Sra International 8-K SRA Announces Financial Results for Fourth

EXHIBIT 99.1

SRA Announces Financial Results for Fourth

Quarter and Fiscal Year 2003

• Revenue: $127.1M for Fiscal Fourth Quarter, $450.4M for Fiscal Year 2003

• Net Income: $8.5M for Fiscal Fourth Quarter, $29.7M for Fiscal Year 2003

• Diluted EPS: $0.35 for Fiscal Fourth Quarter, $1.25 for Fiscal Year 2003

FAIRFAX, Va. – August 4, 2003 – 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 2003, which ended June 30, 2003.

Revenue for the quarter increased 25% from $101.4 million in the June 2002 quarter to $127.1 million. For the year revenue also increased 25%, from $361.2 million in fiscal year 2002 to $450.4 million in fiscal year 2003.

Operating income for the quarter increased 75% from $7.7 million in the June 2002 quarter to $13.5 million. Full-year operating income more than doubled from $18.5 million in fiscal year 2002 to $42.0 million in fiscal year 2003. Operating income margin for the quarter was 10.6% and for the year was 9.3%, compared to 7.6% and 5.1% for the fourth quarter and fiscal year 2002, respectively.

Net income for the quarter increased 93% from $4.4 million (4.3% of revenue) in the June 2002 quarter to $8.5 million (6.7% of revenue). Net income for fiscal year 2003 increased 163% from $11.3 million (3.1% of revenue) in fiscal year 2002 to $29.7 million (6.6% of revenue). Net income for fiscal year 2003 includes a $0.6 million after-tax gain on the sale of our equity investment in Mail2000 and a $2.8 million after-tax gain from the sale of the Assentor practice. Management believes that excluding these one-time fiscal year 2003 gains, yielding a fiscal year 2003 net income of approximately $26.2 million, provides a better baseline against which fiscal year 2004 guidance may be compared.

Diluted earnings per share for the quarter increased 59% from $0.22 for the June 2002 quarter to $0.35. Similarly, diluted EPS for the year were up 89% from $0.66 in fiscal year 2002 to $1.25. Excluding the one-time gains described above, fiscal year 2003 diluted EPS was $1.10. The diluted weighted average share count for the year increased 39%, from 17.0 million shares in fiscal year 2002 to 23.7 million shares in fiscal year 2003, primarily as a result of the company’s initial public offering in May 2002.

On June 18, 2003, the company priced a follow-on public offering of 3,025,000 shares of class A common stock, including 532,000 shares sold by stockholders, at $30.00 per share. On June 20, 2003, the underwriters exercised their option to purchase an additional 453,750 shares to cover over-allotments, of which 33,878 shares were issued by SRA and 419,872 shares were sold by stockholders. The shares were offered through underwriters led by Citigroup Global Markets Inc., Goldman, Sachs & Co., Legg Mason Wood Walker, Incorporated, Adams, Harkness & Hill, Inc., BB&T Capital Markets, a Division of Scott & Stringfellow, Inc., and RBC

Dain Rauscher Inc. SRA received net proceeds before expenses of approximately $72 million; SRA did not receive any proceeds from shares sold by stockholders.

Ernst Volgenau, SRA President and Chief Executive Officer, stated, “This quarter our company continued to execute well, and we completed an excellent year. This is our 25^th consecutive year of revenue growth and profitability. We are pleased with the increases in revenue and the continuing expansion of margins. Looking forward to fiscal year 2004, our visibility into revenue and profit is excellent.”

Chief Financial Officer Stephen Hughes added, “We embarked on a follow-on offering to provide additional financial flexibility and broaden our shareholder base. We achieved these objectives and are now positioned to supplement organic growth with a more assertive program of strategic acquisitions.”

New Business Awards

During the fourth quarter, SRA won new business with potential value of $208 million. A description follows of four key contract awards:

• SRA won a competitive task order to provide full life-cycle information technology (IT) services to the U.S. Marine Corps Command, Control, Communications and Computers Chief Information Officer (USMC C4 CIO) Directorate. The task order was awarded under the Millennia Government Wide Acquisition Contract and has a potential value of $115 million over seven years if all options are exercised. The work includes program management; communications architecture; information assurance; public key infrastructure; workforce planning; knowledge management; IT capital planning and investment; satellite system planning and support; and the acquisition of hardware and software.

• SRA was awarded a competitive task order to provide IT services to modernize and field systems that support Army soldiers at installations worldwide. SRA will convert the Army’s existing installation support modules (ISMs) to Web-enabled systems. This will enhance user access; improve standardization; reduce costs; improve the in- and out-processing procedures; and support transitioning soldiers from active duty to reserve status, retirement, or discharge. The task order, awarded under General Services Administration Federal Supply Schedule, has an estimated value of $25 million over five years if all options are exercised.

