10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2009.

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

FOR THE TRANSITION PERIOD FROM            TO             .

COMMISSION FILE NUMBER: 0-51552

ATS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	11-3747850
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

7925 Jones Branch Drive

McLean, Virginia 22102

(Address of principal executive offices)

(571) 766-2400

(Registrant’s telephone number, including area code)

 (Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ¨No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large accelerated filer ¨	Accelerated filer  ¨
Non-accelerated filer x	Smaller reporting company  ¨
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   ¨    No   x

The number of shares of the issuer’s common stock, $0.0001 par value, outstanding as of August 7, 2009 was 22,740,110.

ATS CORPORATION

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Consolidated Balance Sheets as of June 30, 2009 (unaudited) and as of December 31, 2008 (audited)	3
	Consolidated Statements of Income (unaudited) for the three and six-month periods ended June 30, 2009 and June 30, 2008	4
	Consolidated Statements of Cash Flows (unaudited) for the three and six-month periods ended June 30, 2009 and June 30, 2008	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	18
Item 4.	Controls and Procedures	18
PART II — OTHER INFORMATION
Item 1.	Legal Proceedings	19
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults upon Senior Securities	19
Item 4.	Submission of Matters to a Vote of Security Holders	20
Item 5.	Other Information	20
Item 6.	Exhibits	21
SIGNATURES		22

2

ATS CORPORATION

PART I — FINANCIAL INFORMATION

ITEM 1. — FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

	June 30,			December 31,
	2009			2008
	(unaudited)			(audited)
ASSETS
Current assets
Cash	$	7,839		$	364,822
Accounts receivable, net		24,466,246			29,268,647
Other receivable - escrow		3,793,771			—
Prepaid expenses		607,618			537,974
Income taxes receivable, net		608,598			—
Other current assets		10,502			22,771
Deferred income taxes, current		988,727			1,321,890
Total current assets		30,483,301			31,516,104
Property and equipment, net		3,349,076			3,712,340
Goodwill		55,370,010			59,128,648
Intangible assets, net		7,204,080			8,304,686
Restricted cash		1,322,597			1,316,530
Other assets		332,144			387,897
Deferred income taxes		2,005,883			2,003,348
Total assets	$	100,067,091		$	106,369,553
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	27,343,150		$	2,583,333
Capital leases – current portion		44,705			86,334
Accounts payable and accrued expenses		9,807,944			10,224,266
Accrued salaries and related taxes		3,671,643			2,999,576
Accrued vacation		2,640,774			2,220,865
Income taxes payable, net		—			600,121
Deferred revenue		2,373,403			1,745,352
Deferred rent – current portion		385,493			379,520
Total current liabilities		46,267,112			20,839,367
Long-term debt   – net of current portion		810,214			34,492,558
Capital leases – net of current portion		—			745
Deferred rent – net of current portion		2,742,163			2,842,171
Other long-term liabilities (at fair value)		1,869,329			2,283,256
Total liabilities		51,688,818			60,458,097
Shareholders’ equity:
Preferred stock $0.0001 par value, 1,000,000 shares authorized, and no shares issued and outstanding		—			—
Common stock $0.0001 par value, 100,000,000 shares authorized, 31,082,865 and 30,867,304 shares issued,respectively, and 22,740,110 and 22,524,549 shares outstanding, respectively		3,108			3,087
Additional paid-in capital		131,274,763			130,767,038
Treasury stock, at cost, 8,342,755 shares held		(30,272,007	)		(30,272,007	)
Accumulated deficit		(51,593,445	)		(53,190,822	)
Accumulated other comprehensive loss (net of tax benefit of $651,778 and $887,416, respectively)		(1,034,146	)		(1,395,840	)
Total shareholders’ equity		48,378,273			45,911,456
Total liabilities and shareholders’ equity	$	100,067,091		$	106,369,553

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

3

ATS CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended June 30,						Six Months Ended June 30,
	2009 (unaudited)			2008  (unaudited)			2009 (unaudited)			2008  (unaudited)
Revenue	$	30,266,809		$	33,788,772		$	57,423,323		$	68,662,297
Operating costs and expenses
Direct costs		20,451,932			22,964,775			38,647,669			45,233,416
Selling, general and administrative expenses		6,326,616			7,764,830			12,819,131			17,214,511
Depreciation and amortization		767,616			2,034,302			1,551,743			4,076,910
Total operating costs and expenses		27,546,164			32,763,907			53,018,543			66,524,837
Operating income		2,720,645			1,024,865			4,404,780			2,137,460
Other (expense) income
Interest, net		(792,604	)		(944,729	)		(1,566,684	)		(1,749,136	)
Other (loss) income		—			(4,705	)		—			66,172
Income before income taxes		1,928,041			75,431			2,838,096			454,496
Income tax expense		756,253			8,579			1,240,719			112,615
Net income	$	1,171,788		$	66,852		$	1,597,377		$	341,881
Weighted average number of shares outstanding
—basic		22,660,767			20,410,516			22,601,811			19,706,731
—diluted		22,660,767			20,465,439			22,601,811			19,734,193
Net income per share
—basic	$	0.05		$	0.00		$	0.07		$	0.02
—diluted	$	0.05		$	0.00		$	0.07		$	0.02

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

4

ATS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Six Months Ended  June 30,
	2009			2008
	(unaudited)			(unaudited)
Cash flows from operating activities
Net income	$	1,597,377		$	341,881
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		1,551,743			4,076,910
Stock-based compensation		381,318			765,266
Deferred income taxes		208,221			(1,507,705	)
Deferred rent		(94,036	)		(40,990	)
Gain on disposal of equipment		—			(16,638	)
Provision for bad debt		276,262			92,780
Changes in assets and liabilities, net of adjustments related to other comprehensive loss:
Accounts receivable		4,491,003			(5,159,974	)
Prepaid expenses and other current assets		(69,644	)		(12,794	)
Restricted cash		(6,067	)		(21,999	)
Other assets		66,803			(731,669	)
Accounts payable and other accrued expenses		(426,282	)		(1,037,300	)
Accrued salaries and related taxes		672,066			(1,392,197	)
Accrued vacation		419,908			394,542
Accrued interest		193,365			264,287
Income taxes payable and receivable		(1,321,944	)		879,118
Other current liabilities		628,051			(347,088	)
Other long-term liabilities		—			(45,976	)
Net cash provided by (used in) operating activities		8,568,144			(3,499,546	)
Cash flows from investing activities
Purchase of property and equipment		(86,654	)		(57,574	)
Proceeds from disposals of equipment		—			21,103
Payment on acquired businesses		—			(45,779	)
Net cash used in investing activities		(86,654	)		(82,250	)
Cash flows from financing activities
Borrowings on line of credit		29,405,026			30,451,556
Payments on line of credit		(37,200,267	)		(27,708,307	)
Payments on notes payable		(1,127,286	)		(1,441,667	)
Payments on capital leases		(42,374	)		(54,279	)
Proceeds from stock issued pursuant to Employee Stock Purchase Plan		126,428			211,813
Proceeds from exchange of stock for warrants, net of expense		—			234,477
Net cash (used in) provided by financing activities		(8,838,473	)		1,693,593
Net decrease in cash		(356,983	)		(1,888,203	)
Cash, beginning of period		364,822			1,901,977
Cash, end of period	$	7,839		$	13,774
Supplemental disclosures:
Cash paid or received during the period for:
Income taxes paid	$	2,352,483		$	2,401,682
Income tax refunds		4,924			1,350,000
Interest paid		1,373,319			1,484,849
Interest received		46,406			34,160
Non-cash investing and financing activities and adjustment to other comprehensive loss:
Unrealized other comprehensive income (loss) on interest rate swap, net of tax		361,694			(88,664	)

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

5

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 ¾ BASIS OF PRESENTATION

Principles of Consolidation - The consolidated financial statements include the accounts of ATS Corporation (“ATSC”) and its subsidiary Advanced Technology Systems, Inc. (“ATSI”) (collectively, the “Company”). All material intercompany accounts, transactions, and profits are eliminated in consolidation.

The accompanying consolidated financial statements of the Company have been prepared by management in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission. These statements include all adjustments considered necessary by management to present a fair statement of the consolidated balance sheets, results of operations, and cash flows. Certain information and note disclosures normally included in the annual financial statements have been condensed or omitted pursuant to those instructions, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Therefore, these financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, contained in the Company’s 2008 Annual Report on Form 10-K. The results reported in these financial statements should not be regarded as necessarily indicative of results that may be expected for the entire year.

Accounting Estimates – The Company’s financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”). The preparation of the financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Estimates have been prepared on the basis of the most current and best available information and actual results could differ materially from those estimates.

Financial Statements Reclassifications - Certain amounts on the prior period financial statements and related notes have been reclassified to conform to the current presentation.

NOTE 2 ¾ RECENT ACCOUNTING PRONOUNCEMENTS

Adoption of New Accounting Standards

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. Specifically, this Statement sets forth a definition of fair value, and establishes a hierarchy prioritizing the inputs to valuation techniques, giving the highest priority to quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The provisions of SFAS No. 157 are generally required to be applied on a prospective basis, except to certain financial instruments accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, for which the provisions of SFAS No. 157 should be applied retrospectively. In February 2008, the FASB issued Staff Position FAS 157-2, Effective Date of FASB Statement No. 157, which defers the implementation for the non-recurring nonfinancial assets and liabilities from fiscal years beginning after November 15, 2007 to fiscal years beginning after November 15, 2008. The disclosure requirements of SFAS No. 157, which took effect on January 1, 2008, are presented in Note 4. On January 1, 2009, the Company implemented the previously-deferred provisions of SFAS No. 157 for nonfinancial assets and liabilities recorded at fair value as required. The implementation did not have a material effect on the Company’s consolidated financial position or results of operations.

