights,
conversion rights, voting rights, rights and terms of redemption and liquidation
or dissolution rights of such shares. Because the Board of Directors has the
power to establish the preferences and rights of each series, it may afford the
holder of any Preferred Stock preferences, powers and rights (including voting
rights) senior to the rights of the holders of common stock. No shares of
Preferred Stock are currently outstanding. Although the Company currently has no
intention to issue Preferred Stock, the issuance of shares of Preferred Stock or
the issuance of rights to purchase such shares, may have the effect of delaying,
deferring or preventing a change in control of the Company.

CERTAIN EFFECTS OF AUTHORIZED BUT UNISSUED STOCK

Upon completion of the Offerings, the Company's authorized but unissued
capital stock will consist of 38,424,344 shares of Common Stock, 1,600,000
shares of Class B Common Stock and 500,000 shares of Preferred Stock. All of the
foregoing authorized but unissued shares of capital stock will be available for
future issuance without stockholder approval. These additional shares may be
utilized for a variety of corporate purposes, including issuance pursuant to
stock options granted to certain members of management and key employees and
other employee plans, and future public offerings to raise additional capital or
to facilitate corporate acquisitions.

The Company does not presently have any plans to issue additional shares of
Common Stock other than shares of Common Stock which may be issued upon exercise
of existing options or options which may be granted in the future under the
Management Incentive Stock Purchase Program, the 1990 Stock Option Plan or the
1994 Stock Option Plan.

TRANSFER AGENT AND REGISTRAR

Wachovia Bank of North Carolina, N.A. serves as the Transfer Agent and
Registrar for the Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Upon the completion of the Offerings, the Company will have 11,975,656
shares of Common Stock and Class B Common Stock outstanding. Of these shares,
the 2,500,000 shares of Common Stock sold in the Offerings, the 1,339,217 shares
of Common Stock sold in the 1991 Offering and the 1,562,500 shares of Common
Stock issued, or to be issued, upon exercise of stock options granted under the
1990 Option Plan that have been registered under the Securities Act pursuant
to registration statements on Form S-8 will be freely tradable without
restriction under the Securities Act by persons other than "affiliates" of the
Company without restriction under the Securities Act. In addition, the Company
currently intends to register the shares of Common Stock under the 1994 Stock
Option Plan pursuant to which options to purchase 188,282 shares have been
granted. If registered, such shares will be freely tradable as described above.
An additional 360,000 shares of Common Stock are reserved for issuance under the
Company's Employee Stock Purchase Plan (the "Employee Stock Purchase Plan") of
which 231,748 shares had been issued as of March 31, 1995, and will be freely
tradable without restriction under the Securities Act when issued. The remaining
7,653,515 shares of issued and outstanding Common Stock were acquired in
transactions that were exempt from registration under the Securities Act and
consequently may not be resold unless they are registered under the Securities
Act or are sold pursuant to an applicable exemption from registration, including
Rule 144 under the Securities Act.

In general, under Rule 144 as presently in effect, if a period of at least
two years has elapsed since the later of the date the "restricted shares" (as
that phrase is defined in Rule 144) were acquired from the Company and the date
they were acquired from an "affiliate" (as that term is defined in Rule 144) of
the Company, as applicable, then the holder of such restricted shares (including
an affiliate) is entitled to sell a number of shares within any three-month
period that does not exceed the greater of 1% of the then outstanding shares of
the Common Stock (approximately 120,000 shares immediately after the
consummation of the Offerings, assuming the over-allotment options are not
exercised) or the average weekly trading volume reported by the Nasdaq National
Market in the Common Stock during the four calendar weeks preceding such sale.
The holder may only sell such shares through unsolicited brokers' transactions.
Sales under Rule 144 are also subject to certain requirements pertaining to the
manner of such sales, notices of such sales and the availability of current
public information concerning the Company. Affiliates may sell shares not
constituting restricted securities in accordance with the foregoing volume
limitations and other requirements but without regard to the two-year period.

Under Rule 144(k), if a period of at least three years has elapsed since the
later of the date restricted shares were acquired from the Company and the date
they were acquired from an affiliate of the Company, as applicable, then a
holder of such restricted shares who is not an affiliate of the Company at the
time of the sale and who has not been an affiliate of the Company for at least
three months prior to the sale would be entitled to sell the shares immediately
without regard to the volume limitations and other conditions described above.

The Company has filed two registration statements on Form S-8 under the
Securities Act to register the shares of Common Stock reserved for issuance
under the 1990 Stock Option Plan and the Employee Stock Purchase Plan. The
Company intends to file an additional registration statement on Form S-8 under
the Securities Act to register the shares of Common Stock reserved for issuance
under the 1994 Stock Option Plan. Shares registered pursuant to such
registration statements are freely tradable except to the extent that the
holders thereof are deemed to be "affiliates" of the Company, in which case the
transferability of such shares will be subject to the volume limitations set
forth in Rule 144 under the Securities Act.

The Company, the Principal Stockholders and certain directors and executive
officers have agreed that during the period beginning on the date of this
Prospectus and continuing to and

including the date 180 days after the date of this Prospectus, not to offer,
sell, contract to sell or otherwise dispose of any shares of Common Stock or any
securities of the Company which are substantially similar to the Common Stock,
including securities which are convertible into or exchangeable for, or
represent the right to receive, Common Stock or any such substantially similar
securities (other than pursuant to employee stock option plans, employee stock
purchase plans or 401(k) plans existing on the date of this Prospectus or in an
acquisition in which the person or persons receiving the Common Stock or
substantially similar securities agree in writing to be bound by this clause)
without the prior written consent of the representatives of the Underwriters
except for the shares of Common Stock offered in connection with the concurrent
U.S. and international offerings..

As of March 31, 1995, the Company had reserved 1,581,585 shares of Common
Stock for issuance upon exercise of outstanding stock options and 828,660 shares
of Common Stock for issuance upon exercise of future option grants.

Prior to the Offerings, there has been no public market for the Common
Stock. The Company can make no predictions as to the effect, if any, that sales
of shares of Common Stock or the availability of shares of Common Stock for sale
will have on the market price prevailing from time to time. Nevertheless, sales
of substantial amounts of the Common Stock in the public market, or the
perception that such sales may occur, could adversely affect prevailing market
prices.

REGISTRATION RIGHTS

Pursuant to the Investor Agreement, upon completion of the Offerings, the
stockholders who are subject thereto have registration rights with respect to
6,700,000 shares of Common Stock. Such stockholders have the right, subject to
certain exceptions in the case of an underwritten public offering, to include
their shares in any registration statement relating to Common Stock (or other
securities) filed by the Company under the Securities Act. Once the Common Stock
is traded on the Nasdaq National Market, Investor Group members and transferees
of their shares of Common Stock (pursuant to transactions that are not Exempt
Transactions) holding, at the relevant time, an aggregate of more than 25% of
the total number of shares of Common Stock held by the parties to such agreement
and their transferees, also have the right to require the Company, subject to
certain limitations, to file four registration statements under the Securities
Act in respect of more than 25% of the Common Stock owned in the aggregate by
the parties to such agreement. All of such stockholders have waived all of their
registration rights with respect to this Offerings and to any other registration
statements filed by the Company within 180 days after the date of this
Prospectus. In connection with these piggy-back and demand registration rights,
the Company will pay certain of such stockholders' registration expenses, but
not discount or commission expenses in connection with sales of the shares owned
by such stockholders.

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the U.S. Underwriters named below and each
of such U.S. Underwriters, for whom Goldman, Sachs & Co. and Lehman Brothers
Inc., are acting as representatives, has severally agreed to purchase from the
Company, the respective number of shares of Common Stock set forth opposite its
name below:

NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- --------------------------------------------------------------------- ------------

Goldman, Sachs & Co. ................................................
Lehman Brothers Inc. ................................................

------------
Total.......................................................... 2,000,000
------------
------------

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares offered hereby,
if any are taken.

The U.S Underwriters propose to offer the shares of Common Stock in part
directly to the public at the public offering price set forth on the cover page
of this Prospectus and in part to certain securities dealers at such price less
a concession of $ per share. The U.S. Underwriters may allow, and such
dealers may reallow, a concession not in excess of $ per share to certain
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and other selling terms may from time to time be
varied by the representatives.

The Company has entered into an underwriting agreement (the "International
Underwriting Agreement") with the underwriters of the International Offering
(the "International Underwriters") providing for the concurrent offer and sale
of 500,000 shares of Common Stock in an international offering outside of the
United States. The offering price and aggregate underwriting discounts and
commissions per share for the two offerings are identical. The closing of the
offering made hereby is a condition to the closing of the International
Offering, and vice versa. The representatives of the International Underwriters
are Goldman Sachs International and Lehman Brothers International (Europe).

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters has agreed that, as a part of the distribution of the shares
offered hereby and subject to certain exceptions, it will offer, sell or deliver
the shares of Common Stock, directly or indirectly, only in the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction (the "United
States") and to U.S. persons, which term shall mean, for purposes of this
paragraph: (a) any individual who is a resident of the United States or (b) any
corporation, partnership or other entity organized in or under the laws of the
United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States. Each of the
International Underwriters named herein has agreed pursuant to the Agreement
Between that, as a part of the distribution of the shares offered as a part of
the International Offering, and subject to certain exceptions, it will (I) not,
directly or indirectly, offer, sell or deliver shares of Common Stock (a) in the
United States or to any U.S. persons or (b) to any person who it believes
intends to reoffer, resell or deliver the shares in the United States or

to any U.S. persons, and (ii) cause any dealer to whom it may sell such shares
at any concession to agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.

The Company has granted the U.S. Underwriters an option exercisable for 30
days after the date of the Prospectus to purchase up to an aggregate of 300,000
additional shares of Common Stock solely to cover over-allotments, if any. If
the U.S. Underwriters exercise their over-allotment option, the U.S.
Underwriters have severally agreed, subject to certain conditions, to purchase
approximately the same percentage thereof that the number of shares to be
purchased by each of them, as shown in the foregoing table, bears to the
2,000,000 shares of Common Stock offered hereby. The Company has granted the
International Underwriters a similar option exercisable up to an aggregate of
75,000 additional shares of Common Stock.

The Company, the Principal Stockholders and certain directors and executive
officers have agreed that during the period beginning from the date of this
Prospectus and continuing to and including the date 180 days after the date of
the Prospectus, not to offer, sell, contract to sell or otherwise dispose of any
shares of Common Stock or any securities of the Company which are substantially
similar to the shares of Common Stock, including but not limited to securities
which are convertible into or exchangeable for, or represent the right to
receive, Common Stock or any such substantially similar securities (other than
pursuant to employee stock option plans, employee stock purchase plans or 401(k)
plans existing on the date of this Prospectus or in an acquisition in which the
person or persons receiving the Common Stock or substantially similar securities
agree in writing to be bound by this clause) without the prior written consent
of the representatives, except for the shares of Common Stock offered in
connection with the concurrent U.S. and international offerings.

The representatives of the Underwriters have informed the Company that they
do not expect sales to accounts over which the Underwriters exercise
discretionary authority to exceed five percent of the total number of shares of
Common Stock offered by them.

Prior to the offerings, there has been no public market for the shares. The
initial public offering price will be negotiated among the Company and the
representatives of the U.S. Underwriters and the International Underwriters.
Among the factors to be considered in determining the initial public offering
price of the Common Stock, in addition to prevailing market conditions, are the
Company's historical performance, estimates of the business potential and
earnings prospects of the Company, an assessment of the Company's management and
the consideration of the above factors in relation to market valuation of
companies in related businesses.

Application has been made for the Common Stock to be approved for quotation
and trading on the Nasdaq National Market under the symbol "BDMI."

The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act.

VALIDITY OF COMMON STOCK

The validity of the Common Stock offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York, and for the U.S.
Underwriters by Sullivan & Cromwell, Washington, D.C.

EXPERTS

The audited financial statements included in this Prospectus and elsewhere
in the Registration Statement have been audited by Coopers & Lybrand L.L.P.,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of that firm as
experts in giving such reports.

ADDITIONAL INFORMATION

The Company has filed with the SEC under the Securities Act a Registration
Statement with respect to the Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement in
accordance with the rules and regulations of the SEC. The Registration Statement
may be inspected and copied at the public reference facilities maintained by the
SEC at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the SEC's Regional
Offices in New York (7 World Trade Center, New York, New York 10007) and Chicago
(Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago,
Illinois 60611). Copies of such material can be obtained from the public
reference section of the SEC, Washington, D.C. 20549, at prescribed rates. For
further information pertaining to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement, including the exhibits
thereto and the financial statements, notes and schedules filed as a part
hereof.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

PAGES
-----

BDM International, Inc.

Report of Independent Accountants................................................. F-2

Consolidated Balance Sheets as of March 31, 1995 (unaudited), December 31, 1994
and 1993............................................................................ F-3

Consolidated Statements of Operations for the three months ended March 31, 1995
and 1994 (unaudited) and for the years ended December 31, 1994, 1993 and 1992....... F-4

Consolidated Statements of Stockholders' Equity for the three months ended
March 31, 1995 and 1994 (unaudited) and for the years ended December 31, 1994,
1993 and 1992....................................................................... F-5

Consolidated Statements of Cash Flows for the three months ended March 31, 1995
and 1994 (unaudited) and for the years ended December 31, 1994, 1993
and 1992........................................................................ F-6

Notes to Consolidated Financial Statements........................................ F-7

F-1

REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Stockholders
BDM International, Inc.

We have audited the accompanying consolidated balance sheets of BDM
International, Inc. and Subsidiaries (the Company) as of December 31, 1994 and
1993, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1994. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
BDM International, Inc. and Subsidiaries as of December 31, 1994 and 1993, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended December 31, 1994, in conformity with
generally accepted accounting principles.

As discussed in Note 10 to the consolidated financial statements, effective
as of the beginning of 1992, the Company changed its method of accounting for
income taxes to conform with Statement of Financial Accounting Standards No.
109.

Washington, D.C.
March 10, 1995 COOPERS & LYBRAND L.L.P.

