MAXIMUS Reports Record Revenue of $173.7 Million for the Third Quarter and Earnings of $0.47 per Diluted Share

Third quarter highlights include:

-- Third quarter revenue increased 8.4% to a quarterly record of $173.7 million, compared to revenue of $160.2 million reported for the same period last year,

-- Net income for the third quarter was $10.1 million, or $0.47 per diluted share, which was ahead of consensus estimates,

-- Cash provided by operations for the three months and nine months ended June 30, remained healthy at $11.9 million and $49.1 million respectively,

-- Cash, cash equivalents and marketable securities totaled $163.6 million at quarter end,

-- DSOs improved to 93 days at June 30, 2005, versus 95 days at June 30, 2004,

-- Awarded a five-year $370 million subcontract as part of the Texas ACCESS Alliance for the implementation and operation of integrated eligibility and enrollment for Texas health and human services programs,

-- Year-to-date contracts signed topped $1.1 billion which is already the Company's largest sales year ever, awarded but unsigned contracts totaled $243 million and sales pipeline was $1.2 billion at July 28, 2005,

-- The Company paid a quarterly cash dividend of $0.10 per share.

Revenue for the third quarter grew 8.4% to a quarterly record of$173.7 million compared to $160.2 million for the third quarter offiscal 2004. Net income for the third quarter was $10.1 million, or$0.47 per diluted share, compared to $9.9 million, or $0.45 perdiluted share, last year. For the nine months ended June 30, 2005,revenue increased 6.8% to $480.2 million compared to $449.8 millionfor the same period last year. For the nine-month period, net incometotaled $28.7 million, or $1.33 per diluted share, compared to netincome of $28.6 million, or $1.29 per diluted share, reported for thenine-month period last year.

"In the third quarter, we delivered financial results that met ourobjectives, and we remain on track to achieve previously forecastedresults for the full year," commented Lynn Davenport, Chief ExecutiveOfficer. "Fiscal 2005 is already a landmark sales year for the Companywith $1.1 billion in year-to-date signed contracts at the end of July.Perhaps most important was our strategic win on the Texas integratedeligibility contract which provides MAXIMUS with increasing momentumas we close out the year and move into fiscal 2006. Building uponother recent awards in California and British Columbia, we are in anincreasingly competitive position to pursue larger outsourcing andtechnology opportunities as they emerge. We are striving to expand ourcapabilities, service portfolio and base of government clients in thismore favorable market environment."

In the third quarter, year-over-year revenue growth was drivenprimarily from new work in the Operations and Consulting Segments.However, pre-contract and start-up expenses on certain largeOperations contracts resulted in lower margins for the period.Partially offsetting these costs were profitability gains in theConsulting practice.

Consulting

Consulting Segment revenue for the third quarter was 17% of totalCompany revenue and increased 20% to $30.1 million compared to $25.2million last year. Consulting revenue grew as a result of newcontracts and related license fees within the Education Group as wellas the successful completion of contingency-based work in theManagement and Financial Services Group. Operating income improved to$4.6 million with an operating margin of 15%. Profitability gains wereattributable to higher revenue with a favorable mix and the impact ofpreviously implemented cost-reduction initiatives.

Systems

Systems Segment revenue totaled $34.2 million, or 20% of totalCompany revenue for the period, compared to $36.8 million reported inthe third quarter of 2004. Systems operating income for the thirdquarter totaled $1.2 million, compared to $4.2 million recorded forthe same period a year ago. The Segment's weakness in the quarter ascompared to last year was a result of lower license revenue and thecompletion of a number of contracts that were at the height of theirproject cycles in fiscal 2004, including work in the areas of JusticeSolutions and Federal identification management work in EnterpriseServices. Management actions completed early in the third quarter,including certain cost reductions, are expected to contribute toimproved profitability in the fourth quarter.

Operations

Revenue for the Operations Segment represented 63% of totalCompany revenue and increased 11.2% in the quarter to $109.3 millioncompared to $98.2 million recorded in the same period a year ago,driven principally by the contribution of new work including theBritish Columbia Health Operations contract. As expected, totaloperating income decreased year-over-year to $9.0 million with anoperating margin of 8.2%. Decreases in operating income and marginresulted from the anticipated loss on the start-up of the BritishColumbia contract for the second half of fiscal 2005 and otherpre-contract expenses. The British Columbia contract is expected to beprofitable in fiscal 2006.

