Greetings, and welcome to the MAXIMUS Fiscal 2013 Second Quarter Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lisa Miles, Senior Vice President of Investor Relations for MAXIMUS. Thank you, Ms. Miles. You may begin.

Good morning. Thank you for joining us on today's conference call. I would like to point out that we've 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 will 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 10-K 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.

Thanks, Lisa. Good morning. We are pleased to report another solid quarter of financial results. As noted in today's press release, second quarter results included $16 million of nonrecurring revenue in the Human Services Segment and pre-tax income of $10.9 million, which on a tax effective basis is $6.5 million or $0.19 per diluted share. As a reminder, we filed an 8-K on February 26 disclosing the termination of a contract as part of a broad statewide initiative to focus resources on a smaller number of programs. The recognized revenue and profit relate to deferred revenue associated with the PSI acquisition. We recommend that investors exclude this one-time, non-cash revenue and profit as it is not indicative of current and ongoing operations. As I walk through the financial results, I will provide both reported GAAP number as well as the normalized results that exclude this nonrecurring item. So let's get started. This morning, MAXIMUS reported total company revenue for the fiscal second quarter of $326.4 million, excluding the $16 million of revenue from the terminated contract, fiscal second quarter revenue grew 27% to $310.3 million compared to the same period last year, driven by the PSI acquisition and organic growth. As expected, organic revenue growth in the quarter accelerated. Organic revenue grew 15% over the prior year period due to solid expansion across both segments and in our international operations. Moving on to operating margin, total company operating income, excluding legal, settlement and acquisition expense totaled $50.7 million in the second fiscal quarter. Excluding the $10.9 million in pre-tax profit from the discontinued contract, segment operating income totaled $39.8 million which reflects a 12.8% total company operating margin for our fiscal second quarter of 2013. On the bottom line, earnings were in line with our expectations. For the second quarter,…

Thank you, David. Good morning, everyone. This quarter's solid financial results keep us on track to support our growth trajectory for the remainder of the fiscal year and beyond. While we have several new awards to share with you today, we're also pleased to report that our startup programs are progressing largely as planned. MAXIMUS remains on track for exceptional top and bottom line growth in fiscal 2013, as we seek to expand our Health and Human Services operations both in the U.S. and abroad. We continue to maintain an optimistic outlook on our growth potential and capitalize on opportunities to deliver value to our shareholders. Let's start off this morning with an update on our Health operations. We are very pleased to hear that we have received award notification for a five-year renewal of our MassHealth contract with the Commonwealth of Massachusetts. Under the MassHealth program, this is what we do. We provide general eligibility and program participation, customer service to Medicaid members and providers. We enroll Medicaid participants into managed care health plans, we enroll credentials providers and we provide other services on the Commonwealth's behalf. The scope of work is largely unchanged under the new contract. We are currently in final contract negotiations with the client, and we'll provide additional details once the contract is signed. But clearly, we are very pleased to have the opportunity to continue to serve the great Commonwealth of Massachusetts. In the United States, health care reform remains our largest growth driver and we continue to add new contracts to our growing portfolio of work related to the Affordable Care Act. In the federal market, we are seeing the expected pickup in procurements on the federally facilitated exchange, also known as the health insurance marketplace. We are very pleased to be part…

Thank you. We'll now be conducting the question-and-answer session. Please limit your questions to two. If you wish to ask additional question, you may reenter the queue. (Operator Instructions). Our first question is coming from the line of Charles Strauzer of CJS. Please proceed with your question.

Hi. Good morning.

Hi, Charlie.

Hi. Two questions for you. The first question is, when you look at the guidance, and if you can maybe expand on that. Obviously, you are reaffirming but not raising the guidance. And you've had a couple of good quarters so far to start the year. Can you give a little more color behind that? Is it – just wanting to be more conservative here with these contracts still ramping?