• SRA received a competitive task order to provide system integration and engineering support for the Defense Information Systems Agency (DISA) Defense Collaboration Tool Suite (DCTS). The task order, awarded under the DISA Next Generation Engineering Services contract, has an estimated value of $3.4 million over one year. DCTS enables military forces to link command, control, communications, computers, intelligence and mission planning systems together on a common network and supports voice and video conferencing, document and application sharing, and instant messaging worldwide.

• SRA was awarded a competitive contract valued at $8.5 million over five years, if all options are exercised, to provide services to operate and manage the U.S. General Services Administration Federal Acquisition Institute (FAI). SRA will conduct research relating to acquisition by executive agencies; develop a competency-based acquisition

career model; develop collaborative partnerships with academic and professional associations; design and develop training; enhance the current FAI Online University; sponsor training events; and conduct communications outreach to inform the acquisition workforce of FAI products and services.

The Company’s backlog increased by $81 million to nearly $1.6 billion during the June 2003 quarter. For the fiscal year the Company won $841 million in new business and increased backlog of signed business orders more than 50%.

Forward Guidance

The Company is issuing initial guidance for the first quarter of fiscal year 2004 and raising its forward guidance for fiscal year 2004. The table below represents management’s current expectations about the Company’s future financial performance, based on information available at this time:

Measure	Quarter Ending September 30, 2003	Fiscal Year Ending June 30, 2004
Revenue (in millions)	$125-$130	$540-$560
Diluted EPS	$0.26-$0.28	$1.18-$1.26
Diluted Share Equivalents (in millions)	27.0	27.2

The fiscal year 2004 guidance range for revenue is $5 million higher than the range given on May 5, 2003. Net income implied by the guidance is also higher than that provided on May 5, 2003. The fiscal year 2004 diluted EPS guidance includes the effect of the additional 2.5 million shares sold by the company in the June 2003 follow-on offering. Controlling for the effect of the shares sold in the follow-on offering, the lower end of the fiscal year 2004 diluted EPS guidance is higher by 2¢ and the upper end of the fiscal year 2004 diluted EPS guidance is higher by 5¢ than that provided on May 5, 2003.

About SRA International, Inc.

SRA is a leading provider of information technology services and solutions to clients in national security, health care and public health, and civil government. SRA services include strategic consulting; systems design, development, and integration; and outsourcing and operations management. The Company also delivers business solutions for text and data mining, contingency and disaster response planning, information assurance, environmental strategies and technology, enterprise architecture, network operations and management, and enterprise systems management.

FORTUNE^®magazine has chosen SRA as one of the “100 Best Companies to Work For” for four consecutive years. The Company’s 2,600 employees serve clients from its headquarters in Fairfax, Virginia, and offices across the country. 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 expected future financial performance and about the estimated

value of the task orders and work to be performed under new contracts, and other 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 revenues, our ability to maintain our GSA schedule contracts and our position as a prime contractor on government-wide acquisition contracts, and other factors discussed in our amended Registration Statement on Form S-1 declared effective by the SEC on June 18 2003. In addition, the forward-looking statements included in this press release represent our views as of August 4, 2003. 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 4, 2003.

CONTACTS:
Stuart Davis	Stephen Hughes
Director, Investor Relations	Senior Vice President and CFO
SRA International, Inc.	SRA International, Inc.
(703) 502-7731	(703) 227-7010
stuart_davis@sra.com	steve_hughes@sra.com

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

		Three Months Ended						Year Ended
		6/30/02			6/30/03			6/30/02			6/30/03
Revenue		$	101,442		$	127,121		$	361,197		$	450,375
Operating costs and expenses:
Cost of services			71,064			88,872			258,863			316,672
Selling, general, and administrative			20,515			22,212			76,143			82,753
Depreciation and amortization			2,150			2,543			7,684			8,962
Total operating costs and expenses			93,729			113,627			342,690			408,387
Operating income			7,713			13,494			18,507			41,988
Interest expense			(108	)		(10	)		(433	)		(111	)
Interest income			135			302			332			1,498
Gain on sale of equity method investment	(a)		—			—			373			1,031
Gain on sale of Assentor practice	(b)		—			—			—			4,685
Other income	(c)		—			—			1,775			—
Income before taxes			7,740			13,786			20,554			49,091
Provision for income taxes			3,357			5,308			9,277			19,431
Net income		$	4,383		$	8,478		$	11,277		$	29,660
Earnings per share:
Basic		$	0.26		$	0.38		$	0.77		$	1.39
Diluted		$	0.22		$	0.35		$	0.66		$	1.25
Weighted-average shares:
Basic			17,040,132			22,071,555			14,630,512			21,345,155
Diluted			19,602,921			24,210,355			17,030,717			23,729,986

(a) Non-recurring items reflecting the receipt of escrow payments in each period related to the sale of our minority interest in Mail2000, Inc. in February 2001.

(b) Non-recurring item reflecting the sale of our Assentor practice in October 2002.

(c) Non-recurring item reflecting the reversal of reserve expense related to the resolution of an Internal Revenue Service audit matter.