6

In December 2007, the FASB issued SFAS No. 141(R) — Business Combinations (“SFAS No. 141(R)”). SFAS No. 141(R) replaces FASB Statement No. 141— Business Combinations. The new statement retains the fundamental requirements that the acquisition (or purchase) method of accounting be used for all business combinations and expands the definition of a business, thus increasing the number of transactions which may qualify as business combinations. Contingent consideration will be measured at fair value at the acquisition date, with changes in fair value recognized in earnings, and transaction-related expenses and restructuring costs will be expensed as incurred. Changes in acquired tax contingencies will be recognized in earnings if outside the purchase price allocation period (generally one year or less). Adjustments to finalize purchase price allocations have been revised post-acquisition financial statements to reflect the adjustments as if they had been recorded on the acquisition date. Also, in the event of a bargain purchase (acquisition of a business at below fair market value of net assets acquired), a gain could be recognized, or in the event of a change in control of an existing investment, a gain or loss could be recognized. SFAS No. 141(R) will be applied prospectively to business acquisitions with acquisition dates on or after January 1, 2009. There is no current impact as we have made no acquisitions since January 1, 2009.

SFAS No. 162 — In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles (SFAS 162). SFAS 162 identifies a consistent framework, or hierarchy, for selecting accounting principles to be used in preparing financial statements that are presented in conformity with GAAP for nongovernmental entities (the “Hierarchy”). The Hierarchy within SFAS 162 is consistent with that previously defined in the American Institute of Certified Public Accountants (“AICPA”) Statement on Auditing Standards No. 69, The Meaning of “Present Fairly in Conformity With Generally Accepted Accounting Principles” (“SAS 69”). SFAS 162 is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to the AICPA’s Auditing section No. 411, The Meaning of “Present Fairly in Conformity With Generally Accepted Accounting Principles.” SFAS 162 did not have a material effect because we utilize the guidance within SAS 69.

The SEC issued a final rule (RIN 3235-AJ71 Interactive Data to Improve Financial Reporting) requiring companies to provide financial statement information in a form that is intended to improve its usefulness to investors. This final rule applies to public companies and foreign private issuers that prepare their financial statements in accordance with generally accepted accounting principles (GAAP) and foreign private issuers that prepare their financial statements using International Financial Reporting Standards (IFRS). Companies will provide their financial statements to the SEC and on their corporate website in interactive data format using eXtensible Business Reporting Language (XBRL). The interactive data will be provided as an exhibit to periodic and current reports and registration statements, as well as to transition reports for a change in fiscal year. We will be required to submit an interactive data file for our June 30, 2010 quarterly report on Form 10-Q.

In April 2009, the Financial Accounting Standards Board (FASB) issued FASB Staff Position No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP 107-1), which amends SFAS No. 107, “Disclosures about Fair Value of Financial Instruments” (SFAS No. 107) and APB 28-1, “Interim Financial Reporting.” FSP 107-1 expands the fair value disclosures required for all financial instruments within the scope of SFAS No. 107 to interim periods. FSP 107-1 also requires entities to disclose in interim periods the methods and significant assumptions used to estimate the fair value of financial instruments. FSP 107-1 is effective for interim reporting periods ending after June 15, 2009. The adoption of FSP 107-1 has not had a material impact on our financial position, results of operations or cash flows.

In May 2009, the FASB issued SFAS No. 165, "Subsequent Events" ("SFAS 165"). SFAS 165 sets forth the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements, the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements, and the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. SFAS 165 is effective for interim or annual periods ending after June 15, 2009. The Company has adopted the requirements of this pronouncement. The Company has evaluated its operations through August 7, 2009, which is the date that the interim financial statements for the six-month period ended June 30, 2009 are to be issued and concluded that there have been no recognizable subsequent events. The adoption of SFAS 165 has not had a material impact on our financial position, results of operations or cash flows.

NOTE 3 ¾ RESTRICTED CASH

The Company is required to maintain $1.2 million on deposit with a financial institution to support a bonding requirement for one of the ATSI state contracts. This amount, and accumulated interest of $122,597 and $116,530 earned thereon as of June 30, 2009 and December 31, 2008, respectively, is reflected in restricted cash in the accompanying consolidated balance sheets.

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NOTE 4 ¾ FAIR VALUE OF FINANCIAL INSTRUMENTS

In order to manage interest rate fluctuation exposure on bank debt, the Company entered into an interest rate swap agreement with Bank of America on November 9, 2007 providing the Company an ability to eliminate the variability of interest expense based on $35 million of floating rate debt. The purpose of the derivative instrument is to hedge cash flows and not for trading purposes. The Company records cash payments and receipts related to its interest rate swap as adjustments to interest expense and as a component of operating cash flow.

The Company accounts for its interest rate swap agreement as a cash flow hedge under the provisions of SFAS No. 133. The Company has determined that the swap is 90.2% effective for the variable rate debt. Accordingly, the fair value of the interest rate swap agreement of $1,869,000 and $2,283,000 is included in other long-term liabilities, as of June 30, 2009 and December 31, 2008, respectively. This valuation method, which is consistent with the second highest level of the valuation hierarchy described in SFAS No. 157, Fair Value Measurements, is based upon an extrapolation of forward rates for the remaining term of the interest rate swap. A change in fair value of $414,000 for this derivative, net of a tax benefit of $165,000, was recorded in other comprehensive loss for the six months ended June 30, 2009. Hedge ineffectiveness of $128,000 and $183,000 was recognized for the three and six-month periods ended June 30, 2009 as a portion of the notional amount exceeds expected borrowings in the Company’s variable rate debt.

NOTE 5 ¾ STOCK PLANS AND STOCK-BASED COMPENSATION

Under the fair value recognition provisions of SFAS No. 123(R), Share Based Payment, the Company recognizes stock-based compensation based upon the fair value of the stock-based awards taking into account the effects of the employees’ expected exercise and post-vesting employment termination behavior. A summary of the components of the stock-based compensation expense recognized during the three and six-month periods ended June 30, 2009 and 2008 is as follows:

Compensation Related to  Options and RestrictedStock	Three Months Ended June 30, 2009			Three Months Ended June 30, 2008		Six Months Ended June 30, 2009			Six Months  Ended June 30, 2008
Non-qualified stock options	$	—		$	—	$	—		$	—
Incentive stock options		45,000			48,000		82,000			90,000
Restricted stock		124,000			213,000		198,000			495,000
Stock grants to Directors in lieu of cash		114,000			180,000		114,000			180,000
Forfeitures in excess of estimate		(7,000	)		—		(13,000	)		—
Total stock-based compensation expense	$	276,000		$	441,000	$	381,000		$	765,000

Stock Options - The Company estimates the fair value of options as of the date of grant using the Black-Scholes option pricing model. A total of 202,000 and 312,000 options were granted during the three and six-month periods ended June 30, 2009, respectively. A total of 178,500 options were granted during the three and six-month periods ended June 30, 2008.  The fair value of options granted during the six-month period ended June 30, 2009 have been estimated as of the date of grant using the Black-Scholes option pricing model with the following assumptions:

	Options Granted January 2, 2009			Options Granted April 30, 2009			Options Granted May 5, 2009
Expected dividend yield		—	%		—	%		—	%
Expected volatility		55.3	%		71.6	%		71.6	%
Risk free interest rate		2.9	%		0.5	%		0.5	%
Expected life of options	6.3 years			6.3 years			6.3 years
Forfeiture rate		4.25	%		4.25	%		4.25	%

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The average fair value per option granted during the six months ended June 30, 2009 was $0.89. As of June 30, 2009, there was $634,071 of unrecognized compensation expense related to unvested options. This cost is expected to be recognized over a weighted-average period of 3.2 years. The table below provides stock option information for the six months ended June 30, 2009:

	Number of Shares			Weighted Average Exercise Price Per Share		Weighted- Average Remaining Contractual Life in Years		Aggregate Intrinsic Value of In-the- Money Options
Options outstanding at    January 1, 2009		394,500		$	3.16		9.0	$	—	(1)
Options granted		312,000			1.46		9.7		195,080	(2)
Options expired		—			—		—		—
Options forfeited		(26,000	)		2.44		8.7		—
Options outstanding at    June 30, 2009		680,500		$	2.41		9.0	$	195,080	(2)
Options exercisable at    June 30, 2009		110,875		$	3.47		8.3	$	—	(2)

(1) Intrinsic value represents the excess of the closing stock price on the last trading day of the preceding period, which was $1.40 as of December 31, 2008, over the exercise price, multiplied by the number of options.

(2) Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $2.09 as of June 30, 2009, over the exercise price, multiplied by the number of options.

The following table summarizes information about stock options outstanding at June 30, 2009:

		Options Outstanding					Options Exercisable
				Weighted-
				average	Weighted-			Weighted-
				Remaining	average			average
	Exercise	Number		Life in	Exercise		Number	Exercise
	Prices	Outstanding		Years	Price		Exercisable	Price
$	1.40		110,000	9.5	$	1.40	—	$	—
	1.50		202,000	9.8		1.50	—		—
	2.15		149,000	8.9		2.15	37,250		2.15
	3.40		80,000	8.5		3.40	20,000		3.40
	3.50		30,000	8.4		3.50	7,500		3.50
	3.67		30,000	8.3		3.67	7,500		3.67
	3.75		4,500	8.0		3.75	1,125		3.75
	4.32		15,000	7.7		4.32	7,500		4.32
	4.88		60,000	7.7		4.88	30,000		4.88
			680,500	9.0	$	2.41	110,875	$	2.65

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Restricted Shares – Pursuant to the 2006 Omnibus Incentive Compensation Plan, during the six-month period ended June 30, 2009, the Company granted 142,000 restricted shares valued at $199,000. Such shares vest ratably over a five-year period. The table below provides additional restricted share information for the six months ended June 30, 2009:

	Six months Ended June 30, 2009
	No. of Shares			Weighted Average Grant Date Fair Value
Unvested at January 1, 2009		407,865			$	3.38
Granted		263,142				1.49
Vested		(42,145	)			3.31
Forfeited		(24,260	)			3.17
Unvested at June 30, 2009		604,602			$	2.57

NOTE 6 ¾ EMPLOYEE STOCK PURCHASE PLAN

The Company adopted the 2007 Employee Stock Purchase Plan (the “Plan”) in July 2007. The Plan was subsequently approved by Company stockholders in May 2008. The Plan provides employees and management with an opportunity to acquire or increase their ownership interest in the Company through the purchase of shares of the Company’s common stock at periodic intervals, namely four month offering periods during which payroll deductions are made and shares are subsequently purchased at a discount. The Company initially reserved an aggregate of 150,000 shares of Common Stock exclusively for issuance under the Plan. Additionally, the Company may automatically increase the shares registered under this Plan on an annual basis pursuant to the Plan’s “evergreen” provision. This provision allows the Company to annually increase its registered Plan shares by the lesser of the following: (i) 100,000 shares, (ii) 1% of the Company’s outstanding shares on January 1 of such year, or (iii) a lesser amount as determined by the Board. Accordingly, in the first quarter of 2009, the Company registered an additional 100,000 shares under the Plan.

