MAXIMUS Inc. Reports Operating Results (10-Q)

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Feb 08, 2011
MAXIMUS Inc. (MMS, Financial) filed Quarterly Report for the period ended 2010-12-31.

Maximus Inc. has a market cap of $1.17 billion; its shares were traded at around $69.93 with a P/E ratio of 18.7 and P/S ratio of 1.4. The dividend yield of Maximus Inc. stocks is 0.7%. Maximus Inc. had an annual average earning growth of 3.7% over the past 10 years.Hedge Fund Gurus that owns MMS: Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors. Mutual Fund and Other Gurus that owns MMS: Chuck Royce of Royce& Associates, Chuck Royce of Royce& Associates, James Barrow of Barrow, Hanley, Mewhinney & Strauss, Jeremy Grantham of GMO LLC.

Highlight of Business Operations:

Income from continuing operations, net of income taxes, was $17.6 million, or $0.99 per diluted share, for the three months ended December 31, 2010, compared with $14.6 million, or $0.81 per diluted share, for the same period in fiscal year 2010. The increase is caused by the growth of the business, particularly in jurisdictions with lower tax rates than the United States, and the absence of legal and settlement charges in the current period.

On September 30, 2010, the Company sold its ERP business for cash proceeds of $5.6 million, net of transaction costs of $0.7 million, and recognized a pre-tax loss on sale of less than $0.1 million. The Company had previously recognized a loss on sale of $1.3 million during the fourth quarter of fiscal 2009. During the current period, the Company identified additional liabilities which related to the ERP business. Accordingly, an additional pre-tax loss on sale of $0.2 million was recorded.

Cash flows provided by operating activities from continuing operations for the quarter ended December 31, 2010 was $30.4 million, compared with $48.9 million in the comparative quarter in fiscal year 2010. The decline was caused by: (1) $18.4 million in deferred revenue, primarily declines in advanced cash payments received from customers, principally in Australia and the United Kingdom; (2) $9.5 million of additional accrued compensation and benefits, the principal driver of which relates to the timing of annual bonus payments; and (3) $8.9 million of additional tax payments caused by the timing of payments to the federal and U.S. state governments. These cash outflows were offset by other significant cash inflows including: (1) $13.6 million of additional benefit from the receipt of funds for customers, which had been delayed at the fiscal year-end owing to budgetary constraints, and; (2) an increase in the profitability of the Company of $3.0 million.

Cash used in operating activities from discontinued operations for the three months ended December 31, 2010 was $0.7 million, compared to cash provided of $6.1 million for the same period in fiscal year 2010. In fiscal year 2010, the ERP division had made a number of accounting receivable collections. During the current quarter, the principal cash outflow related to the settlement of accounts payable and payroll liabilities which had not been transferred to the acquirer on the sale of the business.

Cash used in investing activities from continuing operations for the three months ended December 31, 2010 was $4.7 million, compared to $6.4 million for the same period in fiscal year 2010. The prior year cash outflow was principally driven by property and equipment purchases in Australia and the United Kingdom as part of the contract expansion in those locations.

Cash used in financing activities from continuing operations for the three months ended December 31, 2010 was $5.1 million, compared to $9.6 million for the same period in fiscal year 2010. This includes $8.4 million and $8.7 million of acquisitions of the Companys own shares in the quarters ended December 31, 2010 and 2009, respectively, and dividend payments of $2.1 million in both periods. These cash outflows were offset by cash inflows related to the exercise of stock options in the period. Stock option exercises were significantly higher in the quarter ended December 31, 2010 than in the comparative quarter in fiscal year 2010, resulting in $3.3 million of additional cash inflows from the exercise of stock options and $0.9 million of related income tax benefits.

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