Sra International 8-K SRA Announces Financial Results for Second Quarter of Fiscal Year 2009

Exhibit 99.1

SRA Announces Financial Results for Second Quarter of Fiscal Year 2009

• Revenue of $369 million and Diluted EPS of $0.19

• $329 million of contract awards

• Challenges in commercial and international businesses

• Strong January contract award activity in federal services business

FAIRFAX, Va. – February 5, 2009 – SRA International, Inc. (NYSE: SRX), a leading provider of technology and strategic consulting services and solutions to government organizations, today announced operating results for the second quarter of fiscal year (FY) 2009, which ended December 31, 2008.

Revenue for the quarter was $369.3 million, down 3% from $382.0 million in the December 2007 quarter. Operating income for the quarter was $19.5 million, for an operating margin of 5.3%. Net income was $10.8 million, for a net margin of 2.9%. Diluted earnings per share for the quarter were $0.19, down $0.11 year over year.

Second quarter results were affected by a downturn in the company’s Global Clinical Development (GCD) business, which provides clinical trial management and regulatory consulting services to pharmaceutical and biotechnology firms around the world. Contract execution challenges and a decline in industry demand reduced second quarter earnings in that business by about $0.04 per share from our internal forecast.

The revenue and earnings performance of SRA’s government information technology (IT) and professional services business was slightly below its forecast for the quarter due to bid protests and order delays, but January contract awards have shown improvement. In light of the comparative strength and stability of the U.S. federal market, the company intends to focus its primary efforts on the growth and development of that part of our business going forward.

SRA President and CEO Stan Sloane said, “We’re disappointed in these second quarter results, and we have taken steps to improve our performance going forward. The large new business wins we’ve had early in the third quarter will support our organic growth efforts.”

Executive Vice President and COO Tim Atkin added, “Strong hiring and retention results in the second quarter are indications of the stability of our government business, and we continue to be optimistic about our positioning in areas such as cybersecurity, health and environmental services. We intend to leverage the company’s solid reputation and diversified customer base across government to accelerate revenue growth and improve margins.”

The company also announced that SRA Corporate Controller Melissa Burgum has been named acting CFO while retiring CFO Steve Hughes transitions from his role and the company continues its search for a permanent replacement. Burgum, a Certified Public Accountant who has served as Corporate Controller for over three years, held previous roles in finance and accounting, audit and consulting for ITT Industries, Inc. and Arthur Andersen LLP.

New Business Awards

SRA won new business in the second quarter with potential value of $329 million, if all options are exercised. As of December 31, 2008, the company’s backlog of signed business orders was $3.9 billion, unchanged year-over-year. Funded backlog increased 5% year-over-year to $802 million.

The company was awarded several significant contracts during the December quarter. The largest was a five-year, $56 million contract to provide network and systems management services to the Pentagon Force Protection Agency. The Environmental Protection Agency also awarded SRA a five-year, $42 million blanket purchase agreement to continue development and support services for its Energy Star website.

In January, SRA received more than $300 million of contract awards, the largest of which was an IT support services contract for the U.S. European Command and U.S. Africa Command. This single-award task order is worth more than $200 million over five years and represents new work for SRA.

Other Highlights

FORTUNE^®magazine selected SRA as one of the “100 Best Companies to Work For” for the tenth consecutive year. The list is based on the most extensive employee survey in corporate America, with responses from nearly 80,000 employees from more than 350 companies. Only thirteen companies have earned a position on the list for each of the last ten years.

Forward Guidance

The company is updating its revenue and earnings guidance for Fiscal Year 2009. The previous revenue range of $1.54 billion to $1.60 billion has been reduced to account for Q2 performance, weakness in the GCD business, and recent protest and order delays that have affected the government services business.

The previous range of diluted earnings per share was $1.12 to $1.22. The new guidance reflects Q2 performance and lower expectations for the GCD business in Q3 and Q4. The high end of the earnings range has also been reduced to account for continuing delays of Era’s military orders this fiscal year. Q3 and Q4 earnings estimates for the U.S. government business are lower than previous estimates given the revenue reduction.

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 this table does not include any effect for acquisitions that SRA might make in the future.

Measure	Fiscal Year Ending June 30, 2009	Change from FY 2008 to 2009
Revenue	$1.51 billion to $1.54 billion	0% to 2%
Diluted earnings per share	$0.94 to $1.00	-19% to -24%

Conference Call

SRA senior management will hold a conference call to discuss these operating results and forward guidance today at 5:00 PM Eastern. Interested parties may listen to the conference call

by dialing 888-287-9905 (U.S./Canada) or 706-643-7540 (Other) with passcode 81157205. The conference call will be Webcast simultaneously through a link on the SRA Web site (www.sra.com). A replay of the conference call will be available approximately two hours after the conclusion of the call on February 5, 2009 through February 19, 2009 by dialing 800-642-1687 (U.S./Canada) or 706-645-9291 (Other) and entering passcode 81157205.

