Report written by: John Hammon, Janelle Heim, Jay Hammond, and Pete Markovich

ManTech International Corporation [MANT]

Stock Information Ticker MANT Sector Tech Industry1 IT Services Industry2 Aero/Defense Class Growth Mkt. Cap $1.43B Beta 0.49 Price $40.32 52 Wk Range $37.07-62.06 Shares 35.5M

Profile: ManTech provides IT and Business Services and Solutions to the US government, particularly the Department of Defense and NASA. Solutions and services include intelligence, communications, and security systems development and support. ManTech also offers network design and installation. Competitive Advantage: ManTech’s moat develops from strong management and expert employees, an established relationship with the National Security Community and the lucrative opportunity for growth in the US and abroad. Investment Thesis: MANT increase portfolio value by exposure to a solid growth sector in the short-run, with a company well-positioned to sustain growth for shareholders in the long-run.

Key Ratios (TTM) EPS $2.55 Price/Earnings 15.84 PEG (5yr Exp) 0.91 Price/Book (MRQ) 2.05 Price/Sales 0.75 Price/Cash Flow 11.24 EV/EBITDA 8.40 Current Ratio 1.49 Debt/Equity 0.00 Sales Growth 29.20% ROE 14.66% ROA 9.84%

Recommendation: Buy Full Position 1,100 Shares

2007 2008 2009E 2010E 2011E 2012E 2013E NI 67,207 90,292 102,933 113,226 124,549 137,004 150,704 + Depr. 14,244 17,323 16,522 14,734 12,135 11,237 10,735

+ Int. 2,349 1,906 3,609 3,970 4,367 4,804 5,284

- CapEx 4,834 7,792 4,970 4,047 4,452 4,897 5,386

- NWC 61,100 (5,892) 17,524 14,269 15,696 17,266 18,993 FCFF 13,168 103,809 93,352 105,674 112,168 121,275 131,776

WACC 8.05% PV of CF $2,133,302 Shares

Out 35,500

Growth (LT) 3% +Cash 4,375 Terminal

Value $2,687,714 -LT Debt -- Share

Value $60.22

Total CF $564,245 Equity Value

$2,137,677

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Table of Contents

Business Profile ....................................................................................................................................3

Operating Segment Analysis ................................................................................................................4

Recent Company News ............................................................................................................5

Management.........................................................................................................................................5

Growth Strategy....................................................................................................................................7

Macroeconomic Environment ...............................................................................................................8

Industry Analysis...................................................................................................................................8

Competitive Advantages.......................................................................................................................9

Competitors ........................................................................................................................................10

S.W.O.T. Analysis...............................................................................................................................12

Porter’s Five Forces............................................................................................................................13

Investor Relations Interview................................................................................................................14

Who’s Buying Now? ...........................................................................................................................15

Analyst Recommendations .................................................................................................................15

Price Performance ..............................................................................................................................15

Price Multiples Comparison ................................................................................................................16

Relative Valuation...............................................................................................................................17

Financial Ratio Analysis......................................................................................................................18

Pro Forma Income Statement.............................................................................................................23

Pro Forma Balance Sheet ..................................................................................................................25

Discounted Cash Flow........................................................................................................................26

DCF Sensitivity Analysis.....................................................................................................................29

Economic Value Added ......................................................................................................................30 H-Model DCF Valuation......................................................................................................................30

Investment Recommendation .............................................................................................................31

Consolidated Financial Statements ...................................................................................................32

ValueLine............................................................................................................................................35

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Business Profile1

Company Overview ManTech (MANT) was founded in 1968, went public in February 2002, and is headquartered in Fairfax, Virginia. ManTech International Corporation is a leading provider of information technology solutions to the United States government, as well as governments around the world. Its customers include the U.S. Army, the Defense Intelligence Agency, the Department of Defense, the Department of Homeland Security, the Department of State, NATO, NASA, and many more. ManTech operates within the United States and 40 other countries around the world and currently employs approximately 8,000 employees that concentrate on a bevy of operations ranging from systems engineering to cyber security and from intelligence operations to global logistics and supply chain management. These employees are highly trained with approximately 42% of them having Top Secret clearance with government projects. Rather than a large corporate division, ManTech employs a strategy of focusing on four business units to deliver excellent service and unified solutions to the National Security market. Strategic Business Units » ManTech Defense Systems Group (DSG)

This business unit focuses on providing technological support to the United States armed forces. This unit is made up of two subsidiaries, ManTech Telecommunications and Information Systems Corporation (MTISC) and ManTech Systems Engineering Corporation (MSEC). MTISC focuses on the design, development and installation of telecommunication and information systems. MSEC focuses on training development, software engineering and logistics and management.

» ManTech Information Systems & Technology (MIST)

MIST works with clients to determine their objectives and tailor solutions to fit their needs. This business unit includes ManTech MBI, Inc. (MMBI), which is a secure information sharing and IT solutions provider to the federal government with a focus on the Department of Defense, Intelligence Community and Homeland Security markets. This unit is trained in ManTech’s technologies and familiar with problems that arise and are equipped to provide solutions to clients.

» ManTech Security & Mission Assurance (MSMA)

MSMA provides analysis, full life cycle security, critical infrastructure protection and cyber support services to client operations that address all aspect of the clients business. This business unit is separated into three separate segments in order to address clients’ needs more thoroughly: Operations and Security, Strategy and Analysis, and Cyber.

» ManTech SRS (MSRS)

MSRS is ManTech’s engineering and information systems development segment. It has a long history in the design, development and evaluation of new technologies. ManTech Space Systems (MSS), the business located in this segment has developed a great relationship with the space community and has developed a variety of space systems and information technology to federal and civil space communities. MSS also has agreements to work with NATO in Iraq and Afghanistan.

1 ManTech website, company history

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Operating Segment Analysis

Types of Contract Services ManTech has three types of contracts that it enters into when starting a project for the federal government. Since the contracts originate with the US government, there is very little risk of default. The most significant risk ManTech is exposed to would be the potential to underestimate the cost of completing a project, thereby reducing operating profits. The three types of contracts are Cost-Plus, Time and Materials, and Fixed-Price. As seen below, the concentration of contract percentages has been fairly consistent in recent history, with the largest allocation to Time and Materials Contracts. While this increases risk slightly for the company, it also allows for greater upside potential as labor and expenses are contracted at a negotiated rate, which could be significantly less than a cost-adjusted contract.

» Cost-Price Contracts: ManTech is reimbursed for allowable costs and paid a fee which could be performance based or fixed. As long as the costs incurred under these contracts are under the compensation ceiling, ManTech is entitled to be reimbursed plus a profit.

» Time and Materials Contracts

These contracts allow ManTech to be paid based on a negotiated rate for labor and expenses. ManTech assumes a greater financial risk here because they agree upon the job at a negotiated rate.

