SRX Sra International

SRA Announces Financial Results for Fourth Quarter and Fiscal Year 2005 * Revenue: $241.1 Million for Fiscal Fourth Quarter, $881.8 Million for Fiscal Year 2005 FAIRFAX, Va., Aug. 1 /PRNewswire-FirstCall/ -- SRA International, Inc. (NYSE:SRX), a leading provider of information technology services and solutions to the federal government, today announced operating results for the fourth quarter and fiscal year 2005, which ended June 30, 2005. Revenue for the quarter increased 33% from $180.9 million in the June 2004 quarter to $241.1 million. Revenue for the year increased 43% from $615.8 million in fiscal year 2004 to $881.8 million. Organic revenue growth was 38% for the year. Operating income for the quarter increased 28% from $18.9 million in the June 2004 quarter to $24.3 million. Operating income margin was 10.1% for the quarter. Full-year operating income increased 45% from $61.6 million in fiscal year 2004 to $89.1 million. Operating income margin was 10.1% for the full fiscal year. Net income for the quarter increased 34% from $11.9 million in the June 2004 quarter to $15.9 million. Net income for the year increased 48% from $38.9 million in fiscal year 2004 to $57.7 million. Given the 2-for-1 stock split effective May 27, 2005, diluted earnings per share for the quarter increased 27% from $0.22 in the June 2004 quarter to $0.28. Split-adjusted diluted earnings per share for the year increased 44% from $0.71 in fiscal year 2004 to $1.02. Renny DiPentima, SRA President and Chief Executive Officer, stated, "We are pleased to complete our 27th consecutive year of growth and profitability. The federal IT services market continues to grow, and our visibility into future business is excellent. We believe that we can build one of the world's best companies by upholding our ethic of honesty and service and continuing to create value for our customers, employees, and shareholders." Chief Financial Officer Stephen Hughes added, "We are pleased with the growth and returns to shareholders during fiscal year 2005. We have deployed a significant part of our cash and maintain a healthy balance sheet for future growth. We were also able to improve our cash management this quarter as we reduced days sales outstanding from 75 days to 74 days." New Business Awards During the fourth quarter, SRA won new business with potential value of $536 million. For the fiscal year the Company won new business with a potential value of $1.8 billion if all options are exercised. The Company's backlog of signed business orders is now over $2.7 billion, an increase of 32% over the previous fiscal year. Major highlights of competitive contract awards during the quarter include: * Environmental Protection Agency (EPA) Information Technology Solutions- Business Information Strategic Support (ITS-BISS). SRA will provide a full range of IT advisory and assistance services to EPA under this 5- year contract with a maximum value of $148 million. Services provided will include enterprise architecture; information security; information management policy, planning, acquisition, and infrastructure management support; customer relationship management; assessment of emerging technologies; business process management; and independent verification and validation. * Department of Transportation Federal Aviation Administration Enterprise Service Center (ESC). SRA was awarded a six-year contract worth up to $97 million to support the Financial Management Line of Business Center of Excellence within the ESC. SRA will work with ESC to create a strategic plan for the Center of Excellence, develop a framework for executing projects, and implement enterprise resource planning solutions throughout the federal government using the Oracle Federal Financials enterprise software suite. * Department of Justice (DoJ) Office of Justice Programs (OJP). SRA will provide IT systems development, maintenance, and integration services to the OJP under a task order with an estimated value of $80 million over 6 years if all options are exercised. SRA will develop, enhance, integrate, and maintain two major OJP systems: (1) the Grants Management System, which automates the application and approval process for the $8 billion in federal grants to state, local, and private organizations, and (2) the Integrated Financial Management Information System, which is the chief financial accounting system for OJP. * Securities and Exchange Commission (SEC) IT Security Program. SRA was awarded a contract to provide a broad range of information assurance services to the SEC. The task order has an estimated value of $12.7 over five years if all options are exercised. Under this contract, SRA will work with the SEC Office of Information Technology to develop an IT security architecture framework that comprises security plans and policies; provide a training and awareness program to facilitate compliance with the IT security architecture; and develop a compliance monitoring and enforcement program. Forward Guidance The Company is issuing initial guidance for the first quarter of fiscal year 2006 and reaffirming its forward guidance for fiscal year 2006 provided on June 13, 2005. The table below represents management's current expectations about the Company's future financial performance, based on information available at this time. The forward guidance in the table below does not include any effect for acquisitions SRA might make in the future. Measure Quarter Ending Fiscal Year Ending September 30, 2005 June 30, 2006 Revenue (in millions) $260-$265 $1,100-$1,140 Diluted EPS, excluding FAS 123R effect At least $0.27 $1.20-$1.25 Range of FAS 123R Dilution 11%-13% 11%-13% Diluted Share Equivalents (in millions) 57.6 58.1 About SRA International, Inc. SRA is a leading provider of information technology services and solutions -- including strategic consulting; systems design, development, and integration; and outsourcing and managed services -- to clients in national security, civil government, and health care and public health markets. The Company also delivers business solutions for text and data mining, contingency and disaster response