MAXIMUS Reports Fourth Quarter and Full Year Results; Completes Strategic Review Process and Launches $150 Million Accelerated Share Repurchase Program



    RESTON, VA., November 14 /CNW/ - MAXIMUS (NYSE:  MMS), a leading provider
of government services, today reported results for its fourth quarter and
fiscal year ended September 30, 2007. Concurrently, MAXIMUS announced that its
Board of Directors has completed its process to explore the Company's
strategic alternatives and has authorized the repurchase of up to $150 million
of the Company's outstanding shares under an Accelerated Share Repurchase
program (ASR), which represents approximately 15% of the Company's outstanding
stock based on the current stock price.

    Highlights include:

    --  Fourth quarter and full year revenue totaling $201.9 million and
$738.6 million, respectively,

    --  Fourth quarter diluted earnings per share of $0.63, which includes
approximately $2.5 million, or $0.06 per diluted share, in legal expense,

    --  Fourth quarter operating margin of 10.8%, above management's target
margin of 10%,

    --  Pro forma earnings per share of $2.01 for fiscal 2007, as presented
in the supplemental pro forma information provided in the financial tables,

    --  Cash, cash equivalents and marketable securities at September 30,
2007 of $196.7 million,

    --  Days Sales Outstanding of 80 days at September 30, 2007,

    --  Backlog of $1.3 billion at September 30, 2007,

    --  New sales awards totaling $569 million at September 30, 2007 and a
total pipeline of $1.7 billion at November 8, 2007,

    --  Completion of the strategic review process: MAXIMUS launches a $150
million ASR program and plans to secure a $50 million to $75 million line of
credit to provide additional financial flexibility, in addition to refining
its focus on core health and human services operations and seeking possible
alternatives for certain non-core assets.

    Revenue for the fourth quarter increased 17.5% to $201.9 million compared
to $171.8 million reported for the same period last year. Net income increased
to $14.2 million, or $0.63 per diluted share, which includes legal and
settlement expense of approximately $2.5 million, or $0.06 per diluted share,
primarily related to ongoing arbitration. Prior-year-period net income was
$2.0 million, or $0.09 per diluted share, which included a pre-tax loss of
$12.7 million, or $0.36 per diluted share, related to the now-terminated Texas
subcontract with Accenture. The Company is now serving as prime contractor and
directly supporting the Texas Health and Human Services Commission.

    For the full year, fiscal 2007 revenue increased 5.4% to $738.6 million
compared to $700.9 million last year. Excluding revenue from the divested
businesses for fiscal 2006, year-over-year organic growth was 6.8%. Net loss
for the full year was $8.3 million, or $0.38 per share, which included
approximately $44.6 million, or $1.61 per share, in legal and settlement
expense, $25.2 million net loss, or $0.67 per share, from the now-terminated
Accenture subcontract and a loss of $4.2 million or $0.11 per share from the
Ontario project. This compares to fiscal 2006 net income of $2.5 million, or
$0.11 per diluted share. Fiscal 2006 results included a pre-tax loss of $49.4
million, or $1.38 per diluted share, from the now-terminated subcontract with
Accenture and other legal settlement expense of $9.4 million or $0.27 per
diluted share.

    "I'm pleased with our ongoing, strong financial performance in the fourth
quarter and believe we have completed fiscal 2007 in a substantially improved
position from the prior year," commented Richard Montoni, Chief Executive
Officer of MAXIMUS. "In the past 12 months, our focus on quality and risk
management has resulted in the elimination of several legacy issues, more
favorable contract terms on new awards, improved operating margins and
accelerating top-line growth. MAXIMUS is refining its focus around its core
competencies and moving in a direction that builds on the progress made in
fiscal 2007. We will emphasize those businesses which offer us more
predictable, recurring streams of revenue and sustainable levels of
profitability."