The Plan is a qualified plan under Section 423 of the Internal Revenue Code and, for financial reporting purposes, is considered non-compensatory under SFAS No. 123R Share Based Payment. Accordingly, there is no stock-based compensation expense associated with shares acquired under the Plan for the three and six-month periods ended June 30, 2009. During the six-month period ended June 30, 2009, participants have purchased 99,943 shares under the Plan at a weighted average price per share of $1.26. During the three months ended June 30, 2009, 49,971 shares were purchased at a price per share of $1.33.

NOTE 7 ¾ EARNINGS (LOSS) PER SHARE

Basic and diluted earnings per share information is presented in accordance with SFAS No. 128, Earnings Per Share. Basic earnings per share is calculated by dividing the net income/ (loss) attributable to common stockholders by the weighted-average common shares outstanding during the period. Diluted earnings per share is calculated by dividing net income attributable to common stockholders by the weighted average common shares outstanding which includes common stock equivalents. The Company’s common stock equivalents include stock options, restricted stock, and warrants.

The weighted average shares outstanding for the three months ended June 30, 2009 and 2008 excludes unvested restricted shares and excludes an aggregate of approximately 4,205,066 and 3,507,752 warrants and stock options to purchase shares, respectively, because such common stock equivalents have an exercise price in excess of the average market price of the Company’s common stock during the period, or would be anti-dilutive.  The weighted average shares outstanding for the six months ended June 30, 2009 and 2008 excludes unvested restricted shares and excludes an aggregate of approximately 4,212,587 and 3,535,213 warrants and stock options to purchase shares, respectively, because such common stock equivalents have an exercise price in excess of the average market price of the Company’s common stock during the period, or would be anti-dilutive.

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NOTE 8 ¾ SEGMENT ACCOUNTING

The Company reviewed its services by unit to determine if any unit of the business is subject to management appraisal that are different than those of other units in the Company. Based on this review, the Company has determined that all units of the Company are providing comparable services to its clients, and the Company has only one reportable segment.

NOTE 9 ¾ WARRANTS

On June 30, 2009, the Company had 2,980,175 outstanding warrants that will expire on October 19, 2009, unless earlier exercised.

NOTE 10 ¾ GOODWILL VALUATION

Goodwill represents the excess of purchase price over the fair value of net assets acquired because of various business acquisitions. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill must be recorded at the reporting unit level. Reporting units are defined as one level below an operating segment. We have identified one reporting unit and one operating segment. SFAS No. 142 prohibits the amortization of goodwill, but requires that it be tested for impairment at least annually (at any time during the year, but at the same time each year), or more frequently if events or circumstances change, such as adverse changes in the business climate, that would more likely than not reduce the reporting unit’s fair value below its carrying amount.

The Company evaluates goodwill for impairment annually in the third fiscal quarter or more frequently depending on specific events or when evidence of potential impairment exists.  The annual impairment test is based on several factors requiring judgment. Principally, a significant decrease in expected cash flows or changes in general market conditions may indicate potential impairment of recorded goodwill. Management has concluded that there were no triggering events that would indicate an impairment during the quarter ended June 30, 2009. The Company will continue to monitor the recoverability of the carrying value of its goodwill and other long-lived assets.

As of June 30, 2009 and December 31, 2008, goodwill was $55.4 million and $59.1 million, respectively. As of June 30, 2009 and December 31, 2008, our net basis in intangible assets was $7.2 million and $8.3 million, respectively. The decrease in the goodwill is the result of the award of $3.8 million to ATSI relating to claims against the former owners for a net working capital deficit from what was required to be delivered by the sellers and amounts related to accounting method tax escrows.

NOTE 11 ¾ LEGAL PROCEEDINGS

From time to time, we are involved in various legal matters and proceedings concerning matters arising in the ordinary course of business. Other than the matters discussed below, we currently believe that any ultimate liability arising out of these matters and proceedings will not have a material adverse effect on our financial position, results of operations or cash flows.

We are a defendant in Maximus, Inc. vs. Advanced Technology Systems, Inc., pending in the Connecticut Superior Court, Complex Litigation Docket. The lawsuit asserts breach of contract and other claims related to a subcontract between Maximus and ATSI associated with a prime contract between Maximus and the State of Connecticut. Based on the complaint filed in the suit, Maximus seeks damages in excess of $3.5 million. The case was filed in August 2007.

We have answered the complaint denying Maximus’ claims and have asserted counterclaims. In January of 2009, the case was consolidated for discovery purposes with an action brought by the State of Connecticut against Maximus relating to the prime contract. Discovery has commenced, although at a hearing conducted on March 9, 2009, further depositions were delayed until September 4, 2009 in order to give the State of Connecticut sufficient time to review documents received from Maximus. Trial, which had been scheduled for July 2010, is now scheduled to commence in April 2011. Based on the claims asserted in the lawsuit, we have made an indemnification demand against the former principal owners of ATSI under the stock purchase agreement governing the transaction in which the Company (then Federal Services Acquisition Corporation) acquired ATSI.

Following the indemnification demand, the former principal owners of ATSI brought an arbitration against us with the American Arbitration Association claiming that the former owners do not owe us any indemnification obligations for the Maximus lawsuit or the Maximus subcontract. At our request, the arbitration was stayed pending the outcome of the Maximus lawsuit described above.

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We had also asserted other claims against the former principal owners of ATSI based on the stock purchase agreement governing the transaction, and the former ATSI owners asserted certain counterclaims against us. A final award was issued by the arbitrator on June 26, 2009, under which the Company was to receive $3.8 million. This award is recorded as “Other receivable – escrow” on the June 30, 2009 balance sheet. The Company received these funds on July 1, 2009.

NOTE 12 ¾ EMPLOYMENT AGREEMENTS

On May 5, 2009, the Company and Dr. Edward H. Bersoff, the Company’s Chairman, President and Chief Executive Officer, amended Dr. Bersoff’s employment agreement, extending his employment term as Chief Executive Officer through December 31, 2011. The Company originally entered into an employment agreement with Dr. Bersoff on March 19, 2007, who had been serving in that capacity since January 16, 2007.

NOTE 13 ¾ LONG TERM DEBT

Long term debt consisted of the following:

	June 30, 2009			December 31, 2008
Bank Financing	$	24,759,817		$	32,555,058
Notes payable		3,393,547			4,520,833
Total debt	$	28,153,364		$	37,075,891
Less current portion		(27,343,150	)		(2,583,333	)
Long-term debt	$	810,214		$	34,492,558

At June 30, 2009, the aggregate maturities of long-term debt were as follows:

Twelve-months Ending June 30,
2010	$	27,343,150
2011		810,214
Total long-term debt	$	28,153,364

Bank Financing

The Company has a credit facility with Bank of America, N.A. (the “Facility”) which provides for borrowing up to $50 million. The Facility is a three-year, secured facility that permits continuously renewable borrowings of up to $50.0 million, with an expiration date of June 4, 2010. The Company pays a fee in the amount of ..20% to .375% on the unused portion of the Facility, based on its consolidated leverage ratio, as defined in the credit agreement documentation. Any outstanding balances under the Facility are due in full June 4, 2010.

Borrowings under the Facility bear interest at rates based on 30 day LIBOR plus applicable margins based on the leverage ratio as determined quarterly. As of June 30, 2009, the effective interest rate, excluding the effect of amortization of debt financing costs, for the outstanding borrowings under the Facility was 3.82%.

The Company entered into a forward interest rate swap agreement in November 2007 under which it exchanged floating-rate interest payments for fixed-rate interest payments. The agreement has a notional amount of $35.0 million and provides for swap payments through December 1, 2010 with such swaps being settled on a monthly basis. The fixed interest rate provided by the swap agreement is 4.47%.

As of June 30, 2009, the Company’s aggregate outstanding debt balance was $24.8 million. As discussed in Note 4, the Company accounts for the interest rate swap agreement as a cash flow hedge with the change in the fair value of the effective portion of the swap being recorded in other comprehensive income (loss) and any ineffectiveness is recorded to earnings.  It continues to be probable that the Company will be exposed to rate variance associated with future LIBOR based or fixed rate debt which has embedded LIBOR based risk and the Company maintains its hedge with a counterparty that has the financial strength to honor the hedge obligation, Bank of America.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

FORWARD-LOOKING STATEMENTS

Some of the statements in this Quarterly Report on Form 10-Q constitute forward-looking statements. These statements involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” and “would” or similar words. You should read statements that contain these words carefully because they discuss our future expectations, contain projections of our future results of operations or of our financial position, or state other forward-looking information. The factors described in our filings with the SEC, as well as any cautionary language in this Quarterly Report on Form 10-Q, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements, including but not limited to:

· risks related to the government contracting industry, including possible changes in government spending priorities;

· risks related to our business, including our dependence on contracts with U.S. Federal Government agencies and departments, continued good relations, and being successful in competitive bidding, with those customers;

· uncertainties as to whether revenues corresponding to our contract backlog will actually be received;

· risks related to the implementation of our strategic plan, including the ability to identify, finance and complete acquisitions and the integration and performance of acquired businesses; and

· other risks and uncertainties disclosed in our filings with the Securities and Exchange Commission.

