Ladies and gentlemen, welcome to MAXIMUS year end earnings call. (Operator Instructions) At this time, I'd like to turn the call over to Lisa Miles, Vice President of Investor Relations. Thank you, Ms. Miles. You may begin.

Good morning and thank you for joining us on today's conference call. I would like to point out that we have posted a presentation to our website under the Investor Relations page to assist you in following along with today's call. With me today is Rich Montoni, Chief Executive Officer, and David Walker, Chief Financial Officer. Following Rich's prepared comments, we'll open the call up for Q&A. Before we begin, I'd like to remind everyone that a number of statements being made today will be forward-looking in nature. Please remember that such statements are only predictions and actual events or results may differ materially as a result of risks we face, including those discussed in Exhibit 99.1 of our SEC filings. We encourage you to review the summary of these risks in our most recent 10K filed with the SEC. The company does not assume any obligation to revise or update these forward-looking statements to reflect subsequent events or circumstances. And with that, I'll turn the call over to Dave.

Thank you, Lisa. Good morning and thanks for joining us. This morning, MAXIMUS reported GAAP results that were in line with our guidance in September as well as consensus estimates. For the fourth quarter, MAXIMUS reported a GAAP loss of $0.09 per share and for the full fiscal year MAXIMUS reported GAAP earnings of $1.55 per diluted share. The results for the quarter are highlighted by the divestiture of our Asset, Justice and Education Systems businesses. This divestiture further solidifies our presence as the leading government health and human service pure play. You should direct your attention to the pro forma results from continuing operations. The key here is that pro forma diluted EPS from continuing operations was $0.71 for the fourth quarter and $2.83 for the full year. This is important as a benchmark going into fiscal 2009 and these results are well in line with our prior expectations that we shared with you. The most significant item is the non-cash goodwill impairment charge to continuing operations of $7.6 million pre-tax or $0.25 per share in the fourth quarter. This charge is the end result of disposing of the Systems segment. Accounting rules require a portion of the former Systems segment excess goodwill to be included as continuing operations. It is simply income statement geography of what we previously estimated our loss on the disposal would be, but GAAP requires it to be reported within continuing operations. For the fourth quarter, the loss from discontinued operations was $10.2 million or $0.54 per diluted share. This includes an after-tax loss on disposal of $7.4 million and an after-tax operating loss of $2.8 million. Let's turn our attention to top line results from continuing operations and segment level data. Revenue from continuing operations for the fourth quarter grew 9% to $189.1…

Good morning, everyone. We accomplished a great amount in fiscal 2008 that sets a strong foundation for an encouraging long-term future. I am very pleased with the progress we've made to position MAXIMUS as the leading pure play provider in the administration of government health and human services programs. With the divestiture of three of our Systems businesses at the end of the fourth quarter, we enter fiscal 2009 as a leaner organization focused on our core health and human services Operations portfolio, complemented by our Consulting services. Going forward, a critical goal is delivering more predictable financial performance. With a narrowed focus on our operations, we hope to achieve more predictability and certainly more simplicity in our reported financial results. As David discussed, we have lowered our revenue guidance for fiscal 2009 to reflect current exchange rates as a result of the strengthening dollar. As to our EPS guidance, the positive benefit of the share repurchase program has offset the currency declines. As a result, we are reiterating our bottom line guidance of $3.00 to $3.15 per diluted share. We still anticipate total operating margin north of 10%, with operating margin for our Operations segment in the 12% to 15% range. We will also continue with our aggressive share buyback program. Despite the turmoil in the general economy and beyond the news concerning projected state budget deficits, today we are comfortable reiterating our fiscal 2009 bottom line guidance for the three main reasons as follows: First, over 87% of projected revenues for fiscal 2009 is in the form of backlog. This is a testament to our strong base of recurring revenue from our long-term contracts Second, our backlog remains strong at $1.4 billion and our pipeline of new opportunities is at a record level, totaling $1.8 billion, which bodes…

Thank you. (Operator Instructions) Your first question comes from Anurag Rana - KeyBanc Capital Markets.