» Fixed-Price Contracts

This type of contract requires ManTech simply to perform the task for a fixed-price. These have the opportunity for greater margins but have greater financial risk because of the possibility for going over with costs or underestimating the cost of the project.

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Recent Company News

» March 24, 2009 – BroadPoint AmTech analyst Peter Arment said he expects profit this year and next to be below Wall Street expectations, citing uncertainty surrounding the company's leadership and other issues. He downgraded the stock to Neutral.

» March 20, 2009 – Wachovia upgraded ManTech stock to outperform.

» March 4, 2009 – ManTech shares fell sharply when Robert Coleman, the President and

Chief Operating Officer of ManTech, announced he would be resigning, but will remain on the company’s Board of Directors.

» February 26, 2009 – ManTech announced that its revenues grew in the fourth quarter,

aided by its acquisition of Emerging Technologies Group, and that its profits rose by 15%. Management also predicted that it expected first quarter revenue to grow by 14-19%.

» Other recent events include ManTech winning a two-year army contract worth $355M to support MRAPs in southwest Asia. ManTech also recently named Louis M. Addeo to the position of President of Defense Systems Group.

Management2

George J. Pedersen – Chairman of the Board, CEO, and Co-Founder

Mr. Pedersen is Chairman of the Board, CEO and Co-Founder of ManTech International. He also serves as a member of the Board of Directors and Executive Committee of the National Defense Industrial Association (NDIA), Chairman of the Board for the Institute for Scientific Research (ISR), and Chairman of the Board for GSE Systems. In February 2008, Mr. Pedersen received a Federal 100 Award from Federal Computer Week. He was chosen for having a significant influence on how the “federal government

buys, uses and manages information technology,” and “for a risk-taking, vision and pioneering spirit in the federal IT community.”

Jay W. Kelley – President of Space Systems Business Unit Mr. Kelley is President of ManTech's Space Systems business unit. Mr. Kelley joined ManTech in April 2003 and was appointed to his current position in April 2004. Previously he was Vice President of Mid-West Operations. He has additional professional experience as the chief operating officer for STA, Inc., and later, Vice President for Military Programs for Lockheed Martin.

2 www.mantech.com, corporate governance

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Kevin M. Phillips – Chief Financial Officer Mr. Phillips is the Chief Financial Officer of ManTech International Corporation. He previously worked as Chief of Staff at ManTech where he played an active role in the integration of acquisitions and other strategic business issues. Prior to that, he held various roles including controllerships in IT services providers to the government. James N. Allburn – President of ManTech SRS Technologies Mr. Allburn is the President of ManTech SRS Technologies, Inc., a subsidiary of ManTech International Corporation since May 2007. Prior to ManTech, he worked as COO or SRS Technologies and served in the Air Force for 23 years working on research and development. James D. Bryan – President of Defense Systems Group Major General James D. "Dave" Bryan, U.S. Army (Ret.) is the President of ManTech’s Defense Systems Group (DSG), its largest subsidiary. Prior to joining ManTech International Corp. in 2008, Mr. Bryan worked as a Vice President for competitor, Northrop Grumman. Mr. Bryan also served 34 years in the United States military. Kenneth J. Farquhar – President of ManTech Systems Engineering Corp. Mr. Farquhar is President of ManTech Systems Engineering Corporation (MSEC). Mr. Farquhar joined ManTech in 1995 as a Vice President managing MSEC’s Engineering and Systems Support Group, and was named President of MSEC in December 2003. He has also served in positions related to research and development of technology within the military.

Kurt J. Snapper – President of ManTech Security Technologies Corp. President of ManTech Security Technologies Corporation, Senior Vice President and Director of Advanced Programs, Mr. Snapper joined ManTech International Corporation in 1989, and was responsible for developing and managing security and risk management programs. He was named president of ManTech Security Technologies Corporation when it was formed in 2000.

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Growth Strategy3

ManTech’s Five-Part Growth Strategy 1. Grow our business as a premier provider of comprehensive information technology

and technical services solutions to the federal government. ManTech has nailed this part of their strategy by hiring the best employees and management team possible. Members of ManTech are experts in their field that are lent credibility through their personal experiences and innovation in the IT defense field.

2. Expand our customer base by broadening the scope of services we provide to

existing customers and by attracting new customers. ManTech’s customers, namely parts of the federal government, have been extremely loyal to the company because of its ability to deliver a single integrative approach in its solutions. The credibility and expertise ManTech has in this area allows the company to cross-sell products to existing customers while attracting new ones.

3. Expand our service offerings in high growth program areas. ManTech is focusing its

efforts on supporting the departments involved in the Global War on Terror and customers looking to improve their information technology infrastructures.

4. Continue to attract and retain skilled professionals. ManTech targets employees that

have experience as engineers, scientists, and officers. The company retains them through offering generous compensation and incentive plans.

5. Continue our disciplined acquisition strategy. ManTech selectively selects companies

management believes will enhance ManTech’s position within the industry and allow for new customers. The company has acquired 13 companies since going public in 2002 which has accelerated revenue growth.

Revenue Growth Analysis4

Year-over-Year 2008 2007 2006 2005 2004

Sales Growth 29.20% 27.34% 16.00% 18.55% 23.93% EPS Growth 30.77% 30.87% 12.03% 75.00% -30.28%

Over a 5-year average, ManTech has sustained a sales growth rate greater than 20%, making MANT a leader in the industry. MANT has also effectively employed cost control measures to not sacrifice profit margins for sales growth, as evidenced by the growth in Earnings per Share exceeding growth in Sales. The excellence in growth rates can be attributed to ManTech’s ability to win contracts in a competitive market as well as an aggressive acquisition strategy.

3 www.mantech.com 4 Morningstar key ratios: ManTech

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Macroeconomic Environment5

Economists offer a bleak outlook for 2009, even after trillions of dollars of support being offered by the United States Government. Unemployment is roughly 8% for the first time in decades, stripping state governments of cash. Consumers are no longer facing relief from declining energy prices, as oil has bounced back to above $50 per barrel. Consumer spending has also decreased, and protectionism has resurfaced after years of beneficial international interconnectedness. The United States Government has recently begun buying Treasury Bonds in record volume in order to infuse capital into the staggering economy. The result of this has been a depreciated dollar, and harmed revenues from companies highly invested in foreign markets. ManTech is mostly unaffected by the current economic conditions. The balance sheet shows zero LT debt, and nearly all of their revenues are generated within the United States, eliminating any exchange rate risk created by the Government’s printing of money. ManTech’s clients also provide safety, as products are in high demand by government security agencies and the Department of Defense as well as organizations such as NASA.