F-2

BDM INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

MARCH 31, DECEMBER 31,
------------ --------------------
1995 1994 1993
------------ -------- --------
(UNAUDITED)

ASSETS
Current assets:
Cash and cash equivalents.............................. $ 42,885 $ 45,314 $ 48,875
Accounts receivable, net............................... 188,791 215,923 190,158
Prepaid expenses and other............................. 7,257 8,842 3,767
------------ -------- --------
Total current assets............................... 238,933 270,079 242,800

Property and equipment, net.............................. 41,539 40,569 30,162
Intangible assets, net................................... 12,648 13,814 25,486
Deposits and other....................................... 6,629 5,896 706
Equity in and advances to affiliates..................... 5,029 5,193 4,282
------------ -------- --------
Total assets....................................... $304,778 $335,551 $303,436
------------ -------- --------
------------ -------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.................. $149,502 $166,298 $147,710
Current portion of Long-term debt...................... 4,183 426 2,750
Income taxes payable................................... 798 3,000 1,200
Deferred tax liability................................. 4,277 5,441 9,392
------------ -------- --------
Total current liabilities.......................... 158,760 175,165 161,052

Deferred tax liability................................... 5,242 5,243 428
Long-term debt........................................... 60,130 82,750 48,480
Severance and other...................................... 17,482 17,248 22,525
Minority interest........................................ 18,735 14,040 8,042
------------ -------- --------
Total liabilities.................................. 260,349 294,446 240,527
------------ -------- --------
Commitments and contingencies

Stockholders' equity:
Preferred stock, $.01 par value; 500,000 shares
authorized, none issued.................................. -- -- --
Common stock, $.01 par value; 9,475,656 and 9,473,275
shares issued and outstanding at March 31, 1995 and
December 31, 1994; 12,049,905 shares and 11,949,905
shares issued and outstanding, respectively at December
31, 1993................................................. 95 95 120
Additional paid in capital............................... 11,968 12,336 48,849
Retained earnings........................................ 31,732 28,398 15,320
Treasury stock, at cost, 100,000 shares at December 31,
1993..................................................... -- -- (800)
Deferred compensation.................................... (183) (279) (805)
Cumulative translation adjustment........................ 817 555 225
------------ -------- --------
Total stockholders' equity......................... 44,429 41,105 62,909
------------ -------- --------
Total.............................................. $304,778 $335,551 $303,436
------------ -------- --------
------------ -------- --------

The accompanying notes are an integral part of these financial statements.

F-3

BDM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)

THREE MONTHS ENDED
MARCH 31, (UNAUDITED) YEAR ENDED DECEMBER 31,
---------------------- --------------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------

Revenue............................ $191,901 $165,163 $774,249 $558,292 $424,389
-------- -------- -------- -------- --------
Cost of sales...................... 156,989 135,334 643,728 460,186 348,191
Selling, general and
administrative..................... 19,385 19,373 82,950 63,847 41,940
Depreciation, amortization and
other.............................. 5,622 4,899 20,627 12,089 14,802
-------- -------- -------- -------- --------
Operating profit................... 9,905 5,557 26,944 22,170 19,456
Interest expense, net.............. 1,121 248 3,481 4,178 5,302
Equity in earnings of affiliates... (332) (386) (1,841) (2,223) (1,852)
Minority interest.................. 2,227 582 2,526 1,555 --
-------- -------- -------- -------- --------
Income before income taxes......... 6,889 5,113 22,778 18,660 16,006
Provision for income taxes......... 3,555 2,205 9,700 7,632 6,552
-------- -------- -------- -------- --------
Income before extraordinary gain
and cumulative effect of
accounting change................ 3,334 2,908 13,078 11,028 9,454
Extraordinary gain, net of tax..... -- -- -- 413 --
Cumulative effect of accounting
change............................. -- -- -- -- (115)
-------- -------- -------- -------- --------
Net income......................... $ 3,334 $ 2,908 $ 13,078 $ 11,441 $ 9,339
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Earnings per share:
Income before extraordinary gain
and cumulative effect of
accounting change................ $ 0.33 $ 0.24 $ 1.20 $ 0.92 $ 0.81
Extraordinary gain................. -- -- -- 0.03 --
Cumulative effect of accounting
change............................. -- -- -- -- (0.01)
-------- -------- -------- -------- --------
Net income per share............... $ 0.33 $ 0.24 $ 1.20 $ 0.95 $ 0.80
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Weighted average shares
outstanding........................ 9,979 12,289 10,941 11,983 11,703
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

The accompanying notes are an integral part of these financial statements.

F-4

BDM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1995 (UNAUDITED) AND
THE YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN THOUSANDS)

CLASS B COMMON
COMMON ADDITIONAL TREASURY STOCK
-------------- -------------- PAID-IN RETAINED DEFERRED ---------------
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS COMPENSATION SHARES AMOUNT
------ ------ ------ ------ ---------- -------- ------------ ------ -------

Balance at January 1, 1992................. 10,091 $101 750 $7 $ 45,853 $ 520 $ (2,369) -- --
Issuance of common stock.................. 499 5 -- -- 118 -- -- -- --
Deferred compensation..................... -- -- -- -- 575 -- 598 -- --
Tax benefits applicable to stock option
plans...................................... -- -- -- -- 185 -- -- -- --
Net Income................................ -- -- -- -- -- 9,339 -- -- --
-
------ ------ ------ ---------- -------- ------ ------ -------
Balance at December 31, 1992............... 10,590 106 750 7 46,731 9,859 (1,771) -- --
Issuance of common stock.................. 709 7 -- -- 1,205 -- -- -- --
Deferred compensation..................... -- -- -- -- 131 -- 955 -- --
Tax benefits applicable to stock option
plans...................................... -- -- -- -- 793 -- -- -- --
Cancellation of deferred compensation
options.................................... -- -- -- -- (11) -- 11 -- --
Purchase of treasury stock................ -- -- -- -- -- -- -- (100) (800)
Cash dividend of $.50 per share........... -- -- -- -- -- (5,980 ) -- -- --
Translation adjustments................... -- -- -- -- -- -- -- -- --
Net Income................................ -- -- -- -- -- 11,441 -- -- --
-
------ ------ ------ ---------- -------- ------ ------ -------
Balance at December 31, 1993............... 11,299 113 750 7 48,849 15,320 (805) (100) (800)
Issuance of common stock.................. 251 3 -- -- 2,262 -- -- -- --
Deferred compensation..................... -- -- -- -- -- -- 497 -- --
Tax benefits applicable to stock option
plans...................................... -- -- -- -- 11 -- -- -- --
Cancellation of deferred compensation
options.................................... -- -- -- -- (29) -- 29 -- --
Purchase of treasury stock................ -- -- -- -- -- -- -- (2,728) (37,985)
Cancellation of treasury stock............ (2,478) (25) (350) (3) (38,757) -- -- 2,828 38,785
Foreign currency translation adjustments.. -- -- -- -- -- -- -- -- --
Income tax provision on translation
adjustment................................. -- -- -- -- -- -- -- -- --
Net Income................................ -- -- -- -- -- 13,078 -- -- --
-
------ ------ ------ ---------- -------- ------ ------ -------
Balance at December 31, 1994............... 9,072 91 400 4 12,336 28,398 (279) -- --
Issuance of common stock.................. 78 7 -- -- 588 -- -- -- --
Deferred compensation..................... -- -- -- -- 70 -- 96 -- --
Purchase of treasury stock................ -- -- -- -- -- -- -- (74) (1,033)
Cancellation of treasury stock............ (74) (7) -- -- (1,026) -- -- 74 1,033
Foreign currency translation adjustment... -- -- -- -- -- -- -- -- --
Net Income................................ -- -- -- -- -- 3,334 -- -- --
-
------ ------ ------ ---------- -------- ------ ------ -------
Balance, March 31, 1995 (unaudited)........ 9,076 $ 91 400 $4 $ 11,968 $31,732 $ (183) -- --
------ ------ ------ ---------- -------- ------ ------ -------
------ ------ ------ ---------- -------- ------ ------ -------

CUMULATIVE TOTAL
TRANSLATION STOCKHOLDERS'
ADJUSTMENT EQUITY
----------- -------------

Balance at January 1, 1992................. -- $ 44,112
Issuance of common stock.................. -- 123
Deferred compensation..................... -- 1,173
Tax benefits applicable to stock option
plans...................................... -- 185
Net Income................................ -- 9,339

--- -------------
Balance at December 31, 1992............... -- 54,932
Issuance of common stock.................. -- 1,212
Deferred compensation..................... -- 1,086
Tax benefits applicable to stock option
plans...................................... -- 793
Cancellation of deferred compensation
options.................................... -- --
Purchase of treasury stock................ -- (800)
Cash dividend of $.50 per share........... -- (5,980)
Translation adjustments................... 225 225
Net Income................................ -- 11,441

--- -------------
Balance at December 31, 1993............... 225 62,909
Issuance of common stock.................. -- 2,265
Deferred compensation..................... -- 497
Tax benefits applicable to stock option
plans...................................... -- 11
Cancellation of deferred compensation
options.................................... -- --
Purchase of treasury stock................ -- (37,985)
Cancellation of treasury stock............ -- --
Foreign currency translation adjustments.. 643 643
Income tax provision on translation
adjustment................................. (313) (313)
Net Income................................ -- 13,078

--- -------------
Balance at December 31, 1994............... 555 41,105
Issuance of common stock.................. -- 595
Deferred compensation..................... -- 166
Purchase of treasury stock................ -- (1,033)
Cancellation of treasury stock............ -- --
Foreign currency translation adjustment... 262 262
Net Income................................ -- 3,334

--- -------------
Balance, March 31, 1995 (unaudited)........ $ 817 $ 44,429
--- -------------
--- -------------

The accompanying notes are an integral part of these financial statements.

F-5

BDM INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

THREE MONTHS ENDED
MARCH 31,
(UNAUDITED) YEAR ENDED DECEMBER 31,
------------------- ------------------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------------- --------

Cash flows from operating activities:
Cash received from customers........... $220,938 $145,108 $746,335 $530,785 $404,536
Cash paid to suppliers and employees... (206,393) (154,995) (725,312) (486,465) (372,940)
Income taxes paid...................... (3,122) (114) (11,204) (5,584) (389)
Interest received...................... 559 480 1,142 223 98
Interest paid.......................... (1,299) (719) (5,087) (4,824) (5,113)
-------- -------- -------- -------------- --------
Net cash provided by (used in)
operating activities................. 10,683 (10,240) 5,874 34,135 26,192
-------- -------- -------- -------------- --------
Cash flows from investing activities:
Additions to property and equipment.... (1,832) (2,611) (9,641) (7,046) (4,159)
Proceeds from disposals of equipment... -- -- 21 328 42
Purchase of businesses................. -- (4,450) (4,479) (9,038) (12,948)
Cash acquired in business
combination.......................... -- -- -- 20,165 --
Reimbursement of acquisition costs..... 1,143 -- 1,362 -- --
Contributions from minority owners..... 1,862 -- 2,482 4,171 --
Distributions from unconsolidated
affiliates............................... 500 200 2,775 3,216 4,626
Investment in unconsolidated
affiliates............................... (100) (500) (1,936) (500) (1,500)
-------- -------- -------- -------------- --------
Net cash (used in) provided by
investing activities................. 1,573 (7,361) (9,416) 11,296 (13,939)
-------- -------- -------- -------------- --------
Cash flows from financing activities:
Net (repayments of) proceeds from
credit Facility ..................... (19,000) 5,264 31,835 35,451 11,000
Proceeds from term debt................ -- -- -- -- 15,000
Repayment of term debt................. -- -- -- (25,972) (37,819)
Proceeds from issuance of common
stock.................................... 595 307 2,265 1,061 49
Payment of debt issuance costs......... -- -- (234) (580) (440)
Payment of dividend.................... -- -- -- (5,980) --
Acquisition of common stock............ (1,033) (1,200) (37,985) (800) --
-------- -------- -------- -------------- --------
Net cash (used in) provided by
financing activities................. (19,438) 4,371 (4,119) 3,180 (12,210)
-------- -------- -------- -------------- --------
Effect of exchange rate changes on
cash..................................... 4,753 (45) 4,100 179 --
-------- -------- -------- -------------- --------
Net (decrease) increase in cash.......... (2,429) (13,275) (3,561) 48,790 43
Cash, beginning of period................ 45,314 48,875 48,875 85 42
-------- -------- -------- -------------- --------
Cash, end of period...................... $ 42,885 $ 35,600 $ 45,314 $ 48,875 $ 85
-------- -------- -------- -------------- --------
-------- -------- -------- -------------- --------

The accompanying notes are in integral part of these financial statements.

F-6

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

1. ORGANIZATION

BDM International, Inc. (BDM or Company) was privately owned from its
inception in 1959 until 1980, when it became a publicly owned company. BDM was
purchased by and became a wholly-owned subsidiary of Ford Aerospace Corporation
(Ford Aerospace) in June, 1988. BDM remained a wholly-owned subsidiary of Ford
Aerospace until members of senior management and an investor group led by The
Carlyle Group, L.P. (Carlyle), a private merchant banking firm, acquired
substantially all of the assets, liabilities, and business of BDM on October 23,
1990.

BDM is a multinational information technology company that operates
primarily in three interrelated markets: Systems and Software Integration,
Computer and Technical Services and Enterprise Management and Operations. The
Company serves governmental and commercial clients both domestically and abroad.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include all majority-owned or
controlled subsidiaries and joint ventures of the Company. All significant
intercompany accounts and transactions have been eliminated. The Company's
earnings in unconsolidated joint ventures are accounted for using the equity
method.

Revenue Recognition

The Company's revenue is derived primarily from long-term contracts of
various types. Revenue on cost-reimbursable contracts is recognized to the
extent of costs incurred plus a proportionate amount of the fee. Revenue on
fixed-price contracts is recognized using the percentage-of-completion method
based on the relationship of actual costs incurred to total costs estimated to
be incurred over the duration of the contract. Revenue on time-and-material
contracts is recognized based on actual hours delivered at the contracted hourly
rate plus the cost of any materials incurred. The fees under certain U.S.
Government contracts may be increased or decreased in accordance with cost or
performance incentive provisions which measure actual performance against
established targets or other criteria. Such incentive fee awards or penalties
are included in sales at the time the amounts can be reasonably determined.
Provisions for anticipated contract losses are recognized at the time they
become known.

Progress payments received in advance from customers are applied first to
any amount of unbilled accounts receivable of related contracts. Any excess of
the payments received in advance over the related unbilled accounts receivable
is recorded as an advance payment liability.

Foreign Currency Translation

The results of operations from foreign subsidiaries are translated to U.S.
dollars using the average exchange rates during the period. Assets and
liabilities are translated to U.S. dollars at the exchange rate in effect at the
balance sheet date. The resulting cumulative translation adjustments are
reflected in stockholders' equity.

F-7

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

Statements of Cash Flows

Effective in 1993, and as permitted and preferred by the Statement of
Financial Accounting Standard No. 95--Statement of Cash Flows, the Company
changed its method of reporting cash flows to the direct method. The Statements
of Cash Flows for all periods included herein have been restated to conform to
the direct method presentation.

Cash flows from the operations of the Company's foreign subsidiaries are
calculated based on their reporting currencies. The effect of exchange rate
changes on the cash balances held in foreign currencies is reported separately
in the Statements of Cash Flows.

The Company considers all highly liquid financial instruments with purchased
maturities of three months or less to be cash equivalents.

