Sra International 8-K Sra Announces Financial Resultsfor First Quarter Fiscal Year 2005

Exhibit 99.1

SRA ANNOUNCES FINANCIAL RESULTSFOR FIRST QUARTER FISCAL YEAR 2005

• Revenue $203.5 Million, up 54% from First Quarter Fiscal Year 2004

• Net Income $12.4 Million up 59% from First Quarter Fiscal Year 2004

• Diluted EPS $0.45 up 55% from First Quarter Fiscal Year 2004

• Raising guidance for Fiscal Year 2005

FAIRFAX, Va. – November 1, 2004 – SRA International, Inc. (NYSE: SRX), a leading provider of information technology services and solutions to the federal government, today announced operating results for the first quarter of fiscal year 2005, which ended September 30, 2004.

Revenue increased 54% from $132.0 million in the September 2003 quarter to $203.5 million. Operating income increased 59% from $12.4 million in the September 2003 quarter to $19.8 million. Operating income margin was 9.7% compared to 9.4% last year. Net income increased 59% from $7.8 million in the September 2003 quarter to $12.4 million. Diluted earnings per share increased 55% to $0.45 from $0.29 for the September 2003 quarter.

Ernst Volgenau, SRA Chairman and CEO, stated, “We are pleased to begin our fiscal year with such a strong quarter. We continue to grow and execute well across all our business markets. We also had a notable number of contract awards this quarter, which provides an excellent basis for future growth.”

Chief Financial Officer Stephen Hughes added, “Revenue, earnings, and cash flows were up sharply compared to last year. Cash flows from operations were $29.6 million or nearly 2.4 times net income. We reduced days sales outstanding another two days to 72 and ended the quarter with approximately $195 million in cash and investments with no debt.”

New Business Awards

During the first quarter, SRA won new business across its diversified customer portfolio with potential value of $638 million. The Company backlog of signed business orders is now more than $2.4 billion, an increase of 42% over the last twelve months. A description follows of six competitive contract awards during the quarter:

• Federal Deposit Insurance Corporation (FDIC) Infrastructure Support Services.SRA will be the single systems integrator providing enterprise-wide IT services to support the FDIC technology infrastructure. The performance-based task order, awarded under the Millennia contract, consolidates 36 existing contracts and has an estimated value of $341 million over five years if all options are exercised.

• Environmental Protection Agency (EPA) Climate Protection Partnerships Division (CPPD) BPA.SRA will provide a broad range of IT services to support the Office of Air and Radiation. The single award, five-year, time-and-materials contract has a maximum dollar value of $29 million. Through voluntary programs that promote cost-effective energy efficiency and greenhouse gas emissions reductions, CPPD establishes partnerships with private and public organizations. Since 2001, SRA has worked with CPPD to consolidate, upgrade, and modernize the EPA IT infrastructure to reduce cost and improve performance.

• Defense Manpower Data Center (DMDC) Human Resources Strategic Assessment Program IDIQ. Under a single-award indefinite delivery, indefinite quantity contract with a maximum value of $20 million over five years, SRA will provide design, data collection, data management, and statistical analysis services to support the DMDC Human Resources Strategic Assessment Program, which includes evaluations, research, and studies related to DoD personnel policies and programs.

• DoD Logistics Automation Identification Technology (AIT) Office Program Management Support.SRA will resolve standardization issues, identify emerging technologies, and evaluate potential integration of AIT throughout the defense supply chain. Awarded under the Chief Information Officer Solutions and Partners 2 Innovations contract, the task order has an estimated value of $19.2 million over five years if all options are exercised. Since 1998, SRA has assisted DoD to employ Radio Frequency Identification (RFID) Tags and other AIT devices to improve data collection; reduce processing time; and enhance the ability to identify, track, and control deploying forces and supplies.

• Department of Health and Human Services (HHS) Public-Key Infrastructure (PKI).SRA will provide operations and maintenance support for an enterprise PKI program that enables HHS to securely transmit and receive sensitive information. The contract has an estimated value of $18.5 million over five years if all options are exercised. Since 2002, SRA has assisted in the design, development, installation, and support of the HHS PKI System.

• Small Business Administration (SBA) Disaster Credit Management System (DCMS).SRA will provide IT services to support DCMS, which is a Web-enabled electronic loan application processing system used in assisting disaster victims. The task order has an estimated value of $13.9 million over 42 months if all options are exercised and continues the work SRA has performed for SBA since 2002. Under this new contract, SRA will support the DCMS team in implementing software changes, maintaining software and hardware architecture, updating system documentation, providing ongoing support to DCMS users, and supporting all IT operations associated with the system.

Forward Guidance

The Company is issuing initial guidance for the second quarter of fiscal year 2005 and raising its forward guidance for fiscal year 2005. The table below represents management’s current expectations about the Company’s future financial performance, based on information available at this time. The forward guidance in the table below does not include any effect for acquisitions SRA might make in the future.