Industry Analysis

The U.S. Government is the largest consumer of information technology services in the United States. Due to the increasing need to maintain its edge in a world with ever-present threats from rogue nations and terrorists to new, unimagined attacks from domestic hackers, forecasts lead that the U.S. government will maintain spending on updating technology. Government spending on IT services has increased steadily since 1980 and analysts predict continued growth from $72 billion FYE 2008 to $88 billion in 2013. These predictions also don’t consider any spending on confidential government programs needing IT solutions to go forward. The four main drivers of revenue growth for companies in the Information Technology industry and the Aerospace & Defense industry will be: » Spending on Defense and Intelligence during the War on Terror

Even with the change of administrations, the defense industry is continuing to see more and more spending come its way in order to fund operations in Iraq and Afghanistan. Analysts believe that this trend should continue in the foreseeable future since the threat of terrorism has not diminished.

» Spending on Cyber Security The former administration created the Comprehensive National Cyber Initiative which focuses on securing the government’s systems and should last the next 10 years. Spending in this area is expected to grow from $7 Billion in 2008 to $15 Billion in 2013.

5 Livingston Survey; wsj.com

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» Focus on Integrating Systems to Improve Information Sharing New sources and ease of access to information, namely through Internet sites, continues to ensure that the US government needs to step-up their ability to efficiently extract and analyze information, consequently making it even more important for government agencies to communicate clearly with one another.

» Reliance on Technology Service Providers The government will likely have to rely on individuals with experience working in the area of their specific technology in an effort to maximize potential effectiveness and maintain operations.

As of March 25, 2009, the Security Services industry is down 18.45% and Aerospace & Defense is down 23.29% YTD, vs. the S&P 500, down 10.74% YTD. This can primarily be seen as the market beating down the industry, as growth is likely to be sustained in the immediate future. President Barack Obama recently announced that he will “make cyber security the top priority that it should be in the 21st century.”6 This helps to support analysts’ predictions for growth in the defense IT sector; a sector in which ManTech is optimally positioned to capitalize on returns.

Competitive Advantages

» Mission-critical technology solutions

ManTech has gained expertise in the industry through rigorously training individuals in developing optimal solutions, which is impossible to replicate precisely and a cost-barrier for competitors

» Trusted partner to intelligence and defense communities

ManTech has been involved with the Department of Defense and Intelligence communities for years and has proven itself has proved itself as a reliable provider of custom IT solutions.

» Expanding global presence

ManTech employs approximately 8,000 highly skilled people to manage global operations throughout 42 states and 40 countries. This widespread international presence allows ManTech to spread its core competence across the globe, reaching to untapped markets for growth potential.

» Highly dedicated and cleared personnel base

ManTech’s management is well established for practices in leading and managing defense companies and army units. This notion, coupled with years of expertise in cyber IT solutions provide an excellent foundation to foster relationships within the government leading to winning highly valuable contracts and experiencing sustained revenue growth. ManTech’s employees are also given high levels of responsibility, with over 40% having top-level security clearance on classified projects.

6 http://www.forbes.com/2008/12/18/cybersecurity-czar-obama-tech-security-cx_ag_1219cyberczar.html

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Competitors7

Information Technology Computer Sciences Corporation (CSC)

Computer Sciences Corporation provides consulting and outsourcing services in the Information Technology industry. CSC provides systems integration and other technology services, including application development, data hosting, and management consulting services. Similar to ManTech, CSC is also a large government and defense contractor, with about one third of sales attributable to federal agencies. CSC acquired DataTrac in 2006, the primary contract for the Department of Homeland Security. CSC currently holds long-term contracts with AON, Ascension Health and Sun Microsystems. CACI International (CAI)

CACI International focuses most company efforts on contracts with the United States government, and more specifically the Department of Defense. 95 percent of operating revenues are derived from the U.S. government and more than 70 percent from the Department of Defense. CACI International is one of the largest Information Technology service contractors for the government. The growth strategy for CAI is focused mostly on external growth, rather than organic growth. CACI plans to acquire smaller companies that currently serve the Department of Defense. Recent acquisitions for the company include the Institute for Quality Management and Wexford Group in 2007. Currently less than 5% of CAI revenues come from overseas, however the company is beginning to expand globally. SRA International (SRX)

SRA International also contracts with the United States government in the Information Technology sector. However, SRA International primarily serves the Food and Drug Administration, the Internal Revenue Service, and the Department of Defense. SRX is concerned with the national security side of IT, with more than half the company’s sales resulting from national security contracts. SRA International also operates in the public sector, with approximately one-third of contracts being civil contracts. Acquisitions also play a large role in the growth strategy of the company. Recent acquisitions include Touchstone Consulting Group and Spectrum Solutions Group.

7 Hoover’s Premium Company Overview, www.hoovers.com

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Aerospace and Defense Lockheed Martin Corporation (LMT)

Lockheed Martin is the #1 defense contractor for the United States government, focusing on the pure-play of aerospace and defense products. 85% of operating revenues come from U.S. government contracts, which provide stability in the aerospace industry, but also exposes the company to the significant risk of government spending cuts. The business segments include Aeronautics – aircraft products and services, and Space Systems – satellites and strategic missiles. The effects of the Obama administration projected defense spending cuts are predicted to negatively affect current programs. LMT is currently partnering with competitors Northrop Grumman and Alliant TechSystems to design and develop weapons technologies, bridging the gap between the weapons market and aeronautics. Northrop Grumman Corporation (NOC)

Northrop Grumman Corporation is the largest shipbuilder in the United States and the 3rd largest defense contractor. Northrop Grumman is the most internally diverse company in the peer group analysis, as they operate in five sectors: Aerospace Systems, Electronic Systems, Information Systems, Shipbuilding, and Technical Services. NOC is another government-dependent company with 90% of sales coming from contracts with the United States government. Northrop Grumman also focuses on a line of high-profile products, including the B-2 stealth bomber, assault ships, and oil tankers. The acquisitions of Newport News, Litton, and TRW strengthened the company’s operations in command and control systems. Northrop sold more than 80% of the company business to Blackstone Group to pay down debt in 2005. Cuts in military spending are likely to have a strong negative impact on earnings. NOC just began expanding their IT sector in late 2008, a potential growth strategy for the company. General Dynamics (GD)

General dynamics is the Pentagon’s 4th largest pure-play defense contractor, followed by Lockheed, Boeing, and Northrop Grumman. General Dynamics offers capital products and services in four areas: Command and Control Systems, Marine Systems, Combat Systems, and Aerospace. General Dynamics has focused their growth strategy internationally, recently acquiring Switzerland-based Jet Aviation, which provides services in Asia, Europe, Middle East, and the U.S. The United States government also accounts for a substantial portion of company performance, with more than two-thirds of revenues from U.S. contracts. The downturn in the economic environment has also decreased the appetite for business jets, driving down recent sales. However, these risks can potentially be offset by the recent increase in revenues from aircraft services.

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SWOT Analysis

Strengths - Strong Management and Employees – The head officers at ManTech have their jobs because

they have years, even decades, within military and government branches, as well as leading management in companies similar to ManTech ( Management and employees are recognized by major publications and clients for innovations.

- Ability to win new contracts – While ManTech is working for a customer, they are constantly looking for ways that the company can add value by integrating the clients IT further. ManTech’s solid business development pipeline provides significant opportunities for organic growth.