The Operations Segment is comprised of the Company's HealthServices and Human Services practices. Health Services revenueincreased 18% to $69.8 million for the third quarter versus $59.2million reported for the same period last year driven principally bynew work. Human Services revenue for the third quarter was $39.4million versus $39.0 million reported for the same period a year ago.Third quarter operating margin was 9.2% for Health Services and 6.6%for Human Services.

Sales and Pipeline Activity

Year-to-date signed contract wins through July 28, 2005 totaled$1.1 billion, compared to $324 million reported at July 29, 2004. Newcontracts pending at July 28, 2005 (awarded but unsigned) totaled $243million compared to $352 million, reported for the same period lastyear. Sales opportunities at July 28, 2005 totaled $1.2 billion(consisting of $258 million in proposals pending, $296 million inproposals in preparation, and $617 million in proposals tracking)compared to $1.3 billion reported at July 29, 2004.

Liquidity and Dividend

The Company generated cash from operations totaling $11.9 millionin the third quarter and $49.1 million year-to-date. Days SalesOutstanding at June 30, 2005 improved to 93 days compared to 95 daysreported for the same period last year.

At June 30, 2005, cash, cash equivalents and marketable securitiestotaled $163.6 million. During the third quarter, interest incomeincreased to $1.2 million principally from higher interest rates oninvested cash as part of the Company's cash management program. Underits stock repurchase program, the Company repurchased approximately130,000 shares of common stock and has approximately $27.1 millionavailable for future stock repurchases. On May 31, 2005, MAXIMUS paida quarterly cash dividend of $0.10 per share.

Outlook

For fiscal 2005, the Company is narrowing the range for its fullyear estimates. The Company now expects revenue in the range of $635million to $645 million and earnings per diluted share of $1.78 to$1.83.

Mr. Davenport concluded, "We are certainly pleased with resultsthis quarter. Moreover, the achievements realized against theCompany's six-point plan undertaken during fiscal 2005, along with ourrecord sales of $1.1 billion new contracts signed, are a solidfoundation for accelerating growth in fiscal 2006."

The Company will host a conference call on Thursday, August 4, at9:00 a.m. ET which is open to the public and can be accessed under theInvestor Information page of the Company's website at www.maximus.comor by calling:
800.552.8050(Domestic)/206.902.3258 (International)

For those unable to listen to the live call, a replay will beavailable through Thursday, August 11, 2005. Callers can access thereplay by dialing:
Replay: 800.207.7077 or 913.383.5767
PIN: 4188

MAXIMUS is one of America's leading government services companiesdevoted to providing program management, consulting and informationtechnology services. The Company has more than 5,100 employees locatedin more than 280 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 Quarterly Reporton Form 10-Q filed with the Securities and Exchange Commission (filenumber 001-12997) on May 9, 2005.
MAXIMUS, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

September 30, June 30,
2004 2005
------------- -------------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $91,854 $64,978
Marketable securities 47,400 98,615
Restricted cash 1,379 1,758
Accounts receivable - billed, net of
reserves of $5,567 and $7,967 111,834 128,166
Accounts receivable - unbilled 42,280 44,679
Prepaid expenses and other current assets 9,673 8,103
------------- -------------
Total current assets 304,420 346,299
Property and equipment, at cost 52,676 58,367
Less accumulated depreciation and
amortization (26,983) (31,430)
------------- -------------
Property and equipment, net 25,693 26,937
Capitalized software 30,918 38,396
Less accumulated amortization (12,667) (15,389)
------------- -------------
Capitalized software, net 18,251 23,007
Deferred contract costs, net 15,475 20,471
Goodwill 84,886 85,537
Intangible assets, net 9,807 8,265
Other assets, net 6,215 6,563
------------- -------------
Total assets $464,747 $517,079
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $27,476 $41,641
Accrued compensation and benefits 21,224 23,390
Deferred revenue 21,195 28,534
Income taxes payable - 1,722
Deferred income taxes 1,930 2,267
Current portion of capital lease
obligations 1,649 1,540
Other accrued liabilities 1,432 1,785
------------- -------------
Total current liabilities 74,906 100,879
Capital lease obligations, less current
portion 5,108 3,988
Deferred income taxes 10,766 15,630
Other liabilities 419 -
------------- -------------
Total liabilities 91,199 120,497
Shareholders' equity:
Common stock, no par value; 60,000,000
shares authorized; 21,319,847 and
21,322,091 shares issued and outstanding
at September 30, 2004 and June 30, 2005,
at stated amount, respectively 147,966 146,346
Accumulated other comprehensive loss (345) (97)
Retained earnings 225,927 250,333
------------- -------------
Total shareholders' equity 373,548 396,582
------------- -------------
Total liabilities and shareholders'
equity $464,747 $517,079
============= =============