Additional factors that may affect our results are discussed in our Annual Report on Form 10-K for the year ended December 31, 2008 under “Item 1A. Risk Factors.” Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update these forward-looking statements, even if our situation changes in the future.

The terms “we” and “our” as used throughout this Quarterly Report on Form 10-Q refer to ATS Corporation and Advanced Technology Systems, Inc., the wholly-owned subsidiary of ATSC, unless otherwise indicated.

Overview

ATS Corporation was organized as a “blank check” company under the laws of the State of Delaware on April 12, 2005 and was formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination, an operating business in the federal services and defense industries. ATSC acquired four companies in 2007. Their results are included in the results of operations for 2007 from the dates of acquisition. Calendar year 2008 was the first full year that ATSC was an operating company with the acquisitions fully integrated into its operations.

ATSC (www.atsc.com) is an information technology services firm serving both government and commercial organizations, specializing in software and systems development, systems integration, information technology infrastructure and outsourcing, information sharing and consulting services.

Our diverse customer base consists primarily of U.S. government agencies. For the six months ended June 30, 2009, we generated approximately 48% of our revenue from federal civilian agencies, 34% from defense and homeland security agencies, and 18% from commercial customers, including government-sponsored enterprises. Our largest clients in the six months ended June 30, 2009 were the U.S. Department of Housing and Urban Development (“HUD”), the Undersecretary of Defense, Fannie Mae, and the Pension Benefit Guarantee Corporation, representing approximately 19%, 9%, 8% and 7%, respectively, of total revenue.

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We derive substantially all of our revenues from fees for consulting services. We generate these fees from contracts with various payment arrangements, including time and materials contracts and fixed-price contracts. During the six months ended June 30, 2009, revenue from time and materials and fixed-price contracts were approximately 70% and 30% respectively, of total revenue. We typically issue monthly invoices to our clients for services rendered. We recognize revenue on time and materials contracts based on actual hours delivered at the contracted billable hourly rate plus the cost of materials incurred. We recognize revenue on fixed-price contracts using the percentage-of-completion method based on costs we incurred in relation to total estimated cost. However, if the contract is primarily for services, we recognize revenue on a straight-line basis over the term of the contract.

On occasion, we enter into contracts that include the delivery of a combination of two or more of our service offerings. Typically, such multiple-element arrangements incorporate the design, development, or modification of systems and an ongoing obligation to manage, staff, maintain, host, or otherwise run solutions and systems provided to the client. Such contracts are divided into separate units of accounting, and the total fee arrangement is allocated to each unit based on its relative fair value. In accordance with our revenue recognition policy, revenue is recognized separately for each element. If evidence of the fair value of each element does not exist, all revenue must be deferred until such evidence exists, or all elements have been delivered, or evidence of fair value exists for the undelivered elements.

The fees under certain government contracts may be increased or decreased in accordance with cost or performance incentive provisions that measure actual performance against targets or other criteria. Such incentive fee awards or penalties are included in revenue at the time the amounts can be reasonably determined. Provisions for anticipated contract losses are recognized at the time they become known.

In the six months ended June 30, 2009, we derived approximately 78% of our revenue from contracts for which we were the prime contractor and 22% of our revenue as subcontractors to other prime contractors, who contract directly with the end-client and subcontract with us.

Our most significant expense is direct cost, which consists primarily of project personnel salaries and benefits, and direct expenses incurred to complete projects. The number of consulting personnel assigned to a project will vary according to the size, complexity, duration, and demands of the project. As of June 30, 2009, we had 525 personnel who worked on our contracts.

General and administrative expenses consist primarily of costs associated with our executive management, finance and administrative groups, human resources, sales and marketing personnel, and costs associated with marketing and bidding on future projects, unassigned consulting personnel, personnel training, occupancy costs, depreciation and amortization, travel and all other corporate costs.

Goodwill Valuation

Goodwill represents the excess of purchase price over the fair value of net assets acquired because of various business acquisitions. In accordance with SFAS No. 142, “Goodwill and Other Intangible Assets,” goodwill must be recorded at the reporting unit level. Reporting units are defined as one level below an operating segment. We have identified one reporting unit and one operating segment. SFAS No. 142 prohibits the amortization of goodwill, but requires that it be tested for impairment at least annually (at any time during the year, but at the same time each year), or more frequently if events or circumstances change, such as adverse changes in the business climate, that would more likely than not reduce the reporting unit’s fair value below its carrying amount.

The Company evaluates goodwill for impairment annually in the third fiscal quarter or more frequently depending on specific events or when evidence of potential impairment exists.  The annual impairment test is based on several factors requiring judgment. Principally, a significant decrease in expected cash flows or changes in general market conditions may indicate potential impairment of recorded goodwill. Management has concluded there were no triggering events that would indicate an impairment during the quarter ended June 30, 2009. The Company will continue to monitor the recoverability of the carrying value of its goodwill and other long-lived assets. 

As of June 30, 2009 and December 31, 2008, goodwill was $55.4 million and 59.1 million, respectively. As of June 30, 2009 and December 31, 2008, our net basis in intangible assets was $7.2 million and $8.3 million, respectively. The change in the goodwill is the result of the award of $3.8 million to ATSI relating to claims against the former owners for a net working capital deficit from what was required to be delivered by the sellers and amounts related to accounting method tax escrows.

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Contract Backlog

We define backlog as the future revenue we expect to receive from our existing contracts and other current engagements. We generally include in backlog the estimated revenue represented by contract options that have been priced, though not exercised. We do not include any estimate of revenue relating to potential future delivery orders that may be awarded under our General Services Administration Multiple Award Schedule contracts, other Indefinite Delivery/Indefinite Quantity (“IDIQ”) contracts, or other contract vehicles that are also held by a large number of firms, an order under which potential future delivery orders or task orders may be issued by any of a large number of different agencies and are likely to be subject to a competitive bidding process. Our backlog as of June 30, 2009, was approximately $156.1 million, of which $49.5 million was funded.

Recent Events

The Company has evaluated its operations through August 7, 2009, which is the date that the interim financial statements for the six-month period ended June 30, 2009 are to be issued and concluded that there have been no recognizable subsequent events.

Results of Operations (unaudited)

Results of operations for the three and six-month periods ended June 30, 2009 compared with the three and six-month periods ended June 30, 2008 are presented below.

The following table sets forth certain financial data as dollars and as a percentage of revenue.

	For the Three			%			For the Three			%			For the Six			%			For the Six			%
	Months Ended						Months Ended						Months Ended						Months Ended
	June 30,						June 30,						June 30,						June 30,
	2009						2008						2009						2008
Revenue	$	30,266,809					$	33,788,772					$	57,423,323					$	68,662,297
Operating costs and expenses
Direct costs		20,451,932			67.6	%		22,964,775			68.0	%		38,647,669			67.3	%		45,233,416			65.9	%
Selling, general and administrative expenses		6,326,616			20.9	%		7,764,830			23.0	%		12,819,131			22.3	%		17,214,511			25.1	%
Depreciation and amortization		767,616			2.5	%		2,034,302			6.0	%		1,551,743			2.7	%		4,076,910			5.9	%
Total operating costs and expenses		27,546,164			91.0	%		32,763,907			97.0	%		53,018,543			92.3	%		66,524,837			96.9	%
Operating income		2,720,645			9.0	%		1,024,865			3.0	%		4,404,780			7.7	%		2,137,460			3.1	%
Other (expense) income
Interest (expense) income, net		(792,604	)		(2.6	)%		(944,729	)		(2.8	)%		(1,566,684	)		(2.7	)%		(1,749,136	)		(2.5	)%
Other (expense) income		—			0.0	%		(4,705	)		(0.0	)%		—			0.0	%		66,172			0.1	%
Income (loss) before income taxes		1,928,041			6.4	%		75,431			0.2	%		2,838,096			4.9	%		454,496			0.7	%
Income tax expense (benefit)		756,253			2.5	%		8,579			0.0	%		1,240,719			2.2	%		112,615			0.2	%
Net Income (loss)	$	1,171,788			3.9	%	$	66,852			0.2	%	$	1,597,377			2.8	%	$	341,881			0.4	%
Weighted average number of shares outstanding
—basic		22,660,767						20,410,516						22,601,811						19,706,731
—diluted		22,660,767						20,465,439						22,601,811						19,734,193
Net income (loss) per share
—basic	$	0.05					$	0.00					$	0.07					$	0.02
—diluted	$	0.05					$	0.00					$	0.07					$	0.02

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Comparison of the three months ended June 30, 2009 to the three months ended June 30, 2008.

Revenue - Revenue decreased by $3.5 million, or 10.4%, to $30.3 million for the three months ended June 30, 2009 compared to the three months ended June 30, 2008. Revenue from commercial contracts decreased by $1.2 million, or 16.8%, to $6.0 million. This decline resulted from the down-turn in the business climate that began in the fourth quarter of 2008 and continued into 2009.  Although Fannie Mae showed significant decreases from the second quarter 2008, these are expected to be temporary reductions. Revenue from civilian and defense customers decreased $2.6 million to $24.7 million, or 9.7% of this amount. The most significant reduction was with the US Coast Guard, which decreased revenue by $2.2 million as a result of a large contract being converted to a small-business set-aside.

Direct costs - - Direct costs were 67.6% and 68.0% of revenue for the three-month periods ended June 30, 2009 and 2008 respectively, a decrease of 0.4%. Direct costs are comprised of direct labor, fringe on this labor, subcontract labor costs and material and other direct costs (“ODCs”). Material and ODCs are incurred in response to specific client tasks and may vary from period to period. The single largest component of direct costs, direct labor, was $9.8 million and $11.0 million for the three-month periods ended June 30, 2009 and 2008, respectively, which corresponds to the reduction in revenue. Overall margins for the second quarter 2009 remained at 32.4%.