- Large Backlog of Orders – ManTech has total backlog of $4B and a funded backlog of $1.2B, which equals roughly 50% of estimated 2009 revenue.

- Strong Balance Sheet – ManTech’s financial strength will allow the company to continue to grow organically as well as make strategic acquisitions. The company also has access to a revolving credit line of $300 million which could come in handy during the economic crisis.

Weaknesses - Reliance on Government Expenditures – ManTech must be able to win contracts with the

government and the government must be willing to spend on ManTech’s services. Without new contracts, it’ll be tougher to have organic growth in the future.

- International Business – Even though it is a small part of revenues, working internationally can be difficult because ManTech must comply with legislation not only from the United States but of the individual countries it is working in. This could impact performance in this area.

Opportunities - Need for IT Solutions – IT is always changing and companies will are searching for ways to

integrate their current systems. This means a need for MANT services in the foreseeable future.

- Continued War on Terror – As long as terrorist threat exists, government will protect the country from attacks. ManTech specializes in IT that aids intelligence gathering and computer protection.

- Comprehensive National Cyber Initiative – This plan has funding of $7B and forecasted to grow up to $15B in 5 years. ManTech is in a great position to win funds because of experienced personnel and relationships that make the company look reliable to partner with in the War on Terror.

- International Growth – Global business makes up 1.1% of ManTech revenues. Governments and NATO have the same need for integrating systems, so there is a large market for ManTech’s services.

Threats - Transparency on the War Front – Past 2010, revenues coming from Iraq and Afghanistan

become a little fuzzier because policy in the region has not been completely hammered out yet.

- Recession –Current economic crisis could encourage national budget cuts for IT, though appears limited by the Comprehensive National Cyber Initiative, having $7B set aside for cyber upgrades.

- Robert Coleman’s Departure –Robert Coleman, President and COO, will resign. Some analysts speculate a negative impact on growth believing he led to becoming a market leader in defense IT.

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Porter’s Five Forces

Barriers to Entry – The barriers to entry into defense IT are high. ManTech is in an excellent position in this industry because it already has the experienced personnel with necessary clearance to work on classified government work, as well as an existing relationship with a majority of the government departments that need cyber protection and information systems. Supplier Power – This has a negligible impact on business. Buyer Power – ManTech has been able to prove itself as one of the best in the industry and has been awarded many major contracts over the past few years. ManTech’s history of excellence and concentration on providing customer satisfaction should keep it high on the government’s list of IT outsourcing companies. Threat of Substitutes – ManTech provides a quality product that is developed and tested by some of the brightest minds in the industry. It is unlikely that the government would switch providers for cost reasons as long as ManTech continues its streak of excellent products. Rivalry – ManTech is in a very good position to be highly competitive with those in its peer group because of its competencies in management and employees, research and development, and service.

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Investor Relations Interview

The following questions were prepared to ask Investor Relations. As of March 26th we have not received any responses to attempts to speak with IR. If we can set-up an interview before the presentation responses will be handed out.

1. How do you think will the new administration affect your business?

2. Is there any indication that some of your programs might be cut?

3. How will draw downs in US forces in Iraq affect your business? Specifically, your work with MRAPs (mine-resistant vehicles): Will the contract be renewed?

4. How has the current recession affected business?

5. Is there anything ManTech is doing to take advantage of the recession?

6. Seeing how you are in between the IT industry and the Aerospace & Defense industry, which do you view as your primary competitors?

7. What sets you apart from them?

8. How does ManTech intend to attract contracts not originating from the government?

9. Does management believe there is room for growth in this area?

10. What are the company’s expectations for growth this quarter? What are the company’s expectations for growth this year?

11. What makes up the amount of goodwill on ManTech’s balance sheet? Is such a large amount normal for the industry?

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Who’s Buying Now?8

Insider Activity – Last 6 Months Shares Transactions

Total Share Purchases N/A 0

Total Share Sales 86,367 8

Net Shares Purchased (Sold) (86,367) 8

Total Insider Shares Held 719.21K N/A % Net Shares Purchased (Sold) (10.7%) N/A

Analyst Recommendations9

Current Month 1-Month Ago 2-Months ago 3-Months ago

Strong Buy 4 4 4 4 Buy 1 1 2 2 Hold 5 5 4 4

Underperform 0 0 0 0 Sell 0 0 0 0

Recent upgrade to Outperform by Wachovia and a neutral rating from AmTech Research

Price Performance

8 www.morningstar.com 9 www.finance.yahoo.com/MANT

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Price Multiples Comparison10

ManTech Historical Price Multiples TTM 2008 2007 2006 2005 2004 P/E 15.4 21.2 22.5 22.5 17.4 31.3 P/B 2.0 2.8 2.7 2.7 2.4 2.4 P/S 0.7 1.0 1.0 1.1 0.9 0.9 P/CF 11.0 15.1 23.9 14.7 15.0 28.5

The turbulence in the market and economy caused prices of stocks to drop dramatically, which in turn lowers price multiples. ManTech is undervalued because the company is not experiencing decreased demand and earnings due to mismanagement; it is experiencing increased earnings.

Relative Multiples: Information Technology MANT Peers CSC CAI SRX P/E 21.2 10.5 6.1 12.4 13.0 P/B 2.8 1.1 1.0 1.2 1.1 P/S 1.0 0.4 0.3 0.4 0.5 P/CF 15.1 7.2 3.2 6.9 11.6 Current Price $40.32 - $36.47 $36.04 $14.06

ManTech’s P/E, compared to its peers in this industry, seems to indicate the company being overvalued. However, CSC, CAI, and SRX are IT business service companies not experiencing the constant revenue growth from government contracts as ManTech. CAI and SRX are the two companies in the peer average closest in valuation to MANT; however they are smaller companies competing for market share of government contracts. The CSC multiples also decrease the peer average.

Relative Multiples: Aerospace & Defense MANT Peers LMT NOC GD P/E 21.2 7.6 8.7 - 6.4 P/B 2.8 4.0 9.4 1.2 1.5 P/S 1.0 0.5 0.7 0.4 0.5 P/CF 15.1 9.8 19.8 4.4 5.1 Current Price $40.32 - $68.09 $42.22 $39.50

ManTech’s P/E, compared to its peers, indicates it is overvalued. However, LMT, NOC and GD are larger, older companies not experiencing the same growth as MANT. NOC and GD have much lower ratios as IT is a small part of their business, with manufacturing combat jets, vehicles and other combat support as the bulk of revenues. LMT has a better mix of developing and IT similar to ManTech. This allows a better comparison and shows ManTech is more undervalued by the market than LMT when it comes to P/CF.

10 Morningstar Valuation Ratios

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Relative Valuation

Looking at historic multiples for MANT and comparative multiples for the industry and competitors provides the following forecasted valuation. To assess value, multiples are weighted by perceived market importance, with Price/Earnings as the greatest weight at .40. P/E appears to be the best indicator for value, as the market responds to changes in earnings more immediately than other underlying performance metrics. P/B, P/S, and P/CF carry respective weights of .30, .20, and .10. Relative to Recent History

Current Multiple

Historic Avg.

