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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

ý

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

 

 

For the quarterly period ended June 30, 2003

 

 

 

OR

 

 

 

o

 

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

Commission file number 1-12997

 

MAXIMUS, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Virginia

 

54-1000588

(State or Other Jurisdiction of
Incorporation or Organization)

 

(I.R.S. Employer
Identification No.)

 

 

 

11419 Sunset Hills Road
Reston, Virginia

 

20190

(Address of Principal Executive Offices)

 

(Zip Code)

 

 

 

Registrant’s Telephone Number, Including Area Code: (703) 251-8500

 


 

Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  ý   No  o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes  ý   No  o

 

Class

 

Outstanding at August 4, 2003

Common Shares, no par value

 

20,889,421

 

 



 

MAXIMUS, Inc.

 

Quarterly Report on Form 10-Q

For the Quarter Ended June 30, 2003

 

INDEX

 

PART I.  FINANCIAL INFORMATION

 

 

Item 1.

Condensed Consolidated Financial Statements.

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2002 and June 30, 2003 (unaudited)

 

 

 

Condensed Consolidated Statements of Income for the Three Months and Nine Months ended June 30, 2002 and 2003 (unaudited)

 

 

 

Condensed Consolidated Statements of Cash Flows for the Nine Months ended June 30, 2002 and 2003 (unaudited)

 

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

 

Item 4.

Controls and Procedures.

 

 

PART II.  OTHER INFORMATION

 

 

Item 6.

Exhibits and Reports on Form 8-K.

 

 

Signature

 

 

Exhibit Index

 

Throughout this Quarterly Report on Form 10-Q, the terms “we,” “us,” “our” and “MAXIMUS” refer to MAXIMUS, Inc. and its subsidiaries.

 



 

MAXIMUS, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

 

 

 

September 30,
2002

 

June 30,
2003

 

 

 

(Note 1)

 

(unaudited)

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

94,965

 

$

89,501

 

Restricted cash

 

 

1,829

 

Marketable securities

 

160

 

140

 

Accounts receivable - billed

 

108,074

 

120,826

 

Accounts receivable - unbilled

 

25,102

 

28,803

 

Prepaid expenses and other current assets

 

7,123

 

7,385

 

Total current assets

 

235,424

 

248,484

 

Property and equipment, at cost

 

39,612

 

44,421

 

Less accumulated depreciation and amortization

 

(14,206

)

(18,077

)

Property and equipment, net

 

25,406

 

26,344

 

Software development costs

 

19,024

 

21,978

 

Less accumulated amortization

 

(4,908

)

(7,769

)

Software development costs, net

 

14,116

 

14,209

 

Deferred contract costs

 

 

1,148

 

Goodwill, net

 

68,812

 

80,574

 

Intangible assets, net

 

6,540

 

7,536

 

Other assets

 

1,792

 

1,954

 

Total assets

 

$

352,090

 

$

380,249

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

10,867

 

$

20,397

 

Accrued compensation and benefits

 

19,726

 

20,689

 

Deferred revenue

 

12,939

 

22,147

 

Income taxes payable

 

2,325

 

2,495

 

Deferred income taxes

 

1,811

 

1,210

 

Other current liabilities

 

1,794

 

239

 

Total current liabilities

 

49,462

 

67,177

 

Other liabilities

 

499

 

534

 

Total liabilities

 

49,961

 

67,711

 

Shareholders’ equity:

 

 

 

 

 

Common stock, no par value; 60,000,000 shares authorized; 21,509,444 and 20,742,566 shares issued and outstanding at September 30, 2002 and June 30, 2003, at stated amount, respectively

 

144,156

 

128,170

 

Accumulated other comprehensive income (loss)

 

24

 

(34

)

Retained earnings

 

157,949

 

184,402

 

Total shareholders’ equity

 

302,129

 

312,538

 

Total liabilities and shareholders’ equity

 

$

352,090

 

$

380,249

 

 

See notes to unaudited condensed consolidated financial statements.

 

1



 

MAXIMUS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

Revenue

 

$

133,090

 

$

141,741

 

$

384,613

 

$

405,095

 

Cost of revenue

 

90,159

 

99,321

 

266,902

 

281,828

 

Gross profit

 

42,931

 

42,420

 

117,711

 

123,267

 

Selling, general and administrative expenses

 

24,861

 

27,408

 

69,770

 

80,084

 

Non-cash equity based compensation

 

85

 

214

 

85

 

726

 

Amortization of acquisition-related intangibles

 

180

 

311

 

693

 

864

 

Income from operations

 

17,805

 

14,487

 

47,163

 

41,593

 

Interest and other income

 

858

 

331

 

2,261

 

1,268

 

Income before income taxes

 

18,663

 

14,818

 

49,424

 

42,861

 

Provision for income taxes

 

7,559

 

5,853

 

20,017

 

16,930

 

Net income

 

$

11,104

 

$

8,965

 

$

29,407

 

$

25,931

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.49

 

$

0.43

 

$

1.28

 

$

1.23

 

Diluted

 

$

0.48

 

$

0.43

 

$

1.24

 

$

1.22

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

22,695

 

20,731

 

22,979

 

21,016

 

Diluted

 

23,226

 

21,015

 

23,711

 

21,285

 

 

See notes to unaudited condensed consolidated financial statements.

