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SRA Announces Financial Results for Second Quarter of Fiscal Year 2011

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  Published in Science and Technology on Tuesday, February 8th 2011 at 20:20 GMT by Market Wire
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FAIRFAX, Va.--([ BUSINESS WIRE ])--SRA International, Inc. (NYSE:SRX), a leading provider of technology and strategic consulting services and solutions to government organizations and commercial clients, today announced operating results for the second quarter of fiscal year (FY) 2011, which ended December 31, 2010.

"Our pipeline of opportunities in the Federal market is robust. We are taking proactive steps to ensure our continued competitiveness, and are committed to delivering organic growth."

Revenue for the quarter was $434.8 million, up 5.3% from $412.8 million in the December 2009 quarter. Organic revenue growth for the same period was 1.1%. Operating income for the quarter was $31.7 million, for an operating margin of 7.3%. Income from continuing operations was $19.8 million, for a net margin of 4.5%. Diluted earnings per share (DEPS) from continuing operations for the quarter were $0.34. Operating cash flow was $29.8 million.

During the quarter the company incurred a severance charge of $1.8 million in connection with a reduction in its indirect labor force. The actions resulted in a reduction to the annual selling, general and administrative expenses of approximately $10 million. The savings will phase in over the March quarter, and the full effect will be felt in the June quarter. The severance charge is included in selling, general and administrative expenses on the income statement.

SRA President and CEO Stan Sloane said, aOur pipeline of opportunities in the Federal market is robust. We are taking proactive steps to ensure our continued competitiveness, and are committed to delivering organic growth.a

Executive Vice President and CFO Rick Nadeau added, aOperating cash flow was strong in the quarter. We completed the acquisition of Platinum Solutions in November, and completed the quarter with approximately $60 million in cash and no debt.a

Contract Awards

SRA won new business in the second quarter with potential value of $270 million, if all option years are exercised. As of December 31, 2010, the companya™s backlog of signed business orders was $4.84 billion, up 9% year-over-year, and the funded portion of backlog was $1.0 billion, up 20% year-over-year.

Major highlights of competitive contract awards in the quarter include:

• U.S. Special Operations Command. SRA was awarded the Special Operations Research, Development and Acquisition Center Program Executive Office-Fixed Wing task order under the SOCOM Global Battlestaff and Program Support vehicle. The task order is valued at $15.3 million with a period of performance of five years.

SRA was also awarded several multiple-award, IDIQ contracts in the second quarter, which are not included in the companya™s quarterly bookings figure, but are expected to drive growth over time. These include:

• Federal Bureau of Investigation. Platinum Solutions, which was recently acquired by SRA, won a prime position on the Federal Bureau of Investigation Information Technology Supplies and Support Services, or IT Triple S contract. IT Triple S is a multiple-award IDIQ contract with a total ceiling value of $30 billion over 8 years, if all options are exercised.

Forward Guidance

The company is updating revenue and earnings guidance for Fiscal Year 2011 previously provided on November 2, 2010. The table below represents managementa™s current expectations about the companya™s future financial performance, based on information available at this time. SRA completed the acquisition of Platinum Solutions in November. The forward guidance does include the effect of the Platinum acquisition, but does not include any effect of any additional acquisitions or divestitures that SRA might make in the future. The guidance assumes that the FY 2011 diluted weighted-average shares outstanding are 58.2 million, excluding unvested restricted stock awards, and that the allocation of earnings to unvested restricted shares used in the calculation of diluted earnings per share is approximately 1.4% of net income.

Conference Call

SRA senior management will discuss the results in a conference call beginning at 11 a.m. EST. Interested parties may listen to the conference call by dialing 888-790-3103 (U.S./Canada) or 773-756-4790 (Other) with passcode 1256593. The conference call will be webcast simultaneously through a link on the SRA website ([ www.sra.com/investors ]). A replay of the conference call will be available approximately two hours after the conclusion of the call on Feb. 8 through Feb. 22 by dialing 800-219-6350 (U.S./Canada) or 402-220-3904 (Other) and entering passcode 1978.

About SRA International, Inc.

SRA and its subsidiaries are dedicated to solving complex problems of global significance for government organizations and commercial clients serving the national security, civil government and global health markets. Founded in 1978, the company and its subsidiaries have expertise in such areas as air surveillance and air traffic management; contract research organization (CRO) services; cyber security; disaster response planning; enterprise resource planning; environmental strategies; IT systems, infrastructure and managed services; learning technologies; logistics; public health preparedness; public safety; strategic management consulting; systems engineering; and wireless integration.

SRA and its subsidiaries employ more than 7,200 employees serving clients from its headquarters in Fairfax, Va., and offices around the world. For additional information on SRA, please visit [ www.sra.com ].

Any statements in this press release about future expectations, plans, and prospects for SRA, including statements about the estimated value of the contract and work to be performed, and other statements containing the words aestimates,a abelieves,a aanticipates,a aplans,a aexpects,a awill,a and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Factors or risks that could cause our actual results to differ materially from the results we anticipate include, but are not limited to: (i) reduced spending levels and changing budget priorities of our largest customer, the United States federal government, which accounts for more than 90% of our revenue; (ii) failure to comply with complex U.S. government procurement-related laws and other regulations, including but not limited to, punitive damage liabilities under the False Claims Act and other laws, and financial incentives under so-called awhistleblowera statutes, awarding the whistleblower with a percentage of the recovery if the claims are successfully waged; (iii) possible delays or overturning of our government contract awards due to bid protests by competitors or loss of contract revenue or diminished opportunities based on the existence of organizational conflicts of interest; (iv) entry into new markets or foreign legal jurisdictions or operation of our business in various foreign jurisdictions, including incurring liabilities in hazardous areas; (v)failure to comply with laws such as the Foreign Corrupt Practices Act or regulations on government gratuities; (vi) failure to comply with Federal Acquisition Regulations (FAR) and Cost Accounting Standards or the Fair Labor Standards Act; (vii) security threats, attacks or other disruptions on our information infrastructure, and failure to comply with complex network security and data privacy legal and contractual obligations or to protect sensitive information; (viii) any violation of third party intellectual rights; (ix) risks associated with commercial product sales not covered by the FAR; (x)adverse changes in federal government practices such as insourcing; (xi) delays in the U.S. government adopting appropriations necessary for program funding and future appropriation uncertainties adversely impacting customer spending plans; (xii) intense competition to win U.S. government contracts or recompetes and commoditization of services we offer; (xiii) failure to obtain option awards, task orders or funding under contracts, or inability to successfully execute awarded contracts; (xiv) any adverse results of audits and investigations conducted by the Defense Contract Audit Agency or any of the Inspectors General for various agencies with which we contract, including, without limitation, any determination that our contractor business systems or contractor internal control systems are deficient; (xv) difficulties accurately estimating contract costs and contract performance requirements; (xvi)challenges in attracting and retaining key personnel or high-quality employees, particularly those with security clearances; (xvii) failure to manage acquisitions or divestures successfully, including identifying and valuating acquisitions targets, integrating acquired companies, realizing benefits from such acquisitions, or contingent liabilities associated with divestures; (xviii) adverse market conditions and the resulting impact on future cash flows may result in the impairment of goodwill and intangible assets which account for a significant portion of our assets; (xix) adverse weather conditions or unexpected employee leave patterns reducing our expected billable labor revenue; and (xx) adverse impact on employee and customer relations from media speculation regarding the company and its future ownership and operations.

Actual results may differ materially from those indicated by such forward-looking statements. In addition, the forward-looking statements included in this press release represent our views as of February 8, 2011. 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 February 8, 2011.