Current Price

Relative Price

Weight

P/E (ttm) 16.22 23.10 40.32 57.42 0.40 P/B (mrq) 2.10 2.60 40.32 49.92 0.30 P/S (ttm) 0.78 1.00 40.32 51.69 0.20 P/CF (ttm) 12.27 18.27 40.32 60.04 0.10 Relative Price $54.29

Relative to Industry

Current Multiple

Industry Avg.

Current Price

Relative Price

Weight

P/E (ttm) 16.22 27.2 40.32 67.61 0.40 P/B (mrq) 2.10 1.8 40.32 34.56 0.30 P/S (ttm) 0.78 2.2 40.32 113.72 0.20 P/CF (ttm) 12.40 9.1 40.32 29.59 0.10 Relative Value $63.12

Relative to Peer Group

Current Multiple

Peer Average

Current Price

Relative Price

Weight

P/E (ttm) 16.22 9.33 40.32 23.18 0.40 P/B (mrq) 2.10 2.85 40.32 54.72 0.30 P/S (ttm) 0.78 0.47 40.32 24.19 0.20 P/CF (ttm) 12.40 6.38 40.32 20.75 0.10 Relative Value $32.60

MANT shows attractive upside potential in relation to recent history and the industry, at $54.29 for recent history and $63.12 for the industry. MANT indicates a highly undervalued investment, outside the 15% Margin of Safety. However, valuation relative to the peers indicates overvalued, but isn’t highly indicative of MANT, as peers offer significantly different services, so multiple comparison gives little value to begin with. NOC was excluded from the average P/E, as they reported net losses for 2008. We have strong conviction in the recent history and industry valuations. The performance factors driving multiples are affected by competitors; in a competitive, changing sector, recent history is noteworthy.

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Financial Ratio Analysis

Profitability Analysis

Historical Trends 2008 2007 2006 2005 2004 Gross Margin 16.34% 16.16% 16.97% 17.79% 18.10% Operating Margin 8.20% 7.85% 7.97% 8.59% 8.28% Profit Margin 4.83% 4.64% 4.46% 4.51% 2.99%

ManTech has maintained reasonably consistent profit margins across the board the last five years. The slight decrease in gross margin results from an increase in costs of developing and testing security software systems. ManTech did a good job of controlling operating expenses during the recessionary 2008 year, leading to a higher Operating Margin. In 2008 the company didn’t record any losses from discontinued operations such as previous years, also contributing to higher Net Profit Margin.

Information Technology

MANT Peers CSC CAI SRX Gross Margin 16.34% 26.23% 20.29% 32.84% 25.55% Operating Margin 8.20% 6.74% 5.56% 6.73% 7.92% Net Profit Margin 4.83% 3.87% 3.30% 3.44% 4.86%

ManTech is closer to peers in IT Services, as operations and business structure align similarly. It is difficult to determine an exact comparison as competitors compete substantially more in the public arena, with different operating results. Gross margin gives an example of this difference, with ManTech lagging in the industry. However, operating expenses for the peer group are extensive enough to make up the difference, allowing MANT to take industry lead for Operating Margin and Net Profit Margin.

Aerospace & Defense MANT Peers LMT NOC GD

Gross Margin 16.34% 15.83% 10.88% 18.26% 18.33%

Operating Margin 8.20% 8.05% 12.01% -0.33% 12.47%

Net Profit Margin 4.83% 4.05% 7.53% -3.78% 8.39% Relative to the Aerospace and Defense industry, ManTech has a comparable gross profit margin, but lower operating margin and Net Profit Margin. General Dynamics leads the industry for profit margins, but not an important measure of comparison for ManTech, as they contract with the government for manufacturing of aircrafts and aircraft parts, notably distinguishable from ManTech’s contracts for defense IT solutions and services.

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Financial Strength Analysis

Historical Trends 2008 2007 2006 2005 2004 Quick Ratio 1.44 1.17 2.19 1.59 1.73 Current Ratio 1.49 1.23 2.33 1.67 2.00 Debt/Equity Ratio 0.00 0.07 0.00 0.00 0.00

Financial strength for MANT is strong for the last five years with current and quick ratios indicating a current asset position averaging 1.5x the current liabilities position. This liquidity measure has become more important with recent credit market conditions resulting in an inability for to borrow short-term funds easily and at lower rates. The increases in current and quick ratios signify management’s awareness of potential problems and efforts to hedge against that risk by increasing liquidity.

Information Technology MANT Peers CSC CAI SRX Quick Ratio 1.44 1.73 0.92 1.99 2.27 Current Ratio 1.49 1.88 1.24 2.08 2.34 Debt/Equity Ratio 0.00 0.48 0.48 0.76 0.22

In the peer group comparison, MANT is less strong in the IT industry in terms of liquidity. This isn’t a significant concern given that ManTech has confidence in future revenues due to government contracts while both industry leaders, CAI and SRX, compete for public contracts as well as government contracts, yielding a higher financial risk. Looking at the Debt/Equity ratio, ManTech is clearly the industry leader, due to being solely financed by equity, with the exception of 2007.

Aerospace & Defense MANT Peers LMT NOC GD Quick Ratio 1.44 0.69 0.79 0.80 0.49 Current Ratio 1.49 1.05 1.01 0.97 1.15 Debt/Equity Ratio 0.00 0.61 1.24 0.29 0.31

In comparison to the Aerospace and Defense peer group, ManTech again is the market leader. This should be expected due to the capital intensive nature of aerospace and defense production companies. The current ratio is the closest in terms of comparison, but the difference in quick ratios would indicate that a large portion of CA accounted for in the current ratio are held in inventory for the competitors and held in cash and receivables for MANT.

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Asset Management Analysis

Historical Trends 2008 2007 2006 2005 2004 Total Asset Turnover 1.83 1.54 1.85 1.76 1.77 Fixed Asset Turnover 112.96 102.19 81.92 83.69 97.23 Accounts Receivable Turnover 4.59 4.29 4.81 4.09 4.22 Working Capital Turnover 13.29 21.17 6.76 9.46 6.51 Average Collection Period 78.36 83.89 74.85 88.02 85.37

ManTech effectively increased sales revenue per dollar of assets held over 5-yr recent history, as shown by increasing total and fixed asset turnovers. Performance in 2007 is inconsistent with average turnover; an increase in CA resulted in assets not utilized optimally and a lower TATO. ManTech borrowed LTD in 2007 but classified it as “current portion,” decreasing working capital and increasing NWC turnover. The 2008 asset turnovers are higher and ACP lower than 5-yr average, indicating strong performance.