 

2



 

MAXIMUS, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

 

 

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

 

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

 

Net income

 

$

29,407

 

$

25,931

 

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

 

 

 

 

 

Depreciation

 

2,064

 

3,872

 

Amortization

 

2,508

 

3,725

 

Deferred income taxes

 

6,628

 

(435

)

Tax benefit due to option exercises

 

1,225

 

523

 

Non-cash equity based compensation

 

85

 

726

 

 

 

 

 

 

 

Change in assets and liabilities, net of effects from acquisitions:

 

 

 

 

 

Accounts receivable - billed

 

6,932

 

(11,323

)

Accounts receivable - unbilled

 

(6,170

)

(3,702

)

Prepaid expenses and other current assets

 

(1,750

)

(707

)

Deferred contract costs

 

 

(1,148

)

Other assets

 

418

 

262

 

Accounts payable

 

(2,685

)

8,785

 

Accrued compensation and benefits

 

(1,804

)

100

 

Deferred revenue

 

(4,299

)

8,795

 

Income taxes payable

 

1,343

 

169

 

Other liabilities

 

1,141

 

(1,545

)

Net cash provided by operating activities

 

35,043

 

34,028

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

Acquisition of businesses, net of cash acquired

 

(12,673

)

(13,532

)

Purchases of property and equipment

 

(5,408

)

(4,574

)

(Increase) decrease in notes receivable

 

(241

)

188

 

Capitalization of software development costs

 

(4,242

)

(2,954

)

Increase in restricted cash

 

 

(1,829

)

Decrease in marketable securities

 

1,106

 

30

 

Net cash used in investing activities

 

(21,458

)

(22,671

)

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

Employee stock transactions

 

8,223

 

3,682

 

Repurchases of common stock

 

(24,669

)

(20,394

)

Net payments on capital leases

 

(200

)

(109

)

Net cash used in financing activities

 

(16,646

)

(16,821

)

Net decrease in cash and cash equivalents

 

(3,061

)

(5,464

)

Cash and cash equivalents, beginning of period

 

114,108

 

94,965

 

Cash and cash equivalents, end of period

 

$

111,047

 

$

89,501

 

 

See notes to unaudited condensed consolidated financial statements.

 

3



 

MAXIMUS, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

For the Three-Month and Nine-Month Periods Ended June 30, 2003 and 2002

(Dollars in thousands, except per share amounts)

 

In these Notes to Unaudited Condensed Consolidated Financial Statements, the terms the “Company” and “MAXIMUS” refer to MAXIMUS, Inc. and its subsidiaries.

 

1. Organization and Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normally recurring accruals) considered necessary for a fair presentation have been included. The results of operations for the three-month and nine-month periods ended June 30, 2003 are not necessarily indicative of the results that may be expected for the full fiscal year. The balance sheet at September 30, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements.

 

These financial statements should be read in conjunction with the audited financial statements as of September 30, 2002 and 2001 and for each of the three years in the period ended September 30, 2002, included in the Company’s Annual Report on Form 10-K for the year ended September 30, 2002 (File No. 1-12997) filed with the Securities and Exchange Commission on December 20, 2002.

 

2. Deferred Contract Costs

 

Deferred contract costs consist of reimbursable direct project costs relating to the transition phase of a long-term contract in progress, which are required to be reimbursed under the terms of the contract. These costs include system development and facility build-out costs, and will be amortized over five years as services are provided under the contract, beginning January 2004.

 

3. Business Combinations

 

In fiscal 2003, the Company acquired the businesses described below in business combinations accounted for as purchases. Accordingly, the accompanying consolidated financial statements include the results of operations of the acquired businesses since the dates of their respective acquisition.

 

On October 1, 2002, the Company acquired Themis Program Management and Consulting Limited and GAEA Management Ltd. (together “Themis”) for $1,669. Per the terms of the acquisition agreement, additional consideration may be paid resulting from new contracts awarded to the Company during annual performance periods from April 2002 through April 2005. In conjunction with the purchase, the Company recorded goodwill of $1,009 and intangible assets, primarily non-competition agreements and customer relationships, of $660, which have been assigned to the Human Services business segment. Themis operates the Family Maintenance Enforcement Program in the Province of British Columbia, Canada. This program is designed to ensure family maintenance payments are made pursuant to the Family Maintenance Enforcement Act. The primary reason for acquiring Themis was to expand the Company’s presence and services in international markets.

 

On May 1, 2003, the Company acquired the National Misdemeanant Private Probation Operations business of B.I. Incorporated (referred to as "Correctional Services") for $10,525. In conjunction with the purchase, the Company recorded goodwill of $9,077 and intangible assets, primarily non-competition agreements and customer relationships, of

 

4



 

$1,200, which have been assigned to the Human Services business segment. The Correctional Services business constitutes one of the largest providers of community corrections services in the United States and provides programming that includes treatment groups and education classes and drug and alcohol testing and monitoring. The primary reasons for acquiring the Correctional Services business was to expand the Company’s presence in the correction services market and to strategically complement the Company’s current service offerings in the human services area.

 

4. Goodwill and Intangible Assets

 

The changes in the carrying amount of goodwill for the nine months ended June 30, 2003 are as follows (in thousands):

 

 

 

Consulting

 

Health
Services

 

Human
Services

 

Systems

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance as of September 30, 2002

 

$

10,113

 

$

1,792

 

$

17,944

 

$

38,963

 

$

68,812

 

Acquisition of Themis

 

 

 

1,009

 

 

1,009

 

Acquisition of Correctional Services

 

 

 

9,077

 

 

9,077

 

Goodwill reclassification of prior acquisition

 

 

 

3,698

 

(3,698

)

 

Additional consideration on prior acquisitions

 

 

 

1,641

 

35

 

1,676

 

Balance as of June 30, 2003

 

$

10,113

 

$

1,792

 

$

33,369

 

$

35,300

 

$

80,574

 

 

Intangible assets from acquisitions, which consist primarily of non-competition agreements, technology-based intangibles, and customer relationships, are amortized over five to ten years. The weighted-average amortization period for intangible assets is approximately eight years. The estimated amortization expense for the years ending September 30, 2003, 2004, 2005, 2006 and 2007 is $1,189, $1,267, $1,212, $1,197, and $1,145, respectively.