Selling, general and administrative (“SG&A”) expenses – The components of SG&A are marketing, bid and proposal costs, indirect labor and the associated fringe benefits, facilities costs and other discretionary expenses. As a percentage of revenue, SG&A expenses were 20.9% and 23.0% for the three-month periods ended June 30, 2009 and 2008, respectively. Reduced spending in the second quarter of 2009 is attributable to cost reduction efforts that began in the second half of 2008 and continue into this calendar year.  As a result of these efforts, SG&A expenses decreased $1.4 million to $6.3 million, or 18.5%.  Reduction in the second quarter 2009 for building rent and utilities expense associated with the relocation of the Company’s headquarters was the primary factor impacting this decrease.

Depreciation and amortization - Depreciation and amortization expense decreased $1.4 million to $0.8 million or 2.5% of revenue for the three months ended June 30, 2009 compared to 6.0% for the three-month period ended June 30, 2008. This decrease is primarily related to a reduction of amortization resulting from the intangible asset impairment valuation taken during September 2008.

Interest, net - - The net interest expense decreased to $0.8 million for the three-month period ended June 30, 2009, compared to $0.9 million the three-month period ended June 30, 2008, primarily due to significant decreases to our long-term debt balance made possible by our positive operating cash flows. However, our interest expense decreased to a lesser degree due to the higher interest rates on the LIBOR monthly floating rate plus applicable rates based on our consolidated leverage ratio and also $0.1 million charged to earnings for swap ineffectiveness.

Income taxes - The Company reported an income tax expense of $0.8 million and $8.6 thousand for the three-month periods ended June 30, 2009 and 2008, respectively. The effective tax rates were 39.2% and 11.4% for the three-month periods ended June 30, 2009 and 2008, respectively. The effective rate for the three-month period ended June 30, 2008 was affected by non-recurring variances in book-tax differences relative to pre-tax book income which decreased the effective rate and which were not present during the three-month period ended June 30, 2009.

Comparison of the six months ended June 30, 2009 to the six months ended June 30, 2008.

Revenue - Revenue decreased by $11.2 million, or 16.4%, to $57.4 million for the six months ended June 30, 2009. Revenue from commercial contracts decreased by $5.1 million to $10.5 million, or 33.7%. This decline resulted from the down-turn in the business climate that began in the fourth quarter of 2008 and continued into the second quarter of 2009.  Fannie Mae showed significant decreases in the six months of 2009, although these are expected to be temporary reductions. Revenue from civilian and defense customers decreased $6.1 million to $46.9 million, or 11.5%. Of this amount, the most significant reduction was with the US Coast Guard, which decreased revenue by $4.1 million as a result of a large contract being converted to a small-business set-aside.

Direct costs - - Direct costs were 67.3% and 65.9% of revenue for the six-month periods ended June 30, 2009 and 2008 respectively, an increase of 1.8%. Direct costs are comprised of direct labor, fringe on this labor, subcontract labor costs and material and other direct costs (“ODCs”). Material and ODCs are incurred in response to specific client tasks and may vary from period to period. The single largest component of direct costs, direct labor, was $19.2 million and $22.7 million for the six-month periods ended June 30, 2009 and 2008, respectively. Overall margins for the first two quarters of 2009 decreased 1.4% to 32.7%. This is primarily caused by a loss provision during the six-month period ended June 30, 2009 on a fixed price contract and reduced margins on our commercial contracts.

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“SG&A” expenses – The components of SG&A are marketing, bid and proposal costs, indirect labor and the associated fringe benefits, facilities costs and other discretionary expenses. As a percentage of revenue, SG&A expenses were 22.3% and 25.1% for the six-month periods ended June 30, 2009 and 2008, respectively. Reduced spending in the first half of 2009 is attributable to cost reduction efforts that began in the second half of 2008 and continue into this calendar year.  As a result of these efforts, SG&A expenses decreased $4.4 million to $12.8 million, or 25.5%.  The following major cost categories show the following reductions in the first half of 2009 as compared with first half of 2008: salaries and related fringe benefits of $2.7 million and building rent and utilities’ expenses of $1.3 million due to the relocation of the Company’s headquarters.

Depreciation and amortization - Depreciation and amortization expense decreased $2.5 million to $1.6 million or 2.7% of revenue for the six months ended June 30, 2009 compared to 5.9% for the six-month period ended June 30, 2008. This decrease is primarily related to a reduction of amortization resulting from the intangible asset impairment valuation taken during September 2008.

Interest, net - - The net interest expense decreased to $1.6 million for the six-month period ended June 30, 2009 compared to $1.7 million for the six-month period ended June 30, 2008, primarily due to significant decreases to our long-term debt balance made possible by our positive operating cash flows. Average bank debt for the six months ended June 30, 2009 was $27.8 million, a decrease of 34% or $14.4 million from an average balance of $42.2 million for the six months ended June 30, 2008. However, our interest expense decreased to a lesser degree due to the higher interest rates on the LIBOR monthly floating rate plus applicable rate based on our consolidated leverage ratio and also $0.2 million charged to earnings for swap ineffectiveness.

Income taxes - The Company reported an income tax expense of $1.2 million and $0.1 million for the six-month periods ended June 30, 2009 and 2008, respectively. The effective tax rates were 43.7% and 24.8% for the six-month periods ended June 30, 2009 and 2008, respectively. The effective rate for the six-month period ended June 30, 2008 was affected by non-recurring variances in book-tax differences relative to pre-tax book income which decreased the effective rate and which were not present during the six-month period ended June 30, 2009.

Financial Condition, Liquidity and Capital Resources

Financial Condition. Total assets decreased to $100.0 million as of June 30, 2009 from $106.4 million as of December 31, 2008. This decrease was primarily driven by a $1.0 million decrease in our accounts receivable related to increased collection efforts and the resulting decrease in days sales outstanding, as well as a decrease in overall revenues for the quarter. Additionally, goodwill and net intangible assets decreased by $4.9 million.

Our total liabilities decreased $8.8 million to $51.7 million as of June 30, 2009 from $60.5 million as of December 31, 2008. The decrease in total liabilities was primarily attributable to the decrease in notes payable and the revolving credit facility of $8.9 million due to favorable cash collections.

Liquidity and Capital Resources.  Our primary liquidity needs are to fund the debt, finance the costs of operations, acquire capital assets and to make selective strategic acquisitions. We expect to meet our short-term requirements through funds generated from operations and from our $50 million line of credit facility. As of June 30, 2009, we had an outstanding balance of $24.8 million on our credit facility. As noted above, the Company has elected to curtail this outstanding debt given our positive cash flows from operations. The credit facility is considered adequate to meet the operations liquidity and capital requirements. As of June 30, 2009, the Company could borrow an additional $2.2 million while remaining within our loan covenant agreements.

Net cash generated by operating activities was $8.6 million for the six months ended June 30, 2009, compared to cash used in operating activities of $3.5 million for the same period in 2008. Cash generated by operating activities was primarily driven by ongoing operations, specifically collecting receivables, which were utilized to pay down the balance on our line of credit facility as discussed above, as well as income taxes payable and accrued expenses. Depreciation and amortization were also lower due to the effect of the asset impairment recorded in September of 2008.

Net cash used in investing activities remained less than $0.1 million for the six months ended June 30, 2009, just as it did for the same period in 2008.

Net cash used in financing activities was $8.8 million for the six months ended June 30, 2009, compared to cash provided by financing activities of $1.7 million in the same period in 2008. The cash was primarily used to pay down the credit facility and the notes payable from acquisitions in 2007.

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We expect to retain future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future.

ATSC has a credit facility which is a three-year, secured facility that permits continuously renewable borrowings of up to $50.0 million, with an expiration date of June 4, 2010 (the “Agreement”). The interest rate is based on LIBOR plus the applicable rate ranging from 200 to 350 basis points depending on the Company’s consolidated leverage ratio. The Company pays a fee in the amount of ..20% to .375% on the unused portion of the facility, based on its consolidated leverage ratio, as defined in the Agreement. Any outstanding balances under the facility are due on the expiration date. The Agreement places certain restrictions on the Company’s ability to make acquisitions. It also requires the Company to reduce the principal amount on its loan outstanding by between 50% to 100% of the net cash proceeds from the sale or issuance of equity interests.  At June 30, 2009, the Company was in compliance with its covenant agreements. The Company is exploring its renewal alternatives with regard to the credit facility.

Off-Balance Sheet Arrangements

For the six months ended June 30, 2009, we did not have any off-balance sheet arrangements.  

Contractual Obligations

The following table summarizes our contractual obligations as of June 30, 2009 that require us to make future cash payments.

	Less than One Year		One to Three Years		Three to Five Years		More than Five Years		Total
	(in thousands)
Long-Term Debt Obligations	$	27,343	$	810	$	—	$	—	$	28,153
Capital Leases, including interest		45		—		—		—		45
Operating Leases		2,240		3,660		3,578		7,528		17,006
Total	$	29,628	$	4,470	$	3,578	$	7,528	$	45,204

Recent Accounting Pronouncements

See Note 2 of the June 30, 2009 Interim Financial Statements.

Standards Issued But Not Yet Effective

Other new pronouncements issued but not yet effective until after June 30, 2009 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to certain financial market risks, the most predominant being fluctuations in interest rates for a portion of our borrowings under our credit facility. As of June 30, 2009, we had an outstanding balance of $24.8 million under our variable interest rate line of credit. In November 2007, we hedged the interest rate risk on such debt by executing an interest rate swap as discussed in Note 4 of the notes to consolidated financial statements.

Item 4. Controls and Procedures.

Our management performed an assessment, under the supervision and with the participation of our Chief Executive Officer (principal executive officer) and our Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of June 30, 2009 and have concluded that these controls and procedures are effective to ensure that information required to be disclosed by the Company is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s (the “SEC”) rules and forms. The forms of certification are required in accordance with Section 302 of the Sarbanes - Oxley Act of 2002.