Information Technology MANT Peers CSC CAI SRX Total Asset Turnover 1.83 1.21 1.05 1.27 1.33 Fixed Asset Turnover 112.96 47.19 6.40 95.44 39.71 Accounts Receivable Turnover 4.59 4.24 3.70 5.28 3.74 Working Capital Turnover 13.29 8.06 12.38 7.74 4.05 Average Collection Period 78.36 87.21 97.31 68.19 96.13

In the IT industry, ManTech is the leader in asset management. The TATO and fixed asset turnover ratios are almost outside the range of comparison to the peer group; however CAI would be the closest competitor for TATO and FATO, and exceeding MANT performance with A/R turnover and ACP. CSC brings down the peer average for fixed, total, and A/R turnovers.

Aerospace & Defense

MANT Peers LMT NOC GD

Total Asset Turnover 1.83 1.14 1.28 1.12 1.03 Accounts Receivable Turnover 4.59 7.71 7.06 7.61 8.45

Average Collection Period 78.36 46.97 50.98 47.31 42.62 Again, this industry is capital intensive yielding lower turnover ratios. For this reason, the fixed asset turnover and working capital turnover ratios were substantially different form ManTech’s analysis therefore not creating meaningful data and were excluded from this portion of the asset management analysis. In this industry ManTech is lags in the A/R Turnover and ACP, likely due to a difference in the fundamental business operations and agreements with clients.

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Debt Management Analysis

Historical Trends 2008 2007 2006 2005 2004 Accounts Payable Turnover 9.94 12.09 13.09 13.91 12.86 Days Sales in AP 36.20 29.78 27.49 22.09 23.53 Equity Multiplier 1.50 1.70 1.34 1.47 1.46

From a debt management standpoint, MANT decreased A/P turnover and increased Days Sales in A/P, but staying within a moderate expected range, which can be seen as company strength. ManTech decreased ACP in the above analysis and decreased A/P turnover in this analysis, indicating they are receiving their cash sooner and paying their liabilities later, taking advantage of the time value of money. The equity multiplier decreased from 2007 due to paying off all LTD, however this metric indicating ManTech’s financial leverage remained in a relative range of recent history.

Information Technology

MANT Peers CSC CAI SRX Accounts Payable Turnover 9.94 7.13 3.58 10.66 7.15 Days Sales in AP 36.20 61.55 100.55 33.76 50.33 Equity Multiplier 1.50 2.20 2.89 2.07 1.64

The competitors in the peer group far exceed MANT for debt management, indicating stronger power in negotiating agreements to pay liabilities. This would be reflective of the difference in seller power between MANT and the peer group. The higher equity multiplier of the peer group is a function of the reliance on LTD in competitor capital structure, which also creates greater financial risk among peer companies.

Aerospace & Defense MANT Peers LMT NOC GD Accounts Payable Turnover 9.94 4.90 5.80 5.26 3.63 Days Sales in AP 36.20 76.57 62.06 68.40 99.25 Equity Multiplier 1.50 5.68 11.67 2.53 2.82

Also in the Aerospace & Defense industry, ManTech underperforms in terms of debt management. Given the higher cost of services and lower asset turnover ratios for the capital business these peers operate in, higher Days Sales in A/P and lower A/P Turnover are to be expected. Additionally, these companies rely on LTD in their capital structure creating higher Equity Multipliers. Lockheed Martin is an outlier for EM, with nearly 4x as much LTD as direct competitors.

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Extended DuPont Model

Historical Trends

Net Profit

Margin Total Asset Turnover

Equity Multiplier

Return on Equity

2008 4.83% 1.83 1.50 13.27% 2007 4.64% 1.54 1.70 12.19% 2006 4.46% 1.85 1.34 11.05% 2005 4.51% 1.76 1.47 11.67% 2004 2.99% 1.77 1.46 7.71%

The Extended DuPont Model illustrates the company management’s effectiveness. Three factors contribute to effectiveness: Net Profit Margin, Total Asset Turnover, and Equity Multiplier. The increase in 2008 ROE is due to Total Asset Turnover increase and Net Profit Margin increase, which together create Return on Assets (ROA) in 2008. The Equity Multiplier decreased by paying off LTD, but was more than offset by ROA. Given company history of100% equity financing, we expect MANT to continue to grow NPM and TATO, while increasing TA and therefore reasonably predict continued growth of ROE.

Information Technology

Net Profit

Margin Total Asset Turnover

Equity Multiplier

Return on Equity

CSC 3.30% 1.05 2.89 9.97% CAI 3.44% 1.27 2.07 9.08% SRX 4.86% 1.33 1.64 10.57%

IT Competitors have lower profit margins and asset turnovers across the board, yielding lower Return on Equity. Financial leverage of peers is approximately 1.5x of ManTech; however is not offset by Return on Assets. This indicates MANT is better positioned for sales growth with given assets and even with lower financial leverage, achieve a higher rate of return on equity for investors – a strong industry performer.

Aerospace & Defense

Net Profit

Margin Total Asset Turnover

Equity Multiplier

Return on Equity

LMT 7.53% 1.28 11.67 112.29% NOC -3.78% 1.12 2.53 -10.75% GD 8.39% 1.03 2.82 24.46%

For the other peer group comparison, the numbers are not meaningful, through still provided for analysis. Northrop Grumman experienced a net loss in 2008 and therefore a negative ROE. The higher profit margins of this industry, coupled with the higher financial leverage, don’t allow for valuable comparison with ManTech. The lower Total Asset Turnover partially offsets this difference, however not significantly enough to warrant peer comparison.

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Pro Forma Income Statement

2007 2008 2009E 2010E 2011E 2012E 2013E

Revenues 1,448,098

1,870,879

2,132,802

2,346,082

2,580,690

2,838,760

3,122,635

Cost of Sales 1,214,150

1,565,198

1,784,326

1,962,758

2,159,034

2,374,938

2,612,431

Gross Margin 233,948

305,681

348,476

383,324

421,656

463,822

510,204

General & Administrative

120,244

152,323

173,648

191,013

210,114

231,126

254,238

EBITDA 127,404

170,258

191,350

207,045

223,677

243,934

266,701

Operating Income 113,704

153,358

174,828

192,311

211,542

232,696

255,966

Interest Income (3,842)

(3,166)

(3,609)

(3,970)

(4,367)

(4,804)

(5,284)

Other, net 263

(233)

(266)

(292)

(321)

(354)

(389)

EBT 110,125

149,959

170,953

188,049

206,853

227,539

250,293

Less: Taxes (42,798)

(59,667)

(68,020)

(74,822)

(82,305)

(90,535)

(99,589)

Income from Operations

67,327

90,292

102,933

113,226

124,549

137,004

150,704

(Loss) disc comps (458) - - - - - -

Gain on sale of disc ops 338 - - - - - -

(Loss) from disc ops (120) - - - - - -

Net Income 67,207

90,292

102,933

113,226

124,549

137,004

150,704

Basic EPS 1.89 2.54 2.90 3.19 3.51 3.86 4.25

Diluted EPS 2.88 3.17 3.49 3.83 4.22

Sales Growth For the year 2009, we expect ManTech to grow revenues by 14%. We derived this growth rate by taking the lower end of the company’s expectations of $2.1 – 2.2 billion in revenue for 2009. ManTech’s management is predicting to grow between 12-18% for 2009 with 10-16% being organic, and ValueLine expects MANT to grow at 14% next year. While analysts expect MANT to grow at an average rate of 13% annually over the next five years, we lowered these estimates 300 basis points to 10% to be conservative. Thus, for 2010 and after, we assume a growth rate of 10%. Given the opportunities in Iraq and Afghanistan and developments in cyber security to grow revenues, MANT should have no problem meeting analyst expectations. Our performance estimates compared against First Call estimates are listed below.