 

The following table sets forth the components of intangible assets (in thousands):

 

 

 

As of September 30, 2002

 

As of June 30, 2003

 

 

 

Cost

 

Accumulated
Amortization

 

Intangible
Assets, net

 

Cost

 

Accumulated
Amortization

 

Intangible
Assets, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-competition agreements

 

$

3,065

 

$

2,709

 

$

356

 

$

3,425

 

$

2,820

 

$

605

 

Technology-based intangibles

 

1,500

 

50

 

1,450

 

1,500

 

210

 

1,290

 

Customer contracts and relationships

 

5,200

 

466

 

4,734

 

6,700

 

1,059

 

5,641

 

Total

 

$

9,765

 

$

3,225

 

$

6,540

 

$

11,625

 

$

4,089

 

$

7,536

 

 

5. Commitments and Contingencies

 

Litigation

 

On December 5, 2000, the Village of Maywood, Illinois (the “Village”) sued Unison MAXIMUS, Inc. (“Unison”), a wholly-owned subsidiary of the Company, in the Circuit Court of Cook County, Illinois. The Company acquired Unison Consulting Group, Inc. in May 1999 and subsequently renamed it “Unison MAXIMUS, Inc.” Unison remains a wholly-owned subsidiary of the Company. The Village had contracted with Unison to provide a variety of financial and consulting services from 1996 through 1999. The Village has alleged inter alia breach of contract, breach of fiduciary duty, and fraud. The action is in the discovery and motion phase and no trial date has been set. The complaint does not specify the Village’s damages. In September 2002, the Village filed a purported expert report with the court that estimated the Village’s damages to be approximately $47.0 million. The Company and Unison believe that the report is deeply flawed and the Village’s claims are without merit. Unison intends to defend the action vigorously. Unison tendered the claim to the Company’s insurance carrier. Although there is no assurance of a favorable outcome, the Company does not believe that this action will have a material adverse effect on its financial condition or results of operations, and the Company has not accrued for any loss related to this action.

 

5



 

On January 3, 2003, the City of San Diego served the Company with a complaint naming DMG-MAXIMUS (“DMG” – previously a wholly-owned subsidiary of MAXIMUS since merged into MAXIMUS) as a defendant in an on-going lawsuit between the City and Conwell Shonkwiler & Associates, an architectural firm (“CSA”). In 2002, both CSA and the City had sued each other for claims arising out of design services provided by CSA for the City’s Water Department Central Facility Water Project (“Project”). DMG had provided certain assessment and preliminary design services to the City in connection with the Project.  CSA sued the City for payment of approximately $0.7 million in unpaid fees, and the City sued CSA for alleged damages caused by CSA’s breach of the contract and professional negligence in rendering those services.  In its defense, CSA has asserted that any deficiencies in its services were due to errors in the master program document prepared for the City by DMG. Consequently, the City named DMG as a defendant in the lawsuit alleging breach of contract and professional negligence and seeking indemnity from DMG. The City alleges damages against both defendants of at least $10.0 million. The Company believes the claim is without merit and intends to defend the action vigorously. The matter has been tendered to the Company’s insurance carrier. Although there is no assurance of a favorable outcome, the Company does not believe that this action will have a material adverse effect on its financial condition or results of operations, and the Company has not accrued for any loss related to this action.

 

The Company is involved in various legal proceedings in the ordinary course of its business. Management does not expect the ultimate outcome of the legal proceedings to have a material adverse effect on the Company’s financial condition or its results of operations.

 

Financial Instruments – Letter of Credit

 

In June 2003, the Company issued a standby letter of credit facility totaling $20.0 million that may be called by a customer in the event the Company defaults under the terms of the Company’s contract with that customer. The facility contains financial covenants that establish minimum levels of tangible net worth and earnings before interest, tax, depreciation and amortization ("EBITDA") and require the maintenance of certain cash balances.

 

6. Earnings Per Share

 

The following table sets forth the components of basic and diluted earnings per share (in thousands):

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

Numerator:

 

 

 

 

 

 

 

 

 

Net income

 

$

11,104

 

$

8,965

 

$

29,407

 

$

25,931

 

 

 

 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

22,695

 

20,731

 

22,979

 

21,016

 

Effect of dilutive securities:

 

 

 

 

 

 

 

 

 

Employee stock options and unvested restricted stock awards

 

531

 

284

 

732

 

269

 

Denominator for diluted earnings per share

 

23,226

 

21,015

 

23,711

 

21,285

 

 

7. Stock Repurchase Program

 

Under resolutions adopted in May 2000, July 2002, and March 2003, the Board of Directors has authorized the repurchase, at management’s discretion, of up to an aggregate of $90.0 million of the Company’s common stock.  In addition, in June 2002, the Board of Directors authorized the use of option exercise proceeds for the repurchase of the Company’s common stock. During the nine-month period ended June 30, 2003, the Company repurchased approximately 1,003,000 shares. At June 30, 2003, $27.8 million remained available for future stock repurchases under the program.