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Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

During the three months ended June 30, 2009, no change occurred in the Company’s internal control over financial reporting that materially affected, or is likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 11 of the June 30, 2009 Interim Financial Statements included herein.

Item 1A. Risk Factors.

See Part I, Item 1A, “Risk Factors,” of the Company’s 2008 Form 10-K for a detailed discussion of the risk factors affecting the Company.

Item 2. Recent Sales of Unregistered Securities.

There have been no changes to the “Recent Sales of Unregistered Securities” disclosed in Part II, Item 2 of our Form 10-Q for the quarter ended March 31, 2009, other than a total of 73,474 shares of unregistered stock valued at approximately $114,000 issued to four directors of the Company on May 7, 2009 and June 1, 2009.  The issuances of these shares are exempt under Section 4(2) of the Securities Act of 1933, as amended.

Purchases of Equity Securities by Issuer

The Company has not repurchased any of its securities in the quarter ended June 30, 2009.

Item 3.  Defaults upon Senior Securities.

Not applicable.

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Item 4.  Submission of Matters to a Vote of Security Holders.

The annual meeting of shareholders was held on May 5, 2009.  The following matters were presented to the shareholders and the results of the votes were as follows:

To elect Edward H. Bersoff as a Class One Director for a three-year term.
Votes for	20,365,138
Votes withheld	4,375

To elect Ginger Lew1 as a Class One Director for a three-year term.
Votes for	20,369,513
Votes withheld	—

To elect Jack Tomarchio as a Class One Director for a three-year term.
Votes for	20,369,513
Votes withheld	—

To approve an amendment to the ATS Corporation 2006 Omnibus Incentive Compensation Plan (“the Omnibus Plan”) to increase the number of shares authorized for issuance under the Omnibus Plan from 1,500,000 to 2,000,000.
Votes for	13,580,852
Votes against	4,059
Abstentions	—
Not Voted	6,784,602

To ratify the appointment of Grant Thornton, LLP as the Company’s independent registered public accounting firm for the fiscal year 2009.
Votes for	20,369,513
Votes against	—
Abstentions	—

Note 1: Effective May 31, 2009, Ms. Lew resigned from the Company’s Board of Directors due to her assuming a position in the Obama Administration. She has been replaced by Mr. Kevin Flannery.

Item 5.  Other Information.

None.

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Item 6.  Exhibits.

Exhibit Number	Description
10.1	Amended and Restated Employment Agreement by and Between Edward H. Bersoff and ATS Corporation
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended
32.1	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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SIGNATURES

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

	ATS Corporation
	By:	/s/ Edward H. Bersoff
		Chairman of the Board, President and
		Chief Executive Officer
	By:	/s/ Pamela A. Little
		Executive Vice President and Chief Financial Officer
Date: August 7, 2009

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EX-10.1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”), originally executed as of the 19th day of March, 2007, and amended on the 4th day of August, 2008 is hereby amended this 5th day of May, 2009 by and between ATS Corporation, a Delaware corporation (the “Corporation”), and Dr. Edward H. Bersoff, a resident of the State of Maryland (the “Executive”).

WHEREAS, the Executive commenced service as the Corporation’s Chairman, President and Chief Executive Officer on January 16, 2007, the date of the closing of the Corporation’s acquisition of Advanced Technology Systems, Inc.; and

WHEREAS, the Corporation and the Executive initially formalized the terms of the employment relationship in this Agreement on March 19, 2007; and

WHEREAS, the Corporation and the Executive amended the agreement on August 4, 2008 to extend the term and make certain other revisions to the terms of such employment relationship; and

WHEREAS, the parties desire to further extend the term of the Executive’s service as Chief Executive Officer through December 31, 2011; and

WHEREAS, the Executive and the Corporation wish to formalize such extension to the Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual agreements made herein, and intending to be legally bound hereby, the Corporation and the Executive hereby agree to amend and restate the Agreement in the form hereinafter set forth:

1.           Employment; Duties.

(a)           Employment and Employment Period.  The Corporation shall employ the Executive to serve as the Corporation’s Chairman, Chief Executive Officer, and President (the “Chairman/CEO”) for a period to be agreed upon by the Executive and the Compensation Committee of the Board of Directors (the “Compensation Committee”), such period currently expected to extend until on or about December 31, 2011 (the “Employment Period”). Further, the phrase “termination of employment” as used hereinafter, shall be deemed to be “separation from service” under Section 409A of the Internal Revenue Code (the “Code”).  The Employment Period may be extended by mutual agreement of the parties.

(b)           Offices, Duties and Responsibilities.  The Executive shall perform such customary, appropriate and reasonable executive duties as are usually performed by a corporation’s Chairman, Chief Executive Officer and President .  The Executive’s offices shall be located at the Corporation’s headquarters building in McLean, Virginia.

(c)           Devotion to Interests of the Corporation.  Except as expressly authorized by the Board and so long as the Executive serves as Chairman/CEO, the Executive will not, without the prior written consent of the Corporation, directly or indirectly engage in any other business activities or pursuits, except activities in connection with (i) any professional, charitable or civic activities (other than as an officer), (ii) personal investments, (iii) serving as an executor, trustee or in another similar fiduciary capacity for a non-commercial entity, and (iv) continued service on a number of corporate boards consistent with the Executive’s current board service; provided, however, that any such activities do not materially interfere with the performance of his responsibilities and obligations pursuant to this Agreement.  The Executive shall use his best efforts to promote the interests and welfare of the Corporation.

2.           Compensation and Fringe Benefits.

(a)           Base Compensation.  So long as the Executive serves as Chairman/CEO, the Corporation shall pay the Executive a base salary at the rate of $300,000 per year, as adjusted from time to time with the approval of the Compensation Committee (“CEO Base Compensation”).  The CEO Base Compensation shall be payable in installments in accordance with the Corporation’s normal payroll practices for compensating executive personnel and shall be subject to payroll deductions and tax withholdings in accordance with the Corporation’s usual practices and as required by law.

(b)           Incentive Compensation.  The Executive shall be entitled to performance-based incentive compensation within the meaning of Section 409A of the Code (“Incentive Compensation”) during the Employment Period in an amount up to 65% of the CEO Base Compensation.  The Incentive Compensation payable for each performance period  (which shall not be less than twelve (12) months) shall be contingent on and based on corporate and individual performance criteria agreed to between the Executive and the Compensation Committee from time to time.  The target amount payable as Incentive Compensation, as agreed upon between the Executive and the Compensation Committee from time to time, is hereinafter referred to as the “Incentive Compensation Target.”

(c)           Fringe Benefits.  The Executive shall also be entitled to such fringe benefits as are generally made available by the Corporation to executive personnel, including, but not limited to, health insurance. The Executive also will be reimbursed for reasonable expenses incurred in connection with travel and entertainment related to the Corporation’s business and affairs, to be paid by the Corporation in a manner consistent with past practice and as amended by any subsequent changes of corporate policy.

(d)           Restricted Stock.  In connection with the initial execution of this Agreement in March 2007, the Executive was awarded one hundred fifty thousand (150,000) shares of restricted stock under the terms of the Company’s 2006 Omnibus Incentive Compensation Plan, thirty thousand (30,000) of such shares to vest on each December 31 during the Employment Period commencing with December 31, 2007 so long as the Executive continues to serve as Chairman/CEO, and with acceleration following a change in control as defined in the applicable award agreement.

3.           Trade Secrets.  The Executive shall not use or disclose any of the Corporation’s trade secrets or other confidential information.  The term “trade secrets or other confidential information” includes, by way of example, matters of a technical nature, such as scientific, trade and engineering secrets, “know-how,” formulae, secret processes or machines, inventions, computer programs (including documentation of such programs) and research projects, and matters of a business nature, such as proprietary information about costs, profits, markets, sales, lists of customers, plans for future development, and other information of a similar nature that is designated as confidential or generally maintained as confidential or proprietary by the Corporation.  After termination of the Executive’s employment, the Executive shall not use or disclose trade secrets or other confidential information unless such information becomes a part of the public domain other than through a breach of the Corporation's policies or is disclosed to the Executive by a third party who is entitled to receive and disclose such information.

4.           Return of Documents and Property.  Upon the effective date of notice of the Executive’s or the Corporation’s election to terminate the Executive’s employment, or at any time upon the request of the Corporation, the Executive (or his heirs or personal representatives) shall deliver to the Corporation (a) all documents and materials containing trade secrets or other confidential information relating to the Corporation's business and affairs, and (b) all documents, materials and other property belonging to the Corporation, which in either case are in the possession or under the control of the Executive (or his heirs or personal representatives).

5.           Discoveries and Works.  All discoveries and works made or conceived by the Executive during his employment by the Corporation, jointly or with others, that relate to the Corporation's activities shall be owned by the Corporation.  The term “discoveries and works” includes, by way of example, inventions, computer programs (including documentation of such programs), technical improvements, processes, drawings and works of authorship.  The Executive shall (a) promptly notify, make full disclosure to, and execute and deliver any documents requested by, the Corporation to evidence or better assure title to such discoveries and works in the Corporation, (b) assist the Corporation in obtaining or maintaining for itself at its own expense United States and foreign patents, copyrights, trade secret protection or other protection of any and all such discoveries and works, and (c) promptly execute, whether during his employment by the Corporation or thereafter, all applications or other endorsements necessary or appropriate to maintain patents and other rights for the Corporation and to protect its title thereto.  Any discoveries and works which, within six months after the termination of the Executive’s employment by the Corporation, are made, disclosed, reduced to a tangible or written form or description, or are reduced to practice by the Executive and which pertain to the business carried on or products or services being sold or developed by the Corporation at the time of such termination shall, as between the Executive and the Corporation, be presumed to have been made during the Executive’s employment by the Corporation.  Set forth on Schedule 5 attached hereto is a list of inventions, patented or unpatented, if any, including a brief description thereof, which are owned by the Executive, which the Executive conceived or made prior to his employment by the Corporation and which are excluded from this Agreement.