Rich, the contract signs were unusually strong this quarter. Is it just timing or should we read more into this? Also, does this mean that the first quarter could be lighter than what we have seen in the past?

Anurag, I view the contract signing trends - really, I think the best view is to take an annualized basis. From quarter to quarter it does fluctuate and you'll see larger contracts go from one category in the pipeline statistics to another from quarter to quarter, so I tend to focus on the year-to-date trends. I think last year certainly was a very, very strong year. You may recall it included the re-bid win for HCO. It included a number of extensions for Texas. It included a re-bid win for our New York - an option year as it relates to New York. But by and large I think fiscal 2008 was a very solid year for option and new sales activity. And the other metric that's important is the trend in that overall pipeline statistic, and as we report, it's very strong at this date. And I know on the surface that may seem contrary to what we sense in the macroeconomic backdrop, but we're experiencing continued strong interest in what we do. It provides efficiencies. And I think governments are very, very concerned, rightfully so, about making sure they have the right, effective, efficient infrastructure in place, partner in place, to help them deal with what very likely could be increasing caseloads.

And also the SG&A in terms of dollars for Operations were a bit higher than what we were expecting. Is that due to higher bid activity or due to some severance costs?

There's certainly some severance in there and there's higher than normal B&P in there, so you get swings between categories and gross margin in SG&A.

And that's the reason we tend to focus on the net, the operating income percentage, because from quarter to quarter you will get the same individuals in some situations charging SG&A because of B&P activity and then the next quarter back to a project and charging costs to sales. So we tend to focus on the net line operating income percentage.

And is that because you're seeing more opportunities out there or you're bidding on more contracts at this point?

We have a lot of B&P activity that's going on.

I heard your comments about share buyback given the macro environment but just, you know, what's the thought behind it given, I'm not sure where the equity market are going to be in the next six to 12 months, but it seems you're still continuing with your buyback plan aggressively. And could you also give a little more information about the 10(b)(5) plan that you talked about and is that still in place?

Our general thinking is that, of the several alternatives available to us to repatriate earnings to our shareholders, we prefer the repurchase avenue. We try not to be traders. We think at this point in time the stock is good value. We know it's accretive to us at this value, and that's really the cut off for us. And hence, given the fact that we do have excess cash, we anticipate continuing to generate cash from operations and free cash flow, we think it's important to our shareholders to repatriate cash to them and our preferred method is the repurchase of shares. As it relates to the 10(b)(5) filing, we knew coming into this market that we would - when we last talked in September, we entered a quiet period and we still wanted to continue our repurchase program. Because it's our year end, it means we would have been blocked out of the market for quite a period of time - actually through today - so we chose to implement a 10(b)(5)(1) program. I'm pleased that we did. It expired a short time ago, a matter of days ago, and hence it's no longer active at this point in time. But again, I think starting tomorrow our windows open.

And just one last thing on universal health care, any thoughts on how it can benefit you guys over the next several years as we get more information, if we see any plan on that, regarding how that's going to play out for you guys?

Boy, there's so many paths to answer your question as to how universal health care can be important to MAXIMUS. And step back and you may - it's important to think that universal health care is not a new initiative. It goes back several, several years. We have been working very hard over the last several years to best position MAXIMUS as a key player in universal health. Our mantra on an operating level is we take policy and we translate it into action, and we've been working with several states as they develop their universal health care program, and there are many states out there - including the larger states - that have prepared universal health care plans unique to those states. And with the new administration coming on board, we expect that the dialogue is going to become very, very significant as it relates to universal health care and the starting point, I expect, will be with SCHIP. That's very, very important to Democrats, and I think you're going to see a big push to advance the SCHIP programs and MAXIMUS is very much a key player in the SCHIP arena.