planning, information assurance, environmental strategies, enterprise systems management, and wireless integration. FORTUNE(R) magazine has chosen SRA as one of the "100 Best Companies to Work For" for six consecutive years. In 2005, BusinessWeek selected SRA as one of its "Hot Growth" companies and as an Info Tech 100 Company. The Company's 4,600 employees serve clients from its headquarters in Fairfax, Virginia, and offices across the country. For additional information on SRA, please visit http://www.sra.com/. Any statements in this press release about future expectations, plans, and prospects for SRA, including statements containing the words "estimates," "believes," "anticipates," "plans," "expects," "will," and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including: our dependence on our contracts with federal government agencies, particularly within the U.S. Department of Defense, for substantially all of our revenue, our dependence on our GSA schedule contracts and our position as a prime contractor on government-wide acquisition contracts to grow our business, and other factors discussed in our latest quarterly report on Form 10-Q filed with the SEC on May 2, 2005. In addition, the forward-looking statements included in this press release represent our views as of August 1, 2005. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to August 1, 2005. Consolidated Statements of Operations (Unaudited) (in thousands, except share and per share amounts) Three Months Ended Year Ended 6/30/04 6/30/05 6/30/04 6/30/05 Revenue $ 180,860 $ 241,066 $ 615,802 $ 881,770 Operating costs and expenses: Cost of services 131,223 177,328 442,771 653,115 Selling, general, and administrative 27,691 35,623 100,919 126,404 Depreciation and amortization 2,998 3,796 10,511 13,141 Total operating costs and expenses 161,912 216,747 554,201 792,660 Operating income 18,948 24,319 61,601 89,110 Interest income 269 1,195 1,474 3,442 Other income - - 153 - Income before taxes 19,217 25,514 63,228 92,552 Provision for income taxes 7,341 9,648 24,291 34,829 Net income $ 11,876 $ 15,866 $ 38,937 $ 57,723 Earnings per share: Basic $ 0.23 $ 0.29 $ 0.76 $ 1.09 Diluted $ 0.22 $ 0.28 $ 0.71 $ 1.02 Weighted-average shares: Basic 51,622,808 53,865,732 51,008,978 52,965,623 Diluted 55,104,588 57,297,118 54,738,028 56,549,303 Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except per share amounts) As of 6/30/04 6/30/05 Current assets: Cash and cash equivalents $ 143,367 $ 162,973 Short-term investments 9,076 20,156 Accounts receivable, net 164,162 206,995 Prepaid expenses and other 23,053 19,931 Deferred income taxes, current 4,442 6,506 Total current assets 344,100 416,561 Property and equipment, net 23,498 34,754 Other assets: Goodwill 62,747 89,214 Identified intangibles, net 13,168 17,661 Investments 13,719 5,172 Deferred compensation trust 4,661 5,755 Total other assets 94,295 117,802 Total assets $ 461,893 $ 569,117 Current liabilities: Accounts payable and accrued expenses $ 66,230 $ 75,383 Accrued payroll and employee benefits 39,798 49,486 Billings in excess of revenue recognized 8,276 6,616 Total current liabilities 114,304 131,485 Long-term liabilities: Deferred income taxes, noncurrent 1,612 106 Other long-term liabilities 6,709 8,434 Total long-term liabilities 8,321 8,540 Total liabilities 122,625 140,025 Stockholders' equity 339,268 429,092 Total liabilities and stockholders' equity $ 461,893 $ 569,117 Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) Year Ended 6/30/04 6/30/05 Cash flows from operating activities: Net income $ 38,937 $ 57,723 Adjustments to reconcile net income to net cash provided by operating activities- Depreciation and amortization 10,511 13,141 Stock-based compensation 259 317 Tax benefits of stock option exercises 7,109 17,156 Deferred income taxes 1,982 (3,570) Working capital changes (15,347) (18,779) Net cash provided by operating activities 43,451 65,988 Cash flows from investing activities: Capital expenditures (11,760) (21,353) Sales and maturities of investments 1,083 15,983 Purchases of investments (22,792) (18,516) Acquisition of ORION Scientific Systems, net of cash acquired (32,927) - Acquisition of Touchstone Consulting Group, net of cash acquired - (37,124) Net cash used in investing activities (66,396) (61,010) Cash flows from financing activities: Issuance of common stock 5,459 10,192 Purchase of treasury stock (145) - Reissuance of treasury stock 3,134 4,436 Repayment of term loan (400) - Net cash provided by financing activities 8,048 14,628 Net (decrease) increase in cash and cash equivalents (14,897) 19,606 Cash and cash equivalents, beginning of period 158,264 143,367 Cash and cash equivalents, end of period $ 143,367 $ 162,973 Supplemental disclosures of cash flow information: Cash paid during the period- Income taxes $ 11,249 $ 21,211 Cash received during the period- Interest $ 1,524 $ 2,494 Income taxes $ 767 $ 652 Reconciliation Between Total Revenue Growth and Organic Revenue Growth (Unaudited) (in thousands) Organic revenue growth, as presented, measures revenue growth adjusted for the impact of acquisitions. The Company believes that this non-GAAP financial measure provides useful information because it allows investors to better assess the underlying growth rate of the Company's existing business. This non-GAAP financial measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Three Months Ended 6/30/04 6/30/05 Growth Total Revenue, as reported $ 180,860 $ 241,066 33.3% Plus: Touchstone revenue for April 22, 2004 through June 30, 2004 4,442 - - Organic Revenue $ 185,302 $ 241,066 30.1% Year Ended 6/30/04 6/30/05 Growth Total Revenue, as reported $ 615,802 $ 881,770 43.2% Plus: Orion revenue for July 1, 2003 through January 31, 2004 19,392 - - Plus: Touchstone revenue for April 22, 2004 through June 30, 2004 4,442 - - Organic Revenue $ 639,636 $ 881,770 37.9% DATASOURCE: SRA International, Inc. CONTACT: Stuart Davis, VP and Director, Investor Relations, +1-703-502-7731, , or Stephen Hughes, Senior VP and CFO, +1-703-227-7010, , both of SRA International, Inc. Web site: http://www.sra.com/

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