    Consulting Segment

    Consulting Segment revenue was $22.5 million in the fiscal 2007 fourth
quarter compared to $26.1 million in the same period last year. For the full
fiscal year, Consulting Segment revenue was $93.7 million, or 13% of total
revenue, versus $102.8 million last year.

    Fourth quarter operating income for the Consulting Segment was $0.6
million compared to $5.2 million reported for the same period last year. For
the full year, operating income totaled $6.4 million versus $14.5 million last
year. The reduction in revenue and operating income for the fourth quarter and
full year relates primarily to the timing and billing of work as well as the
Company's transition away from contingency-based federal healthcare
engagements.

    Systems Segment

    Systems Segment revenue increased 24.8% to $37.4 million in the fourth
quarter versus $30.0 million in the prior-year period. Systems Segment revenue
represented 19% of total Company revenue in fiscal 2007 and grew to $141.3
million versus $127.2 million last year. Revenue growth for both periods was
driven primarily by new ERP contracts.

    The Systems Segment reported operating income of $0.5 million in the
fourth quarter compared to a loss of $2.0 million for the same period last
year which included the deferral of revenue and income related to two software
sales to future periods. For the full year, the Systems segment had an
operating loss of $4.7 million, compared to a loss of $0.9 million for fiscal
2006. Strong results in the Asset Solutions and ERP divisions offset softness
in the Justice and Education divisions.

    Operations Segment

    Operations Segment revenue for the fourth quarter increased 22.7% to
$141.9 million compared to $115.7 million in the prior-year period. Operations
Segment revenue accounted for 68% of total Company revenue in fiscal 2007 and
totaled $503.6 million compared to $470.9 million in the prior year which
included $29.8 million in revenue from voter hardware sales and divested
businesses which did not recur in fiscal 2007.

    Operations Segment operating income for the fourth quarter was $23.5
million, compared to a loss of $2.9 million reported for the fourth quarter of
last year and for the full fiscal year totaled $39.1 million compared to a
loss of $9.5 million in fiscal 2006. The improved profitability in the fourth
quarter and the full year compared to the prior year periods was driven by the
turnaround on the Texas project as well as strong organic growth.

    Backlog, Sales and Pipeline

    Backlog at September 30, 2007 totaled $1.3 billion compared to $1.5
billion reported for the prior year period. Year-to-date signed contract wins
at September 30, 2007, totaled $569 million, compared to $717 million reported
last year. New contracts pending at September 30, 2007, (awarded but unsigned)
totaled $310 million compared to $103 million reported last year. Sales
opportunities (pipeline) at November 8, 2007, totaled $1.7 billion (consisting
of $418 million in proposals pending, $177 million in proposals in
preparation, and $1.06 billion in proposals tracking) compared to $1.1 billion
the prior year.

    Balance Sheet and Cash Flows

    At September 30, 2007, cash, cash equivalents, and marketable securities
totaled $196.7 million. Days Sales Outstanding (DSO) increased modestly on a
sequential basis to 80 days at September 30, 2007. MAXIMUS paid a quarterly
cash dividend of $0.10 per share on August 31, 2007. Net cash used from
operations in the fourth quarter was $8.2 million. For fiscal 2007 the Company
generated net cash from operating activities of $51.2 million and free cash
flow, which the Company defines as cash from operations less purchased
property and equipment and capitalized software costs, totaled $33.4 million.

    Completion of Strategic Review Process and Accelerated Share Repurchase
(ASR) Program

    The Board of Directors has completed the strategic review process
announced on July 23, 2007. After a thorough review process, the Board of
Directors has concluded that launching a $150 million ASR program,
concentrating the Company's strategic focus on core health and human services
offerings and considering alternatives for certain non-core assets, provides
the best current opportunity to maximize shareholder value, reflecting the
Company's strong financial position and future growth prospects. Under the ASR
program, MAXIMUS will purchase up to $150 million of shares from an affiliate
of UBS Investment Bank at the closing market price on November 15, 2007,
subject to a future price adjustment based on the volume weighted average
trading price of the shares. MAXIMUS will finance the program with cash on
hand. In addition, MAXIMUS has approximately $40.0 million available under its
previously board-authorized share repurchase program and intends to resume
this program after the completion of the ASR.