6.           Termination.

(a)           Upon thirty (30) days’ prior written notice the Corporation may terminate the Executive’s employment, with or without “Cause,” as defined in Section 6(f) below.  Upon thirty (30) days’ prior written notice, the Executive may terminate his employment, with or without “Good Reason,” as defined in Section 6(e) below.  Upon any termination of the Executive’s employment (the “Date of Termination”) for any reason, the Corporation shall:

(i) pay to the Executive any unpaid CEO Base Compensation through the Date of Termination;

(ii) pay to the Executive any unpaid Incentive Compensation earned with respect to completed performance periods but not paid through the date of termination under the terms of applicable incentive compensation arrangements; and

(iii) provide to or for the benefit of the Executive the benefits, if any, otherwise expressly provided under this Section 6, Section 7 or Section 8, as applicable.

Any payments under this Section 6, Section 7 or Section 8 that are to be made in connection with the termination of the Executive’s employment will be paid in cash (with deduction of such amount as may be required to be withheld under applicable law and regulations) within ten (10) business days of the Executive’s termination of employment; provided, however, that in the event the Executive’s employment is terminated pursuant to Section 6(b) below, then, at the Corporation’s election, the “No Cause/Good Reason Termination Fee” (as therein defined) shall be payable in equal monthly installments over the Applicable Severance Period (as provided in Section 6(b)) with the first payment due within five business days after the date of the Executive’s termination of employment (collectively, the “Termination Fee Installment Payments”).  All other compensation and employment benefit arrangements provided for in this Agreement shall cease upon such termination of employment except to the extent required by law or otherwise expressly provided by such arrangements.

(b)           In the event the Corporation terminates the Executive’s employment without Cause or the Executive terminates his employment for Good Reason, then, in addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii) and subject to the provisions of Section 18, the Corporation shall pay to the Executive (i) a severance benefit equal to the Executive’s then applicable CEO Base Compensation for a period of twelve (12) months following the termination of employment if the termination takes place during the Employment  Period (the “Applicable Severance Period”), (ii) the cost of maintaining the level of health insurance then maintained by the Executive (including family) under Federal COBRA laws for a period of eighteen (18) months following the effective date of the termination, plus (iii) an amount equal to fifty percent (50%) of the Incentive Compensation Target, if any, applicable for the first calendar year ending during the Applicable Severance Period (collectively, the “No Cause/Good Reason Termination Fee”).  In addition, all unvested restricted stock, stock options and any other equity-based compensation arrangements shall vest, and all stock options and other equity-based compensation arrangements that must be exercised shall be exercisable in accordance with the applicable award agreement. On or before March 15 of the calendar year following the calendar year in which the Executive’s employment with the Corporation is terminated, the Corporation shall calculate the amount of Incentive Compensation the Executive would have received had the Executive remained employed by the Corporation for the entire applicable calendar year.  To the extent that the amount of the Incentive Compensation the Executive would have received had the Executive remained employed by the Corporation for the entire applicable calendar year is in excess of 50% of the Incentive Compensation Target for that year (the “Overage Amount”), the Corporation shall then promptly pay to the Executive the Overage Amount.  No Overage Amount shall be payable in respect of years following the year in which the Executive’s employment with the Corporation is terminated.

(c)           In the event the Corporation terminates the Executive’s employment for Cause, then, in addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-based compensation arrangements shall be terminated and all vested stock options shall be exercisable in accordance with the applicable award agreement.

(d)           In the event the Executive terminates his employment without Good Reason, then, in addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-based compensation arrangements shall be terminated and all vested stock options shall be exercisable in accordance with the applicable award agreement.

(e)           For purposes of this Agreement, the Executive shall be considered to have “Good Reason” to terminate his employment if, without his express written consent (except as contemplated by this Agreement or in connection with the termination of his employment voluntarily by Executive, by the Corporation for Cause, or under the circumstances described in Section 8 hereof), (i) the responsibilities of the Executive are substantially reduced or altered, (ii) the Executive’s CEO Base Compensation is reduced without his consent, or (iii) the Executive’s offices are relocated anywhere other than within a fifty (50) mile radius of his office in McLean, Virginia; provided, however, that if the Executive terminates this Agreement for one or more of the reasons stated in clauses (i) or (ii), the Corporation shall have a period of thirty (30) business days after actual receipt written notice of the Executive’s assertion of Good Reason to cure the basis for such assertion, and, in the event of cure (or the commencement of steps reasonably designed to result in prompt cure), the assertion of Good Reason shall be null and void.

(f)           For purposes of this Agreement, the Corporation shall have “Cause” to terminate the Executive’s employment hereunder upon (i) the continued, willful and deliberate failure of the Executive to perform his duties in a manner substantially consistent with the manner prescribed by the Board (other than any such failure resulting from his incapacity due to physical or mental illness), (ii) the engaging by the Executive in misconduct materially and demonstrably injurious to the Corporation, (iii) the conviction of the Executive of commission of a felony, whether or not such felony was committed in connection with the Corporation’s business, or (iv) the circumstances described in Section 8 hereof, in which case the provisions of Section 8 shall govern the rights and obligations of the parties; provided, however, that if the Corporation terminates this Agreement for one or more of the reasons stated in clauses (i) or (ii), the Executive shall have a period of thirty (30) business days after actual receipt written notice of the Corporation’s assertion of Cause to cure the basis for such assertion, and, in the event of cure (or the commencement of steps reasonably designed to result in prompt cure), the assertion of Cause shall be null and void.

(g)           Notwithstanding any other provision hereof, the Executive shall not be entitled to receive any payment under Section 6 or 7 of this Agreement that is treated as “deferred compensation” within the meaning of Section 409A of the Code and the regulations thereunder prior to the time such payment is permitted to be made under Section 409A(a)(2)(B) of the Code.

7.           Change in Control.

(a)           All unvested restricted stock, stock options and any other equity-based compensation arrangements theretofore granted to the Executive shall vest in full on the date of a “Change in Control” (as defined in Section 7(c) below).

(b)           In the event that the Corporation terminates the Executive’s employment with the Corporation without Cause within twelve months after a “Change in Control” (as defined in Section 7(c) below), or if the Executive terminates his employment with the Corporation for Good Reason (in accordance with Sections 6(e) and (f) above) within twelve months after a Change in Control, then, in addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), the Corporation shall pay to the Executive  a severance benefit equal to (i) the Executive’s then applicable annual CEO Base Compensation for the Applicable Severance Period, (ii) the cost of maintaining the level of health insurance then maintained by the Executive (including family) under Federal COBRA laws for  a period of eighteen (18) months following the effective date of the termination, plus (iii) an amount equal to one hundred percent (100%) of the Incentive Compensation Target, if any, applicable during the first calendar year ending during the Applicable Severance Period.  The severance benefit shall be payable in Termination Fee Installment Payments; that is, in equal monthly installments over the Applicable Severance Period (as defined in Section 6(b)) with the first payment due within five business days after the date of the Executive’s termination of employment.  In addition, all stock options and other equity-based compensation arrangements that must be exercised shall be exercisable in accordance with the terms of the applicable award agreement.

(c)           For purposes of this Agreement, “Change in Control” shall mean an occurrence of any of the following events:

(i) an acquisition (other than directly from the Corporation) of any voting securities of the Corporation (the “Voting Securities”) by any “person or group” (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”)) other than an employee benefit plan of the Corporation, immediately after which such person or group has “Beneficial Ownership” (within the meaning of Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) of the combined voting power of the Corporation's then outstanding Voting Securities; or

(ii) the consummation of (A) a merger, consolidation or reorganization involving the Corporation, unless the company resulting from such merger, consolidation or reorganization (the “Surviving Corporation”) shall adopt or assume this Agreement and the stockholders of the Corporation immediately before such merger, consolidation or reorganization own, directly or indirectly immediately following such merger, consolidation or reorganization, at least fifty percent (50%) of the combined voting power of the Surviving Corporation in substantially the same proportion as their ownership immediately before such merger, consolidation or reorganization, (B) a complete liquidation or dissolution of the Corporation, or (C) a sale or transfer of all or substantially all of the assets of the Corporation.

(d)           In the event that, as a result of payments to or for the benefit of the Executive under this Agreement or otherwise in connection with a Change in Control, any state, local or federal taxing authority imposes any taxes on the Executive that would not be imposed but for the occurrence of a Change in Control, including any excise tax under Section 4999 of the Internal Revenue Code and any successor or comparable provision, then, in addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii) and under Sections 7(a) and 7(b), the Corporation (including any successor to the Corporation) shall pay to the Executive at the time any such tax becomes payable an amount equal to the amount of any such tax imposed on Executive.

8.           Disability; Death.

(a)           If, prior to the expiration or termination of the Employment Period, the Executive shall be unable to perform his duties by reason of disability or impairment of health for at least six consecutive calendar months, the Corporation shall have the right to terminate the Executive’s employment on account of disability by giving written notice to the Executive to that effect, but only if at the time such notice is given such disability or impairment is still continuing.  In the event of a dispute as to whether the Executive is disabled within the meaning of this Section 8(a), either party may from time to time request a medical examination of the Executive by a doctor selected by the Corporation, and the written medical opinion of such doctor shall be conclusive and binding upon the parties as to whether the Executive has become disabled and the date when such disability arose.  The cost of any such medical examination shall be borne by the Corporation.  If the Corporation terminates the Executive’s employment on account of disability, then, in addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), all unvested stock options and any other equity-based compensation arrangements shall be terminated, and all vested stock options shall be exercisable in accordance with the terms of the applicable award agreement.

(b)           If, prior to the expiration or termination of the Employment Period, the Executive shall die, then, in addition to the benefits provided for under Sections 6(a)(i) and 6(a)(ii), the Employment Period shall terminate without further notice.  In such an event, all unvested stock options and any other equity-based compensation arrangements shall be terminated, and all vested stock options shall be exercisable in accordance with the terms of the applicable award agreement.

