MAXIMUS Reports Record Results for Fiscal 2010 Fourth Quarter and Full Year

-Company Introduces Growth Outlook for Fiscal 2011-

RESTON, Va.--(BUSINESS WIRE)-- MAXIMUS (NYSE: MMS), a leading provider of government services worldwide, today reported record financial results for its fourth quarter and fiscal year ended September 30, 2010.

Key highlights include:

    --  Revenue grew 9.1% to $212.5 million for the fourth quarter and 15.5% to
        $831.7 million for the full fiscal year compared to the same periods
        last year.
    --  Adjusted diluted earnings per share from continuing operations increased
        33.3% to $1.08 for the fourth quarter of fiscal 2010 and increased 26.1%
        to $3.62 for the full fiscal year, compared to the same periods last
        year.

    --  The Company generated record cash in fiscal 2010 with cash provided by
        operating activities from continuing operations of $141.0 million and
        free cash flow from continuing operations of $118.4 million. The Company
        had cash and cash equivalents of $155.3 million at September 30, 2010.
    --  In September, MAXIMUS expanded its share repurchase program by $100
        million.
    --  During the fourth quarter, MAXIMUS signed its second eligibility and
        enrollment modernization contract. Under a new five-year program with
        the state of New York, the Company will establish and administer a
        centralized enrollment center to serve all of New York's public health
        insurance programs.

Revenue for the fiscal 2010 fourth quarter increased 9.1% (7.4% on a constant currency basis) to $212.5 million versus $194.8 million reported for the same period last year. Revenue for fiscal year 2010 increased 15.5% (11.2% on a constant currency basis) to $831.7 million compared to $720.1 million for fiscal year 2009. Revenue growth was driven principally by the international employment services businesses in Australia and the United Kingdom. Organic revenue grew 7.6% in the fourth quarter and 14.5% for the full fiscal year.

During the fourth quarter, the Company recorded a year-end tax adjustment which reduced the tax rate in the quarter to 31.9%. As a result, GAAP net income from continuing operations totaled $20.7 million for the fourth quarter, or $1.16 per diluted share, and includes approximately $0.08 of benefit related to adjustments of tax accounts. Normalized for these tax benefits, adjusted diluted earnings per share from continuing operations for the fourth quarter increased 33.3% to $1.08 compared to $0.81 reported for the same period last year.

For the full fiscal year, GAAP net income from continuing operations totaled $69.4 million, or $3.86 per diluted share, and includes $0.24 of infrequent benefits ($0.19 for legal and settlement recoveries and $0.05 for year-end tax adjustments). Normalized for these benefits, adjusted diluted earnings per share from continuing operations for fiscal 2010 grew 26.1% to $3.62, compared to $2.87 for fiscal 2009.

"We are very pleased with our results for the quarter and the full year. Fiscal 2010 was highlighted by extraordinary growth in our international welfare-to-work programs in Australia and the U.K.," commented Richard A. Montoni, Chief Executive Officer of MAXIMUS. "Domestically, we were awarded strategic new work as states take steps to prepare for health care reform. These wins include contracts for eligibility and enrollment modernization in Colorado and New York, as well as high risk pools in California and New York. This signifies increased traction with our government partners as they seek to build on existing program infrastructure and improve business processes in order to achieve the requirements under the Affordable Care Act."

Financial results by segment reflect the Company's new organization as filed on Form 8-K on October 29, 2010. The Company now reports under the Health Services and Human Services Segments.

Health Services Segment

Health Services Segment revenue for the fourth quarter of fiscal 2010 remained relatively constant at $129.0 million compared to $129.5 million for the same period last year. For fiscal 2010, revenue increased 3.9% to $514.3 million compared to $495.1 million last year, driven by new work and acquired revenue.

Health Services Segment operating income for the fourth quarter grew 5.1% to $20.0 million with an operating margin of 15.5% compared to $19.0 million in the fourth quarter of last year. For the full fiscal year, the segment generated operating income of $64.7 million with a 12.6% operating margin compared to $72.9 million in fiscal 2009. Fiscal 2010 operating income and margin were lower compared to the prior year principally due to the timing of rebids and expansion in cost-reimbursable programs.