Your next question comes from Charles Strauzer - CJS Securities.

The first question is related to the guidance and if you can give us a little bit better sense of kind of the dollar impact of the currency? And also, what depreciation and amortization number we should be using in '09? I know it was something of a moving target after the divestiture.

I'm going to start with the currency. About 16% of our business is overseas and we talk about currency, you know, we're not sending currency back and forth between countries. These businesses are accretive, they're very profitable, they generate their own cash flow, so all of it is just translation losses. But again, 16% of our revenue and profits are from overseas, and the largest of those individual subsidiaries happens to be Australia. While we won't break out by country, it certainly was hit the hardest, at about a 24% decline in revenue when we look at this last quarter compared to October and November, followed by Canada, where we saw a 10% decline. So that's the flavor of what's going on there. So there's no real change in economics, no real currency risk. It's just translation. So that's the currency and the impact on that. When I move on to depreciation and things of that ilk, maybe it would help you, our EBITDA is about $100 to about $105 million embedded in that number, so you can kind of -

For next year?

For next year.

I can back out of it. That's fine. So basically when you look at the currency, you know, the differential between your kind of original guidance ex Systems, the differential in currency we can extrapolate is basically the difference between the new guidance versus the old guidance is basically roughly all translation?

Yes. Well, largely offset by additional shares. So that's why the guidance is really a reiterating. So the currency was offset by the shares.

My second question relates to the cash on the balance sheet and repurchases are obviously still the priority, which is excellent. But when you look at some of the valuations of your peers in the marketplace, both public and private companies - and I would imagine the valuations have come down materially, probably even more so than your own - are there opportunities that you think may be of interest to you now that the prices have gotten to the point where transactions could be accretive to you?

I would say from an M&A perspective, first off, we feel very comfortable where we are today, so we're not compelled to go out and buy a company. I also think that given all of the dynamics in the marketplace, it's a pretty tenuous environment out there, so getting a real fix on long-term value on these properties - and frankly, from an M&A perspective, we're seeing more properties available than in recent history, so there are lots of opportunities out there. Our approach will continue to be opportunistic for tuck-in type acquisitions. We don't have anything sizeable in our strategic plan at this point in time. Again, I think our policy's going to be more towards tuckin type acquisitions to maintain pretty solid financial positioning in these times.

(Operator Instructions) Your next question comes from George Price - Stifel Nicolaus & Company, Inc. George Price - Stifel Nicolaus & Company, Inc.: First, on Consulting, I guess another contract adjustment now there. We've gotten rid of Systems but, you know, we have something going on in Consulting. Can you give us a little color around what's going on with the contract that had the adjustment and, I guess, stepping back you've done a good job de-risking the business, but obviously there's still a little exposure and a little more work to do. How going forward in this kind of budgetary environment do we get comfort around what's happening in Consulting, and particularly just performance and execution on some of these things. I mean, I imagine pricing pressure could be a factor as this stuff is more exposed.

My thinking is I don't think it's so much pricing pressure as it is execution. And I think you're right, we've done a lot of work, as you know, to de-risk the portfolio, and I do think it's down to the point where it's normal risk for what we do. As we all know, the nature of our business is you do have projects that do get delayed, you do have project challenges that sometimes translate into additional cost. So on Consulting performance this quarter, the disappointing aspect came mostly from this one project. It's an ERP-related project, and this is a vision that we transferred into Consulting from what had been in our Enterprise Systems segment. This project does go back many years. It's a legacy project. But in the normal course we take a look - in connection with our year end, we take a hard look at all of our projects, all of our material projects, and look at EACs. This particular project, as we provided guidance earlier, we had concerns that there might be some slippage from a timeline perspective. I do want to emphasize that the project itself is delivering what it's supposed to be delivering, so it's not a deliverable type issue, it's just that there's delays in the project. The delays were longer than we had anticipated and hence the charge was larger than we anticipated. So it's normal course, larger than we had anticipated, so it's disappointing in that context, but it's an isolated instance and I think it's normal, recurring business, if you will, and we're looking to make sure that that project doesn't repeat with another sizeable charge. We've taken all the management actions I think are necessary and sufficient to assure us of that, including some changes in management of that business unit. George Price - Stifel Nicolaus & Company, Inc.: What's the legacy exposure? You didn't get rid of all of Systems; you got rid of most of it, right, and then the rest folded back in? This is one thing. How many of these legacy contracts, what's the lingering exposure?