Property and Equipment

Property, equipment and furniture are recorded at cost, or assigned fair
value if acquired through an acquisition. Furniture and equipment are
depreciated over their estimated useful lives, ranging from three to ten years,
primarily using the declining balance method. Leasehold improvements are
amortized over their estimated useful lives or lease terms, whichever is
shorter, using the straight-line method. Maintenance and repairs are charged to
expense as incurred.

Goodwill and Intangible Assets

Goodwill represents the excess of the cost of acquiring businesses over the
fair value of identifiable net tangible and intangible assets acquired. Goodwill
is amortized on a straight-line basis over the period for which the Company
estimates it will benefit directly from the acquisition. Although the period of
benefit from a goodwill asset can be difficult to estimate, the Company
considers a goodwill asset to be recoverable as long as the acquisition
generates positive cash flow from operations after implementation of the
Company's strategic plan or completion of reorganization efforts, if any.
Recoverability of individual goodwill assets is evaluated periodically based on
current undiscounted cash flow projections of each specific acquired business.
To date, the Company has limited the period of amortization of any individual
goodwill asset to fifteen years, even though most of the Company's acquisitions
would project positive cash flows from operations for a much longer period.
Goodwill is currently being amortized over periods ranging from five to fifteen
years.

Intangible assets are recorded at cost, or assigned fair value if acquired
through a business acquisition. Intangible assets are amortized on a
straight-line basis over the term of the underlying asset or the estimated
period of benefit, currently ranging from three to five years, or in the case of
contract backlog, over the remaining terms of the acquired contracts in relation
to the recognition of related contract revenue.

Income Taxes

Effective January 1, 1992, the Company adopted the provisions of Statement
of Financial Accounting Standard No. 109--Accounting for Income Taxes (SFAS
109). SFAS 109 requires a company to recognize deferred tax assets and
liabilities for the expected future tax consequences of events that have been
recorded in a company's financial statements or tax returns. Deferred tax

F-8

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)

assets and liabilities represent the tax effects of differences between the
financial statement carrying amounts and the tax basis carrying amounts of the
Company's assets and liabilities. These differences are calculated based upon
the statutory tax rates in effect in the years in which the differences are
expected to reverse. The effect of subsequent changes in tax rates on deferred
tax balances is recognized in the period in which a tax rate change is enacted.

Foreign income taxes that are reimbursable pursuant to the contracts
generating the foreign income are classified as contract costs rather than as a
component of the Company's provision for income tax.

Earnings Per Share

Earnings per share is computed by dividing net income by the sum of the
weighted average number of common and common equivalent shares outstanding. The
Company's common equivalent shares, consisting entirely of options to purchase
common stock, are calculated using the treasury stock method which assumes the
exercise of all outstanding stock options with the hypothetical proceeds being
used to repurchase shares for treasury.

Concentrations of Credit Risk

The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of cash equivalents and accounts receivable.

The Company's cash management policy is to use available cash balances,
primarily of its domestic subsidiaries, to reduce the outstanding balance of the
credit facility. To mitigate exposures to foreign currency risks
associated with using the available cash of foreign subsidiaries or joint
ventures, only the portion of available cash balances deemed not to be needed
for short-term operations of the foreign subsidiary are considered eligible for
inclusion in the centralized cash management activities of the Company. The
majority of the cash balance at March 31, 1995 and December 31, 1994, belonged
to IABG (as defined below) (the Company's German subsidiary) (see Note 3). At
March 31, 1995 and December 31, 1994, $40,500,000 and $37,040,000, respectively,
was invested primarily in deposits with various German banks, with purchased
maturities of one month or less. These investments are insured up to amounts
prescribed by German law. Although there were no other investments as of March
31, 1995, and December 31, 1994, significant excess cash balances of domestic
subsidiaries not used to extinguish debt are routinely invested in high quality
commercial paper for periods ranging from overnight to one week. It is the
Company's policy to hold such investments to maturity. Forward contracts
denominated in foreign currencies are considered for purchase by the Company to
hedge long-term commitments in the event that other than temporary fluctuations
in the participating currencies are projected. The Company does not engage in
speculative activities.

The Company generally provides uncollateralized credit to its customers.
Advance payments are secured from a large portion of foreign government
customers pursuant to the appropriations practices of the related governments.
The Company also continually assesses the financial strength of commercial
contractors for whom significant subcontracts are performed.

F-9

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Fair Value of Financial Instruments

The carrying value of financial instruments approximates fair value since
all such instruments are either short-term in nature or bear interest rates
which are indexed to current market interest rates.

Reclassifications

Certain reclassifications have been made to the prior year financial
statements and disclosures to conform them to the current year presentation.

3. ACQUISITIONS

Geoscience Consultants, Ltd.

On February 16, 1994, the Company acquired Geoscience Consultants, Ltd., an
environmental services business, for an acquisition price of approximately
$4,300,000. The acquisition was financed with borrowings from the Company's
credit facility. Goodwill resulting from the transaction, accounted for
as a purchase, approximated $3,200,000 and is being amortized on a straight-line
basis over ten years. A three year covenant not-to-compete for $150,000 was also
issued in connection with the acquisition.

Industrieanlagen-Betriebsgesellschaft mbH

On November 16, 1993, the Company acquired management control, through a 45%
ownership interest, in Industrieanlagen-Betriebsgesellschaft mbH (IABG), located
in Ottobrunn, Germany. The interest was acquired primarily from IVG, a company
formerly owned by the German Government (IVG was privatized during 1993),
pursuant to a privatization plan initiated by the German Government. IABG
performs diversified technical services in the areas of defense technology,
information systems, organizational analysis, structural analysis and testing
and environmental programs on behalf of ministries of the German Government as
well as other governmental and private sector clients.

On the original acquisition date, IVG retained a 15% ownership interest in
IABG and held the remaining 40% ownership interest in trust, for sale to
employees and other investors, subject to the Company's approval. In October
1994, 12% of the trust was sold to Buck Werke GmbH & Co. KG, a German services
company, and an additional 5% was acquired by IVG. The Company plans to complete
the privatization of the remaining 23% trust balance through a sale to IABG's
employees and other investors in 1995.

The Company and IVG had originally entered into a voting rights agreement,
which gave the Company control of IVG's 15% voting authority enabling the
Company to exercise 60% in total voting authority. In connection with the sale
of an additional 5% of IABG to IVG in October 1994, the original voting rights
agreement was revised to provide IVG with direct control of 12% of IABG's total
voting authority while ensuring that the Company would retain the right to vote
IVG's remaining 8% ownership for a total voting authority of 53%. IVG cannot
unilaterally terminate the voting rights agreement. In the event that BDM and
IVG cannot agree on a vote, BDM will be required to acquire the 8% portion of
IABG at a price based on a previously accepted valuation method contained in the

F-10

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

3. ACQUISITIONS--(CONTINUED)

original acquisition agreement. The Company's majority voting authority enables
it to manage the operations of IABG; therefore, the accompanying financial
statements consolidate the financial statements of IABG and present the 55%
ownership as minority interest. As long as BDM maintains its ownership position
in IABG, no owner other than BDM will have voting authority exceeding their
ownership percentage.

The total consideration paid for the acquisition included the purchase price
of $1,705,500, a finders fee of $2,060,800 and transaction costs of
approximately $2,119,700. The transaction, accounted for as a purchase,
generated an excess of the purchase price over the book value of net assets
acquired of approximately $10,600,000. A subsequent valuation of the fair value
of the acquired assets and liabilities, completed in September 1994, resulted in
the allocation of the entire excess purchase price to certain acquired technical
equipment and buildings with fair values exceeding their respective acquisition
date carrying values. Effective January 1, 1994, the allocated excess purchase
price is being depreciated over the estimated useful lives of the specific
underlying assets averaging nine years, and ranging from three to thirteen
years.

In addition to the purchase price consideration, the privatization plan
requires the new owners to guarantee equity infusions in IABG of $22,650,000
during the first two years of ownership. As of December 31, 1994, installment
payments against this requirement had been made by the owners at the acquisition
date and on the first anniversary thereof totaling $6,453,000 and $6,236,000,
respectively, representing 100% and 77% of the equity infusions actually
required as of those dates. The remaining 23% portion of the second infusion,
$1,862,000, was paid in March 1995 by a bank trustee which will administer the
remaining ownership transfer to employees and other investors in 1995. The third
installment commitment of $8,098,000, is due from all of the owners on November
16, 1995. The Company's share of all of the above acquisition costs and equity
guarantees is 45%.

Vinnell Corporation

On March 13, 1992, the Company acquired the outstanding common stock of
Vinnell Corporation (Vinnell) for approximately $29,600,000, including
transaction expenses. The purchase price was $41,700,000, less $16,700,000 of
Vinnell's cash on hand at the acquisition date, a promissory note for $3,700,000
issued to the seller in consideration for a four year not-to-compete agreement
and approximately $900,000 in transaction expenses. The Company also entered
into a consulting agreement with the former owner which provides for annual
compensation of $200,000 per year through 1996. This acquisition, accounted for
as a purchase, generated goodwill of $8,168,000, which is being amortized over
fifteen years.

Pro Forma Information (unaudited)

The following pro forma combined condensed statements of operations set
forth the consolidated results of operations of the Company and these above
mentioned acquisitions as if the transactions had occurred as of January 1, 1994
and 1993 unless actually acquired prior to those dates. This unaudited pro forma
information does not purport to be indicative of the actual financial

F-11

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

3. ACQUISITIONS--(CONTINUED)

position or the results that would actually have occurred if the combinations
had been in effect for the full years ended December 31 (dollars in thousands,
except per share data).

1994 1993
-------- --------

Revenue.............................................................. $774,829 $745,415
-------- --------
Minority interest.................................................... $ (2,526) $ (3,518)
-------- --------
Net income before extraordinary items................................ $ 13,078 $ 11,976
-------- --------
Net income........................................................... $ 13,078 $ 12,389
-------- --------
Net income per common share.......................................... $ 1.20 $ 1.03
-------- --------

Other Acquisitions

Other individually immaterial business acquisitions completed in 1993 were
accounted for as purchases. Goodwill of approximately $2,400,000 was generated
by the combined other purchases and is being amortized over periods ranging from
five to ten years (See Note 7).

F-12

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

4. SUPPLEMENTAL CASH FLOW INFORMATION

The following is a reconciliation of net income to net cash provided (used)
by operating activities for the years periods ended (dollars in thousands):

THREE MONTHS
ENDED MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- --------------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------

Net income............................ $ 3,334 $ 2,908 $ 13,078 $ 11,441 $ 9,339
Noncash adjustments to net income:
Extraordinary items............... -- -- -- 413 --
Accounting change................. -- -- -- -- 115
Depreciation and amortization..... 5,434 3,915 16,466 10,488 11,964
Loss on disposal of property...... -- -- -- 208 515
Equity in earnings of
affiliates............................ (332) (386) (1,841) (2,223) (1,852)
Minority interest................. 2,227 582 2,526 1,555 --
Deferred taxes.................... 1,060 2,776 2,563 5,261 2,155
Provision for contract losses..... 665 551 5,138 1,633 748
Deferred compensation expense..... 96 148 497 1,086 1,173
Other............................. -- -- (749) 691 1,108
Cash effect of changes in current
assets and liabilities:
Accounts receivable............... 26,623 18,361 (36,543) (28,674) (17,204)
Prepaid expenses and other........ 1,099 343 (10,265) 2,579 6,425
Accounts payable.................. (27,321) (38,867) 13,204 28,477 12,074
Income taxes payable.............. (2,202) (571) 1,800 1,200 (368)
-------- -------- -------- -------- --------
Net cash provided (used) by
operating activities.................. $ 10,683 $(10,240) $ 5,874 $ 34,135 $ 26,192
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Noncash financing activities:
Note payable exchanged for covenant
not-to-compete........................ $ 3,700
--------
--------

F-13

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

5. ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following as of (dollars in thousands):

DECEMBER 31,
MARCH 31, --------------------
1995 1994 1993
--------- -------- --------

U.S. government contracts:
Billed.................................................. $ 90,805 $118,727 $103,123
Unbilled:
Retention............................................. 22,981 28,642 21,130
Other................................................. 15,547 20,173 22,750
--------- -------- --------
Total............................................... 129,333 167,542 147,003
Other contracts:
Billed.................................................. 47,803 42,597 38,293
Unbilled:
Retention............................................. 2,806 4,598 1,726
Other................................................. 23,002 10,962 6,513
--------- -------- --------
Total............................................... 73,611 58,157 46,532
Other..................................................... 3,914 7,760 8,599
Allowance for possible contract losses and uncollectible
amounts................................................. (18,067) (17,536) (11,976)
--------- -------- --------
Net accounts receivable............................. $ 188,791 $215,923 $190,158
--------- -------- --------
--------- -------- --------

As of March 31, 1995, December 31, 1994 and 1993, approximately $8,138,000,
$12,146,000 and $18,136,000, respectively, in advance payments from customers
had been applied against the unbilled portion of applicable contract
receivables.

Unbilled retention balances are billable at contract completion or upon
attainment of other specified contract milestones. Other unbilled amounts
consisted primarily of: contractually earned services not yet billable because
of stipulated installment billing provisions, approximately $8,800,000,
$8,400,000 and $1,200,000 at March 31, 1995, December 31, 1994 and 1993,
respectively; revenue recognized pursuant to customer authorizations prior to
the execution of contractual documentation, approximately $1,400,000 ,
$2,430,000 and $11,413,000 at March 31, 1995, December 31, 1994 and 1993,
respectively; and a specific receivable related to a contract whereby the
Company will owe severance to terminated employees at contract completion,
approximately $7,800,000 , $7,770,000 and $7,609,000 at March 31, 1995, December
31, 1994 and 1993, respectively. This liability is included in accrued
severance. Management anticipates that substantially all unbilled receivables as
of March 31, 1995 and December 31, 1994, exclusive of retention balances, will
be billed and collected within one year. Based on the Company's experience with
similar contracts in recent years, retention balances of approximately
$5,000,000 , and $6,655,000 at March 31, 1995 and December 31, 1994
respectively, were are not expected to be collected within the coming year. It
is common industry practice however, to include such amounts in working capital.

F-14

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

6. PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of (dollars in
thousands):

DECEMBER 31,
MARCH 31, -------------------
1995 1994 1993
--------- -------- --------

Equipment and office furniture................................. $ 57,295 $ 52,492 $ 35,160
Leasehold improvements......................................... 11,505 10,965 8,084
--------- -------- --------
68,800 63,457 43,244
Accumulated depreciation and amortization...................... (27,261) (22,888) (13,082)
--------- -------- --------
Net property and equipment................................... $ 41,539 $ 40,569 $ 30,162
--------- -------- --------
--------- -------- --------

Depreciation expense was $3,242,000 and $2,934,000 for the three months
ended March 31, 1995 and 1994, respectively, and $12,491,000, $7,312,000 and
$8,510,000 for the years ended December 31, 1994, 1993 and 1992, respectively
(See Note 7 re:IABG).