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Revenue and Earnings Comparison Earnings Per Share Growth Rate Forecast Street Forecast Street

2009 $ 2.90 $ 2.98 14% 13% 2010 $ 3.19 $ 3.32 10% 13% 2011 $ 3.51 $ 3.25 10% 13% 2012 $ 3.86 $ 3.25 10% 13%

CAGR - - 11% 13%

Cost of Sales and SG&A Expenses Cost of Sales and SG&A expenses are pegged at 84% and 8% as a percentage of revenue, the same as 2008. We feel that using 2008 historicals provides an accurate measure of future cost, because it reflects the company’s consistent ability to lower SG&A expenses over the last few years as a portion of revenue. Cost of Sales has remained about the same over the last five years, with minor fluctuations.

Interest Expense, Other Income, and Tax Rate These projections provide an operating margin of 8.2%, slightly below company expectations of 8.3% going into 2009. Further we see no indication that the company’s operating margin should change much in the foreseeable future. Net Interest Expense and Other Income represent 2% and .15% of EBIT, based on 2008 figures. We used the 2008 effective tax rate of 39.8% for our projections, which is slightly above company guidance of 39.4%.

Income from Discontinued Operations While in the past the company has discontinued and sold off components and operations, 2008 had no such activity and we felt that because those activities against earnings reflected strategic decisions in the firm we decided not to make any assumptions to forecast them. These expenses and revenues do not appear to have much material impact on the bottom line.

Earnings Per Share – EPS EPS calculated using diluted shares for a conservative estimate. The treasury stock method is used to calculate effect of in-the-money options. The company has no convertible securities and debentures.

Stock Options Shares (000)

Exercise Price

Exercisable 646 26.32 Expected to Vest 1184 40.11 Total, In-the-Money Options 1831 Cash Produced 64516 Market Price 40 Buyback 1600 Dilution Effect 231 Common A Shares 21541 Common B Shares 13958 Shares Outstanding 35500 Diluted Shares 35730

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Pro Forma Balance Sheet

2007 2008 2009E 2010E 2011E 2012E 2013E

Cash

8,048

4,375

65,219

188,857

324,748

474,117

638,312

A/R

337,467

407,248

417,893

426,561

436,096

446,584

458,121

Prepaids

19,104

14,200

14,675

15,061

15,486

15,954

16,468

Current Assets

364,619

425,823

497,787

630,479

776,330

936,654

1,112,90

1

PPE

14,170

16,563

16,945

16,552

16,241

16,021

15,900

Goodwill

451,832

479,516

479,516

479,516

479,516

479,516

479,516

Employee Savings Plan

17,999

14,771

14,888

15,005

15,124

15,243

15,363

Intangible Assets

82,976

78,710

78,710

78,710

78,710

78,710

78,710

Other Assets

5,907

6,329

6,329

6,329

6,329

6,329

6,329

Total Assets

937,503

1,021,71

2

1,094,17

4

1,226,59

1

1,372,24

9

1,532,47

3

1,708,72

0

A/P

100,447

157,407

147,175

161,893

178,082

195,890

215,479

Accruals

61,429

75,121

77,083

78,681

80,439

82,372

84,499

Billings EXc Rev Earned

8,334

8,451

8,664

8,837

9,028

9,238

9,469

Current Liabilities

296,210

285,079

232,922

249,411

267,549

287,500

309,447

Accrued Retirement

18,973

15,930

18,160

19,976

21,974

24,171

26,588

Other LT Liabilities

7,848

7,769

8,857

9,742

10,717

11,788

12,967 Deferred Tax- Non-Current

24,167

32,398

32,398

32,398

32,398

32,398

32,398

Total Liabilities

386,198

341,176

292,337

311,528

332,637

355,858

381,400

Common Stock Class A

205

218

218

218

218

218

218

Common Stock Class B

143

140

140

140

140

140

140

Total Liabilities and Equity

937,503

1,021,71

2

1,094,17

4

1,226,59

1

1,372,24

9

1,532,47

3

1,708,72

0

Assets and Liabilities Current asset and current liabilities were calculated as a percentage of revenue, excluding cash and short term debt. The firm expects to pay off its remaining debt in the first two quarters of 2009. Intangible assets and goodwill were left constant because they are not driven by revenue, but by strategic decisions of the firm. Deferred taxes were left constant as well, because they are driven by accounting decisions and tax complications and are thus unpredictable. For

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shareholders equity, we assume no change in common stock or treasury securities. Retained earnings were calculated as net income for the current year plus retained earnings of prior year.

Property, Plant, & Equipment Property Plant and Equipment was calculated as gross PPE less accumulated depreciation. Accumulated depreciation for the current year is calculated as the accumulated balance in the prior year plus the after tax depreciation expense in the current year. Cash was used as the plug for the model. Under the equation Assets=Liabilities + Shareholder Equity, the difference between the two sides of the balance sheet becomes the company’s cash position. Our balance sheet assumes no activity in acquisitions or share buybacks that would likely occur. Acquisitions would likely increase goodwill and share buybacks would lower equity, both which would reduce cash in the equation we used. However, the growing cash balance suggests that the company is generating enough cash in earnings to remain healthy in the future and to continue with its acquisition strategy.

Discounted Cash Flow

Free Cash Flow 2005 2006 2007 2008 2009 2010 2011 2012 2013

Net Income

51,410

50,701

67,207

90,292

102,933

113,226

124,549

137,004

150,704 Add: Dep & Amor

5,512

6,257

8,708

10,430

16,522

14,734

12,135

11,237

10,735

Less: Int Exp

1,449

963

2,349

1,906

3,609

3,970

4,367

4,804

5,284

Less: NWQ

28,522

(15,836)

61,100

(5,892)

17,524

14,269

15,696

17,266

18,993

Less: CapEx

7,103

7,405

4,834

7,792

4,970

4,047

4,452

4,897

5,386

FCFF 19849 64427 7632 96916 93352 105674 112168 121275 131776

FCF per Share

0.56

1.81

0.21

2.73

2.63

2.98

3.16

3.42

3.71

FCF Yield 1% 5% 1% 7% 7% 7% 8% 8% 9%

Cash Flows

93,352

105,674

112,168

121,275

131,776

2,687,714

NPV of CF's 2,133,302

Add: Cash 4375

Less: Debt 0

Intrinsic Value 2,137,677

Shares Outstanding 35,500

Value per Share $ 60.22

Current Price $ 40.32

Under/(Over)Valued 49%

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Capital Expenditures Capital Expenditures include purchases of property plant and equipment and investment in capitalized software. For our forecast, both items were tied to an increase in revenue. Increase in gross PPE is calculated as 1.25% of revenue. Investment in capitalized software is assumed as .065% of the increase in sales revenue, based on 2008 historicals.

