MAXIMUS Reports Fiscal 2011 First Quarter Results

- Company Delivers Record Revenue and Reiterates Fiscal 2011 Guidance -

RESTON, Va.--(BUSINESS WIRE)-- MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, today reported financial results for its fiscal first quarter ended December 31, 2010.

Key highlights include:

    --  Record revenue for the quarter was $214.1 million and grew 5.3% compared
        to the same period last year. This was in-line with management
        expectations and consistent with seasonal revenue trends.
    --  Diluted earnings per share from continuing operations increased 13.8% to
        $0.99 for the first quarter compared to adjusted diluted EPS of $0.87
        for the same period in the prior year.
    --  The Company generated strong cash flows in the first quarter with cash
        provided by operating activities from continuing operations of $30.4
        million and free cash flow of $25.7 million.
    --  Cash and cash equivalents totaled $177.0 million at December 31, 2010.
    --  Year-to-date signed awards were $753 million at January 28, 2011.
    --  In January, MAXIMUS increased its quarterly cash dividend by 25% to
        $0.15 per share.

Revenue for the fiscal 2011 first quarter increased 5.3% (3.6% on a constant currency basis) to $214.1 million versus $203.3 million reported for the same period last year. Revenue growth was driven by the international employment services businesses in Australia and the United Kingdom in the Human Services Segment.

Income from continuing operations increased to $17.6 million for the first quarter, compared to $14.6 million last year, driven by growth, profit expansion and a lower tax rate in geographies outside the United States. For the first quarter, diluted earnings per share from continuing operations increased 13.8% to $0.99 compared to adjusted diluted EPS of $0.87 (normalized to exclude $0.02 of legal expense and $0.04 related to 2010 year-end tax adjustments) for the same period last year.

"Our first quarter results represent a strong start to the year, and we are on track to realize our growth objectives for fiscal 2011," commented Richard A. Montoni, Chief Executive Officer of MAXIMUS. "During the first quarter, we renewed two large contracts in California and Texas and were named as a preferred supplier for the bidding framework on a promising employment services opportunity as the United Kingdom reforms its welfare system. Additionally, we successfully launched operations on a ground-breaking eligibility and enrollment modernization effort in Colorado, which is expected to serve as a model for health insurance exchanges. This is a growing area for the Company as more states proactively evaluate modernization initiatives to simplify and streamline the enrollment process for their public health insurance programs."

Mr. Montoni continued, "We are also seeing increased activity in Requests for Information (RFIs) and Request for Proposals (RFPs) for other programs as states work to reduce costs, improve the quality of service delivery, and increase accountability. For example, many states are exploring the transition from traditional Medicaid fee-for-service to new Medicaid managed care models. In addition, other states, such as Texas, are actively moving certain Medicaid populations into mandatory managed care. Initiatives like these present us with new growth opportunities today."

Health Services Segment

Health Services Segment revenue for the first quarter of fiscal 2011 remained relatively constant at $130.0 million compared to the same period last year. Operating income for the first quarter increased 7.5% to $18.8 million compared to $17.5 million last year. As a result, Health Segment operating margin expanded 110 basis points to 14.5% compared to the prior year. Income and margin expansion were driven by the timing of transaction-based revenue during the quarter. The Company expects quarterly fluctuations in the Segment's operating margin as a result of volumes, open enrollments, contract start up and program timing.

Human Services Segment

Human Services Segment revenue for the fiscal 2011 first quarter increased 15.7% (11.5% on a constant currency basis) to $84.1 million compared to the prior-year period. Revenue growth was driven by the Company's international employment services business in Australia and the United Kingdom. Operating income for the first quarter increased 15.2% to $8.5 million compared to $7.4 million in the same period last year. Segment operating margin was 10.1% and consistent with the prior year. The Segment's operating margin is seasonally lower in the fiscal first quarter as a result of normal business trends in the Company's tax credit business.