Human Services Segment

Human Services Segment revenue for the fourth quarter increased 27.8% (23.7% on a constant currency basis) to $83.5 million compared to $65.3 million in the prior year period. For fiscal 2010, revenue increased 41.1% (or 29.4% on a constant currency basis) to $317.5 million compared to $225.0 million last year. Revenue growth was driven by the Company's international employment services business in Australia, where the Company more than doubled its book of business at the end of fiscal 2009, as well as new work in the United Kingdom.

Human Services Segment operating income for the fourth quarter totaled $12.4 million with operating margin of 14.8% compared to $5.2 million in the same period last year. Improved margin was driven both by economies of scale from expanded international business and seasonality in the tax credit business. As a result of the international expansion, operating income for the full fiscal year grew to $39.5 million with a 12.4% operating margin compared to $12.4 million in fiscal 2009.

Backlog, Sales and Pipeline

The Company reported record backlog totaling $2.1 billion at September 30, 2010, which is a 17% increase over backlog at September 30, 2009.

Year-to-date signed contract wins at September 30, 2010 totaled $685 million, compared to $1.1 billion for fiscal 2009. The lower contract signings for the year are offset by an increase in new contracts pending at September 30, 2010 (awarded but unsigned), which totaled $709 million compared to $254 million reported at September 30, 2009. Sales opportunities (pipeline) at November 5, 2010, totaled $1.8 billion (consisting of $238 million in proposals pending, $111 million in proposals in preparation and $1.5 billion in proposals tracking).

Balance Sheet and Cash Flows

Cash and cash equivalents totaled $155.3 million at September 30, 2010. For the full fiscal year, cash provided by operating activities from continuing operations totaled $141.0 million with free cash flow of $118.4 million. The Company defines free cash flow as cash provided by operating activities from continuing operations less property, equipment and capitalized software.

Days Sales Outstanding (DSO) from continuing operations totaled 66 days, in line with the Company's stated range of 65 to 80 days. On August 31, 2010, MAXIMUS paid a quarterly cash dividend of $0.12 per share, and on October 8, 2010, the Company declared a $0.12 per share cash dividend, payable on November 30, 2010 to shareholders of record on November 15, 2010. During the fourth quarter, MAXIMUS used $17.7 million to purchase 307,987 shares of MAXIMUS common stock and also announced a $100 million expansion to its Board-authorized share repurchase program. At September 30, 2010, the Company had $122.8 million available for repurchases under the program.

Outlook

MAXIMUS is introducing fiscal 2011 revenue guidance in the range of $890 million to $920 million which represents a 7% to 11% increase compared to fiscal 2010 revenue of $831.7 million. At September 30, 2010, 97% of forecasted 2011 revenue was in the form of backlog or options periods. The Company expects fiscal 2011 adjusted diluted earnings from continuing operations in the range of $3.95 to $4.15, which represents 9% to 15% growth compared to adjusted diluted earnings per share from continuing operations of $3.62 for fiscal 2010.

Mr. Montoni concluded, "We enter fiscal 2011 with a leading market position, strong cash flows and a healthy balance sheet that will enable us to meet the growing demands of our government clients worldwide, as they contend with greater regulatory demands and increased program participation in a resource-constrained environment. We look forward to advancing our mission of 'Helping Government Serve the People' in the coming year."

Website Presentation, Conference Call and Webcast Information

MAXIMUS will host a conference call this morning, November 11, 2010, at 9:00 a.m. (EST). 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 November 19, 2010. Callers can access the replay by calling:

877.660.6853 (Domestic)/201.612.7415 (International)
Replay account number: 316
Replay conference ID number: 359622

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, the United Kingdom, and Israel. 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.