    Peter Pond, MAXIMUS' chairman stated, "The Company, working with its
financial advisors UBS, undertook an extensive process reviewing all possible
alternatives, including a potential sale of MAXIMUS. While there was a
substantial amount of interest among various parties with all options under
consideration, the process was impacted largely by eroded capital market
conditions and we ultimately concluded that remaining an independent public
Company was the best option for all our constituencies."

    Mr. Montoni commented, "The share repurchase program announced today
represents an efficient mechanism to return value to shareholders. The ASR
increases earnings per share and improves the efficiency of our capital
structure while maintaining our ability to properly fund growth. Lastly, we
also remain committed to increasing shareholder value on an ongoing basis
through the opportunistic repurchase of shares pursuant to our current board
authorized stock repurchase program, upon the completion of the ASR."

    Outlook

    The Company expects fiscal 2008 revenue to be in the range of
approximately $850 million to $880 million. The Company estimates that
approximately 83% of its fiscal 2008 forecasted revenue is presently in the
form of backlog. Diluted earnings per share for fiscal 2008 are expected to be
in the range of $2.40 to $2.65. Earnings in the first fiscal quarter are
traditionally lower compared to the rest of the year, and as a result the
Company expects diluted earnings per share of $0.45 to $0.50. This guidance
does not include the positive benefit from the expected $0.15 to $0.20
accretion from the ASR plan in fiscal 2008.

    Website Presentation, Conference Call and Webcast Information

    MAXIMUS will host a conference call on Thursday, November 15, 2007, at
8:30 a.m. (ET). The Company has also posted a presentation on its website,
under the Investor Relations page, for analysts to follow along with during
the conference call.

    The call is open to the public and can be accessed under the Investor
Relations page of the Company's website at www.maximus.com or by calling:

    888.881.3328 (Domestic)/206.902.3258 (International)

    A replay will be available through November 22, 2007. Callers can access
the replay by registering for the digital playback at the below website. Upon
registration, participants will receive an email with the call back
information.

    http://reg.linkconferencecall.com/DigitalPlayback/
DigitalPlaybackRegistration.aspx?recid=5826 (Due to its length, this URL may
need to be copied/pasted into your Internet browser's address field. Remove
the extra space if one exists.)

    MAXIMUS is one of America's leading government services companies devoted
to providing program management, consulting and information technology
services. The Company has more than 5,200 employees located in more than 220
offices in the United States, Canada and Australia. In 1999, 2001, 2002, 2003,
and 2005 MAXIMUS was selected by Forbes Magazine as one of the Best 200 Small
Companies in America for that year. Additionally, MAXIMUS is included in the
Russell 2000 Index and the S&P SmallCap 600 Index.

    Statements that are not historical facts, including statements about the
Company's confidence and strategies and the Company's expectations about
revenues, results of operations, profitability, future contracts, market
opportunities, market demand or acceptance of the Company's products are
forward-looking statements that involve risks and uncertainties. These
uncertainties could cause the Company's actual results to differ materially
from those indicated by such forward-looking statements and include reliance
on government clients; risks associated with government contracting; risks
involved in managing government projects; legislative changes and political
developments; opposition from government unions; challenges resulting from
growth; adverse publicity; and legal, economic, and other risks detailed in
Exhibit 99.1 to the Company's most recent Annual Report on Form 10-K filed
with the Securities and Exchange Commission (file number 001-12997).