Good morning, Charlie. This is Rich. As it relates to guidance – and yes, we're very, very pleased with the quarter. I think with a solid quarter and we're very pleased to over-deliver by $0.02 which is roughly 3% better than our expectations on the quarter, so we need to put it in perspective. The other points that I would make is that as we go through our process here and we do it every quarter when we print actual results, we take a look at the rest of the year. And what we delivered in the quarter, we look at what were the actual results versus expectations, we look at the pipeline from a bottoms up perspective and we factor that into our revised view of full year guidance. And there are, in fact, quarters where we do raise guidance based upon that detailed analysis. In fact, that's what we did just last quarter. The other point that's very important to remember is that this year is very backend loaded and it's a great opportunity to have and the backend load is really due to the growth that we're experiencing today that we experienced in this second quarter, that we'll experience in the third quarter and ongoing into the fourth quarter. And at this time, we have an unpreceded number of startups and that's ramping revenue and profit as the year builds. And many of these startups we've mentioned in the prepared remarks. So we still have a lot of ground to cover, Charlie. So when we add it all up, we conclude that our existing guidance squarely remains the right place to be.

Excellent. And then just a quick question – my second question would be just on the organic growth rate. It was very strong in the quarter. Could you break that down a little bit by each segment too as well, what the organic growth rates were?

Charlie, we don't provide organic growth rate by segment, but I would say that it's been strong in both segments.

Thank you. Our next question is from the line of James Naklicki with Citigroup. Please proceed with your questions.

Yeah, thanks for taking my question, guys. My first question is on the Human Services segment. Results there were a little bit lighter than what I was looking for on a revenue and earnings basis. Can you talk about what the drivers were there?

Yeah. Good morning. It's actually consistent with our expectation. If you look year-over-year, we saw some softness coming mainly out of MAXNetWork and we've talked about that in previous quarters and just to add a little favor to that. The lower margin contribution from Australia has really resulted in some required changes from the government and the government modified the documentation process into clients when we put people into employment, which is not unusual for these programs to evolve over time. And the last two quarters, they have increased the regulatory oversight to support billings and outcomes for vendors across the board. So it's not just MAXIMUS, it's that whole marketplace. As we've shared in prior quarters, we've invested more resources, added more staff. So naturally we wanted to increase our efforts to ensure that we meet the new requirements and still maintain our top-rated standing. The department has also modified all vendor contracts to reflect these changes, so it's a permanent change. Our Australian contracts in context as still some of the best performing and I'd also say that we found the government to be a good partner who is fair and equitable.

Okay, thanks. And just one follow-up on the state-based health exchange opportunities that you're pursuing. Could you give us a point of reference to how many you are actually pursuing? And then one other on the same topic is what was the HIX revenue for the quarter if we include Minnesota, New York and Connecticut?

This is Rich Montoni. I have Bruce Caswell who's joined us today and as you know, Bruce runs our Health business. I'm going to ask him to answer part one. We haven't disclosed separately the HIK's revenue in the quarter, so we'll have to decline on that one for the moment. But Bruce, can you talk about the HIK-based activity.

Sure, absolutely. So, James, it's probably important to segment it into two components. One is those states that are state-based exchanges. And as you know, there is 17 states in the District of Columbia, they're doing state-based exchanges that still have active service center RFPs out. There's only a small handful of those remaining. Of course, time is running short and those awards need to be completed and vendors need to get underway. And we don't disclose specific contracts that we're bidding on but as we've said before, we remain active and focused on that marketplace. And so we are active participants in those remaining procurements. And we also, however, are being selective. We recognize that there is limited capacity in the industry, one I'm sure that we're picking our spots correctly. So don't expect us to bid all of them. Secondly though many states, and this is maybe not well known in the industry, but for states that are in the federally facilitated exchange and there's 34 of them, that doesn't mean that their obligations are complete on the state side. So there are things that they need to do to modify their existing systems and business processes to meet requirements of the Act, such as the no-wrong-door requirement so that individuals who are applying not just at the federal level can also apply through existing state county offices or existing websites and so forth, a number of components of those operations which MAXIMUS has responsibility in those states. So we would expect organic growth opportunities in existing states to help them become compliant with the requirements of the Act at the federal level. So those would be two dynamics to continue to watch as we move through the summer months.

James, I want to add one point to the other question that you asked. It's interesting as it relates to the state-based health insurance exchange work. Some of that work is very, very difficult to bifurcate from our existing contracts. In fact, in some cases, it's simply an add-on to our existing work. So it's virtually not practical to sort out the two. Next question, please.

Thank you. (Operator Instructions). The next question is from the line of Richard Close of Avondale Partners. Please proceed with your question.

