Concentrating Focus to Core Health and Human Services; Operations Segment Again Delivers Solid Quarter

MAXIMUS (NYSE:MMS), a leading provider of government services, today reported results for its fiscal third quarter ended June 30, 2008. Results reflect the sale of the Company’s Security Solutions and Unison divisions, which have been accounted for as discontinued operations.

Highlights include:

• Revenue of $206.3 million, an increase of 9%, compared to the same period last year,
• Net income of $11.4 million and record diluted earnings per share of $0.61, which included expense of $0.24 per diluted share related to a provision for an anticipated settlement to exit a legacy Justice contract. This necessary action reflects the Company’s ongoing strategy to concentrate its focus on its core health and human services business,
• Strong results from the Operations Segment which delivered operating margin of 15%,
• Completion of its Accelerated Share Repurchase (ASR) program with $13.9 million received for final settlement in July and an increase of its share buyback authorization to $75 million,
• Healthy cash and cash equivalents at June 30, 2008, totaling $77.9 million and cash flow from operations of $12.8 million,
• New sales awards of $700 million and total pipeline of $1.8 billion at August 5, 2008, and
• Subsequent to quarter close, MAXIMUS acquired WTCS, Limited, a U.K.-based workforce services provider with an established presence and strong brand reputation.

Revenue for the third quarter increased 9% to $206.3 million compared to $189.7 million reported for the same period last year. All revenue growth in the quarter was organic and driven by the Operations Segment, which represented 77% of total Company revenue for the period.

Net income for the third quarter increased to $11.4 million, or $0.61 per diluted share, compared to a net loss of $14.4 million, or $0.65 per diluted share, for the same period last year which was impacted by legal and settlement expense of $33.0 million. Fiscal 2008 third quarter net income from continuing operations totaled $9.8 million, or $0.52 per diluted share, which includes a pre-tax gain of $3.9 million, or $0.14 per diluted share, from the sale of a property in McLean, Virginia, a $7.0 million provision for settlement expense, or $0.24 per diluted share, and a $0.7 million legal expense accrual related to arbitration. Third quarter income from discontinued operations totaled $1.6 million, or $0.09 per diluted share, and includes a $1.7 million after-tax gain for the sale of the Company’s Security Solutions division.

Richard Montoni, Chief Executive Officer of MAXIMUS, commented, “Our Operations Segment once again delivered excellent operational and financial results for the quarter. This clearly demonstrates the benefits of our strategy to focus on our core business of health and human services offerings. Also, as an element of our strategy, we divested two non-core businesses during the quarter and negotiated an exit to a legacy Justice contract. Our strategy remains focused on improving underperforming businesses, while exploring divestment opportunities of certain non-core assets.”

Montoni continued, “Additionally, we continue to expand our geographic footprint, both organically and through acquisition. On August 1, 2008, we acquired WTCS, Limited which provides us with an immediate foothold in the U.K. employment and training sector and better positions MAXIMUS to effectively compete for several new large tenders as part of the U.K. government’s Flexible New Deal workforce services program.”

Operations Segment

Operations Segment revenue accounted for 77% of total Company revenue in the third quarter and increased 13% to $157.9 million compared to $140.3 million for the third quarter of last year. Third quarter operating income for the Operations Segment totaled $23.8 million, or a margin of 15%, compared to $24.6 million, or a margin of 18%, reported for the same period last year. Last year’s operating income included a non-recurring benefit of $3.2 million related to the collection of previously reserved receivables on the now-terminated Texas subcontract. The Operations Segment continues to deliver solid results driven by business optimization efforts and strong organic growth.

Consulting Segment

For the third quarter, Consulting Segment revenue was $19.7 million, or 9% of total Company revenue, compared to $19.2 million reported for the prior-year period. Third quarter operating income was $0.5 million compared to $1.6 million reported in the third quarter of fiscal 2007. The Segment performed as expected and continues to make investments and gain traction in new program integrity markets, such as Medicaid Fraud, Waste and Abuse, as it transitions away from contingent-based claiming work.

Systems Segment

Systems Segment revenue, which represented 14% of total Company revenue, totaled $28.7 million in the third quarter compared to $30.2 million in the same period last year. The Segment’s third quarter operating loss was $5.6 million which compares to a loss of $3.9 million for the third quarter of last year. Strong financial results from the Asset Solutions and ERP divisions were offset by losses principally related to product development and contractual commitments in the Justice and Education divisions.

Sales and Pipeline

Year-to-date signed contract wins at August 5, 2008, totaled $700 million, compared to $423 million reported last year. New contracts pending at August 5, 2008, (awarded but unsigned) totaled $213 million compared to $339 million reported last year. Sales opportunities (pipeline) was again at record levels and at August 5, 2008, totaled $1.8 billion (consisting of $406 million in proposals pending, $285 million in proposals in preparation, and $1.1 billion in proposals tracking) compared to $1.3 billion the prior year.

Balance Sheet & Share Repurchase Program

At June 30, 2008, cash and cash equivalents totaled $77.9 million. The Company also announced the completion of its Accelerated Share Repurchase program and in July received $13.9 million in cash for final settlement. The Board of Directors has also reactivated the Company’s share repurchase program and has increased the authorization for purchases up to $75 million. For its third fiscal quarter, MAXIMUS generated net cash from operations of $12.8 million and free cash flow of $6.0 million (the Company defines free cash flow as cash from operations less purchased property and equipment and capitalized software costs). Days Sales Outstanding (DSOs) continue to run in a favorable range and were 79 days at June 30, 2008. MAXIMUS paid a quarterly cash dividend of $0.10 per share on May 30, 2008.

Outlook

The Company is updating its revenue outlook for fiscal 2008 to exclude revenue from discontinued operations, which totaled approximately $13.2 million for the fiscal year through April 2008. The Company now expects revenue in the range of $815 million to $830 million for the full year. In addition, the Company has also refined its diluted earnings per share guidance to reflect the settlement provision of $0.24. MAXIMUS now expects that GAAP basis diluted earnings per share will be in the range of $2.30 to 2.35. This guidance excludes any gains or losses from potential future divestiture or restructuring activities.

Mr. Montoni concluded, “We are very encouraged with the overall pipeline of new opportunities, despite a challenging fiscal environment for state and local governments. While we continue to grow the business, we remain selective in the pursuit of new opportunities to enhance Company profitability. We are confident that our commitment to focus on our core business will provide future operational and financial benefits as we solidify our position as the leading pure play provider in the government health and human services market.

Website Presentation, Conference Call and Webcast Information

MAXIMUS will host a conference call this morning, August 7, 2008, 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.

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 6,000 employees located in more than 220 offices in the United States, Canada and Australia. 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 certain financial results excluding certain items and provides certain additional information because 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.