    Non-GAAP Financial Information

    This press release includes certain non-GAAP financial information as
defined by Securities and Exchange Commission Regulation G. Pursuant to the
requirements of this regulation, reconciliations of this non-GAAP financial
information to MAXIMUS financial statements as prepared under generally
accepted accounting principles (GAAP) are included in this press release.
MAXIMUS discloses net income and earnings per share excluding legal settlement
expense and losses from the Texas project in the first half of fiscal 2007,
and provides certain additional information, such as non-recurring reserves,
regarding earnings per share for fiscal 2007. MAXIMUS management believes
providing investors with this information gives additional insights into
MAXIMUS results of operations. While MAXIMUS management believes that these
non-GAAP financial measures are useful in evaluating MAXIMUS operations, this
information should be considered as supplemental in nature and not as a
substitute for the related financial information prepared in accordance with
GAAP.

    
                                MAXIMUS, Inc.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands)
                                 (Unaudited)

                                                          September 30,
                                                        ------------------
                                                          2006      2007
                                                        --------  --------
                          ASSETS
    Current assets:
      Cash and cash equivalents                         $ 39,545  $ 70,472
      Marketable securities                              117,315   126,210
      Restricted cash                                      1,512       325
      Accounts receivable -- billed, net                 153,399   132,962
      Accounts receivable -- unbilled                     47,728    42,200
      Income taxes receivable                              9,003        --
      Deferred income taxes                                6,844    17,409
      Prepaid expenses and other current assets            8,334     9,159
                                                        --------  --------
       Total current assets                              383,680   398,737
    Property and equipment, net                           33,429    35,901
    Software development costs, net                       33,925    29,540
    Deferred contract costs, net                          11,165     8,116
    Goodwill                                              86,688    86,086
    Intangible assets, net                                 5,720     3,603
    Other assets                                           3,894     2,481
                                                        --------  --------
       Total assets                                     $558,501   564,464
                                                        --------  --------
           LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities:
      Accounts payable                                  $ 54,484  $ 54,425
      Accrued compensation and benefits                   24,426    29,449
      Deferred revenue                                    46,669    38,545
      Income taxes payable                                    --     5,487
      Current portion of capital lease obligations         1,690     1,627
      Other accrued liabilities                            1,600     2,059
                                                        --------  --------
       Total current liabilities                         128,869   131,592
    Capital lease obligations, less current portion        2,044       417
    Long term deferred revenue                             7,745    10,143
    Deferred income taxes                                 14,944    12,912
                                                        --------  --------
       Total liabilities                                 153,602   155,064
    Commitments and contingencies
    Shareholders' equity:
      Common stock, no par value; 60,000,000 shares
       authorized; 21,544,964 and 22,194,489 shares
       issued and outstanding at September 30, 2006 and
       2007, at stated amount, respectively              156,349   175,208
      Accumulated other comprehensive income (loss)         (916)    1,730
      Retained earnings                                  249,466   232,462
                                                        --------  --------
       Total shareholders' equity                        404,899   409,400
                                                        --------  --------
       Total liabilities and shareholders' equity       $558,501  $564,464
                                                        --------  --------
    

    
                                MAXIMUS, Inc.
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (In thousands, except per share data)
                                 (Unaudited)

                                                Year ended September 30,
                                               --------------------------
                                                 2005     2006     2007
                                               -------- -------- --------

    Revenue                                    $647,538 $700,894 $738,646
    Cost of revenue                             467,588  547,539  561,563
    Write-off of deferred contract costs             --   17,109       --
                                               -------- -------- --------
       Gross profit                             179,950  136,246  177,083
    Selling, general and administrative
     expenses                                   116,676  129,678  135,581
    Legal and settlement expense                  7,000    9,394   44,638
                                               -------- -------- --------
    Income (loss) from operations                56,274   (2,826)  (3,136)
    Interest and other income, net                3,345    6,859    5,804
    Gain on sale of business                         --       --      451
                                               -------- -------- --------
       Income before income taxes                59,619    4,033    3,119
    Provision for income taxes                   23,550    1,573   11,374
                                               -------- -------- --------
       Net income (loss)                       $ 36,069 $  2,460 $ (8,255)
                                               -------- -------- --------

