MAXIMUS Reports First Quarter Results; First Quarter Revenue of $162.7 Million and EPS of $0.41

-- First quarter revenue grew 6.7% over last year to $162.7 million,

-- The Company began expensing stock options in the first quarter of fiscal 2006 and as a result, net income was $8.9 million, or $0.41 per diluted share, compared to the same period a year ago on an options-adjusted basis of $8.2 million, or $0.38 per diluted share,

-- Cash, cash equivalents and marketable securities totaled $172.4 million at December 31,

-- Total pipeline was $1.3 billion at February 1, 2006,

-- The Company made significant implementation progress on the large new jobs that were awarded this past year.

Revenue for the first quarter ended December 31, 2005 grew 6.7% to$162.7 million compared to revenue of $152.5 million in the sameperiod a year ago. All revenue growth was organic. Net income was $8.9million or $0.41 per diluted share and, on an options-adjusted basis,compares to net income of $8.2 million or $0.38 per diluted sharereported for the same period last year. Beginning in the first quarterof 2006, the Company implemented FAS 123(R) on a prospective basis andcommenced expensing stock options as selling, general andadministrative expense.

Lynn Davenport, Chief Executive Officer commented, "Financialresults for the first quarter were at the top of our expected range.During the quarter, we also achieved key operational milestones on twolarge projects. Namely, in Texas we completed the operations andsystems launch for two major components and commenced the phased rollout of the fully integrated eligibility function. In British Columbia,while we have not achieved profitability, we were within servicetimelines by the end of November and in full compliance with servicelevel requirements in December. In addition to our projectimplementation efforts, we put new management in place at thebeginning of the quarter. They are fully engaged and we're activelyinvolved in several large outsourcing opportunities. We're confidentour progress this quarter positions us to achieve our long-term growthobjectives."

Results for the fiscal 2006 first quarter include a $0.6 millionforeign currency transaction gain recorded in other income which waspartially offset by $0.5 million in legal expense for an internalreview by independent outside counsel associated with the previouslydisclosed subpoena from the U.S. Attorney's Office for the District ofColumbia.

Consulting

Consulting segment revenue for the first quarter, whichrepresented 15% of total Company revenue, was $23.6 million, comparedto revenue of $24.1 million for the same period last year. Consultingoperating income for the first quarter increased to $2.5 million withan operating margin of 10.7% versus operating income of $2.3 million(which excludes stock option expense) in the same period last yeardriven principally by improvement in the Revenue Services division.

Systems

Systems segment revenue for the first quarter, which represented22% of total Company revenue, increased 10.5% to $36.3 million versus$32.8 million reported in last year's first quarter, driven by growthin Enterprise Resource Planning (ERP), Asset Solutions and EducationalSystems. Systems operating income for the first quarter returned tomore normalized levels and totaled $3.9 million with an operatingmargin of 10.7%, compared to the first quarter of fiscal 2005 whichhad operating income of $4.9 million (which excludes stock optionexpense). The decreased operating income in the first quarter of 2006was due to lower license revenue in Justice Solutions and less profitin Security Solutions, which benefited from higher income from acontract in the first quarter of 2005.

Operations

Revenue for the Operations Segment, which represented 63% of totalCompany revenue, increased 7.5% to $102.8 million compared to $95.6million recorded a year ago. Revenue growth for the quarter wasprimarily attributable to the British Columbia project, which launchedin April 2005. Operating income for the first quarter was $6.1 millionwith an operating margin of 5.9% compared to operating income of $7.1million (which excludes stock option expense) for the same period lastyear. The decreases in income and margin were as expected and relatedto the British Columbia project. The Company anticipates financialimprovement on this project throughout the remainder of the year.

Sales and Pipeline Activity

Year-to-date signed contract wins through February 1, 2006 totaledapproximately $130 million, compared to $447 million reported atJanuary 27, 2005, which included the $268 million British Columbiaaward. New contracts pending at February 1, 2006 (awarded butunsigned) totaled $161 million compared to $78 million reported forthe same period last year. Sales opportunities at February 1, 2006totaled $1.3 billion (consisting of $464 million in proposals pending,$190 million in proposals in preparation, and $633 million inproposals tracking) compared to $1.16 billion reported at January 27,2005.

Liquidity and Dividend

The Company generated cash from operations totaling $5.1 millionin the first quarter after the payout of annual bonuses. As expected,Days Sales Outstanding trended slightly higher due to the seasonalnature of collections during the holiday period and totaled 99 days atDecember 31, 2005.

