MAXIMUS
SETTLES DISTRICT OF COLUMBIA CONTRACT INVESTIGATION
–
Company
Provides Preliminary Third Quarter Results and Will Host a
Conference
Call
on
Tuesday, July 24, 2007 at 8:30 a.m. ET –
(RESTON,
Va. – July 23, 2007) – MAXIMUS (NYSE: MMS), a leading provider of
government services, announced today that it has reached an agreement with
the
Federal government to settle its investigation of the Company’s Medicaid
claiming work for the District of Columbia. Under the terms of the settlement,
MAXIMUS will reimburse the Federal government $30.5 million for Medicaid
claims
prepared on behalf of the District of Columbia that lacked sufficient
documentation.
As
part of
the settlement, MAXIMUS has entered into a Corporate Integrity Agreement
with
the U.S. Department of Health and Human Services and a Deferred Prosecution
Agreement with the U.S. Attorney’s Office for the District of Columbia. The
government is not filing any criminal charges against the Company. However,
the
U.S. Attorney’s Office has reserved the right to file charges in the event
MAXIMUS fails to comply with the terms of the integrity and settlement
agreements during the next 24 months.
“This
settlement is in the best interests of the Company and its shareholders and
resolves an investigation concerning work that dates back to 1999,” commented
Richard Montoni, CEO of MAXIM US. “MAXIMUS accepts responsibility for the
conduct of its employees, and since that time, we have taken remedial actions
to
improve oversight to prevent a recurrence. It is imperative that our business
achieves the highest standards, and over the last twelve months, we have
actively worked to standardize procedures with the creation of a formal
professional practices guide, the expansion of our compliance function,
increased training programs, and rigorous quality reviews. MAXIMUS and its
employees are committed to maintaining corporate integrity and client trust.
We
remain focused on the delivery of services in an environment that promotes
and
fosters leadership under the MAXIMUS Code of Business Conduct and
Ethics.”
In
its
fiscal 2007 third quarter, MAXIMUS plans to record legal fees and settlement
expenses totaling approximately $33.0 million which includes certain unrelated
legal costs. Portions of the settlement are not tax deductible. Therefore,
the
associated tax benefit of the settlement and related expenses is approximately
$4.5 million, resulting in an after-tax charge of approximately $1.30 per
share
in the Company’s third fiscal quarter. As a result of the legal and settlement
charges, MAXIMUS now expects GAAP loss per share for the third quarter to
be in
the range of $0.66 to $0.68 and $0.35 to $0.45 for the full fiscal year 2007.
Excluding the impact of the settlement and legal expenses, MAXIMUS expects
third
quarter earnings per share in the range $0.62 to $0.64. The Company also
reiterated its full year guidance, excluding the legal and settlement expenses
in the third quarter, of $0.85 to $0.95. The Company will report full financial
results on August 7, 2007.
Mr.
Montoni concluded, “Our operations performed well in the quarter, and we
continued to take steps necessary to position the Company for long-term growth.
Prior to the outlay of cash for this settlement that will occur in the fourth
quarter, the ending cash and short-term investment position on the balance
sheet
at June 30, 2007 remains healthy at $215 million. Our continued strong cash
position reflects solid performance from operations and improved Days Sales
Outstanding (DSO) resulting in cash from operations of approximately $36
million
for the three months ended June 30, 2007. This settlement is consistent with
a
series of actions we have taken over the last twelve months to address legacy
matters and best position the Company for long-term growth, client service,
and
the optimization of shareholder value.”
The
Company will host a conference call on Tuesday, July 24, 2007, at 8:30 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:
800.552.8050
(Domestic)/ 206.902.3258 (International)
For
those
unable to listen to the live call, a replay will be available through August
3,
2007. Callers can access the replay by registering for the digital playback
at
the following website:
http://reg.linkconferencecall.com/DigitalPlayback/DigitalPlaybackRegistration
.aspx?recid=564 1. Upon registration, participants will receive an
email with the call back information.
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, MAXIM
US 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).
CONTACTS:
Lisa
Miles
Investor
Relations 703.251.8637
Rachael
Rowland
Public/Media
Relations 703.251.8688