Measure	Quarter Ending December 31, 2004	Fiscal Year Ending June 30, 2005
Revenue (in millions)	$197-$202	$800-$830
Diluted EPS	$0.44-$0.46	$1.82-$1.92
Diluted Share Equivalents (in millions)	27.9	27.9

Previously, the Company provided guidance for fiscal year 2005 revenue of $720-$750 million and diluted earnings per share of $1.65-$1.75 based on 27.9 million shares.

About SRA International, Inc.

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

FORTUNE^® magazine has chosen SRA as one of the “100 Best Companies to Work For” for five consecutive years. The Company’s 3,500 employees serve clients from its headquarters in Fairfax, Virginia, and offices across the country. For additional information on SRA, please visit http://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 “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 revenue, our dependence on our GSA schedule contracts and our position as a prime contractor on government-wide acquisition contracts to grow our business, and other factors discussed in our latest annual report on Form 10-K filed with the SEC on September 13, 2004. In addition, the forward-looking statements included in this press release represent our views as of November 1, 2004. 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 November 1, 2004.

CONTACTS:
Stuart Davis	Stephen Hughes
Vice President and 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 (Unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended
	9/30/03		9/30/04
Revenue	$	131,978	$	203,474
Operating costs and expenses:
Cost of services		94,119		151,546
Selling, general, and administrative		23,147		29,276
Depreciation and amortization		2,267		2,882
Total operating costs and expenses		119,533		183,704
Operating income		12,445		19,770
Interest income		393		523
Income before taxes		12,838		20,293
Provision for income taxes		5,007		7,853
Net income	$	7,831	$	12,440
Earnings per share:
Basic	$	0.31	$	0.48
Diluted	$	0.29	$	0.45
Weighted-average shares:
Basic		25,185,472		25,993,011
Diluted		27,088,038		27,770,389

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except per share amounts)

	As of
	6/30/04			9/30/04
Current assets:
Cash and cash equivalents	$	143,367		$	169,991
Short-term investments		9,076			17,307
Accounts receivable, net		164,162			177,942
Prepaid expenses and other		23,053			15,489
Deferred income taxes, current		4,442			5,036
Total current assets		344,100			385,765
Property and equipment, net		23,498			24,597
Other assets:
Goodwill		62,747			62,747
Identified intangibles, net		13,168			12,714
Investments		13,719			7,355
Deferred compensation trust		4,661			4,701
Total other assets		94,295			87,517
Total assets	$	461,893		$	497,879
Current liabilities:
Accounts payable and accrued expenses	$	66,230		$	77,875
Accrued payroll and employee benefits		39,798			48,897
Billings in excess of revenue recognized		8,276			6,730
Total current liabilities		114,304			133,502
Long-term liabilities:
Deferred income taxes, noncurrent		1,612			1,250
Other long-term liabilities		6,709			6,269
Total long-term liabilities		8,321			7,519
Total liabilities		122,625			141,021
Stockholders’ equity:
Preferred stock, $0.20 par value		—			—
Class A common stock, $0.004 par value		97			98
Class B common stock, $0.004 par value		39			39
Additional paid-in capital		241,831			246,898
Treasury stock, at cost		(46,560	)		(46,560	)
Deferred stock-based compensation		(716	)		(634	)
Retained earnings		144,577			157,017
Total stockholders’ equity		339,268			356,858
Total liabilities and stockholders’ equity	$	461,893		$	497,879

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended
	9/30/03			9/30/04
Cash flows from operating activities:
Net income	$	7,831		$	12,440
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		2,267			2,882
Stock-based compensation		52			82
Tax benefits of stock option exercises		3,069			2,658
Deferred income taxes		(212	)		(956	)
Working capital changes		(5,349	)		12,502
Net cash provided by operating activities		7,658			29,608
Cash flows from investing activities:
Capital expenditures		(2,608	)		(3,527	)
Purchases of investments		—			(1,867	)
Proceeds from sale of investments		1,083			—
Net cash used in investing activities		(1,525	)		(5,394	)
Cash flows from financing activities:
Issuance of common stock		1,992			2,410
Purchase of treasury stock		(145	)		—
Repayment of term loan		(400	)		—
Net cash provided by financing activities		1,447			2,410
Net increase in cash and cash equivalents		7,580			26,624
Cash and cash equivalents, beginning of period		158,264			143,367
Cash and cash equivalents, end of period	$	165,844		$	169,991
Supplemental disclosures of cash flow information:
Cash paid during the period:
Income taxes	$	6		$	1,391
Cash received during the period:
Interest	$	248		$	769
Income taxes	$	—		$	176

Reconciliation Between Total Revenue Growth and Organic Revenue Growth

(in thousands)

Organic revenue growth, as presented, measures revenue growth adjusted for the impact of acquisitions. The Company believes that this non-GAAP financial measure provides useful information because it allows investors to better assess the underlying growth rate of the Company’s existing business. This non-GAAP financial measure should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

	Three Months Ended
	9/30/03		9/30/04		Growth
Total Revenue, as reported	$	131,978	$	203,474	54	%
Plus: Orion revenue for July 1, 2003 through September 30, 2003		8,900		—	—
Organic Revenue	$	140,878	$	203,474	44	%