 

6



 

8. Restricted Stock Units

 

In May 2002, the Company issued 170,000 Restricted Stock Units (RSUs) to certain executive officers and employees under its 1997 Equity Incentive Plan. The grant-date fair value of each RSU was $30.14. The RSUs will vest in full upon the sixth anniversary of the date of grant, provided, however, that the vesting will accelerate if the Company meets certain earnings targets determined by the Board of Directors as set forth in the RSUs. The fair value of the RSUs at the grant date is amortized to expense over the vesting period. Compensation expense recognized related to these RSUs for the nine-month period ended June 30, 2003 was $0.7 million.

 

9. Employee Stock Option Plan

 

The Company accounts for its employee stock option plan under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock option based employee compensation cost is reflected in net income, as all employee stock options granted under the plan had an exercise price equal to the market value of the underlying common stock on the date of grant.

 

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value provisions of FAS 148, Accounting for Stock-Based Compensation - Transition and Disclosure, to stock-based employee compensation for the periods indicated.

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

(dollars in thousands, except per share data)

 

Net income, as reported

 

$

11,104

 

$

8,965

 

$

29,407

 

$

25,931

 

 

 

 

 

 

 

 

 

 

 

Deduct: Total stock-based employee compensation expense determined under fair value based method, net of related tax effects

 

(1,813

)

(1,501

)

(5,385

)

(5,108

)

 

 

 

 

 

 

 

 

 

 

Pro forma net income

 

$

9,291

 

$

7,464

 

$

24,022

 

$

20,823

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic – as reported

 

$

0.49

 

$

0.43

 

$

1.28

 

$

1.23

 

Basic – pro forma

 

$

0.41

 

$

0.36

 

$

1.05

 

$

0.99

 

 

 

 

 

 

 

 

 

 

 

Diluted – as reported

 

$

0.48

 

$

0.43

 

$

1.24

 

$

1.22

 

Diluted – pro forma

 

$

0.40

 

$

0.36

 

$

1.01

 

$

0.98

 

 

7



 

10. Segment Information

 

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

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

Revenue:

 

 

 

 

 

 

 

 

 

Consulting

 

$

34,518

 

$

37,466

 

$

102,930

 

$

104,227

 

Health Services

 

42,704

 

40,923

 

118,983

 

123,032

 

Human Services

 

38,085

 

38,521

 

110,883

 

112,894

 

Systems

 

17,783

 

24,831

 

51,817

 

64,942

 

Total

 

$

133,090

 

$

141,741

 

$

384,613

 

$

405,095

 

 

 

 

 

 

 

 

 

 

 

Gross Profit:

 

 

 

 

 

 

 

 

 

Consulting

 

$

15,508

 

$

15,422

 

$

47,598

 

$

43,472

 

Health Services

 

8,588

 

8,532

 

20,081

 

28,474

 

Human Services

 

9,339

 

7,592

 

24,493

 

21,900

 

Systems

 

9,496

 

10,874

 

25,539

 

29,421

 

Total

 

$

42,931

 

$

42,420

 

$

117,711

 

$

123,267

 

 

 

 

 

 

 

 

 

 

 

Income from operations:

 

 

 

 

 

 

 

 

 

Consulting

 

$

6,492

 

$

7,075

 

$

22,868

 

$

17,346

 

Health Services

 

4,668

 

3,986

 

8,150

 

15,398

 

Human Services

 

3,808

 

294

 

9,417

 

2,417

 

Systems

 

2,837

 

3,132

 

6,728

 

6,432

 

Total

 

$

17,805

 

$

14,487

 

$

47,163

 

$

41,593

 

 

11. Recent Accounting Pronouncements

 

In November 2002, the Emerging Issues Task Force issued a final consensus on Issue 00-21, Accounting for Revenue Arrangements with Multiple Deliverables. Issue 00-21 provides guidance on how and when to recognize revenue on arrangements requiring delivery of more than one product or service. Issue 00-21 is effective prospectively for arrangements entered into in fiscal periods beginning after June 15, 2003. Companies may also elect to apply the provisions of Issue 00-21 to existing arrangements and to record the income statement impact as the cumulative effect of a change in accounting principle. The Company adopted Issue 00-21 prospectively. Management does not expect that the adoption of Issue 00-21 will have a significant impact on the Company’s financial position or results of operations.

 

12. Subsequent Event

 

On July 15, 2003, the Company entered into a capital lease financing arrangement with a financial institution, whereby the Company may acquire equipment pursuant to an equipment lease agreement. Rental installments for equipment leased will be payable over a 60-month period at a rate of 3.05%, subject to certain adjustments, commencing in January 2004.

 

8



 

Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Business Overview

 

We are a leading provider of health and human services program management, consulting services and systems solutions primarily to government. Since our inception, we have been at the forefront of innovation in meeting our mission of “Helping Government Serve the People®.” We use our expertise, experience and advanced information technology to make government operations more efficient while improving the quality of services provided to program beneficiaries. We operate primarily in the United States and we have had contracts with government agencies in all 50 states. We have been profitable every year since we were founded in 1975. For the fiscal year ended September 30, 2002, we had revenue of $518.7 million and net income of $40.3 million. For the nine months ended June 30, 2003, we had revenue of $405.1 million and net income of $25.9 million.

 

Business Combinations and Acquisitions

 

As part of our growth strategy, we intend to continue to selectively identify and pursue complementary businesses to expand our geographic reach and the breadth and depth of our services and to enhance our customer base.

 

On October 1, 2002, we acquired Themis Program Management and Consulting Limited and GAEA Management Ltd. (together “Themis”), located in British Columbia, Canada, for cash consideration of approximately $1.7 million. Additional consideration may be paid based on Themis achieving certain future performance objectives. In conjunction with the purchase, we recorded approximately $1.0 million of goodwill and $0.7 million of intangible assets, which has been assigned to the Human Services business segment.