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 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.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

                                                      September 30,

                                                      2009          2010

ASSETS

Current assets:

Cash and cash equivalents                             $87,815       $155,321

Restricted cash                                       3,919         4,182

Accounts receivable--billed, net                      133,485       136,260

Accounts receivable--unbilled                         19,510        17,245

Current portion of note receivable                    736           --

Prepaid income taxes                                  7,501         4,149

Deferred income taxes                                 5,389         13,290

Prepaid expenses and other current assets             19,749        25,702

Current assets of discontinued operations             14,007        --

Total current assets                                  292,111       356,149

Property and equipment, net                           45,286        48,873

Capitalized software, net                             18,969        24,715

Deferred contract costs, net                          8,206         6,708

Goodwill                                              61,029        71,251

Intangible assets, net                                2,455         7,778

Deferred income taxes                                 1,239         1,844

Deferred compensation plan assets                     --            8,317

Other assets                                          3,939         2,106

Total assets                                          $433,234      $527,741

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable                                      $44,644       $49,200

Accrued compensation and benefits                     31,738        40,807

Deferred revenue                                      22,177        58,070

Acquisition-related contingent consideration          --            923

Income taxes payable                                  --            7,120

Accrued liabilities                                   15,083        7,934

Liabilities of discontinued operations                13,823        634

Total current liabilities                             127,465       164,688

Deferred revenue, less current portion                6,527         4,083

Long-term debt                                        --            1,411

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

Income taxes payable, less current portion            1,871         1,793

Deferred income taxes                                 243           4,946

Deferred compensation plan liabilities                --            9,893

Total liabilities                                     136,106       188,952

Commitments and contingencies

Shareholders' equity:

Common stock, no par value                            338,739       352,696

Treasury stock, at cost                               (319,149 )    (359,366 )

Accumulated other comprehensive income                8,268         14,530

Retained earnings                                     269,270       330,929

Total shareholders' equity                            297,128       338,789

Total liabilities and shareholders' equity            $433,234      $527,741




MAXIMUS, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

                         Quarter Ended September 30,   Year Ended September 30,

                           2009          2010            2009          2010

Revenue                  $ 194,806     $ 212,516       $ 720,108     $ 831,749

Cost of revenue            144,268       151,422         528,762       610,916

Gross profit               50,538        61,094          191,346       220,833

Selling, general and
administrative             26,645        30,904          107,028       118,778
expenses

Legal and settlement       190           --              (4,271  )     (5,351  )
expense (recovery)

Operating income from      23,703        30,190          88,589        107,406
continuing operations

Interest and other         (113    )     189             145           916
income, net

Income from continuing
operations before          23,590        30,379          88,734        108,322
income taxes

Provision for income       9,161         9,698           34,893        38,925
taxes

Income from continuing     14,429        20,681          53,841        69,397
operations

Discontinued
operations, net of
income taxes:

Income (loss) from
discontinued               (4,300  )     1,060           (5,734  )     1,040
operations

Loss on disposal           (1,562  )     (28     )       (1,567  )     (28     )

Income (loss) from
discontinued               (5,862  )     1,032           (7,301  )     1,012
operations

Net income               $ 8,567       $ 21,713        $ 46,540      $ 70,409

Basic earnings (loss)
per share:

Income from continuing   $ 0.82        $ 1.20          $ 3.06        $ 3.99
operations

Income (loss) from
discontinued               (0.33   )     0.06            (0.41   )     0.05
operations

Basic earnings per       $ 0.49        $ 1.26          $ 2.65        $ 4.04
share

Diluted earnings
(loss) per share:

Income from continuing   $ 0.80        $ 1.16          $ 3.01        $ 3.86
operations

Income (loss) from
discontinued               (0.32   )     0.06          $ (0.41   )   $ 0.06
operations

Diluted earnings per     $ 0.48        $ 1.22          $ 2.60        $ 3.92
share

Dividends per share      $ 0.12        $ 0.12          $ 0.46        $ 0.48

Weighted average
shares outstanding:

Basic                      17,538        17,227          17,570        17,413

Diluted                    17,945        17,807          17,886        17,965




MAXIMUS, Inc.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

                         Quarter Ended September 30,   Year Ended September 30,

                           2009          2010            2009          2010

Net income               $ 8,567       $ 21,713        $ 46,540      $ 70,409

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

(Income) loss from
discontinued               5,862         (1,032  )       7,301         (1,012  )
operations

Depreciation               2,575         3,302           8,882         12,857

Amortization               1,270         1,390           3,350         5,483

Deferred income taxes      4,368         (5,814  )       26,719        (7,095  )

Gain on sale of fixed      --            --              (51     )     --
assets

Deferred interest
income on note             64            --              376           263
receivable

Non-cash equity based      1,679         1,935           7,307         7,918
compensation

Change in assets and
liabilities, net of
effect from
divestitures:

Accounts receivable --     (19,579 )     (10,857 )       (13,052 )     38
billed

Accounts receivable --     602           4,954           (6,677  )     2,415
unbilled

Due from insurance         --            --              12,500        --
carrier

Prepaid expenses and       (852    )     264             (11,801 )     (1,740  )
other current assets

Deferred contract          324           183             (2,882  )     1,541
costs

Other assets               (1,130  )     (6,637  )       (822    )     (6,773  )

Accounts payable           (1,689  )     (8,975  )       993           (407    )

Accrued compensation       5,619         1,122           5,497         7,883
and benefits

Deferred revenue           2,431         8,745           5,820         31,294

Income taxes               (709    )     778             (20,751 )     10,297

Other liabilities          (1,051  )     9,551           (36,715 )     7,600

Cash provided by
operating activities     $ 8,351       $ 20,622        $ 32,534      $ 140,971
-- continuing
operations

Cash used in operating
activities --              (1,203  )     (378    )       (1,901  )     (2,530  )
discontinued
operations

Cash provided by         $ 7,148       $ 20,244        $ 30,633      $ 138,441
operating activities

Cash flows from
investing activities:

Proceeds (payments)
from sale of
discontinued             $ (1,626  )   $ 1,700         $ (1,626  )   $ 1,700
operations, net of
transaction costs

Acquisition of
businesses, net of         (406    )     (1,287  )       (406    )     (11,960 )
cash acquired

Proceeds from sale of      642           --              696           --
equipment

Decrease in note           341           --              972           473
receivable

Purchases of property      (9,090  )     (3,553  )       (19,694 )     (13,936 )
and equipment

Capitalized software       (1,851  )     (2,365  )       (6,888  )     (8,672  )
costs

Cash used in investing
activities --              (11,990 )     (5,505  )       (26,946 )     (32,395 )
continuing operations

Cash used in investing
activities --              (54     )     --              (90     )     --
discontinued
operations

Cash used in investing     (12,044 )     (5,505  )       (27,036 )     (32,395 )
activities

Cash flows from
financing activities:

Employee stock           $ 1,656       $ 84            $ 2,292       $ 2,763
transactions

Repurchases of common      --            (17,699 )       (30,046 )     (40,217 )
stock

Payments on capital        --            --              (417    )     --
lease obligations

Tax benefit due to
option exercises and       645           1,477           651           2,901
restricted stock units
vesting

Repayment of long-term     --            --              --            (7      )
debt

Issuance of long-term      --            199             --            533
debt

Cash dividends paid        (2,099  )     (2,079  )       (8,054  )     (8,375  )

Cash used in financing
activities --              202           (18,018 )       (35,574 )     (42,402 )
continuing operations

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

Cash used in financing     202           (18,018 )       (35,574 )     (42,402 )
activities

Effect of exchange
rate changes on cash       843           5,541           187           3,862
and cash equivalents

Net increase
(decrease) in cash and     (3,851  )     2,262           (31,790 )     67,506
cash equivalents

Cash and cash
equivalents, beginning     91,666        153,059         119,605       87,815
of period

Cash and cash
equivalents, end of      $ 87,815      $ 155,321       $ 87,815      $ 155,321
period




MAXIMUS, Inc.