7. INTANGIBLE ASSETS

Intangible assets consisted of the following as of (dollars in thousands):

DECEMBER 31,
MARCH 31, ------------------
1995 1994 1993
--------- ------- -------

Goodwill..................................................... $11,479 $13,326 $21,941
Less: Accumulated amortization............................. (1,978) (2,124) (1,419)
--------- ------- -------
9,501 11,202 20,522
Intangible Assets:
Covenant not-to-compete.................................... 3,850 3,850 3,700
Debt issue costs........................................... 784 814 580
Contract backlog........................................... 3,752 3,752 3,752
Software licenses.......................................... 2,369 1,309 1,141
--------- ------- -------
10,755 9,725 9,173
Less: Accumulated amortization........................... (7,608) (7,113) (4,209)
--------- ------- -------
3,147 2,612 4,964
--------- ------- -------
Total.................................................. $12,648 $13,814 $25,486
--------- ------- -------
--------- ------- -------

Goodwill recorded in connection with the IABG acquisition in 1993 of
$10,900,000 was reallocated to the excess of the fair values over the
acquisition date carrying values of certain acquired technical equipment and
test facilities as a result of a valuation of all acquired assets and
liabilities, completed in September 1994.

Unamortized goodwill totalling $1,640,000 and $440,000 was expensed during
the three months ended March 31, 1995 and the year ended December 31,1994 as a
result of the Company's evaluation of the recoverability of the respective
goodwill recorded in two separate business acquisitions.

F-15

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

8. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

The components of accounts payable and accrued expenses were as follows as
of (dollars in thousands):

DECEMBER 31,
MARCH 31, --------------------
1995 1994 1993
--------- -------- --------

Accounts payable.......................................... $ 53,404 $ 74,357 $ 61,678
Accrued expenses:
Advance payments........................................ 25,549 24,096 17,356
Accrued salaries/benefits............................... 32,094 33,131 35,483
Accrued vacation........................................ 17,858 15,548 12,110
Restructuring/severance................................. 17,770 12,030 12,953
Environmental matters................................... 1,987 2,381 2,900
Other................................................... 840 4,755 5,230
--------- -------- --------
$ 149,502 $166,298 $147,710
--------- -------- --------
--------- -------- --------

Restructuring/Severance Liability/Debt Forgiveness

Prior to the Company's acquisition of IABG (See Note 3), IABG found it
necessary to reduce its reliance on the German Government for the majority of
its revenue. In addition to redirecting marketing efforts in non-defense areas,
IABG sought means to reduce operating costs. IABG therefore determined that it
would be necessary to reduce its workforce through involuntary terminations. As
prescribed by German law and pursuant to the German Government plan for
privatization of IABG, a severance plan was developed by IABG providing for the
estimated number of involuntary employee reductions, the conditions for
termination and the method for determining the amount of severance due to the
terminating employees. IABG's workforce reductions began in 1994 and will
continue through 1997. In connection with the approval of the plan by the German
Government and prior to acquisition of IABG by the Company, an estimate for the
severance totalling $35,000,000 was accrued. Benefits paid through December 31,
1994, and during the three months ended March 31, 1995, totalling $7,900,000 and
$2,600,000, respectively, have been applied against the original accrual.
Management believes the remaining liability will be adequate to cover future
benefits claimed pursuant to the plan. The remaining liability as of March 31,
1995, has been classified among current and long-term liabilities according to
IABG's plan for effecting the actual employee reductions.

As an incentive to new investors acquiring IABG, the German Government
privatization plan agreed to fund a portion of the above severance liability in
an amount equal to the principal balance of two notes held by IABG payable to
the German Ministry of Defense (MOD), for a total amount of $10,000,000. As
payments for the severance liability are made to terminated employees, the MOD
is forgiving an equivalent amount of the debt. Severance payments made through
December 31, 1994, resulted in debt extinguishment of $7,900,000. The remaining
debt of $2,100,000 was extinguished as of March 31, 1995. The balance due on
these notes was previously included as part of the accrued severance liability.

F-16

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

9. DEBT

Long-term debt consisted of the following as of (dollars in thousands):

DECEMBER 31,
MARCH 31, ------------------
1995 1994 1993
--------- ------- -------

Working Capital Facility..................................... $60,000 $79,000 $44,684
Subordinated Seller Note..................................... 3,700 3,700 3,700
FACE Acquisition Note........................................ -- -- 2,481
Other........................................................ 613 476 365
--------- ------- -------
64,313 83,176 51,230
Less current portion......................................... (4,183) (426) (2,750)
--------- ------- -------
Total long-term debt......................................... $60,130 $82,750 $48,480
--------- ------- -------
--------- ------- -------

Working Capital Facility. In July 1993, the Company entered into a new
credit agreement which provided for a working capital facility of up to
$100,000,000 for an original term of three years with two options to extend the
term for one additional year. The facility was amended in May 1994, increasing
the borrowing capacity to $125,000,000 and extending the term of the facility
for one of the option years. In April 1995, the Company exercised the second one
year option to extend the term of the facility through July 20, 1998. Through
December 31, 1995, the Company can borrow up to the total amount of the
facility. Effective January 1, 1996, the aggregate amount of borrowing, defined
to include outstanding letters of credit, pursuant to the amendment is limited
to a percentage of the Company's eligible receivables as defined in the
agreement. The Company has the option to borrow principal at interest rates
based either on the bank's prime rate or the LIBOR rate plus margins, with
unused credit also accruing a standard interest charge. The outstanding
borrowings are collateralized by a security interest in the Company's accounts
receivable. Costs incurred to obtain the facility have been capitalized and are
being amortized over the term of the agreement. The Company was eligible to
borrow an additional $58,605,650 and $39,606,163 as of March 31, 1995 and
December 31, 1994, respectively.

The credit agreement contains financial covenants, the most restrictive
being a minimum tangible net worth. Other covenants include minimum fixed charge
coverage and interest coverage ratios and minimum ratios of receivables to
outstanding debt. The agreement contains certain other restrictive covenants
including limitations on new investments and dividends. As of March 31, 1995 and
December 31, 1994, the Company was in compliance with all covenants.

Predecessor Credit Facility. In connection with the early termination of the
predecessor credit facility, the Company recorded an extraordinary loss, net of
the related tax benefit, of $1,300,000 during the year ended December 31, 1993
in connection with the expensing of unamortized debt issuance costs incurred in
obtaining the predecessor facility.

The Company had also entered into an interest rate swap agreement to reduce
exposure to changes in interest rates. This agreement, which matured on October
23, 1993, required the payment of interest on a $30,000,000 notional amount at
the spread between the prevailing LIBOR interest rate and 8.01%.

Subordinated Seller Note. In connection with the acquisition of Vinnell in
1992, the Company issued a subordinated promissory note to the former owner in
the amount of $3,700,000. The note

F-17

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

9. DEBT--(CONTINUED)

bears interest at 10% per annum, and is payable semi-annually. The principal
balance and unpaid accrued interest is due the earlier of: (1) the fourth
anniversary of the acquisition date on March 13, 1996, or (2) six months after
the death of the former owner.

FACE Acquisition Note. Effective January 1, 1993, the Company acquired FACE
Holding BV (a Netherlands company). To finance the acquisition, the Company
executed a line of credit arrangement in April 1993 with a Netherlands bank for
up to $2,700,000. The outstanding balance incurred interest at 2% above the
prime rate of the Dutch Central Bank. In August 1994, this amount was repaid
with borrowings from the Company's working capital credit facility.

Subordinated Conditional Note. In connection with the acquisition of the
Company in 1990, in exchange for $3,000,000 in consideration, the Company issued
the right to additional future consideration based upon the Company's actual
earnings before interest and taxes (EBIT) for the years 1991 through 1993. The
Company reflected the $3,000,000 consideration as an estimate for this
liability, thereafter termed the Subordinated Conditional Note. At the
conclusion of 1993, it became evident that the EBIT level necessary to trigger
the additional purchase price consideration would not be attained for any of the
years 1991 through 1993. The Subordinated Conditional Note included a provision
that if the EBIT levels were not met, the Company would not be liable for any
conditional amount, or interest thereon, including the amount paid as
consideration. Accordingly, during the year ended December 31, 1993, the Company
recognized an extraordinary gain of $1,700,000, net of related income tax
expense, on the reversal of the amount initially assigned to the conditional
principal liability. Interest expense had not been accrued on the assigned value
of the right to the conditional principal amount.

Maturities. Maturities of long-term debt outstanding at December 31, 1994,
prior to any exercise of currently available extension options, are as follows:
1996--$3,728,805; 1997-- $79,021,604.

Interest Expense. Total interest expense incurred during the three months
ended March 31, 1995 and 1994 was $1,710,000 and $801,000, reflecting weighted
average interest rates of 8.5% and 5.5%, respectively. Total interest expense
incurred during calendar years 1994, 1993 and 1992 was $5,053,000, $4,631,000
and $5,678,000, respectively. The weighted average interest rate incurred for
the years ended December 31, 1994, 1993 and 1992, respectively was 7.0%, 10.3%
and 10.7%.

F-18

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

10. INCOME TAXES

The provisions for income taxes for the quarters ended March 31, 1995 and
1994 were calculated by applying the projected annual effective rate to income
before tax adjusted for known differences between income before tax for
financial reporting and income tax reporting purposes. The effective rate for
the first quarter of 1995 increased to approximately 52% of pretax income due to
the expensing of $1.6 million in goodwill which is not deductible for income tax
purposes.

The components of income before taxes were as follows for the years ended
December 31, (dollars in thousands):

1994 1993 1992
------- ------- -------

Domestic...................................................... $12,335 $10,648 $12,076
Foreign....................................................... 10,443 8,012 3,930
------- ------- -------
Income before taxes......................................... $22,778 $18,660 $16,006
------- ------- -------
------- ------- -------

The provision for income taxes included the following for the years ended
December 31, (dollars in thousands):

1994 1993 1992
------ ------ ------

Current provision:
Federal........................................................ $3,193 $ 138 $ 300
State.......................................................... 942 1,033 522
Foreign........................................................ 3,000 1,200 --
------ ------ ------
Total current provision.................................... 7,135 2,371 822
------ ------ ------
Deferred provision (benefit):
Federal........................................................ 1,629 3,365 4,871
State.......................................................... 223 97 859
Foreign........................................................ 713 1,799 --
------ ------ ------
Total deferred provision................................... 2,565 5,261 5,730
------ ------ ------
Total provision for income taxes........................... $9,700 $7,632 $6,552
------ ------ ------
------ ------ ------

The actual provision for income taxes as a percentage of pre-tax income
varies from the U.S. federal statutory income tax rate for the following
reasons:

1994 1993 1992
---- ---- ----

U.S. federal statutory income tax rate.................................. 35.0% 35.0% 34.0%
State income taxes, net of federal income tax benefits.................. 6.0 6.0 6.0
Tax effect relating to non-deductible goodwill amortization............. 1.6 1.6 0.9
Differences between U.S federal statutory and foreign income tax
rates................................................................. -- (2.8) --
Effect of U.S. federal tax rate increase on cumulative deferred tax
liability............................................................. -- 1.1 --
---- ---- ----
Effective income tax rate............................................... 42.6% 40.9% 40.9%
---- ---- ----
---- ---- ----

F-19

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

10. INCOME TAXES--(CONTINUED)

The sources and tax effects of temporary differences which result in a net
deferred income tax liability were as follows as of December 31, (dollars in
thousands):

1994 1993
------- -------

Financial reporting basis of net assets acquired........................ $ 4,725 $ --
Other................................................................... 480 --
Revenue recognition................................................... 26,531 21,265
------- -------
Gross deferred tax liability.......................................... $31,736 $21,265
------- -------
------- -------

Financial reporting depreciation in excess of tax depreciation.......... $ 646 $ 726
Financial reporting basis of net assets acquired........................ -- 2,122
Accrued expenses........................................................ 7,994 2,679
Foreign operating loss carryforward..................................... 4,400 7,000
Less: valuation allowance............................................... -- (7,000)
Reserve provisions in excess of deductible write-offs................... 3,797 2,862
Tax credit carryforwards................................................ 4,215 2,969
Other................................................................... -- 87
------- -------
Gross deferred tax asset.............................................. $21,052 $11,445
------- -------
------- -------
Net deferred liability................................................ $10,684 $ 9,820
------- -------
------- -------

As of December 31, 1994, the Company had foreign tax credit carryforwards
(FTC's) of $4,215,000 expiring in various years through 1999. Utilization of the
FTC's is subject to certain limitations, including the future amount of taxable
foreign source income, the effective tax rate on such income and the amount of
future U.S. taxable income. The Company also has a net operating loss
carryforward of $10,700,000 generated by IABG prior to its acquisition in 1993
by the Company to offset future taxable income in Germany. The related deferred
tax asset was entirely reserved as of December 31, 1993 pending the Company's
finalization of purchase accounting for the IABG acquisition. The reserve was
subsequently eliminated in 1994, as a result of this finalization (See Note 3),
since the differences in the basis of depreciable assets for financial reporting
purposes and income tax reporting purposes resulting from IABG's fixed asset
write-up provide assurance of future taxable income for financial reporting
purposes sufficient to utilize the remaining net operating loss carryforward.
The term of this net operating loss carryforward is not limited.

Effective January 1, 1992, the Company adopted SFAS No. 109, which requires
the use of the liability method of accounting for income taxes. The Company
recorded a cumulative charge to income of $115,000 or $.01 per share as a result
of accounting for the difference between the financial reporting and the tax
bases of assets and liabilities. In addition, SFAS 109 required that the Company
restate certain assets and liabilities acquired in prior business combinations
as well as related deferred taxes resulting in a decrease of the remaining
assets of these combinations of $824,000. The effect on 1992 pretax income from
continuing operations as a result of these asset adjustments was a decrease in
income of approximately $360,000.

F-20

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

11. STOCKHOLDERS' EQUITY

Description of Capital Stock

Pursuant to a Certificate of Incorporation revised on March 7, 1994, the
Company is authorized to issue a total of 52,500,000 shares of capital stock,
consisting of 500,000 shares of Preferred Stock, 50,000,000 shares of Common
Stock and 2,000,000 shares of Class B Common Stock, all shares with $.01 par
value. The Preferred Stock may be issuable in one or more series from time to
time at the discretion of the Board of Directors. The Board of Directors is
authorized to fix the respective designation, relative rights, preferences,
qualifications, restrictions, and limitations of each series.

Each share of Common Stock is entitled to one vote in elections of directors
and all other matters required or permitted to be submitted to a vote of the
stockholders. The holders of Class B Common Stock have no voting rights. Holders
of both Common Stock and Class B Common Stock are entitled to receive dividends,
when and if declared by the Board of Directors of the Company. The shares of
Class B Common Stock are convertible into the same number of shares of Common
Stock upon their dispostion in connection with the occurrence of certain events
including a sale of all or substantially all of the Common Stock of the Company;
a merger or consolidation of the Company in which the stockholders of the
Company receive cash and/or marketable securities in exchange for their stock;
and an underwritten public offering of Common Stock of the Company.