 

On May 1, 2003, we acquired the National Misdemeanant Private Probation Operations business of B. I. Incorporated (referred to as "Correctional Services") for approximately $10.5 million. In conjunction with the purchase, we recorded goodwill of $9.1 million and intangible assets, primarily non-competition agreements and customer relationships, of $1.2 million, which have been assigned to the Human Services business segment. The Correctional Services business constitutes one of the largest providers of community corrections services in the United States and provides programming that includes treatment groups and education classes and drug and alcohol testing and monitoring. The primary reasons for acquiring the Correctional Services business was to expand our presence in the correction services market and to strategically complement our current service offerings in the human services area.

 

9



 

Results of Operations – Consolidated

 

The following table sets forth, for the periods indicated, selected statements of income data.

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

(dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

133,090

 

$

141,741

 

$

384,613

 

$

405,095

 

Cost of revenue

 

90,159

 

99,321

 

266,902

 

281,828

 

Gross profit

 

$

42,931

 

$

42,420

 

$

117,711

 

$

123,267

 

 

 

 

 

 

 

 

 

 

 

Gross margin percentage

 

32.3

%

29.9

%

30.6

%

30.4

%

Selling, general and administrative

 

$

24,861

 

$

27,408

 

$

69,770

 

$

80,084

 

Net income

 

$

11,104

 

$

8,965

 

$

29,407

 

$

25,931

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.49

 

$

0.43

 

$

1.28

 

$

1.23

 

Diluted

 

$

0.48

 

$

0.43

 

$

1.24

 

$

1.22

 

 

Our revenue increased 6.5% for the three months ended June 30, 2003 compared to the same period in fiscal 2002. Excluding revenue of $5.5 million related to acquisitions in fiscal 2002 and 2003, our revenue for the three months ended June 30, 2003 increased 2.4% when compared to the three months ended June 30, 2002. Our revenue increased 5.3% for the nine months ended June 30, 2003 compared to the same period in fiscal 2002. Excluding revenue of $20.0 million related to acquisitions in fiscal 2002 and 2003, we had an overall increase in revenue of 0.1% for the nine months ended June 30, 2003 compared to the nine months ended June 30, 2002.

 

Our gross margin decreased to 29.9% for the three months ended June 30, 2003, a decrease of 2.4%, compared to 32.3% for the same period in the 2002 fiscal year. Our gross margin was 30.4% for the nine months ended June 30, 2003, a decrease of 0.2%, compared to 30.6% for the same period in the 2002 fiscal year.

 

Selling, general and administrative expense (“SG&A”) consists of management, marketing and administration costs (including salaries, benefits, bid and proposal efforts, travel, recruiting, continuing education, training and non-chargeable labor costs), facilities costs, printing, reproduction, communications and equipment depreciation. SG&A increased in the three months and nine months ended June 30, 2003 compared to the same periods in fiscal 2002 due to the increase in expenses necessary to support higher revenue and to strengthen the infrastructure to market our products and grow our business, including our proposal facilities and systems, and new finance, operational, and compliance personnel. The increase was also due to additional SG&A related to businesses acquired in fiscal 2002 and 2003.

 

Our provision for income taxes for the three-month and nine-month periods ended June 30, 2003 was 39.5% of income before income taxes as compared to 40.5% for the three-month and nine-month periods ended June 30, 2002. These decreases were due primarily to differences in the amounts of certain expense items and some recently implemented tax reduction strategies.

 

Net income for the three months ended June 30, 2003 was $9.0 million, or $0.43 per diluted share, compared with net income of $11.1 million, or $0.48 per diluted share, for the three months ended June 30, 2002. Net income for the nine months ended June 30, 2003 was $25.9 million, or $1.22 per diluted share, compared with net income of $29.4 million, or $1.24 per diluted share, for the nine months ended June 30, 2002. These declines in net income are attributed primarily to general weaknesses in the state government markets due to current state fiscal conditions.

 

10



 

Consulting Segment

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

(dollars in thousands)

 

 

 

 

 

Revenue

 

$

34,518

 

$

37,466

 

$

102,930

 

$

104,227

 

Cost of revenue

 

19,010

 

22,044

 

55,332

 

60,755

 

Gross profit

 

$

15,508

 

$

15,422

 

$

47,598

 

$

43,472

 

 

 

 

 

 

 

 

 

 

 

Gross margin percentage

 

44.9

%

41.2

%

46.2

%

41.7

%

 

Revenue of our Consulting segment increased 8.5% for the three months ended June 30, 2003 compared to the same period in fiscal 2002, and increased 1.3% for the nine months ended June 30, 2003 compared to the same period in fiscal 2002. These increases were attributable primarily to growth in our financial services practice as well as our education business. Gross margin decreased to 41.2% for the three months ended June 30, 2003 from 44.9% for the same period in fiscal 2002, and decreased to 41.7% for the nine months ended June 30, 2003 from 46.2% for the same period in fiscal 2002. These declines in gross margin were primarily due to competitive pressures as well as weaknesses in the management consulting and IT consulting practices as government procurement of traditional consulting services and large system projects has declined.