Depreciation Depreciation was forecasted as a percentage of gross PPE. Specifically, we used the rate of 10.3%, which was depreciation/gross PPE for 2008. We feel that tying depreciation to gross PPE would provide a more accurate forecast of depreciation than sales or net PPE because of volatility in growth as well as accumulated depreciation. Gross PPE was forecasted as well to determine depreciation and is calculated as 1.25% of the increase in revenue, based on 2008 levels and is similar to the three year average. The firm also has considerable non-cash amortization expenses from goodwill. Because goodwill occurs from acquisitions, which are a function of the firm’s long term strategic decisions, we decided to keep goodwill constant and let the firms amortization expenses zero out. Our forecasted amortization expense comes from the firms’ amortization schedule presented in the 10-K and no new acquisitions.

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Investment in Net Working Capital Investment in Net Working Capital was forecasted as a 6.7% of the increase in sales. Over the last five years, the NWC as a percent of incremental revenue has ranged from -10% to 20%. Because of this volatility, we averaged the last four years to derive 6.7% of incremental revenue. Interest expense is explained in the Pro Forma. Cash and Current Portion of Long Term Debt were excluded from working capital as recommended by John Stowe, because holding cash does not generate a use or a source of cash and short term debt relates to the firm’s financing activities, not its operating activities.

Weighted Average Cost of Capital [WACC] The risk free rate was calculated as the average rate of return the 10 year treasury bills from 1999 to 2009, which was 4.75%.11The historical average return of the market is 10.75%. The firm’s beta is .55 according to Capital IQ. The difference between the return of the market and the risk free rate is 6% after beta is applied. The resulting cost of equity is 8.05%. Because the firm has no debt or preferred stock, the cost of equity is representative of the weighted average cost of capital. WACC = (Cost of Equity)*(Weight of Equity) + (Cost of debt)*(Weight of Debt) We utilized the Capital Asset Pricing Model to determine the cost of equity. Ke=rf + B (rm-rf)

11 Federal Reserve Bank

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DCF Sensitivity Analysis

We also conducted a sensitivity analysis to give insight on possible valuations given changes in WACC or LT growth. Below are the terminal values, present values, and values per share given the changes. Currently, the 15% Margin of Safety requires our valuation to be above $46.26. This margin is eclipsed in each combination of WACC and LT growth, except when growth slips below 4% with a 9.05% WACC, and to 2% with an 8.55% WACC. However, our forecasts, as well as other analysts’, show that these growth-WACC combinations are unlikely. The sensitivity analysis shows ManTech is currently undervalued.

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Economic Value Added [EVA]

Over the last four years, ManTech International has grown both its economic value added, as well as its market value added. EVA is a measure of value that is created from the capital contribution of shareholders and bondholders. A positive EVA indicates creating value.

EVA=((NOPAT/K)-C)K , Where C is the cost of capital and K is the capital invested. Capital invested is the book value of shareholders equity + current and LT debt – Non-operating cash and marketable securities. MANT has created value over the last few years and EVA grew substantially from 2007 to 2008. Market Value Added is a measure of the difference between the firm’s market value and its adjusted book value. To calculate MVA, we used the year end market price and shares outstanding to determine the market value of the firm.

MVA=Market Value – Capital Invested. MANT has grown its MVA substantially from 2005 to 2008. However, because ManTech’s share price has depreciated, MVA will be slightly lower, but still exceeding 2007.

Economic Value Added 2005 2006 2007 2008 Operating Income 60,412 55,596 67,327 90,292

Contributed Capital 415,454 417,506 708,257 720,261

WACC 8.05% 8.05% 8.05% 8.05%

EVA 29,935 18,645 22,947 35,509

Market Value Added

Market Value, 12/31 989,030 1,307,465 1,527,210 1,923,745

Shareholder Value 415,454 417,506 708,257 720,261

MVA 573,576 889,959 818,953 1,203,484

H-Model DCF Valuation

We conducted a three-stage H-model valuation for ManTech using FCFF as the shareholder payout. Stage 1 assumes that the FCFF stream will grow at a short-term rate for four years. Stage 2 assumes the short-term rate will decline in a linear fashion from the short-term growth rate to the long-term growth rate over a six year period. The final stage represents long-term growth in perpetuity, which will likely resemble that of the overall economy. The variables of this three stage model are (thousands USD$):

• D0= FCFF 2008 (as shown on the pro forma Income Statement) = $96,916. • r = WACC = 8.05% as calculated by the CAPM (ManTech has no LTD). 8.05%

WACC is used to discount the future cash flows back to the present.

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• During stage 1, FCFF will grown by gs = 6% for 4 years. This growth rate is the average pro forma growth rate in FCFF over the next 4 years.

• During stage 2, FCFF growth will decline over a six from gs = 6% to gL = 3%. • During stage 3, FCFF growth will remain at the equilibrium rate of 3%, which

resembles GDP growth.

With short-term growth of 6% lasting four years, a declining growth stage of 6 years, and a long-term equilibrium growth rate of 3%, our 3 stage H-model valuation gives an intrinsic value of $66.61. This gives a 39.47% upside on the current market price of $40.32.

(t) Vt Value Vt / Dt Derivation of Vt PV of Vt @ 0.0805%

1 D1 112,057.90 96,916(1.06)1 $103,279.17

2 D2 118,781.37 96,916(1.06)2 100,899.47

3 D3 125,908.26 96,916(1.06)3 98,574.59

4 D4 133,462.75 96,916(1.06)4 96,303.29 4 + perpetuity V4 2,717,786.95 1,961,085.17

Total PV of CF $2,360,141.69

Investment Summary

• Recommendation: Purchase 1100 shares of MANT. • Trading at a large discount to intrinsic value, according to numerous valuation

models. • Strong Balance Sheet: No LT Debt. • 10-16% organic growth for near future. • Strong Management Team • Engaged in Mission Critical Activities. The business model is immune to budget

cuts.

PV of FCFF $2,360,141.69

Cash $4,375

LT Debt $0 PV Equity $2,364,516 Shares Out. (35.5M) 35,500 Target Price $66.61 Current Price $40.32 Upside Potential 39.47%

D0 96,916

r 0.0805 gs 0.06

gL 0.03

H 3

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Income Statement12

12 ManTech 2008 10-K

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Balance Sheet

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Statement of Cash Flows