Fair Value of Common Stock

Since the acquisition of the Company in October 1990, and through the date
of this report, there has been no public market for the Company's Common Stock
and Class B Common Stock. The fair value of the Company's Common Stock and Class
B Common Stock is determined by the Board of Directors based primarily on
periodic valuations performed by an independent valuation company.

Stockholders Agreement

At the time of the purchase of the Company in October 1990, certain members
of the Company's then senior management (the Management Group), the Carlyle
Group (Carlyle) and certain outside investors (the Investor Group) entered into
a Stockholders Agreement. As subsequently amended, the Stockholders Agreement
provides that the parties subject thereto will vote their shares as follows:
seven directors, designated by Carlyle, five directors designated by the
Management Group, and three independent directors designated jointly by Carlyle
and the Management Group. All recipients of management incentive stock pursuant
to the Management Incentive Stock Purchase Program (see Note 12) are subject to
the terms of the Stockholders Agreement. Upon consummation of a contemplated
public offering, the Stockholders Agreement will terminate in accordance with
the terms.

Investor Stock Purchase Agreement

An Investor Stock Purchase Agreement, also executed at the time of the
purchase of the Company in October 1990, provides the Company and members of the
Investor Group with the right of first refusal in the event any member of the
Investor Group desires to sell the shares purchased under the agreement, subject
to certain exceptions. The agreement also provides for anti-dilution, piggy-back
and demand registration rights. Most of the expenses incurred in connection with
the exercise of such registration rights by certain stockholders would be borne
by the Company.

F-21

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

11. STOCKHOLDERS' EQUITY--(CONTINUED)

Common Stock Purchase

On May 27, 1994, the Company acquired 2,250,000 shares and 350,000 shares of
its outstanding Common Stock and Class B Common Stock, respectively, from the
Investor Group for its then fair value of $14.00 per share. Subsequent to all
stock purchases to date (See Note 12), the Investor Group still retains a
majority ownership of the Company's outstanding common stock. Coincident with
this stock purchase, these common shares, as well as all previously acquired
treasury shares, were cancelled.

12. EQUITY PARTICIPATION PROGRAMS

Employee Stock Purchase Plan

The Company implemented an Employee Stock Purchase Plan in March 1993. The
Plan allows participants to buy Common Stock at the fair market value through
payroll deductions. Each participating employee may purchase up to 26 shares of
Common Stock per month at the fair market value per share. On various occasions
since inception of the Plan, the Company has acquired 74,072, 14,349, 100,000
and 100,000 shares of its outstanding Common Stock at its then fair market value
averaging $13.95, $13.50, $12.00 and $8.00, respectively. During the three
months ended March 31, 1995 and the years ended December 31, 1994 and 1993, the
Plan participants purchased 26,399, 127,120 and 78,229 shares for an average of
$14.93, $12.75 and $8.00 per share, respectively. As of March 31, 1995, the
Company had 50,324 shares reserved for issuance pursuant to the Plan. The
Company's working capital credit facility (see Note 9) limits the number of
outstanding shares that can be acquired each year for the Employee Stock
Purchase Plan to 150,000 shares. The Company reserves the right to discontinue
this plan.

1990 Stock Option Plan

In 1990, the Company established the 1990 Stock Option Plan (the 1990 Plan)
(Non-MIS Plan) to provide officers and key employees with up to 1,562,500
qualified or non-qualified incentive stock options to purchase shares of Common
Stock. The 1990 Plan provides that qualified incentive stock options (as defined
in the Internal Revenue Code) have an exercise price equal to the fair market
value of the Common Stock on the date of the option grant. Non-qualified
incentive stock options have exercise prices as determined by the Compensation
Committee of the Board of Directors. The 1990 Plan provides for adjustments in
the number of shares related to stock options and their respective exercise
prices in the event of stock dividends or stock splits, and for adjustments in
the event that the Company effects a recapitalization or other change in its
capital structure. Options granted pursuant to the 1990 Plan vest over periods
ranging from one to four years. As of March 31, 1995, all options available
pursuant to this Plan had been granted. The Company had 1,311,324 shares of
Common Stock reserved for issuance upon exercise of this Plan's remaining
outstanding.

1994 Stock Option Plan

In 1994, the Company's Board of Directors reserved 1,000,000 shares of
Common Stock and established the 1994 Stock Option Plan (the 1994 Plan) (Non-MIS
Plan) to succeed the 1990 Plan. The continuation 1994 Plan has identical
provisions as the predecessor 1990 Plan. No options were issued pursuant to this
plan in 1994. At March 31, 1995, the Company had 1,000,000 shares

F-22

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

12. EQUITY PARTICIPATION PROGRAMS--(CONTINUED)

of Common Stock reserved for issuance upon exercise of outstanding options and
of future option grants.

Management Incentive Stock Purchase Program

In 1991, the Company established the Management Incentive Stock Purchase
Program (MIS Plan), which provides for the granting of up to 1,111,111
nonqualified options to purchase shares of Common Stock to certain senior
members of management. The option exercise price is $.01 per share. Intended to
serve as incentive compensation for the management member, a portion of each
option grant vested each year based on management's ability to meet defined
minimum performance criteria. The majority of remaining outstanding options
became fully vested on March 31, 1995 as the related minimum performance
criteria established for 1994 was achieved. Upon option grant, the Company
records deferred compensation equal to the difference between the fair market
value of the Company's Common Stock on the date of grant and the option exercise
price. The deferred compensation is expensed over the vesting term of the
underlying options. As of March 31, 1995, the Company had 98,921 shares of
Common stock reserved for issuance upon exercise of the outstanding options and
for issuance upon exercise of future option grants.

Stock option activity pursuant to these plans has been as follows:

NON-MIS PLANS
MIS PLAN -------------------------
-------------------------- EXERCISE
EXERCISE PRICE PRICE
SHARES PER SHARE SHARES PER SHARE
-------- -------------- --------- ------------

Balance,
January 1, 1992....................... 980,000 $.01 618,450 $4.00-$5.25
Granted............................... 124,375 .01 80,300 5.25
Exercised............................. (474,377) .01 (10,060) 4.00
Forfeited............................. (17,187) .01 (56,250) 4.00-5.25
-------- ---------
Balance,
December 31, 1992..................... 612,811 .01 632,440 4.00-5.25
Granted............................... 25,000 .01 429,925 5.25-8.00
Exercised............................. (506,147) .01 (102,310) 4.00-5.25
Forfeited............................. (2,811) .01 (19,540) 4.00-8.00
-------- ---------
Balance,
December 31, 1993..................... 128,853 .01 940,515 4.00-8.00
Granted............................... -- -- 471,050 8.00-14.00
Exercised............................. (17,291) .01 (99,678) 4.00-8.00
Forfeited............................. (20,208) .01 (95,589) 4.00-12.00
-------- ---------
Balance,
December 31, 1994..................... 91,354 .01 1,216,298 4.00-14.00
Granted............................... 5,000 .01 360,950 17.25
Exercised............................. (14,375) .01 (37,728) 4.00-14.00
Forfeited............................. -- -- (39,914) 4.00-12.00
-------- ---------
Balance,
March 31, 1995........................ 81,979 $.01 1,499,606 $4.00-$17.25
-------- ---------
-------- ---------

F-23

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

12. EQUITY PARTICIPATION PROGRAMS--(CONTINUED)

At December 31, 1994, 509,404 options were exercisable under the 1990 Plan
and no options were exercisable pursuant to the MIS Plan. At March 31, 1995,
760,795 options were exercisable under the non-MIS Plans and 77,813 options were
exercisable under the MIS Plan.

On May 5, 1995, the Company granted 25,000 options pursuant to the MIS Plan
at an exercise price of $.01 and 32,500 options pursuant to the 1994 Plan at an
exercise price equal to the then fair value per common share of $17.25.

Directors' Stock Purchase Plan

Members of the Company's Board of Directors are eligible to receive their
compensation in the form of Common Stock in lieu of cash. During the first
quarter of 1995 and during 1994 and 1993, the Company issued 3,752, 14,296 and
23,018 shares, respectively, of Common Stock for this purpose. During 1994, the
Company purchased 13,750 shares of its outstanding Common Stock for $14.00 per
share for use by this plan. As of March 31, 1995, the Company had 8,983 shares
of Common Stock reserved for issuance upon the exercise of the board members'
option to receive compensation in this form.

13. RETIREMENT PLANS

The Company maintains a 401(k) plan covering substantially all full-time
employees of the Company's domestic subsidiaries. Employees may direct the
investment of their contributions among several mutual fund options. Employees
may contribute up to the maximum allowed by federal regulations, currently 15%
of their monthly salary or a maximum of $9,240. The Company contributes an
amount equal to 25% of the first 4% of the employee's salary contributed to the
plan by the employee. For the three months ended March 31, 1995 and 1994, and
for the years ended December 31, 1994, 1993 and 1992, the Company's contribution
was approximately $189,000, $203,000, $842,430, $719,000 and $657,000,
respectively. At the time of the Company's change in ownership in 1990,
employees were allowed a one-time option to purchase the Company's Common Stock
with balances in their plan. A total of 342,979 common shares were held by the
participants of the plan as of December 31, 1994 and March 31, 1994.

The Company also sponsors several other defined contribution plans for
substantially all of the employees of IABG. Participation in the plans is
voluntary; however, participants are required to make contributions to the plans
equal to 50% of the amount of the Company contribution. Company contributions
are based on percentages of the employees' monthly salary up to maximum monthly
benefits. The plans are fully funded and assets of the plans are invested in
insurance company annuities. The Company incurred $955,000, $800,000, $3,453,000
and $423,000, respectively, in plan contribution expense for the three months
ended March 31, 1995 and 1994 and for the year ended December 31, 1994 and in
1993 since the November 16, 1993 acquisition date.

The Company has a defined benefit pension plan (the Retirement Plan) and a
supplemental executive retirement plan (SERP) providing noncontributory
retirement benefits for eligible employees. Benefits are determined based upon
years of service and employee compensation. The Company's funding policy is to
contribute annually, at a minimum, amounts required by applicable laws and
regulations. Retirement Plan assets are invested principally in a group annuity
contract with an insurance company, as well as in a portfolio of diversified
equity securities and mutual funds.

F-24

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

13. RETIREMENT PLANS--(CONTINUED)

The actuarily determined cumulative net periodic pension expense for these
defined benefit plans included the following components for the years ended
December 31, (dollars in thousands):

1994 1993 1992
------ ------ ------

Service cost..................................................... $4,975 $3,686 $3,408
Interest cost on projected benefit obligation.................... 5,752 4,385 3,811
Actual return on plan assets..................................... (526) (5,864) (5,967)
Net amortization and deferral.................................... (5,590) 521 677
------ ------ ------
Net periodic pension expense..................................... $4,611 $2,728 $1,929
------ ------ ------
------ ------ ------

During the three months ended March 31, 1995 and 1994, the Company accrued a
quarterly estimate of $1,300,000 and $1,152,000 for the respective 1995 and 1994
expense.

The funded status of the Company's defined benefit plans as well as other
disclosures required by Statement of Financial Accounting Standard No.
87--Accounting for Employee Benefit Plans (SFAS 87) were as follows (dollars in
thousands):

DECEMBER 31, 1994 DECEMBER 31, 1993
--------------------- ---------------------
RETIREMENT RETIREMENT
PLAN SERP PLAN SERP
---------- ------- ---------- -------

Actuarial present value of vested benefit
obligation...................................... $ 66,516 $ 1,593 $ 67,646 $ 1,755
---------- ------- ---------- -------
---------- ------- ---------- -------
Actuarial present value of accumulated benefit
obligation...................................... $ 68,774 $ 1,607 $ 69,693 $ 1,762
---------- ------- ---------- -------
---------- ------- ---------- -------
Plan assets at fair value......................... $ 66,073 $ -- $ 67,920 $ --
Actuarial present value of projected benefit
obligation...................................... (73,700) (1,794) (75,677) (1,812)
---------- ------- ---------- -------
Plan assets less than projected benefit
obligation...................................... (7,627) (1,794) (7,757) (1,812)
Unrecognized prior service cost................... 3,588 6 4,104 7
Unrecognized net gain (loss)...................... (1,331) 140 2,016 342
Adjustment required to recognize minimum
liability....................................... (--) (--) (136) (299)
---------- ------- ---------- -------
Accrued pension cost.............................. $ (5,370) $(1,648) $ (1,773) $(1,762)
---------- ------- ---------- -------
---------- ------- ---------- -------

The actuarial present values of the vested benefit obligations shown above
represent the amount to which employees are entitled based on the employees'
expected dates of separation or retirement. Assumptions, based on actual
historical results, used in accounting for the defined benefit plans were as
follows as of December 31:

1994 1993 1992
----- ----- ----

Discount rate for projected benefits.................................. 8.50% 7.50% 7.25%
Discount rate for pension costs....................................... 7.50 7.25 8.00
Average wage increases................................................ 4.00 4.00 5.00
Expected long-term return on plan assets.............................. 10.00 10.00 9.00

The Company also maintains another defined benefit pension plan covering
nine past and present members of the management board of IABG. Benefits are
determined based on the members' years of service and compensation. The Company
had an accrued balance of

F-25

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

13. RETIREMENT PLANS--(CONTINUED)

$6,444,000, and $5,699,000 for this pension obligation as of March 31, 1995 and
December 31, 1994, respectively. The contribution expense amounted to $33,000
and $70,000 for the three months ended March 31, 1995 and 1994 and to $554,000
in calendar year 1994 and to $128,000 for the period of ownership in 1993. No
additional pension disclosures required by SFAS 87 have been provided since the
majority of the members covered by the plan have retired and the liability
reflected in these financial statements for this plan will not increase
significantly in the future.

The Company maintains a self-insurance plan to cover the costs of certain
employee health benefits. As of March 31, 1995, December 31, 1994 and 1993, the
estimated balance accrued for the cost of incurred but unreported claims was
approximately $2,000,000. The Company's annual liability for claims expense is
contractually limited pursuant to an agreement with an insurance company. The
actual claims expense for 1994 did not exceed the contractual maximum.

14. TRANSACTIONS WITH RELATED PARTIES

The Chairman, Vice Chairman and a member of the Company's Board of Directors
are the Chairman and two Managing Directors, respectively, of Carlyle. The
Company retains Carlyle to provide certain advisory and consulting services for
an annual fee of $500,000 plus expenses. Total amounts incurred by the Company
related to these services for the three months ended March 31, 1995 and 1994 and
for the years ended December 31, 1994, 1993 and 1992 were approximately
$125,000, $125,000, $505,000, $535,000 and $512,000, respectively. Upon
completion of a contemplated public offering, Carlyle will waive its right to
receive this fee in the future in exchangeprimarily for a number of shares of
Common Stock to be determined by dividing $1,620,000 by the initial public
offering price per share of the shares of Common Stock offered thereby. Also
in 1992, the Company paid $250,000 to Carlyle as an advisory fee for services
rendered in connection with the acquisition of Vinnell.