At December 31, 2005, cash, cash equivalents, and marketablesecurities totaled $172.4 million. During the first quarter, theCompany generated interest and other income of approximately $2.0million, including a $0.6 million foreign currency transaction gain.The year-over-year increase in interest and other income was alsodriven by higher interest earned on invested cash. During the quarter,the Company repurchased approximately 118,400 shares of common stockand had approximately $26.4 million available at December 31, 2005,for future stock repurchases under its share repurchase program. TheCompany paid a quarterly cash dividend of $0.10 per share on November30, 2005.

Outlook and Conclusion

For fiscal 2006, the Company still expects revenue in the range of$710 million to $725 million and GAAP earnings of $1.87 to $1.92 perdiluted share.

"With new leadership added at the segment level, we are focusingour efforts to drive operational improvement and to pursue newopportunities for growth," concluded Mr. Davenport. "Our marketinginitiatives are organized with dedicated sales teams pursuing newopportunities, including large health and human services outsourcingcontracts and new federal work, both of which represent growingmarkets for the Company."

The Company will host a conference call on Thursday, February 2,2006 at 9:00 a.m. ET which is open to the public and can be accessedunder the Investor Relations page of the Company's website atwww.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 beavailable through Friday, February 10, 2006. Callers can access thereplay by dialing:

Replay: 800.207.7077 or 913.383.5767
PIN: 4504

MAXIMUS is one of America's leading government services companiesdevoted to providing program management, consulting and informationtechnology services. The Company has more than 5,300 employees locatedin more than 220 offices in the United States, Canada and Australia.In 1999, 2001, 2002, 2003, and 2004 MAXIMUS was selected by ForbesMagazine as one of the Best 200 Small Companies in America for thatyear. MAXIMUS was selected by Business Week Magazine as one of the 100Best Hot Growth Small Companies in 1999, 2000, 2001, and 2002.Additionally, MAXIMUS is included in the Russell 2000 Index and theS&P SmallCap 600 Index.

Statements that are not historical facts, including statementsabout the Company's confidence and strategies and the Company'sexpectations about revenues, results of operations, profitability,future contracts, market opportunities, market demand or acceptance ofthe Company's products are forward-looking statements that involverisks and uncertainties. These uncertainties could cause the Company'sactual results to differ materially from those indicated by suchforward-looking statements and include reliance on government clients;risks associated with government contracting; risks involved inmanaging government projects; legislative changes and politicaldevelopments; opposition from government unions; challenges resultingfrom growth; adverse publicity; and legal, economic, and other risksdetailed in Exhibit 99.1 to the Company's most recent Annual Report onForm 10-K filed with the Securities and Exchange Commission (filenumber 001-12997).

MAXIMUS, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)


September 30, December 31,
2005 2005
-------------- --------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $59,073 $36,707
Marketable securities 119,290 135,665
Restricted cash 2,193 2,201
Accounts receivable - billed, net of
reserves of $6,013 and $8,036 124,477 123,580
Accounts receivable - unbilled 43,774 47,194
Deferred income taxes - 2,367
Prepaid expenses and other current
assets 7,270 7,462
-------------- --------------
Total current assets 356,077 355,176
Property and equipment, at cost 64,730 68,322
Less accumulated depreciation and
amortization (33,574) (35,717)
-------------- --------------
Property and equipment, net 31,156 32,605
Capitalized software 40,770 42,650
Less accumulated amortization (16,817) (18,250)
-------------- --------------
Capitalized software, net 23,953 24,400
Deferred contract costs, net 22,162 29,234
Goodwill 86,832 86,832
Intangible assets, net 7,756 7,247
Other assets, net 6,626 6,685
-------------- --------------
Total assets $534,562 $542,179
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $38,151 $40,700
Accrued compensation and benefits 26,828 21,371
Deferred revenue 32,898 38,315
Income taxes payable 4,695 4,633
Deferred income taxes 277 -
Current portion of capital lease
obligations 1,502 1,517
Other accrued liabilities 3,386 2,306
-------------- --------------
Total current liabilities 107,737 108,842
Capital lease obligations, less current
portion 3,606 3,221
Deferred income taxes 17,225 19,739
Other liabilities 40 -
-------------- --------------
Total liabilities 128,608 131,802
Shareholders' equity:
Common stock, no par value;
60,000,000 shares authorized;
21,451,302 and 21,388,592 shares
issued and outstanding at September
30, 2005 and December 31, 2005, at
stated amount, respectively 150,883 149,345
Accumulated other comprehensive loss (522) (1,321)
Retained earnings 255,593 262,353
-------------- --------------
Total shareholders' equity 405,954 410,377
-------------- --------------
Total liabilities and
shareholders' equity $534,562 $542,179
============== ==============