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

Three Months Nine Months
Ended June 30, Ended June 30,
---------------------------------------
2004 2005 2004 2005
--------- --------- --------- ---------
Revenue $160,158 $173,658 $449,759 $480,204
Cost of revenue 114,696 126,427 317,083 344,853
--------- --------- --------- ---------
Gross profit 45,462 47,231 132,676 135,351
Selling, general and
administrative expenses 29,340 31,741 86,245 90,004
--------- --------- --------- ---------
Income from operations 16,122 15,490 46,431 45,347
Interest and other income, net 291 1,229 819 2,032
--------- --------- --------- ---------
Income before income
taxes 16,413 16,719 47,250 47,379
Provision for income taxes 6,483 6,604 18,664 18,715
--------- --------- --------- ---------
Net income $9,930 $10,115 $28,586 $28,664
========= ========= ========= =========

Earnings per share:
Basic $0.46 $0.47 $1.32 $1.35
========= ========= ========= =========
Diluted $0.45 $0.47 $1.29 $1.33
========= ========= ========= =========

Dividends per share $- $0.10 $- $0.20
========= ========= ========= =========

Weighted average shares
outstanding:
Basic 21,664 21,298 21,612 21,303
========= ========= ========= =========
Diluted 22,071 21,599 22,095 21,595
========= ========= ========= =========


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

Nine Months
Ended June 30,
---------------------
2004 2005
---------- ----------
Cash flows from operating activities:
Net income $28,586 $28,664
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 5,203 5,392
Amortization 4,366 5,334
Deferred income taxes 11,151 5,201
Tax benefit due to option exercises and
restricted stock units vesting 3,604 1,570
Non-cash equity based compensation 809 927
Change in assets and liabilities, net of
effects from acquisitions:
Accounts receivable - billed (7,667) (16,332)
Accounts receivable - unbilled (11,380) (2,399)
Prepaid expenses and other current assets (1,511) 1,128
Deferred contract costs (5,758) (4,997)
Other assets (4,360) (329)
Accounts payable 4,168 14,166
Accrued compensation and benefits (1,705) 2,166
Deferred revenue 2,195 7,338
Income taxes payable (971) 1,722
Other liabilities (526) (443)
---------- ----------
Net cash provided by operating activities 26,204 49,108

Cash flows from investing activities:
Acquisition of businesses, net of cash
acquired (6,429) (651)
Purchases of property and equipment (4,961) (6,637)
Capitalized software costs (6,212) (8,548)
Decrease (increase) in marketable
securities 62 (50,983)
Other 165 442
---------- ----------
Net cash used in investing activities (17,375) (66,377)

Cash flows from financing activities:
Employee stock transactions 21,340 7,872
Repurchases of common stock (15,133) (11,990)
Payments on capital lease obligations (797) (1,230)
Dividends paid - (4,259)
---------- ----------
Net cash provided by (used in) financing
activities 5,410 (9,607)
---------- ----------
Net increase (decrease) in cash and cash
equivalents 14,239 (26,876)
Cash and cash equivalents, beginning of period 117,372 91,854
---------- ----------
Cash and cash equivalents, end of period $131,611 $64,978
========== ==========


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

Three Months Nine Months
Ended June 30, Ended June 30,
--------------------- ---------------------
2004 2005 2004 2005
---------- ---------- ---------- ----------
Revenue:
Consulting $25,150 $30,149 $76,586 $79,939
Systems 36,778 34,237 106,547 102,748
Operations 98,230 109,272 266,626 297,517
---------- ---------- ---------- ----------
Total $160,158 $173,658 $449,759 $480,204
========== ========== ========== ==========

Income from Operations:
Consulting $1,965 $4,553 $7,262 $6,135
Systems 4,195 1,203 12,416 9,362
Operations 9,425 9,012 25,623 27,665
Consolidating
adjustments 537 722 1,130 2,185
---------- ---------- ---------- ----------
Total $16,122 $15,490 $46,431 $45,347
========== ========== ========== ==========