Prior to its privatization by the German Government in 1993, IVG was
majority owned by the German Government (See Note 3). Contract revenue derived
by IABG from the German Government and its ministries totalled $28,950,000 and
$21,736,000 for the three months ended March 31, 1995 and 1994 and $118,543,000
for the year ended December 31, 1994 and $16,300,000 for the period from
November 17, 1993 through December 31, 1993. The total amount receivable from
the German Government at March 31, 1995 and December 31, 1994 and 1993 was $0,
$3,325,476 and $11,576,000, respectively.

IABG leases most of its facilities from IVG (a 20% owner of IABG). Total
rent expense incurred with IVG for the three months ended March 31, 1995 and
1994 was $1,926,000 and $1,840,000, respectively and was $7,305,000 and
$1,054,000 for the year ended December 31, 1994 and for the period in 1993,
since the acquisition by the Company. IABG earns a market rate of interest on a
related $5,000,000 lease deposit with IVG. Interest income earned during 1994
since the installment payments of the lease deposit in 1994 totalled $19,700.

F-26

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

15. UNCONSOLIDATED AFFILIATES

The Company has ownership interests ranging from 33% to 50% in certain
unconsolidated joint ventures. The Company's investments in and advances to the
unconsolidated joint ventures, as well as the location of the ventures'
operations, are summarized as follows (dollars in thousands):

DECEMBER 31,
MARCH 31, ----------------
OWNERSHIP % 1995 1994 1993
----------- --------- ------ ------

VBR, Turkey....................................... 50% $ 1,790 $1,880 $1,807
AWV, Sultanate of Oman............................ 50 1,756 1,793 1,173
Seavin, Egypt..................................... 50 1,043 1,174 1,142
Others............................................ 33-42 440 346 160
--------- ------ ------
$ 5,029 $5,193 $4,282
--------- ------ ------
--------- ------ ------

Combined summarized financial information of all of the Company's joint
ventures is as follows as of and for the respective three and twelve months
periods ended (dollars in thousands):

MARCH 31, DECEMBER 31,
------------------ ------------------
1995 1994 1994 1993
------- ------- ------- -------

Current assets...................................... $13,397 $14,382 $14,943 $14,356
Non-current assets.................................. 774 20 775 --
Current liabilities................................. 3,722 4,860 5,181 6,243
Non-current liabilities............................. 245 -- 245 --
Revenue............................................. 15,114 18,405 72,946 92,791
Gross profit........................................ 896 1,037 4,663 5,660
Net income.......................................... 532 657 3,681 4,446

16. MAJOR CUSTOMERS AND GEOGRAPHIC OPERATIONS

Major Customers

Revenue from major customers was as follows for the periods ended (dollars
in thousands):

MARCH 31, DECEMBER 31,
-------------------- --------------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------

U.S. Government (including sub-
contract revenues from government
primes):
Dept. of Defense.................. $ 67,008 $ 52,755 $244,671 $261,082 $213,388
Other federal agencies............ 27,231 32,209 132,309 122,579 111,397
Foreign Defense Agencies............ 46,466 41,060 193,523 122,227 73,747
Other foreign government agencies... 11,984 11,110 54,433 -- --
State and local governments......... 9,721 5,309 40,533 22,332 16,978
Commercial.......................... 29,491 22,720 108,780 30,072 8,879
-------- -------- -------- -------- --------
Total........................... $191,901 $165,163 $774,249 $558,292 $424,389
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

No contracts individually represented more than 10% of total revenue for the
quarter ended March 31, 1995 or for 1994 while contracts individually
representing more than 10% of total revenue for the years ended December 31,
1993 and 1992, totalled $74,768,000 and $96,568,000, respectively.

F-27

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

Geographic Operations

Revenue, profit after allocable contract costs (cost of sales, selling,
general and administrative expenses, and depreciation expense) and assets by
geographic area of all consolidated subsidiaries were as follows as of or for
the respective three and twelve month periods ended (dollars in thousands):

MARCH 31, DECEMBER 31,
-------------------- --------------------------------
1995 1994 1994 1993 1992
-------- -------- -------- -------- --------

Revenue:
United States..................... $111,987 $ 97,078 $438,474 $414,528 $351,110
Europe............................ 48,801 40,847 201,418 32,940 --
Middle East....................... 31,113 27,238 134,357 110,824 73,279
-------- -------- -------- -------- --------
Total........................... $191,901 $165,163 $774,249 $558,292 $424,389
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Profit After Allocable Contract
Costs:
United States..................... $ 6,900 $ 5,966 $ 26,958 $ 23,957 $ 22,060
Europe............................ 1,606 738 4,693 4,116 --
Middle East....................... 3,791 819 10,554 6,656 4,858
-------- -------- -------- -------- --------
Total........................... $ 12,297 $ 7,523 $ 42,205 $ 34,729 $ 26,918
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Assets:
United States..................... $168,355 $170,730 $209,983 $167,851 $139,235
Europe............................ 99,479 69,973 103,582 96,240 --
Middle East....................... 36,944 31,180 21,986 39,345 35,581
-------- -------- -------- -------- --------
Total........................... $304,778 $271,883 $335,551 $303,436 $174,816
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------

17. COMMITMENTS AND CONTINGENCIES

Government Audits

Payments to the Company on United States or foreign government contracts are
subject to adjustments upon audit by various agencies of the respective
governments. Audits currently in progress are in varying stages of completion;
however, management does not expect the results of these audits, or audits
related to any operations prior to March 31, 1995 and December 31, 1994,
subsequently initiated, to have a material effect on the Company's financial
position or results of future operations.

Litigation and Claims

The Company is a party to various legal actions, claims, government
inquiries and audits resulting from the normal course of business. Although the
total amount of liability with respect to these matters cannot be ascertained,
management of the Company believes that any resulting liability should not have
a material effect on the results of future operations.

Environmental Matters

One of the Company's wholly owned subsidiaries was previously notified by
the United States Environmental Protection Agency (EPA) that it is one of
several potentially responsible parties

F-28

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

17. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

(PRPs) for remediation in connection with asbestos present at two sites. The
subsidiary, along with another PRP, entered into a consent decree with the EPA
in 1992, by which the subsidiary and the other PRP are obligated to reimburse
the EPA for costs incurred in its assessment and monitoring of approximately
$1,600,000 and to undertake work to address the environmental exposure as
defined in the consent decree. The Company originally accrued $4,400,000 which
management believed to be the best estimate of the liability for this claim.
Amounts paid and charged against this provision through 1994 total approximately
$2,019,000. Management believes that the remaining accrual for this contingency
of $2,381,000 is sufficient to cover costs to be incurred related to the
subsidiary's performance pursuant to the consent decree.

Another of the Company's subsidiaries was previously notified by the
Massachusetts Department of Environmental Protection that it is also one of
several PRPs in an environmental matter arising as a result of work performed on
a contract with the U.S. Air Force. The Company has been, and management
believes the Company will continue to be, reimbursed by the U.S. Air Force for
all costs incurred in connection with addressing the claimed environmental
hazard associated with the former contract. No costs were incurred in 1995 or in
1994 relative to this contingency.

Lease Obligations

The Company leases office space and equipment under various operating lease
agreements. Leases for principal office space typically have terms of five to
twenty years and carry optional renewal periods of five to twenty years. Most
leases include provisions for periodic rent escalations based on changes in
various economic indices. Amounts representing aggregate rent expense on all
operating leases, excluding equipment rented for use on specific contracts and
reimbursed pursuant to the terms of those contracts, totalled $7,686,000,
$8,014,000, $35,426,000, $23,933,000 and $22,756,000 for the three months ended
March 31, 1995 and 1994 and for the years ended December 31, 1994, 1993 and
1992, respectively.

Future minimum payments on non-cancellable operating leases were as follows
on December 31, 1994 (dollars in thousands):

WHOLLY OWNED
SUBSIDIARIES IABG
-------------------- --------------------
YEAR ENDING OFFICE OFFICE
DECEMBER 31, SPACE EQUIPMENT SPACE EQUIPMENT
- -------------------------------------------------- ------- --------- ------- ---------

1995.............................................. $20,056 $ 1,094 $ 7,944 $ 580
1996.............................................. 15,862 714 6,775 227
1997.............................................. 11,299 556 6,775 99
1998.............................................. 7,154 419 6,775 --
1999.............................................. 1,482 55 6,775 --
Thereafter...................................... 1,731 -- 27,102 --
------- --------- ------- ---------
Total......................................... $57,584 $ 2,838 $62,146 $ 906
------- --------- ------- ---------
------- --------- ------- ---------

The Company's share of the future minimum lease commitments of IABG is 45%.
The remaining 55% commitment is the responsibility of the subsidiary's other
owners.

IABG is required to provide cash collateral of $6,400,000 to the lessor for
its facilities which are leased through the year 2004. Approximately $4,800,000
of this commitment was paid in 1994

F-29

BDM INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND 1994 IS
UNAUDITED)

17. COMMITMENTS AND CONTINGENCIES--(CONTINUED)

and the remaining $1,600,000 is due on November 16, 1995. The amount of the
collateral balance will be reduced by the landlord by $2,400,000 prior to the
end of the lease term in $600,000 increments paid every two years beginning on
November 16, 1997. Cash on deposit is interest-bearing and interest income will
accrue at current market rates payable quarterly.

After the termination of certain of the leases for operating facilities of
IABG, the Company is liable for costs to be incurred, cumulatively up to
$7,000,000 adjusted for inflationary changes in a specified economic index, for
any removal or repair of buildings and facilities deemed necessary by the
lessor. For any year that the related lease is extended beyond the year 2013,
the commitment is reduced by 1/10th per year to a minimum commitment of
$1,000,000. The Company's share of the reclamation costs would be 45%. No
amounts have been accrued for this contingency.

Sublease Commitments

Sublease rental income earned was $990,000, $1,106,000, $4,379,000,
$2,579,000 and $1,312,000 during the three months ended March 31, 1995 and 1994
and during the years ended December 31, 1994, 1993 and 1992, respectively.
Future minimum payments on non-cancellable subleases were as follows as of
December 31, 1994 (dollars in thousands):

YEAR ENDING
DECEMBER 31,
- ----------------------------------------------------------------
1995............................................................ $2,243
1996............................................................ 1,440
1997............................................................ 831
1998............................................................ 426
1999............................................................ 45
Thereafter.................................................. --
------
Total....................................................... $4,985
------
------

F-30

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES UNDER ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT
TO ITS DATE.

--------------

TABLE OF CONTENTS

PAGE
----
Available Information................. 2
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 14
Use of Proceeds....................... 17
Dividend Policy....................... 17
Dilution.............................. 18
Capitalization........................ 19
Selected Consolidated Financial
Information........................... 20
Management's Discussion and Analysis
of Financial Condition and Results of
Operations............................ 22
Business.............................. 28
Management............................ 36
Certain Transactions.................. 46
Security Ownership of Certain
Beneficial Owners and Management..... 49
Description of Capital Stock.......... 51
Shares Eligible for Future Sale....... 53
Underwriting.......................... 55
Validity of Common Stock.............. 56
Experts............................... 57
Additional Information................ 57
Index to Consolidated Financial
Statements............................ F-1

2,500,000 SHARES

BDM INTERNATIONAL, INC.

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

--------------

[LOGO]

--------------

GOLDMAN, SACHS & CO.

LEHMAN BROTHERS

REPRESENTATIVES OF THE UNDERWRITERS

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

ALTERNATE INTERNATIONAL

SUBJECT TO COMPLETION, DATED MAY 12, 1995

[LOGO]

2,500,000 SHARES
BDM INTERNATIONAL, INC.

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

-------------------

Of the 2,500,000 shares of Common Stock offered, 500,000 shares are being
offered hereby in an international offering outside the United States and
2,000,000 shares are being offered in a concurrent United States offering. The
initial public offering price and aggregate underwriting discount per share will
be identical for both offerings. See "Underwriting".

SEE "RISK FACTORS" FOR CERTAIN CONSIDERATIONS RELEVANT TO AN INVESTMENT IN
THE COMMON STOCK.

Application has been made for the Common Stock to be approved for quotation
and trading on the Nasdaq National Market under the symbol "BDMI".

-------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

-------------------

INITIAL PUBLIC UNDERWRITING PROCEEDS TO
OFFERING PRICE DISCOUNT(1) COMPANY(2)
-------------- ------------ -----------

Per Share..................... $ $ $
Total(3)...................... $ $ $

- ------------

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.

(2) Before deducting estimated expenses of $650,000 payable by the Company.

-------------------

The shares offered hereby are offered severally by the International
Underwriters, as specified herein, subject to receipt and acceptance by them and
subject to their right to reject any order in whole or in part. It is expected
that certificates for the shares will be ready for delivery in New York, New
York, on or about , 1995.

GOLDMAN SACHS INTERNATIONAL LEHMAN BROTHERS

-------------------

The date of this Prospectus is , 1995.

CERTAIN UNITED STATES TAX CONSEQUENCES
TO NON-U.S. HOLDERS OF COMMON STOCK

The following is a general discussion of certain U.S. federal income and
estate tax consequences of the ownership and disposition of Common Stock by a
person that, for U.S. federal income tax purposes, is a non-resident alien
individual, a foreign corporation, a foreign partnership or a foreign estate or
trust (a "non-U.S. holder"). This discussion does not consider specific facts
and circumstances that may be relevant to a particular holder's tax position
(including the tax position of certain U.S. expatriates) and does not deal with
U.S. state and local or non-U.S. tax consequences. Furthermore, the following
discussion is based on provisions of the U.S. Internal Revenue Code of 1986, as
amended (the "Code"), and administrative and judicial interpretations as of the
date hereof, all of which are subject to change. Each prospective holder is
urged to consult a tax advisor with respect to the U.S. federal tax consequences
of acquiring, holding and disposing of Common Stock as well as any tax
consequences that may arise under the laws of any U.S. state, municipality or
other tax jurisdiction.

DIVIDENDS

Dividends paid to a non-U.S. holder of Common Stock will be subject to
withholding of U.S. federal income tax at a 30% rate or such lower rate as may
be specified by an applicable income tax treaty, unless the dividends are
effectively connected with the conduct of a trade or business within the United
States or, if an income tax treaty applies, are attributable to a U.S. permanent
establishment of such holder. Dividends that are effectively connected with such
holder's conduct of a trade or business in the United States or, if an income
tax treaty applies, are attributable to a U.S. permanent establishment of such
holder, are subject to tax at rates applicable to U.S. citizens, resident aliens
and domestic U.S. corporations, and are not generally subject to withholding.
Any such effectively connected dividends received by a non-U.S. corporation may
also, under certain circumstances, be subject to an additional "branch profits
tax" at a 30% rate or such lower rate as may be specified by an applicable
income tax treaty.