MAXIMUS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)


Three Months
Ended December 31,
------------------------------
2004 2005
-------------- --------------
Revenue $152,495 $162,726
Cost of revenue 108,090 117,980
-------------- --------------
Gross profit 44,405 44,746
Selling, general and administrative
expense 29,450 31,564
Legal expense 99 500
-------------- --------------
Income from operations 14,856 12,682
Interest and other income, net 100 2,038
-------------- --------------
Income before income taxes 14,956 14,720
Provision for income taxes 5,907 5,814
-------------- --------------
Net income $9,049 $8,906
============== ==============

Earnings per share:
Basic $0.43 $0.42
============== ==============
Diluted $0.42 $0.41
============== ==============

Dividends per share $- $0.10
============== ==============

Weighted average shares outstanding:
Basic 21,307 21,432
============== ==============
Diluted 21,551 21,908
============== ==============


Note: In the three months ended December 31, 2005, the Company
adopted FAS 123 (R) on a prospective basis and commenced expensing
stock options. Consequently, selling, general and administrative
expense, income from operations, and associated margin percentages for
periods prior to adoption may not be comparable to fiscal 2006 data.



MAXIMUS, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)


Three Months
Ended December 31,
------------------------------
2004 2005
-------------- --------------
Cash flows from operating activities:
Net income $9,049 $8,906
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 1,739 2,202
Amortization 1,753 1,942
Deferred income taxes 496 (130)
Tax benefit due to option
exercises and restricted stock
units vesting 224 -
Non-cash equity based
compensation 316 1,333
Change in assets and liabilities,
net of effects from acquisitions:
Accounts receivable - billed (7,368) 897
Accounts receivable - unbilled 344 (3,421)
Prepaid expenses and other
current assets 2,208 (192)
Deferred contract costs 608 (7,073)
Other assets 495 (707)
Accounts payable (1,298) 2,548
Accrued compensation and benefits (1,651) (5,457)
Deferred revenue 218 5,417
Income taxes payable 3,054 (62)
Other liabilities (102) (1,127)
-------------- --------------
Net cash provided by operating
activities 10,085 5,076
Cash flows from investing activities:
Acquisition of businesses, net of
cash acquired (257) -
Purchases of property and
equipment (1,817) (3,651)
Capitalized software costs (2,888) (1,880)
Increase in marketable securities - (16,525)
Other 328 -
-------------- --------------
Net cash used in investing
activities (4,634) (22,056)
Cash flows from financing activities:
Employee stock transactions 1,937 1,532
Repurchases of common stock (4,280) (4,315)
Payments on capital lease
obligations (405) (370)
Tax benefit due to option
exercises and restricted stock
units vesting - (87)
Cash dividends paid - (2,146)
-------------- --------------
Net cash used in financing
activities (2,748) (5,386)
-------------- --------------
Net increase (decrease) in cash and
cash equivalents 2,703 (22,366)
Cash and cash equivalents, beginning of
period 91,854 59,073
-------------- --------------
Cash and cash equivalents, end of
period $94,557 $36,707
============== ==============



MAXIMUS, Inc.
Segment Information
(In thousands)
(Unaudited)

The following table provides certain financial information for each of
the Company's business segments:


Three Months
Ended December 31,
------------------------------
2004 2005
-------------- --------------
Revenue:
Consulting $24,064 $23,635
Systems 32,838 36,290
Operations 95,593 102,801
-------------- --------------
Total $152,495 $162,726
============== ==============

Gross Profit:
Consulting $10,420 $10,196
Systems 14,030 13,870
Operations 19,955 20,680
-------------- --------------
Total $44,405 $44,746
============== ==============

Selling, General and Administrative
expense:
Consulting $8,130 $7,660
Systems 9,104 9,983
Operations 12,820 14,612
Corporate/other (604) (691)
-------------- --------------
Total $29,450 $31,564
============== ==============

Income from Operations:
Consulting $2,290 $2,536
Systems 4,926 3,887
Operations 7,135 6,068
Consolidating adjustments 604 691
Legal expense (99) (500)
-------------- --------------
Total $14,856 $12,682
============== ==============


Note: In the three months ended December 31, 2005, the Company
adopted FAS 123 (R) on a prospective basis and commenced expensing
stock options. Consequently, selling, general and administrative
expense, income from operations, and associated margin percentages for
periods prior to adoption may not be comparable to fiscal 2006 data.