 

Health Services Segment

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

(dollars in thousands)

 

 

 

 

 

Revenue

 

$

42,704

 

$

40,923

 

$

118,983

 

$

123,032

 

Cost of revenue

 

34,116

 

32,391

 

98,902

 

94,558

 

Gross profit

 

$

8,588

 

$

8,532

 

$

20,081

 

$

28,474

 

 

 

 

 

 

 

 

 

 

 

Gross margin percentage

 

20.1

%

20.8

%

16.8

%

23.1

%

 

Revenue of our Health Services segment decreased 4.2% for the three months ended June 30, 2003 compared to the same period in fiscal 2002, and increased 3.4% for the nine months ended June 30, 2003 compared to the same period in fiscal 2002. These changes were due primarily to variations in volume of certain existing enrollment broker contracts and changes in certain discretionary components, such as revenue from project-related mailing and advertising activities. Gross margin increased to 20.8% for the three months ended June 30, 2003 from 20.1% for the same period in fiscal 2002, and to 23.1% for the nine months ended June 30, 2003 from 16.8% for the same period in fiscal 2002. These improvements were due primarily to improved profitability on certain projects in fiscal 2003. Fiscal 2002 results were adversely impacted by losses related to a certain project, which losses were non-recurring.

 

11



 

Human Services Segment

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

(dollars in thousands)

 

 

 

 

 

Revenue

 

$

38,085

 

$

38,521

 

$

110,883

 

$

112,894

 

Cost of revenue

 

28,746

 

30,929

 

86,390

 

90,994

 

Gross profit

 

$

9,339

 

$

7,592

 

$

24,493

 

$

21,900

 

 

 

 

 

 

 

 

 

 

 

Gross margin percentage

 

24.5

%

19.7

%

22.0

%

19.4

%

 

Revenue of our Human Services segment increased 1.1% for the three months ended June 30, 2003 compared to the same period in fiscal 2002. The increase in revenue included $5.9 million of revenue from entities acquired in fiscal 2002 and 2003 ($2.3 million of which was from the Correctional Services business aquired on May 1, 2003) and approximately $0.4 million of revenue resulting from the resolution of pre-acquisition gain contingencies at APG, Inc. (“APG”). Revenue of our Human Services segment increased 1.8% for the nine months ended June 30, 2003 compared to the same period in fiscal 2002. The increase in revenue included $20.2 million of revenue from entities acquired in fiscal 2002 and 2003 and approximately $1.7 million of revenue resulting from the resolution of pre-acquisition gain contingencies at APG. Gross margins decreased to 19.7% for the three months ended June 30, 2003 from 24.5% for the same period in fiscal 2002, and to 19.4% for the nine months ended June 30, 2003 from 22.0% for the same period in fiscal 2002. The fiscal 2003 financial results of the Human Services segment reflects weakened demand in certain lines of business, particularly Workforce Services where we have experienced certain program reductions.

 

Systems Segment

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

(dollars in thousands)

 

 

 

 

 

Revenue

 

$

17,783

 

$

24,831

 

$

51,817

 

$

64,942

 

Cost of revenue

 

8,287

 

13,957

 

26,278

 

35,521

 

Gross profit

 

$

9,496

 

$

10,874

 

$

25,539

 

$

29,421

 

 

 

 

 

 

 

 

 

 

 

Gross margin percentage

 

53.4

%

43.8

%

49.2

%

45.3

%

 

Revenue of our Systems segment increased 39.6% for the three months ended June 30, 2003 compared to the same period in fiscal 2002. Revenue of our Systems segment increased 25.3% for the nine months ended June 30, 2003 compared to the same period in fiscal 2002. These revenue increases were primarily due to new contracts awarded to certain divisions within the segment. Gross margin decreased to 43.8% for the three months ended June 30, 2003 from 53.4% for the same period in fiscal 2002, and decreased to 45.3% for the nine months ended June 30, 2003 from 49.2% for the same period in fiscal 2002. These decreases were primarily due to declines in software license revenue, which carries higher gross margins.

 

12



 

Other (income) expenses

 

 

 

Three Months
Ended June 30,

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

2002

 

2003

 

 

 

(dollars in thousands)

 

Non-cash equity based compensation

 

$

85

 

$

214

 

$

85

 

$

726

 

Percentage of revenue

 

 

0.1

%

 

0.2

%

 

 

 

 

 

 

 

 

 

 

Amortization of acquisition related intangibles

 

$

180

 

$

311

 

$

693

 

$

864

 

Percentage of revenue

 

0.1

%

0.2

%

0.2

%

0.2

%

 

 

 

 

 

 

 

 

 

 

Interest and other income

 

$

(858

)

$

(331

)

$

(2,261

)

$

(1,268

)

Percentage of revenue

 

0.6

%

0.2

%

0.6

%

0.3

%

 

We recognized approximately $0.2 million and $0.7 million of non-cash equity-based compensation expense for the three-month and nine-month periods ended June 30, 2003, respectively, related to the issuance of restricted stock units in May 2002. In future quarters, the quarterly amortization expense related to these restricted stock units is estimated to be approximately $0.2 million, which amount may increase if certain earnings targets are achieved.

 

Interest and other income decreased due to less average cash on hand and lower interest rates.

 

Liquidity and Capital Resources

 

 

 

Nine Months
Ended June 30,

 

 

 

2002

 

2003

 

 

 

(dollars in thousands)

 

Net cash provided by (used in):

 

 

 

 

 

Operating activities

 

$

35,043

 

$

34,028

 

Investing activities

 

(21,458

)

(22,671

)

Financing activities

 

(16,646

)

(16,821

)

Net decrease in cash and cash equivalents

 

$

(3,061

)

$

(5,464

)

 

For the nine months ended June 30, 2003, cash provided by our operations was $34.0 million, compared to cash provided of $35.0 million for the nine months ended June 30, 2002. Cash provided by operating activities for the nine months ended June 30, 2003 primarily consisted of net income of $25.9 million plus non-cash items aggregating $8.4 million offset by net uses of working capital of $0.3 million. Non-cash items included $7.6 million of depreciation and amortization. The net uses of working capital reflect an increase in accounts receivable-billed and accounts receivable-unbilled totaling $15.0 million offset by an increase in deferred revenue of $8.8 million. During the nine months ended June 30, 2002, cash provided by operating activities consisted primarily of net income of $29.4 million plus non-cash items of $12.5 million offset by net uses of working capital of $6.9 million. Non-cash items included $4.6 million of depreciation and amortization. The net uses of working capital were primarily due to a decrease in deferred revenue of $4.3 million.