It's less than the number of fingers on your right hand. Not an extensive amount. They're a normal course. But more importantly, I'd put the portfolio in the normal course category and, but for the additional surprise on this one, it would have been the normal thing that we deal with in forecasting our numbers. As you know, when you close the books you've got some projects that over deliver, some that under deliver, and you look for a blended result that's within your bandwidth. George Price - Stifel Nicolaus & Company, Inc.: 16% of international revenue, David, I heard you say that Canada's the bigger -

Actually, George, it's Australia. George Price - Stifel Nicolaus & Company, Inc.: Oh, I'm sorry if I mixed that up. Anyway, can you just, of the 16% of revenue, can you give us a sense roughly of what the percentages are for each of those? I'm trying to get a sense of currency exposure as a percent of revenue for each of the currencies you're exposed to.

Australia's over half of it, followed largely by Canada. A very small amount in other countries at this point. George Price - Stifel Nicolaus & Company, Inc.: Which I guess would be Israel?

We have Israel. We have a U.K. subsidiary. George Price - Stifel Nicolaus & Company, Inc.: How big - is the U.K. material?

Not at this point although, George, there are many big tenders that we're looking at overseas. Much of the world is looking at welfare to work opportunities, as are we, so when we look out into the future, it can have a bigger effect. But these are great opportunities for us - right in our sweet spot. George Price - Stifel Nicolaus & Company, Inc.: The $11 million being disbursed in fiscal 2009 related to the divestiture, what is that exactly?

Sure. There were some things - for example, last quarter we talked about the [Houston] settlement and so that cash payment actually went out subsequent to the fiscal year and that's a large portion of it and that was $5 million - and there's some other things, for example, certain employees weren't assumed, group level staff, etc., and other technical employees by the company that acquired these subsidiaries, so it's the severance, vacation payouts, other liabilities on that. And there's some other reasonable reserves that happen in these sort of transactions.

Your next question comes from Jason Kupferberg - UBS.

How fast do you think the Consulting business will grow in fiscal 2009 or is it going to be another year of negative growth? I'm trying to triangulate the overall revenue guidance down to the segment level. I think the growth for fiscal 2008 ended up coming in maybe flat to slightly down and it sounds like there's still some moving pieces there. So are you guys budgeting for a down year in Consulting and also what should we expect from a margin perspective there?

Our approach with Consulting is to get in a shape and get in a composition where it's positioned to best complement our Operations business on a go forward basis and from a risk perspective. So the moving pieces in that regard are, as you know, exiting the RevMax business, so that revenue will go away. It's now on a downward trend and it was a little bit of a factor in this quarter. It will continue to be a factor into FY '09 as we complete the exiting of that business. And overall I think that Consulting will have a sequential year-over-year slight decline in revenue. I'm not looking for it to increase. I'm more interested in just getting it right, doing the right thing, but at a critical mass level. And from a margin perspective, I expect that it's going to start out slow, somewhere near breakeven, and for the year I expect it's going to get into frankly probably the mid single-digits. We do have one very significant contract that has been awarded to us. It's in the contract final negotiation stages. That's very much a swing factor, a very important factor, to the Consulting segment. I'm quite optimistic we're going to move forward with that, so that's good news and it's good work, we're very capable of performing and it's a nice contract. So that's how Consulting is shaping up. The other thing you need to remember is we've changed out a lot of the management in Consulting. [DeeAnn Wharton] has taken over that business; look forward to working with her very, very closely. And those are the big drivers.

