RESTON, Va.--(BUSINESS WIRE)--November 11, 2010--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.

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 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 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.

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).

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.

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.”

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:

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

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.

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 current portion	—		2,138
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 expenses		26,645			30,904			107,028			118,778
Legal and settlement expense (recovery)		190			—			(4,271	)		(5,351	)
Operating income from continuing operations		23,703			30,190			88,589			107,406
Interest and other income, net		(113	)		189			145			916
Income from continuing operations before income taxes		23,590			30,379			88,734			108,322
Provision for income taxes		9,161			9,698			34,893			38,925
Income from continuing operations		14,429			20,681			53,841			69,397
Discontinued operations, net of income taxes:
Income (loss) from discontinued operations		(4,300	)		1,060			(5,734	)		1,040
Loss on disposal		(1,562	)		(28	)		(1,567	)		(28	)
Income (loss) from discontinued operations		(5,862	)		1,032			(7,301	)		1,012
Net income	$	8,567		$	21,713		$	46,540		$	70,409
Basic earnings (loss) per share:
Income from continuing operations	$	0.82		$	1.20		$	3.06		$	3.99
Income (loss) from discontinued operations		(0.33	)		0.06			(0.41	)		0.05
Basic earnings per share	$	0.49		$	1.26		$	2.65		$	4.04
Diluted earnings (loss) per share:
Income from continuing operations	$	0.80		$	1.16		$	3.01		$	3.86
Income (loss) from discontinued operations		(0.32	)		0.06		$	(0.41	)	$	0.06
Diluted earnings per share	$	0.48		$	1.22		$	2.60		$	3.92
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 operations		5,862			(1,032	)		7,301			(1,012	)
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 assets		—			—			(51	)		—
Deferred interest income on note receivable		64			—			376			263
Non-cash equity based compensation		1,679			1,935			7,307			7,918

Change in assets and liabilities, net of effect from divestitures:
Accounts receivable — billed		(19,579	)		(10,857	)		(13,052	)		38
Accounts receivable — unbilled		602			4,954			(6,677	)		2,415
Due from insurance carrier		—			—			12,500			—
Prepaid expenses and other current assets		(852	)		264			(11,801	)		(1,740	)
Deferred contract costs		324			183			(2,882	)		1,541
Other assets		(1,130	)		(6,637	)		(822	)		(6,773	)
Accounts payable		(1,689	)		(8,975	)		993			(407	)
Accrued compensation and benefits		5,619			1,122			5,497			7,883
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 — continuing operations	$	8,351		$	20,622		$	32,534		$	140,971
Cash used in operating activities — discontinued operations		(1,203	)		(378	)		(1,901	)		(2,530	)
Cash provided by operating activities	$	7,148		$	20,244		$	30,633		$	138,441

Cash flows from investing activities:
Proceeds (payments) from sale of discontinued operations, net of transaction costs	$	(1,626	)	$	1,700		$	(1,626	)	$	1,700
Acquisition of businesses, net of cash acquired		(406	)		(1,287	)		(406	)		(11,960	)
Proceeds from sale of equipment		642			—			696			—
Decrease in note receivable		341			—			972			473
Purchases of property and equipment		(9,090	)		(3,553	)		(19,694	)		(13,936	)
Capitalized software costs		(1,851	)		(2,365	)		(6,888	)		(8,672	)
Cash used in investing activities — continuing operations		(11,990	)		(5,505	)		(26,946	)		(32,395	)
Cash used in investing activities — discontinued operations		(54	)		—			(90	)		—
Cash used in investing activities		(12,044	)		(5,505	)		(27,036	)		(32,395	)

Cash flows from financing activities:
Employee stock transactions	$	1,656		$	84		$	2,292		$	2,763
Repurchases of common stock		—			(17,699	)		(30,046	)		(40,217	)
Payments on capital lease obligations		—			—			(417	)		—
Tax benefit due to option exercises and restricted stock units vesting		645			1,477			651			2,901
Repayment of long-term debt		—			—			—			(7	)
Issuance of long-term debt		—			199			—			533
Cash dividends paid		(2,099	)		(2,079	)		(8,054	)		(8,375	)
Cash used in financing activities — continuing operations		202			(18,018	)		(35,574	)		(42,402	)
Cash used in financing activities — discontinued operations		—			—			—			—
Cash used in financing activities		202			(18,018	)		(35,574	)		(42,402	)

Effect of exchange rate changes on cash and cash equivalents		843			5,541			187			3,862
Net increase (decrease) in cash and cash equivalents		(3,851	)		2,262			(31,790	)		67,506
Cash and cash equivalents, beginning of period		91,666			153,059			119,605			87,815
Cash and cash equivalents, end of period	$	87,815		$	155,321		$	87,815		$	155,321


	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 adjustments		(279	)	NM			(2,185	)	NM			(913	)	NM			(2,160	)	NM
Subtotal: Segment operating income		23,893		12.3	%		30,190		14.2	%		84,318		11.7	%		102,055		12.3	%
Legal and settlement recovery (expense), net		(190	)	NM			—		NM			4,271		NM			5,351		NM
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.”


FY 2010	Quarter Ended											Year Ended Sept. 30, 2010
	Dec. 31, 2009		Mar. 31, 2010			June 30, 2010			Sept. 30, 2010			Year Ended Sept. 30, 2010
Diluted EPS from continuing operations – GAAP basis	$	0.81	$	1.00		$	0.90		$	1.16		$	3.86

Pro forma adjustments:
Legal and settlement expense (recovery), net		0.02		(0.21	)		—			—			(0.19	)
Adjustment for tax accounts		0.04		(0.02	)		0.01			(0.08	)		(0.05	)
Subtotal pro forma adjustments	$	0.06	$	(0.23	)	$	0.01		$	(0.08	)		(0.24	)

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



FY 2009	Quarter Ended											Year Ended Sept. 30, 2009
	Dec. 31, 2008		Mar. 31, 2009			June 30, 2009			Sept. 30, 2009			Year Ended Sept. 30, 2009
Diluted EPS from continuing operations – GAAP basis	$	0.69	$	0.66		$	0.85		$	0.80		$	3.01

Pro forma adjustments:
Legal and settlement expense (recovery), net		—		0.01			(0.16	)		0.01			(0.14	)
Severance		—		0.01			—			—			—
Subtotal pro forma adjustments		—	$	0.02		$	(0.16	)	$	0.01		$	(0.14	)

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