Yes. Thank you for taking the time here today. A quick question. I want to focus in on the appeals. I think you mentioned you expect that to be strong through the remainder of the current year. I'm curious your expectations of the appeals opportunity. Any impact on, one, the Part A, Part B CMS rule that is currently seeking comments there, so a proposed rule on that part? And then also two, any impact from the RAC rebid process that is currently progressing?

Thanks, Richard. We're going to ask Bruce Caswell to respond to your questions.

Sure. Good morning, Richard. Thanks for the questions. They are good ones and I guess I'd begin with the question about the ability for hospitals to bill under Part B for otherwise previously incurred Part A costs. So first of all, I'd like to note that our analysis suggest that those – we call those Part B of A appeals. The volume that we see from those is about 10% to 15% of the overall RAC appeals that we receive, so it's definitely a meaningful statistic to put in the context of the overall appeals business. And as you've noted, we're only a couple of months under the new interim rule, so it's very early to see if this is going to change the hospital's behaviors in a meaningful way. It's important to note, of course, that Part A pays more than Part B, so hospitals generally we've seen continued to bill initially under Part A because they then have 12 months to re-bill under Part B if they're not successful in that process. And even for hospitals that then chooses re-bill under Part B, there will be a portion, probably not as great a portion, but a portion of those that will turn into appeals as well. So at this point, too early to tell if there is any significant impact but we've not seen anything material to reflect a change in behavior on behalf of the hospital that has resulted that proposed interim final rule. Turning to the RAC re-procurements, as you're well aware, those are coming up in 2014. But I think our view would be that when they get re-procured because CMS is realigning the regions to align with the MAC regions, you could have some transitional, call it lumpiness if contracts change and vendors have to reposition into new regions and start up operations and so forth. But fundamentally we don't expect the vendors in those areas to change their behavior or become really less aggressive in terms of the business that they're going after. So, if you wanted to extend, and this is purely theorizing a little bit, in a competitive environment where margins maybe under pressure for those RAC vendors because they're paid a contingent fee, if anything you could theorize they may step up the level of aggressiveness and going after claims in order to minimize the absolute impact on their profitability, but it's too early to tell at this point.

And I would add if the rebid process, it's an if, results in material reassignments amongst the RACs then there could be a temporarily pause as it relates to the claims and hence the appeals. But we would view that as temporarily, Richard. Is that helpful?

I guess.

Next question, please.

Our next question is coming from the line of Brian Kinstlinger of Sidoti & Company. Please proceed with your question. Brian Kinstlinger – Sidoti & Company: Great, thanks. In relationship to your Saudi Arabia contract that's ending – I think you provided in a couple of months, what's your expectation afterward? Are you already in negotiations for a much larger piece given this is a pilot project? Tell us; is the customer happy with your performance? Just maybe give us a sense of down the road how you see that contract playing out.

Good morning, Brian. We do believe that our performance has been solid. We do believe the client respects our performance and values our contribution. As you would expect, we are in active negotiations to hopefully extend that contract and possibly to expand the scope and the size of the work we do for that country. Brian Kinstlinger – Sidoti & Company: Great. And then of your $886 million of bookings for the year so far, I'm curious how much is from new projects or expansion of existing programs versus re-competes? And then specifically, on Vermont, you announced that contract. How much of that is expansion from the old contract? So maybe give us a sense of what HIX is adding as a percentage of that.

I think the pipeline dynamics are very interesting and I think you hit on something that's key. I'm going to defer to Bruce in a minute as it relates to Vermont per se to give you some qualitative aspects of how much we think is new, but the majority of the pipeline is attributable to new work which I think is great news. And I really think that's an important factor as we think about our expectations not only for the rest of the year, but it starts to give us – sets the table for fiscal '14 as well. So, the majority of the pipeline is attributable to new work. Bruce, any comments on Vermont per se?

Yeah, we mentioned that the value of that is in the – about $12 million range on an annual basis. And it's actually fairly substantial. I think it more than doubles the size of the current work that we do in the state. So I would just say that if you're looking as an indicator of that effect, that's a fairly good representation.

Next question, please.

Thank you. (Operator Instructions). The next question comes from the line of Frank Sparacino with First Analysis. Please go ahead with your question.