 

For the nine months ended June 30, 2003, cash used in investing activities was $22.7 million, compared to $21.5 million for the nine months ended June 30, 2002. Cash used in investing activities for the nine months ended June 30, 2003 primarily consisted of $13.5 million for acquisitions of businesses, $3.0 million for expenditures for capitalized software costs, and purchases of property and equipment of $4.6 million. During the nine months ended June 30, 2002, we used $12.7 million for the acquisition of a business, $4.2 million for expenditures related to capitalized software costs, and purchases of property and equipment of $5.4 million.

 

For the nine months ended June 30, 2003, cash used in financing activities was $16.8 million, compared to $16.6 million for the nine months ended June 30, 2002. Cash used in financing activities for the nine months ended

 

13



 

June 30, 2003 primarily consisted of $20.4 million of common stock repurchases offset by $3.7 million of sales of stock to employees through our Employee Stock Purchase Plan and Equity Incentive Plan. Cash used in financing activities for the nine months ended June 30, 2002 primarily consisted of common stock repurchases of $24.7 million offset by $8.2 million of proceeds from sales of stock to employees through our Employee Stock Purchase Plan and Equity Incentive Plan.

 

Under resolutions adopted in May 2000, July 2002, and March 2003, our Board of Directors has authorized the repurchase, at management’s discretion, of up to an aggregate of $90 million of our common stock. In addition, in June 2002, the Board of Directors authorized the use of option exercise proceeds for the repurchase of our common stock. During the nine-month period ended June 30, 2003, we repurchased approximately 1.0 million shares. At June 30, 2003, $27.8 million remained available for future stock repurchases under the program.

 

Our working capital at June 30, 2003 was $181.3 million. At June 30, 2003, we had cash, cash equivalents, (excluding restricted cash) and marketable securities of $89.6 million and no debt. We believe this strong liquidity and financial position allows us to continue our stock repurchase program, depending on the price of our common stock, and to pursue selective acquisitions.

 

Under the provisions of a recently awarded long-term contract, we expect to incur certain reimbursable transition period costs of up to $18.2 million through December 31, 2003. During this transition period, these expenditures will result in the use of our cash or in us entering into lease financing arrangements for a portion of the costs. Reimbursement of these costs will occur over the sixty months of the contract operating period, commencing January 2004. Also under the provisions of this contract, we issued a standby letter of credit facility totaling $20.0 million that may be called by a customer in the event we default under the terms of our contract with that customer. The facility contains financial covenants that establish minimum levels of tangible net worth and EBITDA and require the maintenance of certain cash balances.

 

We believe that we will have sufficient resources to meet our currently anticipated capital expenditure and working capital requirements for at least the next twelve months.

 

Critical Accounting Policies and Estimates

 

Our discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities and the reported amounts of revenue and expenses. On an ongoing basis, we evaluate our estimates including those related to revenue recognition and cost estimation on certain contracts, the realizability of goodwill, and amounts related to income taxes, certain accrued liabilities and contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.

 

We believe that we do not have significant off-balance sheet risk or exposure to liabilities that are not recorded or disclosed in our financial statements. While we have significant operating lease commitments for office space, those commitments are generally tied to the period of performance under related contracts. Additionally, although on certain contracts we are bound by performance bond commitments and standby letters of credit, we have not had any defaults resulting in draws on performance bonds or letters of credit. Also, we do not speculate in derivative transactions.

 

We believe the following critical accounting policies affect the significant judgments and estimates used in the preparation of our condensed consolidated financial statements:

 

Revenue recognition. Our revenue is generated from contracts with various payment arrangements,

 

14



 

including:  (1) fixed-price; (2) costs incurred plus a negotiated fee (“cost-plus”); (3) performance-based criteria; and (4) time and materials (used primarily by the Consulting segment). Also, some contracts contain “not-to-exceed” provisions. For the nine months ended June 30, 2003, revenue from fixed-price contracts was approximately 33% of total revenue; revenue from cost-plus contracts was approximately 18% of total revenue; revenue from performance-based contracts was approximately 37% of total revenue; and revenue from time and materials contracts was approximately 12% of total revenue. A majority of our contracts with state and local government agencies have been fixed-price and performance-based and our contracts with the federal government have been cost-plus. Fixed-price and performance-based contracts generally offer higher margins but typically involve more risk than cost-plus or time and materials reimbursement contracts.

 

We recognize revenue on fixed-priced contracts as services are provided using the percentage of completion method, which relies on estimates of total expected contract revenue and costs. The cumulative impact of any revisions in estimated revenue and costs are recognized in the period in which the facts that give rise to the revision become known. Also, with fixed-price contracts, we are subject to the risk of potential cost overruns. We recognize revenue on our performance-based contracts as such revenue becomes fixed or determinable, which generally occurs when amounts are billable to clients. For certain contracts, this may result in revenue being recognized in large, irregular increments. Additionally, costs related to certain contracts are incurred in periods prior to recognizing revenue. Certain of these direct costs may be deferred until services are provided and revenue begins to be recognized when reimbursement of such costs is contractually guaranteed. These factors may result in irregular revenue and profit margins for performance-based contracts, which exist in our Consulting segment, Health Services segment and Human Services segment. As a result, with performance-based contracts we have more uncertainty regarding expected future revenue.