Sales and Pipeline

At January 28th, fiscal year-to-date signed contract wins totaled $753 million compared to $183 million reported last year, and new contracts pending (awarded but unsigned) totaled $177 million compared to $347 million last year. Sales opportunities (pipeline) at January 28, 2011 totaled $1.6 billion (consisting of $96 million in proposals pending, $460 million in proposals in preparation and $1.1 billion in proposals tracking) compared to $1.6 billion the prior year.

Balance Sheet and Cash Flows

Cash and cash equivalents totaled $177.0 million at December 31, 2010. For the fiscal 2011 first quarter, cash provided by operating activities from continuing operations totaled $30.4 million with free cash flow of $25.7 million. The Company defines free cash flow as cash provided by operating activities from continuing operations less property, equipment and capitalized software. Cash flows in the quarter were driven by solid net income and strong collections.

Days Sales Outstanding (DSO) from continuing operations were 57 days. On November 30, 2010, MAXIMUS paid a quarterly cash dividend of $0.12 per share and in January 2011, the Company announced a 25% increase for its next quarterly cash dividend to $0.15 per share, payable on February 28, 2011 to shareholders of record on February 15, 2011.

During the first quarter of fiscal 2011, MAXIMUS used $8.4 million to purchase 136,153 shares of common stock and at December 31, 2010, the Company had $118.6 million available for repurchases under the current program.

Outlook

The Company is reiterating its fiscal 2011 revenue and earnings guidance. MAXIMUS continues to expect revenue from continuing operations in the range of $890 million to $920 million and diluted earnings per share from continuing operations in the range of $3.95 to $4.15.

Mr. Montoni concluded, "With governments actively evaluating new models to transform their public health and human services programs, MAXIMUS is engaging with new and existing government partners to offer relevant and timely solutions. We expect our 2011 results to be driven by increased activity in our Health Services Segment with continued solid performance from our Human Services Segment. We see significant opportunity in the days ahead to build upon our brand and presence in our current markets, both domestically and internationally, while exploring entry into new markets where favorable dynamics exist."

Website Presentation, Conference Call and Webcast Information

MAXIMUS will host a conference call this morning, February 3, 2011, at 9:00 a.m. (ET). 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:

877.407.8289 (Domestic)/201.689.8341 (International)

For those unable to listen to the live call, a replay will be available through February 11, 2011. Callers can access the replay by calling:

877.660.6853 (Domestic)/201.612.7415 (International)
Replay account number: 316
Replay conference ID number: 366059

About MAXIMUS

MAXIMUS is a leading provider of government services worldwide and is devoted to providing health and human services program management and consulting services to its clients. The Company has more than 6,500 employees located in more than 220 offices in the United States, Canada, Australia, and the United Kingdom. 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 Quarterly Report filed with the Securities and Exchange Commission, found on www.maximus.com.


MAXIMUS, Inc.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

                                                     December 31,  September 30,

                                                     2010          2010

                                                     (unaudited)

ASSETS

Current assets:

Cash and cash equivalents                            $ 177,004     $ 155,321

Restricted cash                                        4,966         4,182

Accounts receivable -- billed, net of reserves of      114,586       136,260
$2,088 and $1,845

Accounts receivable -- unbilled                        18,797        17,245

Income taxes receivable                                8,559         4,149

Deferred income taxes                                  14,848        13,290

Prepaid expenses and other current assets              24,682        25,702

Total current assets                                   363,442       356,149

Property and equipment, net                            48,505        48,873

Capitalized software, net                              26,346        24,715

Deferred contract costs, net                           7,320         6,708

Goodwill                                               72,189        71,251

Intangible assets, net                                 7,389         7,778

Deferred income taxes                                  425           1,844

Deferred compensation plan assets                      8,878         8,317

Other assets, net                                      2,250         2,106

Total assets                                         $ 536,744     $ 527,741

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable                                     $ 53,638      $ 49,200