The new contract that you just won in Consulting, is that an ERP contract?

No.

And as far as the buybacks go, it sounds like you're still being fairly aggressive here. Obviously, there's a lot more sensitivity in the current environment around balance sheet liquidity, but do you guys envision exhausting the remainder of the current authorization this year and does the EPS guidance assume any more buybacks on top of what you've already executed fiscal year to date?

Our guidance only assumes the beneficial impact of the share repurchases that we've completed to date, which is the 1 million shares we've talked about. It does not assume any benefit from future purchases. Two, we have $62 million remaining authorized. We intend to remain aggressive in the share buyback program and my Board, as a matter of routine, revisits our share buyback status essentially every Board meeting and I expect they will continue to do that.

And just for the math, Jason, it might be helpful, most of the shares that we bought back were subsequent to September. On a weight average basis, those that we acquired in Q4, really negligible; they didn't even move EPS half a cent. So they were immaterial to '08's results, but much more so in '09, if that's helpful.

Can you recap where we are on any outstanding remaining legal issues and have you planned for any legal expenses in the fiscal '09 guidance?

We've worked really hard this year to eliminate many overhangs - legal overhangs, project overhangs. At this point in time we still have the Accenture arbitration, which is pending, so that remains open. We have the Connecticut situation, which remains open. We have provided for some reserve on that contract, and we have not provided for any legal expense on a go forward basis in our guidance for fiscal 2009. I should also add I think Dave Walker has accrued some dollars for legal expense at 9/30 that we think should be necessary to get us through these remaining issues.

Your next question comes from Richard Glass - Morgan Stanley.

Can you help us or give us any sense of the Accenture timing or what's going on there, number one? And number two, can you give us a little more understanding of what you're pursuing in the international arena and what the potential there is, the growth that could be there or what the contract sizes are, things like that, what markets.

On the Accenture arbitration situation, it remains in arbitration stage between us and Accenture. There's always alternatives, but at this point technically it's in arbitration stage so I can't go into details on that. On the international side, there's a lot of opportunities out there. We started to talk about the international opportunities on the basis that what we do for governments here, the same social issues we help governments deal with here are experienced by countries around the world. We are seeing international interest, inbound international interest where we get calls, unsolicited calls, from countries to learn about what we do in the area of helping people find jobs and the area of health care systems. They look for best practices, and I think a lot of countries, when they fast forward their demographics, they realize that the existing programs, the existing infrastructure, is not sufficient, won't get the job done, so they're looking to learn about and contract with world class partners. And MAXIMUS routinely is identified as one of those partners. We see significant opportunities and have active dialogue from developing countries in Africa, South America, Europe, Canada - several years ago we expanded our business into Canada and that's worked out quite well - and generally it's in the area of health and employment. Just one data point - the United Kingdom is in the process of bidding and we are submitting bids to reengineer their welfare to work program. That's a national initiative. They call it the Flexible New Deal. We're very excited about that opportunity, but that's just one example, Rich, of the opportunities that are out there. I think this is a very, very long-term trend. We intend to pursue it seriously. We've got several key executives dedicated to it. But we're also going to do it in the appropriate fashion. Doing business internationally has different risks, different environment, different cultures, so you've got to go about it in the right fashion. Our next question is from Charles Strauzer - CJS Securities.

Rich, just a quick kind of bigger picture question for you. Obviously, CMS puts out their budget for what they expect Medicaid expenditures to increase each year and I think they're talking about roughly 8% this upcoming year, but that was obviously before things started falling off a cliff back in September/October. As unemployment creeps up and grows and ultimately the expenditures grow, do you have any kind of volume upticks in your contracts that if you have growth in the number of enrollees, are there benefits to that in the contracts you have?