Hi, guys. Bruce, I just wanted to go back on the state exchanges and just get a better sense from your perspective. When we look at the remaining state opportunity, and I guess the opportunity associated with the state-federal partnerships, where are we at sort of in terms of those contracts being awarded? And I'd like to get your perspective as well as where you thought we would be now. It seems like the states have been slower to move than I would have expected, but just wanted to get your perspective on that.

Bruce?

Sure, I'd be happy to. I think that if you followed it in the marketplace, there's been some good consternation on behalf of the states in terms of lack of information that's essential to kind of finalize lot of playing execution. I think some of those, if you will, gates have opened and there's more dialogue going on and in fact there's testing now occurring between states and the federal data services hub, which I view as a positive sign. But the reality is that states, just like the federal government, I think are looking hard at what really constitutes day one operations and success on day one. So they're going to move forward. And there's no doubt that operations will open as scheduled, and it's managed, some manual workarounds and so forth are required to accomplish that. Certainly states are planning for that presently. So, as I mentioned in an answer to a prior question, time is drawing short for states that need to procure service center or call center operations for their state exchanges to complete that process and we would expect that to draw to a close sometime probably in the next 30 days. And then for those states that will need supplemental services to be compliant with the requirements of the federally facilitated exchange, generally those are being handled through modifications to existing contracts and are well under way as well. So, I'd say things are pacing as we would expect. Not without some glitches here and there where there's outstanding information still needed and workarounds that are being contemplated, but as largely as we would expect at this point.

Next question, please.

Thank you. The next question is a follow-up from the line of Richard Close of Avondale Partners. Please proceed with your question.

Thank you. With respect to the credit facility and that announcement, how should we view that? Should we get the sense that there could be potentially a transaction more near-term rather than farther out? And then I guess a preference from your standpoint on potential M&A, is it more focused in on international and the Health or Human Services areas?

Richard, really the best answer comes from just a discussion of what our M&A situation is. And as we've discussed in the past, we are active from an M&A perspective. We have internal resources that help us sort out M&A opportunities that we view as strategic. We would very much like to move forward with a transaction provided it fits our strategic mindset. So, we are looking at opportunities – and I'd say our primary focus right now is international in nature. What we'd really like to do is find an international opportunity in the Health arena. The majority of our work internationally is on the Human Services side and welfare-to-work. So you can look at our program in Australia, you can look at our program in the UK, Saudi Arabia, we just mentioned. All of these are Human Services, welfare-to-work opportunities. Our view is once we establish ourselves as a valued provider and partner to that government, that we should be able to effectively to piggyback on that reputation on that brand and offer value in our complementary segment, our Health segment. So we're taking a hard look at those established markets and looking for health opportunities. So we're active, we're interested and are signing this credit facility as an interval part of that strategy.

Great. Thank you for that follow-up.

You're welcome. Next question, please.

(Operator Instructions). The next question is from the line of Brian Kinstlinger of Sidoti & Company. Please go ahead with your question. Brian Kinstlinger – Sidoti & Company: Great. I'm curious with both the bids in for the federal procurement, why is it competitive not to tell us whether you bid sub or prime?

That's a great question, Brian, and I'm going to ask Bruce Caswell to give us some insight on that one.

Sure. Yeah, Brian, it is a great question. Fundamentally, in situations where we're a subcontractor, we obviously would have an obligation to the prime contractor and they would control any kind of disclosure of that nature. In situations where we're the prime contractor, and really I guess this could apply to both, these bids are bid that follow a process, as you're probably well aware, that often includes the best and final offer and negotiations and so forth. And any kind of disclosure of that nature sends a signal to the other competitors in the market that can be quite meaningful to them in their strategies for that portion of the bid process that remains, like their best and final offer process. So we treat that information very confidentially as a consequence. Brian Kinstlinger – Sidoti & Company: Okay. And then the follow-up is – it wasn't quite clear the answer on my first question. On the 886 million of actual awards year-to-date, and/or you can combine the 400 million and some odd contracts that hasn't been signed, but have been awarded. How much of that, not the future pipeline, has been new or expansion of work?

My answer was intended to speak to the awards to-date in this period, not the pipeline, not the future awards, but the majority of the awards to-date is new work. We have not and today we're not prepared to provide the specific metric, because historically we've not disclosed how much of that's new versus re-bid, but it's very important to note the majority of it is new work, Brian. Next question.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time and thank you for your participation.

Thank you, folks.