Accrued compensation and benefits                      29,626        40,807

Deferred revenue                                       53,286        58,070

Acquisition-related contingent consideration           1,000         923

Income taxes payable                                   8,260         7,120

Other accrued liabilities                              7,038         7,934

Liabilities of discontinued operations                 --            634

Total current liabilities                              152,848       164,688

Deferred revenue, less current portion                 3,761         4,083

Long-term debt                                         1,452         1,411

Acquisition-related contingent consideration, less     2,300         2,138
current portion

Income taxes payable, less current portion             1,823         1,793

Deferred income tax liability                          5,924         4,946

Deferred compensation plan liabilities                 11,459        9,893

Total liabilities                                      179,567       188,952

Shareholders' equity:

Common stock, no par value; 60,000,000 shares
authorized; 27,612,647 and 27,487,725 shares issued
and 17,164,447 and 17,174,141 shares outstanding at    360,198       352,696
December 31, 2010 and September 30, 2010, at stated
amount, respectively

Treasury stock, at cost;10,448,200 and 10,313,584
shares at December 31, 2010 and September 30, 2010,    (367,733 )    (359,366 )
respectively

Accumulated other comprehensive income                 18,459        14,530

Retained earnings                                      346,253       330,929

Total shareholders' equity                             357,177       338,789

Total liabilities and shareholders' equity           $ 536,744     $ 527,741




MAXIMUS, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

                                                       Three Months

                                                       Ended December 31,

                                                       2010         2009

Revenue                                                $ 214,114    $ 203,320

Cost of revenue                                          158,155      151,145

Gross profit                                             55,959       52,175

Selling, general and administrative expenses             28,667       27,429

Legal and settlement expense                             --           686

Operating income from continuing operations              27,292       24,060

Interest and other income, net                           491          99

Income from continuing operations before income taxes    27,783       24,159

Provision for income taxes                               10,196       9,559

Income from continuing operations                        17,587       14,600

Discontinued operations, net of income taxes:

Loss from discontinued operations                        --           (1,972  )

Loss on disposal                                         (105    )    --

Loss from discontinued operations                        (105    )    (1,972  )

Net income                                             $ 17,482     $ 12,628

Basic earnings (loss) per share:

Income from continuing operations                      $ 1.02       $ 0.83

Loss from discontinued operations                        --           (0.11   )

Basic earnings per share                               $ 1.02       $ 0.72

Diluted earnings (loss) per share:

Income from continuing operations                      $ 0.99       $ 0.81

Loss from discontinued operations                        --           (0.11   )

Diluted earnings per share                             $ 0.99       $ 0.70

Dividends paid per share                               $ 0.12       $ 0.12

Weighted average shares outstanding:

Basic                                                    17,180       17,595

Diluted                                                  17,710       18,039




MAXIMUS, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

                                                      Three Months

                                                      Ended December 31,

                                                      2010         2009

Cash flows from operating activities:

Net income                                            $ 17,482     $ 12,628

Adjustments to reconcile net income to net cash
provided by operating activities:

Loss from discontinued operations                       105          1,972

Depreciation and amortization                           5,232        4,540

Deferred income taxes                                   990          (8,492  )

Deferred interest income on note receivable             --           61

Non-cash equity based compensation                      2,057        1,865

Change in assets and liabilities:

Accounts receivable -- billed                           22,145       9,349

Accounts receivable -- unbilled                         (1,554  )    (2,327  )

Prepaid expenses and other current assets               1,041        1,042

Deferred contract costs                                 (580    )    479

Other assets                                            (1,284  )    (34     )

Accounts payable                                        3,948        587

Accrued compensation and benefits                       (11,553 )    (2,035  )

Deferred revenue                                        (5,270  )    13,134

Income taxes                                            (3,470  )    14,867

Other liabilities                                       1,092        1,251

Cash provided by operating activities -- continuing     30,381       48,887
operations

Cash provided by (used in) operating activities --      (739    )    6,134
discontinued operations