Under current United States Treasury regulations, dividends paid to an
address in a foreign country are presumed to be paid to a resident of that
country (unless the payor has knowledge to the contrary) for purposes of the
withholding discussed above and, under the current interpretation of the United
States Treasury regulations, for purposes of determining the applicability of a
tax treaty rate. Under proposed United States Treasury regulations, not
currently in effect, however, a non-U.S. holder of Common Stock who wishes to
claim the benefit of an applicable treaty rate would be required to satisfy
applicable certification and other requirements.

A non-U.S. holder of Common Stock that is eligible for a reduced rate of
U.S. withholding tax pursuant to a tax treaty may obtain a refund of any excess
amounts currently withheld by filing an appropriate claim for refund with the
U.S. Internal Revenue Service.

GAIN ON DISPOSITION OF COMMON STOCK

A non-U.S. holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of Common Stock unless (i) the
gain is effectively connected with a trade or business of the non-U.S. holder in
the United States , (ii) in the case of a non-U.S. holder who is an individual
and holds the Common Stock as a capital asset, such holder is present in the
United States for 183 or more days in the taxable year of the sale and either
(a) such individual's "tax home" for the U.S. federal income tax purposes is in
the United States, or (b) the gain is attributable to an office or other fixed
place of business maintained in the United States by such individual, or (iii)
the Company is or has been a "U.S. real property holding corporation" for
federal income tax purposes and the non-U.S. holder held, directly or
indirectly, at any time during the five-year period ending on the date of
disposition, more than 5% of the Common Stock. The Company has not been, is not,
and does not anticipate becoming a "U.S. real property holding corporation" for
federal income tax purposes.

FEDERAL ESTATE TAXES

Common Stock held by a non-U.S. holder at the time of death will be included
in such holder's gross estate for U.S. federal estate tax purposes, unless an
applicable estate tax treaty provides otherwise.

U.S. INFORMATION REPORTING REQUIREMENT AND BACKUP WITHHOLDING TAX

U.S. information reporting requirements, other than reporting of dividend
payments for purposes of the withholding tax noted above, and backup withholding
tax generally will not apply to dividends paid to non-U.S. holders that are
either subject to the 30% withholding discussed above or that are not so subject
because an applicable tax treaty reduces such withholding. Otherwise, backup
withholding of U.S. federal income tax at a rate of 31% may apply to dividends
paid with respect to the Common Stock to holders that are not "exempt
recipients" and that fail to provide certain information (including the holder's
U.S. taxpayer identification number) in the manner required by U.S. law and
applicable regulations. Generally, the payor of the dividends may rely on the
payees' address outside the United States in determining that the withholding
discussed above applies, and consequently, that the backup withholding
provisions do not apply.

As a general proposition, U.S. information reporting and backup withholding
also will not apply to a payment made outside the United States of the proceeds
of a sale of Common Stock through an office outside the United States of a
non-U.S. broker. However, U.S. information reporting requirements (but not
backup withholding) will apply to a payment made outside the United States of
the proceeds of a sale of Common Stock through an office outside the United
States of a broker that is a U.S. person, that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States, or that is a "controlled foreign corporation" as to the United States,
unless the broker has documentary evidence in its records that the holder is a
non-U.S. holder and certain conditions are met or the holder otherwise
establishes an exemption. Payment by a U.S. office of a broker of the proceeds
of a sale of Common Stock is currently subject to both U.S. backup withholding
and information reporting unless the holder certifies non-U.S. status under
penalties of perjury or otherwise establishes an exemption.

A non-U.S. holder generally may obtain a refund of any excess amounts
withheld under the backup withholding rules by filing the appropriate claim for
refund with the U.S. Internal Revenue Service.

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company has agreed to sell to each of the International Underwriters named below
and each of such International Underwriters, for whom Goldman Sachs
International and Lehman Brothers International (Europe), are acting as
representatives, has severally agreed to purchase from the Company, the
respective number of shares of Common Stock set forth opposite its name below:

NUMBER OF
SHARES OF
UNDERWRITER COMMON STOCK
- --------------------------------------------------------------------- ------------

Goldman Sachs International..........................................
Lehman Brothers International (Europe)...............................

------------
Total.......................................................... 500,000
------------
------------

Under the terms and conditions of the Underwriting Agreement, the
International Underwriters are committed to take and pay for all of the shares
offered hereby, if any are taken.

The International Underwriters propose to offer the shares of Common Stock
in part directly to the public at the public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at such
price less a concession of $ per share. The International Underwriters may
allow, and such dealers may reallow, a concession not in excess of $ per
share to certain brokers and dealers. After the shares of Common Stock are
released for sale to the public, the offering price and other selling terms may
from time to time be varied by the representatives.

The Company has entered into an underwriting agreement (the "U.S.
Underwriting Agreement") with the underwriters of the U.S. Offering (the "U.S.
Underwriters") providing for the concurrent offer and sale of 2,000,000 shares
of Common Stock in a U.S. offering in the United States. The offering price and
aggregate underwriting discounts and commissions per share for the two offerings
are identical. The closing of the International Offering is a condition to the
closing of the U.S. offering, and vice versa. The representatives of the U.S.
Underwriters are Goldman, Sachs & Co. and Lehman Brothers Inc.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two offerings, each of the
U.S. Underwriters has agreed that, as a part of the distribution of the shares
offered hereby and subject to certain exceptions, it will offer, sell or deliver
the shares of Common Stock, directly or indirectly, only in the United States of
America (including the States and the District of Columbia), its territories,
its possessions and other areas subject to its jurisdiction (the "United
States") and to U.S. persons, which term shall mean, for purposes of this
paragraph: (a) any individual who is a resident of the United States or (b) any
corporation, partnership or other entity organized in or under the laws of the
United States or any political subdivision thereof and whose office most
directly involved with the purchase is located in the United States. Each of the
International Underwriters named herein has agreed pursuant to the Agreement
Between that, as a part of the distribution of the shares offered as a part of
the international offering, and subject to certain exceptions, it will (i) not,
directly or indirectly, offer, sell or deliver shares of Common Stock (a) in the
United States or to any U.S. persons or (b) to any person who it believes
intends to reoffer, resell or deliver the shares in the United States or to any
U.S. persons, and (ii) cause any dealer to whom it may sell such shares at any
concession to agree to observe a similar restriction.

The Company has granted the International Underwriters an option exercisable
for 30 days after the date of the Prospectus to purchase up to an aggregate of
75,000 additional shares of Common Stock solely to cover over-allotments, if
any. If the International Underwriters exercise their over-allotment option, the
International Underwriters have severally agreed, subject to certain conditions,
to purchase approximately the same percentage thereof that the number of shares
to be purchased by each of them, as shown in the foregoing table, bears to the
500,000 shares of Common Stock offered hereby. The Company has granted the U.S.
Underwriters a similar option exercisable up to an aggregate of 300,000
additional shares of Common Stock.

stock purchase plans or 401(k) plans existing on the date of this Prospectus or
in an acquisition in which the person or persons receiving the Common Stock or
substantially similar securities agree in writing to be bound by this clause)
without the prior written consent of the representatives, except for the shares
of Common Stock offered in connection with the concurrent U.S. and international
offerings.

Each International Underwriter has also agreed that (a) it has not offered
or sold, and will not offer or sell, in the United Kingdom, by means of any
document, any shares of Common Stock other than to persons whose ordinary
business it is to buy or sell shares or debentures, whether as principal or
agent, or in circumstances which do not constitute an offer to the public within
the meaning of the Companies Act 1985 of Great Britain, (b) it has complied, and
will comply with, all applicable provisions of the Financial Services Act of
1986 of Great Britain with respect to anything done by it in relation to the
shares at Common Stock in, from or otherwise involving the United Kingdom, and
(c) it has only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issuance of the
shares of Common Stock to a person who is of a kind described in Article 9(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order
1988 (as amended) of Great Britain or is a person to whom the document may
otherwise lawfully be issued or passed on.

Buyers of shares of Common Stock offered hereby may be required to pay stamp
taxes and other charges in accordance with the laws and practice of the country
of purchase in addition to the initial public offering price.

Prior to the offerings, there has been no public market for the shares. The
initial public offering price will be negotiated among the Company and the
representatives of the International Underwriters and U.S. Underwriters. Among
the factors to be considered in determining the initial public offering price of
the Common Stock, in addition to prevailing market conditions, are the Company's
historical performance, estimates of the business potential and earnings
prospects of the Company, an assessment of the Company's management and the
consideration of the above factors in relation to market valuation of companies
in related businesses.

Application has been made for the Common Stock to be approved for quotation
and trading on the Nasdaq National Market under the symbol BDMI.

The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act.

VALIDITY OF COMMON STOCK

The validity of the Common Stock offered hereby will be passed upon for the
Company by Willkie Farr & Gallagher, New York, New York, and for the
International Underwriters by Sullivan & Cromwell, Washington, D.C.

EXPERTS

ADDITIONAL INFORMATION

ALTERNATE INTERNATIONAL

- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES UNDER ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION
IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO COMMON STOCK CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.

--------------

TABLE OF CONTENTS
PAGE
----
Available Information................. 2
Prospectus Summary.................... 3
Risk Factors.......................... 8
The Company........................... 14
Use of Proceeds....................... 17
Dividend Policy....................... 17
Dilution.............................. 18
Capitalization........................ 19
Selected Consolidated Financial
Information.......................... 20
Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 22
Business.............................. 28
Management............................ 36
Certain Transactions.................. 46
Security Ownership of Certain
Beneficial Owners and Management..... 49
Description of Capital Stock.......... 51
Shares Eligible for Future Sale....... 53
Certain United States Tax Consequences
to Non-U.S. Holders of Common Stock... 55
Underwriting.......................... 56
Validity of Common Stock.............. 58
Experts............................... 58
Additional Information................ 59
Index to Consolidated Financial
Statements........................... F-1

2,500,000 SHARES

BDM INTERNATIONAL, INC.

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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[LOGO]

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GOLDMAN SACHS INTERNATIONAL

LEHMAN BROTHERS

REPRESENTATIVES OF THE UNDERWRITERS

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered which will be paid
solely by the Company. All the amounts shown are estimates, except the SEC
registration fee, the NASD filing fee and the Nasdaq National Market listing
fee:

SEC Registration Fee.................................................... $ 1,507
NASD Filing Fees........................................................ 437
Nasdaq National Market Listing Fee...................................... 0
Transfer Agent and Registrar Fees and Expenses.......................... *
Printing and Engraving Expenses......................................... 100,000
Legal Fees and Expenses................................................. 300,000
Accounting Fees and Expenses............................................ 150,000
Blue Sky Fees and Expenses.............................................. *
Miscellaneous Expenses.................................................. 98,056
--------
Total............................................................. $ * +
--------
--------

- ------------

* To be completed by amendment.

+ An additional $550,000 of expenses were incurred in connection with the
initial filing of the registration statement on March 30, 1994 and were
expensed in the year ended December 31, 1994.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the DGCL empowers a Delaware corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of such corporation), by reason of the fact that such person is or was a
director, officer, employee or agent of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise. A
corporation may, in advance of the final disposition of any civil, criminal,
administrative or investigative action, suit or proceeding, pay the expenses
(including attorneys' fees) incurred by any officer, director, employee or agent
in defending such action, provided that such person undertakes to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation. A corporation may indemnify such person against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.

A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the
defense of any action referred to above, the corporation must indemnify him
against the expenses (including attorneys' fees) which he actually and
reasonably incurred in connection therewith. The indemnification provided is not
deemed to be exclusive of any other rights to which an officer or director may
be entitled under any corporation's by-laws, agreement, vote or otherwise.

II-1

In accordance with Section 145 of the DGCL, Section 13 of the By-laws
provides that the Company shall indemnify any director, officer or employee of
the Company entitled to indemnity under the DGCL to the fullest extent permitted
by the DGCL; provided, however, that the Company may not be permitted to
indemnify any person in connection with any proceeding initiated by such person,
unless such proceeding is authorized by a majority of the directors of the
Company. Article Eighth of the Certificate of Incorporation provides that a
director of the Company shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (i) for any breach of the director's duty of loyalty to the
Company or its shareholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL or (iv) for any transaction from which the director
derived an improper personal benefit. If the DGCL is amended to authorize
further elimination or limitation of personal liability of directors, then the
liability of a director of the Company shall be eliminated or limited to the
fullest extent permitted by the DGCL, as so amended. Any repeal or modification
of Article Eighth of the Certificate of Incorporation will not adversely affect
any right or protection of a director of the Company existing at the time of
such repeal or modification.

Section 8 of the Underwriting Agreement, a form of which is included in
Exhibit 1.1 to this Registration Statement, provides for indemnification of
directors and officers of the Company by the Underwriters against certain
liabilities, including certain liabilities under the Securities Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since October 23, 1990, the Company has sold and issued the following
unregistered securities:

1. In connection with the 1990 Acquisition, the Company sold an aggregate of
6,750,000 shares of Common Stock and 750,000 shares of Class B Common Stock at a
purchase price of $4.00 per share as follows: The Carlyle Fund purchased
6,000,000 shares of Common Stock, Mellon purchased 750,000 shares of Common
Stock, The Equitable Partnership purchased 562,500 shares of Class B Common
Stock and The Equitable Fund purchased 187,500 shares of Class B Common Stock.

2. In connection with the 1990 Acquisition, the Company sold 100,000 shares
of Series A Preferred Stock to The Carlyle Fund at a purchase price of $100.00
per share.

3. In connection with the 1990 Acquisition, the Company issued to LAC a
Conditional Note, dated October 23, 1990, which expired October 23, 1994.

4. In connection with the 1991 Offering, the Company sold 1,500,000 shares
of Common Stock to The Carlyle Fund at a purchase price of $4.00 per share.

5. In May 1991, the Company sold 500,000 shares of Common Stock to The
Carlyle Fund at a purchase price of $4.00 per share.

6. To finance the acquisition of the outstanding common stock of Vinnell in
March 1992, the Company issued to the seller a subordinated promissory note,
dated March 13, 1992, in the principal amount of $3.7 million at an annual
interest rate of 10%.

7. In connection with the acquisition of FACE, effective January 1, 1993,
the Company issued to ING Bank in April 1993 a note in the principal amount of
approximately $2.75 million which bears interest at the rate of 2% above the
prime rate of the Dutch Central Bank. This note was repaid in full in August
1994.