BUSINESS SEGMENTS

(Dollars in thousands)

(Unaudited)

During the fourth quarter, the Company aligned its organization of the business
to reflect its focus on the administration of government health and human
services programs. As a result of this organizational realignment, the Company
has reclassified its segment financial information to reflect the two new
operating segments of Health Services and Human services.





                  Three Months Ended Sept. 30,                  Twelve Months Ended Sept. 30,

                  2009          % (1)    2010          % (1)    2009          % (1)    2010          % (1)

Revenue:

Health Services   $ 129,503     100  %   $ 129,032     100  %   $ 495,141     100  %   $ 514,258     100  %

Human Services      65,303      100  %     83,484      100  %     224,967     100  %     317,491     100  %

Total               194,806     100  %     212,516     100  %     720,108     100  %     831,749     100  %

Gross profit:

Health Services     33,283      25.7 %     36,009      27.9 %     131,547     26.6 %     130,276     25.3 %

Human Services      17,255      26.4 %     25,085      30.0 %     59,799      26.6 %     90,557      28.5 %

Total               50,538      25.9 %     61,094      28.7 %     191,346     26.6 %     220,833     26.6 %

Selling,
general, and
administrative
expense:

Health Services     14,267      11.0 %     16,024      12.4 %     58,673      11.8 %     65,551      12.7 %

Human Services      12,099      18.5 %     12,695      15.2 %     47,442      21.1 %     51,067      16.1 %

Corporate/other     279         NM         2,185       NM         913         NM         2,160       NM

Total               26,645      13.7 %     30,904      14.5 %     107,028     14.9 %     118,778     14.3 %

Operating
income from
continuing
operations:

Health Services     19,016      14.7 %     19,985      15.5 %     72,874      14.7 %     64,725      12.6 %

Human Services      5,156       7.9  %     12,390      14.8 %     12,357      5.5  %     39,490      12.4 %

Consolidating       (279    )   NM         (2,185  )   NM         (913    )   NM         (2,160  )   NM
adjustments

Subtotal:
Segment             23,893      12.3 %     30,190      14.2 %     84,318      11.7 %     102,055     12.3 %
operating
income

Legal and
settlement          (190    )   NM         --          NM         4,271       NM         5,351       NM
recovery
(expense), net

Total             $ 23,703      12.2 %   $ 30,190      14.2 %   $ 88,589      12.3 %   $ 107,406     12.9 %

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




MAXIMUS, Inc.

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

FY 2010 and FY 2009

(Unaudited)

In fiscal 2010, the full-year tax rate was 35.9%, which includes a benefit of
0.8% from certain non-recurring credits. Without these credits, the effective
full-year tax rate would have been 36.7%. This adjustment normalizes the tax
rates for each individual quarter to reflect the final full-year tax rate.




FY 2010                Quarter Ended
                                                                      Year Ended

                       Dec. 31,   Mar. 31,    June 30,    Sept. 30,   Sept. 30,

                       2009       2010        2010        2010        2010


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

Pro forma
adjustments:

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

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

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

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

FY 2009                Quarter Ended
                                                                      Year Ended

                       Dec. 31,   Mar. 31,    June 30,    Sept. 30,   Sept. 30,

                       2008       2009        2009        2009        2009


Diluted EPS from
continuing             $ 0.69     $ 0.66      $ 0.85      $ 0.80      $ 3.01
operations - GAAP
basis

Pro forma
adjustments:

Legal and settlement
expense (recovery),      --         0.01        (0.16 )     0.01        (0.14 )
net

Severance                --         0.01        --          --          --

Subtotal pro forma       --       $ 0.02      $ (0.16 )   $ 0.01      $ (0.14 )
adjustments

Adjusted EPS from
continuing             $ 0.69     $ 0.68      $ 0.69      $ 0.81      $ 2.87
operations




    Source: MAXIMUS