Cash provided by operating activities                   29,642       55,021

Cash flows from investing activities:

Proceeds from note receivable                           --           217

Purchases of property and equipment                     (2,407  )    (3,938  )

Capitalized software costs                              (2,298  )    (2,641  )

Cash used in investing activities -- continuing         (4,705  )    (6,362  )
operations

Cash used in investing activities -- discontinued       --           --
operations

Cash used in investing activities                       (4,705  )    (6,362  )

Cash flows from financing activities:

Employee stock transactions                             4,329        1,004

Repurchases of common stock                             (8,370  )    (8,661  )

Tax benefit due to option exercises and restricted      1,031        135
stock units vesting

Cash dividends paid                                     (2,067  )    (2,118  )

Cash used in financing activities -- continuing         (5,077  )    (9,640  )
operations

Cash used in financing activities -- discontinued       --           --
operations

Cash used in financing activities                       (5,077  )    (9,640  )

Effect of exchange rate changes on cash and cash        1,823        106
equivalents

Net increase/(decrease) in cash and cash equivalents    21,683       39,125

Cash and cash equivalents, beginning of period          155,321      87,815

Cash and cash equivalents, end of period              $ 177,004    $ 126,940




MAXIMUS, Inc.

BUSINESS SEGMENTS

(Dollars in thousands)

(Unaudited)

The following table provides certain financial information for each of the
Company's business segments (in thousands):

                                      Three Months Ended December 31,

                                      2010         % (1)   2009         % (1)

Revenue:

Health Services                       $ 130,011    100  %  $ 130,640    100  %

Human Services                          84,103     100  %  72,680       100  %

Total                                   214,114    100  %  203,320      100  %

Gross profit:

Health Services                         34,277     26.4 %  32,910       25.2 %

Human Services                          21,682     25.8 %  19,265       26.5 %

Total                                   55,959     26.1 %  52,175       25.7 %

Selling, general, and administrative
expense:

Health Services                         15,454     11.9 %  15,402       11.8 %

Human Services                          13,179     15.7 %  11,886       16.4 %

Corporate/other                         34         NM      141          NM

Total                                   28,667     13.4 %  27,429       13.5 %

Operating income from continuing
operations:

Health Services                         18,823     14.5 %  17,508       13.4 %

Human Services                          8,503      10.1 %  7,379        10.2 %

Consolidating adjustments               (34     )  NM      (141      )  NM

Subtotal: Segment operating income      27,292     12.7 %  24,746       12.2 %

Legal and settlement expense            --         NM      (686      )  NM

Total                                 $ 27,292     12.7 %  $ 24,060     11.8 %




(1)  % of respective segment revenue. Changes not considered meaningful are
     marked NM.




MAXIMUS, Inc.

Supplemental Pro Forma Diluted EPS from Continuing Operations ("Adjusted
Diluted EPS")

FY 2010 and FY 2011

(Unaudited)

                                                           Year        Quarter
                 Quarter Ended
                                                           Ended       Ended

                 Dec.    Mar. 31,    Jun. 30,  Sept. 30,   Sept. 30,   Dec. 31,
                 31,
                         2010        2010      2010        2010        2010
                 2009

Diluted EPS
from continuing  $ 0.81  $ 1.00      $ 0.90    $ 1.16      $ 3.86      $ 0.99
operations-GAAP
basis

Pro forma
adjustments:

Legal and
settlement         0.02    (0.21  )    -         -           (0.19  )    -
expense
(recovery), net

Severance          -       -           -         -           -           -

Adjustment for     0.04    (0.02  )    0.01      (0.08  )    (0.05  )    -
tax accounts

Subtotal pro
forma            $ 0.06    ($0.23 )    0.01      ($0.08 )    ($0.24 )    -
adjustments

Adjusted
Diluted EPS      $ 0.87  $ 0.77      $ 0.91    $ 1.08      $ 3.62      $ 0.99
from continuing
operations




    Source: MAXIMUS