8. In connection with the execution and delivery of the Credit Facility, the
Company and the subsidiaries of the Company named therein issued a Revolving
Credit Note, dated July 20, 1993, in

II-2

the principal amount of $23 million and payable jointly and severally by the
Company and the subsidiaries of the Company named therein.

9. Under the 1990 Stock Option Plan, the Compensation Committee of the Board
of Directors granted to certain employees incentive stock options to purchase a
total of 1,562,500 shares of Common Stock, net of forfeitures, at an exercise
price ranging from $4.00 to $17.25 per share, since the inception of the plan on
December 1990.

10. Under the Director Stock Purchase Program, the Company sold to certain
directors a total of 47,146 shares of Common Stock at a purchase price ranging
from $5.25 to $8.00 per share, since the inception of the program on July 1992.

11. Since December 1990, the Compensation Committee has granted to selected
members of management MISOs to purchase a total of 1,119,169 shares of Common
Stock, net of forfeitures, at an exercise price equal to par value $.01 per
share.

12. Under the 1994 Stock Option Plan, the Compensation Committee of the
Board of Directors granted to certain employees incentive stock options to
purchase a total of 220,782 shares of Common Stock, net of forfeitures, at an
exercise price of $17.25 per share, since the inception of the plan in 1994.

No underwriters were engaged in connection with the foregoing sales of
securities. Such sales were made in reliance upon the exemption from the
registration provisions of the Securities Act set forth in Section 4(2) thereof
as transactions not involving a public offering, the respective purchasers
thereof having acquired such shares for their respective accounts without a view
to the distribution thereof.

ITEM 16. EXHIBITS

EXHIBIT
NO. DESCRIPTION
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II-3

EXHIBIT
NO. DESCRIPTION
- ------- -----------------------------------------------------------------------------------

10.1 Transaction Agreement, dated October 2, 1990, among New BDM, Inc., BDM Holdings,
Inc., The Carlyle Group, L.P., Loral Corporation and Loral Aerospace Corporation.+
10.2 Amendment No. 1 to Transaction Agreement, dated October 23, 1990, New BDM, Inc.,
BDM Holdings, Inc., The Carlyle Group, L.P., Loral Corporation and Loral Aerospace
Corporation.+
10.3 Non-Competition Agreement, dated March 13, 1992, by and among the selling
shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
10.4 Stock Purchase and Redemption Agreement, dated March 13, 1992, by and among the
selling shareholder, Vinnell Corporation and BDM Holdings, Inc.++
10.5 Vinnell Corporation Promissory Note, dated March 13, 1992, in the principal amount
of $3,700,000 issued to the selling shareholder.++
10.6 Subordinated Guaranty Agreement, dated March 13, 1992, by and among the selling
shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
10.7 Consulting Agreement, dated March 13, 1992, among BDM Holdings, Inc., the selling
shareholder and Vinnell Corporation.++
10.9 Credit Agreement, dated as of July 20, 1993, among BDM International, Inc., certain
subsidiaries of BDM International, Inc. and the several banking institutions named
therein with CoreStates Bank, N.A. as Agent.++++
10.10 First Amendment to the Credit Agreement, dated as of March , 1994, by and among
BDM International, Inc., each of its subsidiaries' signatories thereto, the banking
institutions' signatories thereto and CoreStates Bank, N.A.++++
10.11 Second Amendment to the Credit Agreement, dated as of May 27, 1994, by and among
BDM International, Inc., each of its subsidiaries signatories thereto, the banking
institutions' signatories thereto, and CoreStates Bank, N.A.+++++
10.12 Security Agreement, dated as of July 20, 1993, among BDM International, Inc.,
certain subsidiaries of BDM International, Inc. and the several banking
institutions named therein with CoreStates Bank, N.A. as Agent.++++
10.13 Agreement, dated November 16, 1993, among the Federal Republic of Germany,
Industrieanlagen-Betriebsgesellschaft mbH, BDM International, Inc.,
Industrieverwaltungsgesellschaft AG and IABG Holding GmbH.+++
10.14 Voting Rights Agreement, dated November 16, 1993, between
Industrieverwaltungsgesellschaft AG and BDM Europe BV.+++
10.15 1990 Stock Option Plan.+
10.16 Form of Management Incentive Stock Purchase Agreement.+
10.17 Form of Director Stock Purchase Plan Purchase Authorization.++++
10.18 BDM International, Inc. 401(k) PLUS Plan.+
10.19 The BDM Corporation Retirement Plan.+
10.20 The BDM Corporation Supplemental Executive Retirement Plan, effective December 26,
1984.+
10.21 BDM International, Inc. Defined Contribution Supplemental Executive Retirement
Plan, effective October 8, 1993.++++
10.22 The BDM Corporation Cash and Stock Incentive Compensation Plan.+
10.23 Letter Agreement, dated March 4, 1992, between BDM International, Inc. and Philip
A. Odeen.++++
10.24 1994 Stock Option Plan.+++++
11 Statement of Computation of Earnings Per Share.
21 Subsidiaries of BDM International, Inc.+++++

II-4

EXHIBIT
NO. DESCRIPTION
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24.1 Consent of Coopers & Lybrand.
24.2 Consent of Willkie Farr & Gallagher (included in Exhibit 5.1).
25.1 Power of Attorney of the Board of Directors (included on the signature page
hereof).
27. Financial Data Schedule.

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* To be filed by amendment.

+ Incorporated by reference to Registration Statement on Form S-1 (File No.
33-38405) of BDM Holdings, Inc. filed with the SEC on February 14, 1991.

++ Incorporated by reference to Current Report on Form 8-K (File No.
33-38405) of BDM International, Inc. filed with the SEC on March 13, 1992.

+++ Incorporated by reference to Amendment No. 1 to Current Report on Form
8-K/A (File No. 33-38405) of BDM International, Inc. filed with the SEC on
January 31, 1994.

++++ Incorporated by reference to Registration Statement on Form S-1 (File No.
33-77096 of BDM International, Inc. filed with the SEC on March 30, 1994.

+++++ Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1994 (File No. 000-23966) of BDM International, Inc.
filed with the SEC on March 31, 1995.

ITEM 17. UNDERTAKINGS

(1) The undersigned Registrant hereby undertakes to provide to the
Underwriters at the closing specified in the Underwriting Agreement certificates
in such denominations and registered in such names as required by the
Underwriter to permit prompt delivery to each purchaser.

(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to its Certificate of Incorporation, By-Laws, the
Underwriting Agreement or otherwise, the Registrant has been advised that, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(3) The Registrant hereby undertakes that:

(a) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.

(b) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and this offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of McLean, Commonwealth of Virginia, on May 12, 1995.

BDM INTERNATIONAL, INC.

By /s/ PHILIP A. ODEEN

...................................

Name: Philip A. Odeen
Title: President and Chief Executive
Officer

Each of the undersigned officers and directors of BDM International, Inc.
hereby severally constitutes and appoints Philip A. Odeen and C. Thomas
Faulders, III, each their attorney in fact for the undersigned, in any and all
capacities, each with full power of substitution, to sign any amendments to this
Registration Statement (including post-effective amendments), and to file the
same with exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each said attorney-in-fact, or any of them, may lawfully do
or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
- -------------------------------------------------- --------------------------------- ------------

/s/ PHILIP A. ODEEN President and Chief Executive May 12, 1995
.................................................. Officer, Director
Philip A. Odeen

/s/ C. THOMAS FAULDERS, III Executive Vice President, May 12, 1995
.................................................. Treasurer and Chief Financial
C. Thomas Faulders, III Officer

/s/ FRANK C. CARLUCCI Chairman of the Board of May 5, 1995
.................................................. Directors
Frank C. Carlucci

/s/ DR. JEANNETTE G. BROWN Director May 5, 1995
..................................................
Dr. Jeannette G. Brown

/s/ WILLIAM E. CONWAY, JR. Vice Chairman and Director May 5, 1995
..................................................
William E. Conway, Jr.

/s/ JAMES A.D. GEIER Director May 5, 1995
..................................................
James A.D. Geier

/s/ NEIL GOLDSCHMIDT Director May 5, 1995
..................................................
Neil Goldschmidt

.................................................. Director May , 1995
Walter Leisler Kiep

II-6

SIGNATURE TITLE DATE
- -------------------------------------------------- --------------------------------- ------------

.................................................. Director May , 1995
Dr. Hans Mark

/s/ THOMAS G. RICKS Director May 5, 1995
..................................................
Thomas G. Ricks

/s/ JOHN M. SLOSAR Director May 5, 1995
..................................................
John M. Slosar

/s/ HELMUT SONNENFELDT Director May 5, 1995
..................................................
Helmut Sonnenfeldt

/s/ DR. WILLIAM E. SWEENEY, JR. Director May 5, 1995
..................................................
Dr. William E. Sweeney, Jr.

/s/ EARLE C. WILLIAMS Director May 5, 1995
..................................................
Earle C. Williams

II-7

EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
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1.1 Form of Underwriting Agreement.*
3.1 Amended and Restated Certificate of Incorporation.++++
3.2 Amended and Restated By-Laws.++++
4.1 Specimen Common Stock certificate.*
4.2 Stockholders Agreement, dated October 23, 1990, among BDM Holdings, Inc., The
Carlyle Group, L.P., The Carlyle Partners Leveraged Capital Fund I, L.P., Equitable
Partnership, II, L.P., Equitable Deal Flow Fund, L.P., the Richard King Mellon
Foundation, Earle C. Williams, Michael J. Mruz and Dr. William E. Sweeney.+
4.3 Amendment No. 1 to Stockholders Agreement, dated December 10, 1990.+
4.4 Amendment No. 2 to Stockholders Agreement, dated April 30, 1992.++++
4.5 Amendment No. 3 to Stockholders Agreement, dated January 5, 1993.+++++
4.6 Investor Stock Purchase Agreement, dated October 23, 1990, among
BDM Holdings, Inc., The Carlyle Partners Leveraged Capital Fund I, L.P., Equitable
Partnership, II, L.P., Equitable Deal Flow Fund, L.P., the Richard King Mellon
Foundation.+
4.7 Amendment No. 1 to Investor Stock Purchase Agreement, dated , 1995.*
4.8 Form of Lock-up Agreement, dated , 1994.*
4.9 Certain instruments defining the rights of holders of long-term debt of BDM
International, Inc. are omitted pursuant to Section(b)(4)(iii) of Item 601 of
Regulation S-K under the Securities Act. The Company hereby agrees to furnish
copies of these instruments to the SEC upon request.
5.1 Opinion of Willkie Farr & Gallagher.*
10.1 Transaction Agreement, dated October 2, 1990, among New BDM, Inc., BDM Holdings,
Inc., The Carlyle Group, L.P., Loral Corporation and Loral Aerospace Corporation.+
10.2 Amendment No. 1 to Transaction Agreement, dated October 23, 1990, New BDM, Inc.,
BDM Holdings, Inc., The Carlyle Group, L.P., Loral Corporation and Loral Aerospace
Corporation.+
10.3 Non-Competition Agreement, dated March 13, 1992, by and among the selling
shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
10.4 Stock Purchase and Redemption Agreement, dated March 13, 1992, by and among the
selling shareholder, Vinnell Corporation and BDM Holdings, Inc.++
10.5 Vinnell Corporation Promissory Note, dated March 13, 1992, in the principal amount
of $3,700,000 issued to the selling shareholder.++
10.6 Subordinated Guaranty Agreement, dated March 13, 1992, by and among the selling
shareholder, BDM Holdings, Inc. and Vinnell Corporation.++
10.7 Consulting Agreement, dated March 13, 1992, among BDM Holdings, Inc., the selling
shareholder and Vinnell Corporation.++
10.9 Credit Agreement, dated as of July 20, 1993, among BDM International, Inc., certain
subsidiaries of BDM International, Inc. and the several banking institutions named
therein with CoreStates Bank, N.A. as Agent.++++
10.10 First Amendment to the Credit Agreement, dated as of March , 1994, by and among
BDM International, Inc., each of its subsidiaries' signatories thereto, the banking
institutions' signatories thereto and CoreStates Bank, N.A.++++

EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------------------------------------------------------------------------------

10.11 Second Amendment to the Credit Agreement, dated as of May 27, 1994, by and among
BDM International, Inc., each of its subsidiaries signatories thereto, the banking
institutions' signatories thereto, and CoreStates Bank, N.A.+++++
10.12 Security Agreement, dated as of July 20, 1993, among BDM International, Inc.,
certain subsidiaries of BDM International, Inc. and the several banking
institutions named therein with CoreStates Bank, N.A. as Agent.++++
10.13 Agreement, dated November 16, 1993, among the Federal Republic of Germany,
Industrieanlagen-Betriebsgesellschaft mbH, BDM International, Inc.,
Industrieverwaltungsgesellschaft AG and IABG Holding GmbH.+++
10.14 Voting Rights Agreement, dated November 16, 1993, between
Industrieverwaltungsgesellschaft AG and BDM Europe BV.+++
10.15 1990 Stock Option Plan.+
10.16 Form of Management Incentive Stock Purchase Agreement.+
10.17 Form of Director Stock Purchase Plan Purchase Authorization.++++
10.18 BDM International, Inc. 401(k) PLUS Plan.+
10.19 The BDM Corporation Retirement Plan.+
10.20 The BDM Corporation Supplemental Executive Retirement Plan, effective December 26,
1984.+
10.21 BDM International, Inc. Defined Contribution Supplemental Executive Retirement
Plan, effective October 8, 1993.++++
10.22 The BDM Corporation Cash and Stock Incentive Compensation Plan.+
10.23 Letter Agreement, dated March 4, 1992, between BDM International, Inc. and Philip
A. Odeen.++++
10.24 1994 Stock Option Plan.+++++
11 Statement of Computation of Earnings Per Share.
21 Subsidiaries of BDM International, Inc.+++++
24.1 Consent of Coopers & Lybrand.
24.2 Consent of Willkie Farr & Gallagher (included in Exhibit 5.1).
25.1 Power of Attorney of the Board of Directors (included on the signature page
hereof).
27. Financial Data Schedule.

- ------------

* To be filed by amendment.

+ Incorporated by reference to Registration Statement on Form S-1 (File No.
33-38405) of BDM Holdings, Inc. filed with the SEC on February 14, 1991.

++ Incorporated by reference to Current Report on Form 8-K (File No.
33-38405) of BDM International, Inc. filed with the SEC on March 13, 1992.

+++ Incorporated by reference to Amendment No. 1 to Current Report on Form
8-K/A (File No. 33-38405) of BDM International, Inc. filed with the SEC on
January 31, 1994.

++++ Incorporated by reference to Registration Statement on Form S-1 (File No.
33-77096 of BDM International, Inc. filed with the SEC on March 30, 1994.

+++++ Incorporated by reference to the Annual Report on Form 10-K for the year
ended December 31, 1994 (File No. 000-23966) of BDM International, Inc.
filed with the SEC on March 31, 1995.