    Earnings (loss) per share:
      Basic                                    $   1.69 $   0.11 $  (0.38)
                                               -------- -------- --------
      Diluted                                  $   1.67 $   0.11 $  (0.38)
                                               -------- -------- --------

    Cash dividends per share                   $   0.30 $   0.40 $   0.40
                                               -------- -------- --------

    Weighted average shares outstanding:
      Basic                                      21,331   21,465   21,870
      Diluted                                    21,653   21,821   21,870
    

    
                                MAXIMUS, Inc.
               CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (Dollars in thousands)
                                 (Unaudited)

                                                Year ended September 30,
                                               --------------------------
                                                 2005     2006     2007
                                               -------- -------- --------

    Cash flows from operating activities:
      Net income (loss)                        $ 36,069 $  2,460 $ (8,255)
      Adjustments to reconcile net income to
       net cash provided by operating
       activities:
      Depreciation                                7,874    9,195   10,648
      Amortization                                7,271    8,450   10,322
      Deferred income taxes                       4,806   (9,402) (12,598)
      Non-cash equity based compensation          1,372    6,577    3,829
      Gain on sale of Corrections division           --       --     (451)
      Write-off of deferred contract costs           --   17,109       --
      Tax benefit due to option exercises and
       restricted stock units vesting             2,955       --       --
      Changes in assets and liabilities, net
       of effects from acquisitions:
       Accounts receivable - billed             (12,643) (28,922)  20,438
       Accounts receivable - unbilled            (1,494)  (3,954)   4,483
       Prepaid expenses and other current
        assets                                    1,961   (1,064)    (813)
       Deferred contract costs                   (4,954)  (7,845)   3,049
       Other assets                                (828)   2,489    4,144
       Accounts payable                          10,675   16,332      434
       Accrued compensation and benefits          5,604   (2,401)   5,023
       Deferred revenue                          11,703   21,516   (5,321)
       Income taxes                               4,695  (13,699)  14,490
       Other liabilities                            761   (1,145)   1,768
                                               -------- -------- --------
         Net cash provided by operating
          activities                             75,827   15,696   51,190
                                               -------- -------- --------
    Cash flows from investing activities:
      Acquisition of businesses, net of cash
       acquired                                  (1,946)      --       --
      Proceeds from sale of Corrections
       division                                      --       --    1,871
      Purchases of property and equipment       (13,337) (11,467) (13,418)
      Capitalized software development costs    (12,655) (14,654)  (4,412)
      (Increase) decrease in marketable
       securities                               (71,649)   1,825   (8,895)
      Other                                         442      144       --
                                               -------- -------- --------
         Net cash used in investing activities  (99,145) (24,152) (24,854)
                                               -------- -------- --------
    Cash flows from financing activities:
      Employee stock transactions                14,645    7,697   12,953
      Repurchases of common stock               (16,056) (10,139)      --
      Payments on capital lease obligations      (1,649)  (1,374)  (1,690)
      Tax benefit due to option exercises and
       restricted stock units vesting                --    1,331    2,078
      Cash dividends paid                        (6,403)  (8,587)  (8,750)
                                               -------- -------- --------
         Net cash provided by (used in)
          financing activities                   (9,463) (11,072)   4,591
                                               -------- -------- --------
         Net increase (decrease) in cash and
          cash equivalents                      (32,781) (19,528)  30,927
    Cash and cash equivalents, beginning of
     period                                      91,854   59,073   39,545
                                               -------- -------- --------
    Cash and cash equivalents, end of period   $ 59,073 $ 39,545 $ 70,472
                                               -------- -------- --------
    

    
                                MAXIMUS, Inc.
                             Segment Information
                     (In thousands except per share data)
                                 (Unaudited)