That's a fair question. The number one driver to our revenues in the health-related programs we do administration is the number of cases that we handle, and there'll be variations on that theme. Sometimes it's the number of new cases coming into a program that we handle, sometimes it's just maintaining cases in a program, sometimes it's disenrolling folks in a program, but fundamentally our revenue is a function of the number of cases that we handle. It correlates to our direct cost, including folks in a call center, etc. So historically and I'm told that the number for FY '09 is 5.8% is CMS's expected increased spend. I would tell you that if they're able to stay within that, I'll be surprised. I would think that given the number of cases that one should expect, I think what's going to happen here is you're going to see a lot more folks unemployed. I mean, that's a given; we're seeing that trend and the debate is is the unemployment rate going to be 8% or 8.5% or some folks say 10%. When that happens, several things occur in our business. One, we find that a lot of those folks then look to get enrolled. They go off their corporate health plans and they look to get enrolled in these public health plans, so that causes a spike in terms of the number of eligible individuals, although that also causes pressures on the state in terms of more cases and the more they have to fund. So it remains to be seen, I think, the relationship between the state and the new federal government how they're going to pay for what I think is going to be increasing caseloads and increasing costs. I'd say on a daily basis stay tuned. I expect you'll see our national leaders interface with the president-elect to come up with a solution to that. The second dynamic that it causes is that there's more unemployed people and they look for job opportunities, and that plays right into the sweet spot for our welfare to work programs. And there'll be equilibrium that needs to be achieved there. There'll be more people looking for jobs and fewer jobs available. So their challenge is heightened, but their opportunity is heightened as well.

Your last question comes from George Price - Stifel Nicolaus & Company, Inc. George Price - Stifel Nicolaus & Company, Inc.: On the re-bids and the options, the 452, the 197, can you give us a sense of what kind of the annualized revenue impact of those are and kind of how much impact in fiscal 2009? Are they concentrated in certain parts of the year, spread out, that sort of thing?

The data that I have on the re-bids for '09 - and that's about $425 million in '09 - the annualized revenue in FY '09 and some of this is partial year, is roughly $56 million, George. And on the option years, I think we talked about $197, $196 - $197 million up for option in '09. The FY '09 revenue impact is approximately $28 million. George Price - Stifel Nicolaus & Company, Inc.: And how about timing of the re-bids and when the options get decided? Is it early, late, spread out, any concentration?

It's really spread across the board. We do have one that's scheduled fairly early on. The Texas rebids are now in process at this point in time, so I expect that that’s going to be, at least in the first half of the year, that decision will be made and that's the largest one next year. George Price - Stifel Nicolaus & Company, Inc.: Will Texas get done - probably not done by the end of the year, right, so probably, what, second fiscal quarter?

I think no later than the second fiscal quarter based on what we know today. Sometimes they get deferred. George Price - Stifel Nicolaus & Company, Inc.: And the CapEx, looking at about 2.6%, 2.7% revenue, which seems in line - actually below historically depending on the year, but looks to be up year-over-year. And your business profile's a little bit different now, right, on a continuing operations - after the divestiture. Is that reflective of investment in ERP? Is there anything else in there?

Well, there's investment in ERP and every so many - internal ERP. But there's also investment going on and you'll see it on cap software, so the financials restated you can have more visibility in that, primarily in the health area. So while we are a provider of outsourced services, we employ a great deal of technology to, in fact, provide those services on an efficient basis, and every few years we make investment in that technology to make sure that we stay competitive. So there's some of that going on.

Gentlemen, we have no further questions. At this time, I'd like to turn the floor back over to management for any closing comments.

We'd like to thank everyone for joining us on today's conference call and, with that, our call is over.

Ladies and gentlemen, this concludes today's presentation. A replay of this call will be available to you within one hour. You can access the replay by dialing 1-877-660-6853 or internationally 12016127415. Enter account number 316 followed by replay ID number 302929. Thank you for your participation. You may now disconnect.