(c)           Nothing contained in this Section 8 shall impair or otherwise affect any rights and interests of the Executive under any insurance arrangements, death benefit plan or other compensation plan or arrangement of the Corporation which may be adopted by the Board.

9.           Non-Competition/Non-Solicitation.

(a)           Non-Competition.       The Executive agrees that for a period commencing on the Effective Date and ending at the end of the Applicable Severance Period (the “Non-Competition Period”), the Executive will not, except as otherwise provided herein, engage or participate, directly or indirectly, as principal, agent, officer, employee, employer or consultant or in any other comparable capacity, in the conduct or management of, any business which is competitive with any business conducted by the Corporation.  For the purpose of this Agreement, a business shall be considered to be competitive with the business of the Corporation only if such business is engaged in providing services similar to (i) any service currently provided by the Corporation or provided by the Corporation during the Employment Period; (ii) any service which in the ordinary course of business during the Non-Competition Period evolves from or results from enhancements to the services provided by the Corporation as of the Effective Date or during the Non-Competition; or (iii) any future service of the Corporation as to which the Executive materially and substantially participated in the design or enhancement.  Nothing in this Section 9(a) shall be interpreted to prohibit the Executive from continuing to serve as a non-employee member of the board of directors of services companies that may compete with the Corporation or, during the Chairman Only Period, as the non-executive chairman of the board of such companies.

(b)           Non-Solicitation of Employees.  During the Non-Competition Period, the Executive will not (for the Executive’s own benefit or for the benefit of any person or entity other than the Corporation) solicit, or assist any person or entity other than the Corporation to solicit, any officer, director, executive or employee of the Corporation or its affiliates to leave his or her employment.

(c)           Reasonableness.  The Executive acknowledges that (i) the markets served by the Corporation are national and are not dependent on the geographic location of executive personnel or the businesses by which they are employed, (ii) the length of the Non-Competition Period is related to the length of the Employment Period and the Corporation’s agreement to provide severance benefits as set forth in Sections 6 or 7, above, that, under certain circumstances, will provide additional compensation to the Executive upon the termination of the Executive’s employment; and (iii) the above covenants are reasonable on their face, and the parties expressly agree that such restrictions have been designed to be reasonable and no greater than is required for the protection of the Corporation.

(d)           Investments.  Nothing in this Agreement shall be deemed to prohibit the Executive from owning equity or debt investments in any corporation, partnership or other entity which is competitive with the Corporation, provided that such investments (i) are passive investments and constitute five percent (5%) or less of the outstanding equity securities of such an entity the equity securities of which are traded on a national securities exchange or other public market, or (ii) are approved by the Compensation Committee.

10.           Waiver.  The waiver of the breach of any term or provision of this Agreement shall not operate as or be construed to be a waiver of any other or subsequent breach of this Agreement.  Failure by the Executive or the Corporation to insist upon strict compliance with any provision of this Agreement or to assert any right the Executive or the Corporation may have hereunder, including, without limitation, the right of the Executive to terminate employment for Good Reason, shall not be deemed to be a waiver of such provision or right or of any other provision or rights under this Agreement.

11.           Enforcement.  The Executive agrees that the Corporation’s remedies at law for any breach or threat of breach by him of Sections 3, 4, 5 or 9 hereof will be inadequate, and that the Corporation shall be entitled to an injunction or injunctions to prevent breaches of Sections 3, 4, 5 or 9 hereof and to enforce specifically the terms and provisions thereof, in addition to any other remedy to which the Corporation may be entitled at law or equity.  If the Corporation sues to enforce Sections 3, 4, 5 or 9 hereof and fails to prevail in such proceeding, the court shall award to the Executive his reasonable fees for his attorneys, the reasonable expenses of his witnesses, and any other reasonable expenses incurred in connection with the proceeding to the extent that the court determines that the Executive has prevailed in such proceeding.

12.           Arbitration.  Any dispute or claim other than those referred to in Section 11, arising out of or relating to this Agreement or otherwise relating to the employment relationship between the Executive and the Corporation, shall be submitted to arbitration, in Fairfax County, Virginia, before a single arbitrator, in accordance with the rules of the American Arbitration Association as the exclusive remedy for such claim or dispute.  The Executive and the Corporation agree that such arbitration will be confidential and no details, descriptions, settlements or other facts concerning such arbitration shall be disclosed or released to any third party without the specific written consent of the other party, unless required by law or court order or in connection with enforcement of any decision in such arbitration.  Any damages awarded in such arbitration shall be limited to the contract measure of damages, and shall not include punitive damages.  In any proceeding, whether commenced by the Executive or by the Corporation, the arbitrator shall award to the Executive his reasonable fees for his attorneys, the reasonable expenses of his witnesses, and any other reasonable expenses incurred in connection with the arbitration to the extent that the arbitrator determines that the Executive has prevailed in such proceeding.

13.           Full Settlement.  The Corporation’s obligation to make any payments provided for in this Agreement and otherwise to perform its obligations hereunder shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Corporation may have against the Executive or others.  In no event shall the Executive be obligated to seek other employment or take other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment.

14.           Severability.  Should any provision of this Agreement be determined to be unenforceable or prohibited by any applicable law, such provision shall be ineffective to the extent, and only to the extent, of such unenforceability or prohibition without invalidating the balance of such provision or any other provision of this Agreement, and any such unenforceability or prohibition in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

15.           Counterparts.  This Agreement may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute one and the same instrument.

16.           Assignment.  The Executive’s rights and obligations under this Agreement shall not be assignable by the Executive.  The Corporation's rights and obligations under this Agreement shall not be assignable by the Corporation except as incident to the transfer, by merger or otherwise, of all or substantially all of the business of the Corporation in a transaction in which the successor entity remains obligated under, or by operation of law or otherwise assumes, the Corporation’s obligations under this Agreement.  In the event of any such assignment by the Corporation, all rights of the Corporation hereunder shall inure to the benefit of the assignee.

17.           Notices.  Any notice required or permitted under this Agreement shall be deemed to have been effectively made or given if in writing and personally delivered or sent by registered or certified U.S. mail, UPS or recognized overnight courier, properly addressed in a sealed envelope, with delivery charges prepaid.  Unless otherwise changed by notice, notice shall be properly addressed to the Executive if addressed to:

Dr. Edward H. Bersoff

7710 Woodmont Ave., Unit 1210

Bethesda, MD  20814

and properly addressed to the Corporation if addressed to:

ATS Corporation

7925 Jones Branch Drive

McLean, Virginia 22102

Attention:  Chairman of Compensation Committee

18.           Compliance with Section 409A.  Because the parties hereto intend that any payment under this Agreement shall be paid in compliance with Section 409A of the Code (“Section 409A”) and all regulations, guidance and other interpretative authority thereunder, such that there will be no adverse tax consequences, interest or penalties as a result of such payments, the parties hereby agree to modify this Agreement with respect to the timing (but not the amount) of any payment to the extent necessary to comply with Section 409A and avoid application of any taxes, penalties or interest thereunder.  Notwithstanding any provision of this Agreement to the contrary, if the Executive is a “specified employee” as defined in Section 409A, the Executive shall not be entitled to any payments upon Date of Termination until the earlier of (a) the date which is six (6) months after Date of Termination for any reason other than death, or (b) the date of the Executive’s death.  Any amounts otherwise payable to the Executive following Date of Termination that are not so paid by reason of this Section 18 shall be paid as soon as practicable after the date that is six (6) months after Date of Termination (or, if earlier, the date of the Executive’s death).  The provisions of this Section 18 shall only apply if, and to the extent, required to comply with Section 409A in a manner such that the Executive is not subject to additional taxes and/or penalties under Section 409A.

19.           Miscellaneous.  Except for the separate agreement related to the award of restricted stock contemplated by Section 2(a), this Agreement constitutes the entire agreement, and terminates and supersedes all prior agreements, of the parties hereto relating to the subject matter hereof, and there are no written or oral terms or representations made by either party other than those contained herein, except that nothing contained in this Agreement shall invalidate or supersede the terms of any previously or subsequently granted stock options or other equity-based compensation arrangements (including without limitation the provisions thereof relating to post termination exercisability) to the extent that such stock options or arrangements provide more favorable terms to the Executive.  The validity, interpretation, performance and enforcement of this Agreement shall be governed by the laws of the Commonwealth of Virginia, without giving effect to conflicts of laws principles.  The headings contained herein are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Amended and Restated Employment Agreement effective as of the day and year first above written.

EXECUTIVE:
	/s/ Dr. Edward H. Bersoff
	Dr. Edward H. Bersoff
CORPORATION:
	ATS Corporation
	a Delaware Corporation

By:	/s/ Joseph A. Saponaro
	Joseph A. Saponaro
	Chairman, Compensation Committee

SCHEDULE 5

Inventions Owned by Executive

None

EX-31.1

Exhibit 31.1

CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER

I, Edward H. Bersoff, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ATS Corporation (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or person performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated this 7th day of August, 2009.
	By:	/s/ Edward H. Bersoff
		Edward H. Bersoff
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER

I, Pamela A. Little, certify that:

1. I have reviewed this quarterly report on Form 10-Q of ATS Corporation (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or person performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Dated this 7th day of August, 2009.
	By:	/s/ Pamela A. Little
		Pamela A. Little
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification of Principal Executive Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (the “Report”) of ATS Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Edward H. Bersoff, Chairman and Chief Executive Officer of the Registrant, hereby certify that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 7, 2009	By:	/s/ Edward H. Bersoff
		Edward H. Bersoff
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)

EX-32.2

Exhibit 32.2

Certification of Principal Financial Officer

Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

In connection with the Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 (the “Report”) of ATS Corporation (the “Registrant”), as filed with the Securities and Exchange Commission on the date hereof, I, Pamela A. Little, Chief Financial Officer of the Registrant, hereby certify that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: August 7, 2009	By:	/s/ Pamela A. Little
		Pamela A. Little
		Executive Vice President and Chief Financial Officer
		(Principal Financial Officer)