                                     Three Months            Year
                                  Ended September 30, Ended September 30,
                                    2006      2007      2006      2007
                                  --------- --------- --------- ---------
    Revenue:
     Consulting                   $  26,125 $  22,542 $ 102,842 $  93,707
     Systems                         29,984    37,425   127,189   141,335
     Operations                     115,690   141,907   470,863   503,604
                                  --------- --------- --------- ---------
       Total                      $ 171,799 $ 201,874 $ 700,894 $ 738,646
                                  --------- --------- --------- ---------

    Gross profit:
     Consulting                   $  12,615 $   7,199 $  44,127 $  37,296
     Systems                          8,258    10,920    38,769    37,678
     Operations                      14,753    37,380    53,350   102,109
                                  --------- --------- --------- ---------
       Total                      $  35,626 $  55,499 $ 136,246 $ 177,083
                                  --------- --------- --------- ---------

    Selling, general, and
     administrative expense:
     Consulting                   $   7,446 $   6,645 $  29,628 $  30,875
     Systems                         10,266    10,454    39,622    42,333
     Operations                      17,697    13,832    62,803    62,977
     Corporate/other                   (456)      196    (2,375)     (604)
                                  --------- --------- --------- ---------
       Total                      $  34,953 $  31,127 $ 129,678 $ 135,581
                                  --------- --------- --------- ---------

    Income (loss) from
     operations:
     Consulting                   $   5,169 $     554 $  14,499 $   6,421
     Systems                         (2,008)      466      (853)   (4,655)
     Operations                      (2,944)   23,548    (9,453)   39,132
     Consolidating adjustments          456      (196)    2,375       604
     Legal and settlement expense       909    (2,524)   (9,394)  (44,638)
                                  --------- --------- --------- ---------
       Total                      $   1,582 $  21,848 $  (2,826)$  (3,136)
                                  --------- --------- --------- ---------

    Net income (loss)             $   1,993 $  14,169 $   2,460 $  (8,255)
                                  --------- --------- --------- ---------

    Earnings (loss) per share
       Basic                      $    0.09 $    0.64 $    0.11 $   (0.38)
                                  --------- --------- --------- ---------
       Diluted                    $    0.09 $    0.63 $    0.11 $   (0.38)
                                  --------- --------- --------- ---------
    

    
                                MAXIMUS, Inc.
                      Supplemental Pro Forma Information
                 (Dollars in millions, except per share data)
                                 (unaudited)

                                   Three Months Ended      Year Ended
                                   ------------------- -------------------
                                   September September September September
                                      30,       30,       30,       30,
                                     2006      2007      2006      2007
                                   --------- --------- --------- ---------

    Revenue, as reported (GAAP)    $  171.8  $  201.9   $  700.9 $  738.6


    Income (loss) before taxes, as
     reported (GAAP)               $    3.3  $   24.4   $    4.0 $    3.1
      Add back Texas subcontract
       (1)                             12.7      (0.2)      49.4     25.2
      Add back Ontario project
       loss                               -         -          -      4.2
      Add back legal and
       settlement expense              (0.9)      2.5        9.4     44.6
                                   --------- --------- --------- ---------

    Pro forma income before taxes,
     (non-GAAP)                    $   15.1  $   26.7   $   62.8 $   77.1
                                   --------- --------- --------- ---------


    Diluted earnings (loss) per
     share, as reported (GAAP)     $   0.09  $   0.63   $   0.11 $  (0.38)
      Add back Texas subcontract
       contract (1)                    0.36     (0.01)      1.38     0.67
      Add back Ontario project
       loss                               -         -          -     0.11
      Add back legal and
       settlement expense             (0.03)     0.06       0.27     1.61
                                   --------- --------- --------- ---------

    Pro forma diluted earnings per
     share (non-GAAP)              $   0.42  $   0.68   $   1.76 $   2.01
                                   --------- --------- --------- ---------
    

    
    (1) Only reflects results from the now-terminated Accenture
     subcontract.
    




For further information:

For further information: MAXIMUS Lisa Miles Investor Relations
703-251-8637 or Rachael Rowland Public/Media Relations 703-251-8688

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