Consulting and Systems Integration Segment Statements of Operations Data

(in thousands)

	Three Months Ended				Year Ended
	6/30/02		6/30/03		6/30/02		6/30/03
Revenue	$	100,055	$	127,121	$	356,246	$	449,298
Operating costs and expenses:
Cost of services		70,351		88,872		255,692		315,898
Selling, general, and administrative		19,513		22,212		68,518		82,417
Depreciation and amortization		2,098		2,543		7,371		8,949
Total operating costs and expenses		91,962		113,627		331,581		407,264
Operating income	$	8,093	$	13,494	$	24,665	$	42,034

Emerging Technologies Segment Statements of Operations Data

(in thousands)

	Three Months Ended					Year Ended
	6/30/02			6/30/03		6/30/02			6/30/03
Revenue	$	1,387		$	—	$	4,951		$	1,077
Operating costs and expenses:
Cost of services		713			—		3,171			774
Selling, general, and administrative		1,002			—		7,625			336
Depreciation and amortization		52			—		313			13
Total operating costs and expenses		1,767			—		11,109			1,123
Operating loss	$	(380	)	$	—	$	(6,158	)	$	(46	)

Condensed Consolidated Balance Sheets

(in thousands, except per share amounts)

	As of
	6/30/02			6/30/03
Current assets:
Cash and cash equivalents	$	87,137		$	158,264
Short-term investments		—			433
Accounts receivable, net		95,862			119,224
Prepaid expenses and other		6,283			12,434
Deferred income taxes, current		4,573			5,980
Total current assets		193,855			296,335
Property and equipment, net		19,207			20,641
Other assets:
Goodwill		2,957			36,171
Identified intangibles, net		2,092			6,120
Deferred compensation trust		3,394			3,483
Deferred income taxes, noncurrent		4,185			1,308
Investments and other		603			653
Total other assets		13,231			47,735
Total assets	$	226,293		$	364,711
Current liabilities:
Accounts payable	$	13,267		$	18,640
Accrued payroll and employee benefits		20,942			26,614
Accrued expenses		19,997			26,077
Current portion of long-term debt		1,600			400
Billings in excess of revenue recognized		6,480			4,949
Total current liabilities		62,286			76,680
Long-term debt, net of current portion		400			—
Other long-term liabilities		4,163			5,016
Total liabilities		66,849			81,696
Stockholders’ equity:
Preferred stock, $0.20 par value		—			—
Class A common stock, $0.004 par value		74			93
Class B common stock, $0.004 par value		43			40
Additional paid-in capital		129,567			224,808
Treasury stock, at cost		(45,422	)		(47,057	)
Notes receivable from stockholders		(78	)		—
Deferred stock-based compensation		(720	)		(509	)
Retained earnings		75,980			105,640
Total stockholders’ equity		159,444			283,015
Total liabilities and stockholders’ equity	$	226,293		$	364,711

Condensed Consolidated Statements of Cash Flows

(in thousands)

	Year Ended
	6/30/02			6/30/03
Cash flows from operating activities:
Net income	$	11,277		$	29,660
Adjustments to reconcile net income to net cash provided by operating activities—
Depreciation and amortization		7,866			9,042
Stock-based compensation		937			211
Tax benefits of stock option exercises		6,563			12,622
Deferred income taxes		(25,074	)		(785	)
Gain on sale of equity method investment		(373	)		(1,031	)
Gain on sale of Assentor practice		—			(4,685	)
Working capital changes		8,010			(1,723	)
Net cash provided by operating activities		9,206			43,311
Cash flows from investing activities:
Capital expenditures		(5,577	)		(9,596	)
Purchases of investments		—			(8,353	)
Proceeds from sale of investments		—			7,270
Proceeds from sale of equity method investment		373			1,031
Proceeds from sale of Assentor practice		—			4,685
Acquisition of The Marasco Newton Group, Ltd., net of cash acquired		(7,087	)		(8,006	)
Acquisition of Adroit Systems, Inc., net of cash acquired		—			(33,304	)
Net cash used in investing activities		(12,291	)		(46,273	)
Cash flows from financing activities:
Repayment of equipment loan		(546	)		—
Repayment of term loan		(1,600	)		(1,600	)
Repayment of The Marasco Newton Group, Ltd. debt acquired		(5,195	)		—
Repayment of Adroit Systems, Inc. debt acquired		—			(990	)
Issuance of common stock, net of offering expenses		99,952			77,950
Reissuance of treasury stock		10,011			1,696
Purchase of treasury stock		(12,408	)		(2,967	)
Net cash provided by financing activities		90,214			74,089
Net increase in cash and cash equivalents		87,129			71,127
Cash and cash equivalents, beginning of period		8			87,137
Cash and cash equivalents, end of period	$	87,137		$	158,264
Supplemental disclosures of cash flow information:
Cash paid during the period—
Interest	$	524		$	131
Income taxes	$	27,842		$	8,091
Cash received during the period—
Interest	$	263		$	1,317
Income taxes	$	154		$	168