 

Our most significant expense is cost of revenue, which consists primarily of project-related costs such as employee salaries and benefits, subcontractors, computer equipment and travel expenses. Our management uses its judgment and experience to estimate cost of revenue expected on projects. Our management’s ability to accurately predict personnel requirements, salaries and other costs as well as to effectively manage a project or achieve certain levels of performance can have a significant impact on the gross margins related to our fixed-price, performance-based and time and materials contracts. If actual costs are higher than our management’s estimates, profitability may be adversely affected. Service cost variability has little impact on cost-plus arrangements because allowable costs are reimbursed by the client.

 

We also license software under non-cancelable license agreements. License fee revenue is recognized when a non-cancelable license agreement is in force, the product has been shipped, the license fee is fixed or determinable, and collection is probable. If the fee is not fixed or determinable, revenue is recognized as payments become due from the client. In addition, when software license contracts contain post-contract customer support as part of a multiple element arrangement, revenue is recognized based upon the vendor-specific objective evidence of the fair value of each element. Maintenance and post-contract customer support revenue are recognized ratably over the term of the related agreements, which in most cases is one year. Revenue from software-related consulting services under time and material contracts and for training is recognized as services are performed. Revenue from other software-related contract services requiring significant modification or customization of software is recognized under the percentage-of-completion method.

 

Human Services segment and Health Services segment contracts generally contain base periods of one or more years as well as one or more option periods that may cover more than half of the potential contract duration. As of September 30, 2002, our average Human Services segment and Health Services segment contract duration was approximately 2.5 years. Our Consulting segment contracts had performance periods ranging from one month to approximately two years. Our average Systems segment contract duration was one year.

 

Impairment of goodwill. In June 2001, the Financial Accounting Standards Board issued Statements of Financial Accounting Standards No. 141, Business Combinations (“FAS 141”), and No. 142, Goodwill and Other Intangible Assets (“FAS 142”). Under the new rules, goodwill is no longer amortized but is subject to annual impairment tests in accordance with FAS 141 and FAS 142. We elected to adopt FAS 141 and 142 effective

 

15



 

October 1, 2001, and as a result, amortization of goodwill was discontinued as of October 1, 2001. Upon adoption, the required impairment tests were performed. Results of these impairment tests did not generate any impairment loss. Goodwill will be tested on an annual basis, or more frequently as impairment indicators arise. Annual impairment tests involve the use of estimates related to the fair market values of the business operations with which goodwill is associated. Losses, if any, resulting from annual impairment tests will be reflected in operating income in our income statement.

 

Forward Looking Statements

 

From time to time, we may make forward-looking statements that are not historical facts, including statements about our confidence and strategies and our expectations about revenue, results of operations, profitability, current and future contracts, market opportunities, market demand or acceptance of our products and services. Any statements contained in this Quarterly Report on Form 10-Q that are not statements of historical fact may be forward-looking statements. The words “could,” “estimate,” “future,” “intend,” “may,” “opportunity,” “potential,” “project,” “will,” “believes,” “anticipates,” “plans,” “expect” and similar expressions are intended to identify forward-looking statements. These statements may involve risks and uncertainties that could cause our actual results to differ materially from those indicated by such forward-looking statements. Examples of these risks 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 this Quarterly Report on Form 10-Q.

 

Item 3.   Quantitative and Qualitative Disclosures About Market Risk.

 

We believe that our exposure to market risk related to the effect of changes in interest rates, foreign currency exchange rates, commodity prices and equity prices with regard to instruments entered into for trading or for other purposes is immaterial.

 

Item 4.   Controls and Procedures.

 

        (a)  Evaluation of Disclosure Controls and Procedures

 

                Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, the “Exchange Act”) as of the end of the period covered by this quarterly report.  Based on this evaluation, our principal executive officer and principal financial officer concluded that these disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods.

 

        (b)  Changes in Internal Control over Financial Reporting

 

                There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II.  OTHER INFORMATION

 

Item 6.   Exhibits and Reports on Form 8-K.

 

(a)           Exhibits.  The Exhibits filed as part of this Quarterly Report on Form 10-Q are listed on the Exhibit Index immediately preceding the Exhibits. The Exhibit Index is incorporated herein by reference.

 

(b)           Reports on Form 8-K.

 

During the quarter ended June 30, 2003, the Registrant filed the following Current Reports on Form 8-K:

 

16



 

1)             Current Report on Form 8-K (Items 7 and 9) was filed on April 3, 2003 to update the Company’s earnings outlook for the fiscal year ending September 30, 2003;

2)             Current Report on Form 8-K (Item 12) was filed on May 6, 2003 to announce the Company’s financial results for the quarter ended March 31, 2003; and

3)             Current Report on Form 8-K (Item 5) was filed on May 23, 2003 to disclose certain financial information reflecting a division reorganization within the Company’s principal operating segments.

 

17



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

MAXIMUS, INC.

 

 

 

 

Date:     August 13, 2003

 

By:

/s/ Richard A. Montoni

 

 

 

 

Richard A. Montoni

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial and Accounting Officer)

 

18



 

EXHIBIT INDEX

 

Exhibit No.

 

Description

 

 

 

31.1

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

 

 

31.2

 

Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Filed herewith.

 

 

 

32.1

 

Section 906 Principal Executive Officer Certification. Furnished herewith.

 

 

 

32.2

 

Section 906 Principal Financial Officer Certification. Furnished herewith.

 

 

 

99.1

 

Important Factors Regarding Forward Looking Statements. Filed herewith.

 

19