Any statements in this press release about future expectations, plans, and prospects for SRA, including guidance about future financial results and statements about the estimated value of contracts 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 a substantial majority 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; our exposure to commercial and international technology market conditions; our ability to attract and retain skilled employees; any reductions in or reallocations of the U.S. defense budget or the budgets for civil government agencies; the market price of the company’s stock prevailing from time to time; the nature of other investment opportunities presented to the company from time to time; the company’s cash flows from operations; and other factors discussed in our latest annual report on Form 10-K filed with the Securities and Exchange Commission on August 28, 2008 and updated in quarterly Form 10-Q filings. In addition, the forward-looking statements included in this press release represent our views as of February 5, 2009. 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 5, 2009.

Contact

Dave Keffer

Vice President, Investor Relations

SRA International, Inc.

(703) 502-7731

david_keffer@sra.com

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended						Six Months Ended
	31-Dec-08			31-Dec-07			31-Dec-08			31-Dec-07
Revenue	$	369,323		$	382,015		$	761,678		$	746,142
Operating costs and expenses:
Cost of services		268,050			286,029			555,872			560,998
Selling, general and administrative		74,560			59,872			145,768			112,990
Depreciation and amortization		7,415			6,424			14,293			12,591
Acquired in-process research and development		(200	)		—			900			—
Total operating costs and expenses		349,825			352,325			716,833			686,579
Operating income		19,498			29,690			44,845			59,563
Interest expense		(2,155	)		(752	)		(3,935	)		(1,605	)
Interest income		631			889			1,403			2,488
Gain on sale of Constella Futures Holding, LLC		—			—			1,939			—
Income before taxes		17,974			29,827			44,252			60,446
Provision for income taxes		7,144			11,836			18,008			23,996
Net income	$	10,830		$	17,991		$	26,244		$	36,450
Earnings per share:
Basic	$	0.19		$	0.31		$	0.47		$	0.63
Diluted	$	0.19		$	0.30		$	0.46		$	0.61
Weighted-average shares:
Basic		56,122,367			57,663,214			56,364,444			57,475,124
Diluted		57,285,022			59,599,737			57,629,785			59,376,343

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

	As of
	31-Dec-08		30-Jun-08
Current assets:
Cash and cash equivalents	$	106,964	$	229,260
Restricted cash		800		1,194
Accounts receivable, net		358,971		344,974
Inventories		2,762		—
Prepaid expenses and other		42,616		64,159
Deferred income taxes, current		11,062		11,544
Total current assets		523,175		651,131
Property, plant and equipment, net		40,776		37,949
				��
Other assets:
Goodwill		487,310		395,766
Identified intangibles, net		49,056		36,813
Deferred income taxes, noncurrent		5,321		3,217
Deferred compensation trust		6,097		7,747
Notes receivable and other assets		25,288		3,892
Total other assets		573,072		447,435
Total assets	$	1,137,023	$	1,136,515
Current liabilities:
Accounts payable and accrued expenses	$	118,365	$	163,927
Accrued payroll and employee benefits		98,757		99,742
Billings in excess of revenue recognized		23,893		15,111
Short-term borrowings		8,857		—
Total current liabilities		249,872		278,780
Long-term liabilities:
Long-term debt		175,000		150,000
Other long-term liabilities		12,889		14,799
Total long-term liabilities		187,889		164,799
Total liabilities		437,761		443,579
Stockholders’ equity		699,262		692,936
Total liabilities and stockholders’ equity	$	1,137,023	$	1,136,515

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Six Months Ended
	31-Dec-08			31-Dec-07
Cash flows from operating activities:
Net income	$	26,244		$	36,450
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		14,293			12,591
Stock-based compensation		5,362			4,886
Deferred income taxes		(2,312	)		(4,542	)
Gain on sale of Constella Futures Holding, LLC		(1,939	)		—
Loss on disposal of property and equipment		—			744
Acquired in-process research and development		900			—
Working capital changes, net of the effect of acquisitions and divestitures		(34,246	)		(28,632	)
Net cash provided by operating activities		8,302			21,497
Cash flows from investing activities:
Capital expenditures		(8,869	)		(6,650	)
Payments to Spectrum Solutions Group, Inc. shareholders		(7,016	)		—
Acquisitions, net of cash acquired		(132,246	)		(185,955	)
Issuance of notes receivable		(17,526	)		—
Proceeds from sale of Constella Futures Holding, LLC		31,846			—
Net cash used in investing activities		(133,811	)		(192,605	)
Cash flows from financing activities:
Issuance of common stock		2,265			10,063
Tax benefits of stock option exercises		108			4,184
Net borrowings under credit facility		23,431			50,000
Payment of financing costs		—			(324	)
Purchase of treasury stock		(21,824	)		(272	)
Net cash provided by financing activities		3,980			63,651
Effect of exchange rate changes on cash and cash equivalents		(767	)		—
Net decrease in cash and cash equivalents		(122,296	)		(107,457	)
Cash and cash equivalents, beginning of period		229,260			212,034
Cash and cash equivalents, end of period	$	106,964		$	104,577
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest	$	3,093		$	1,185
Income taxes	$	26,667		$	34,466
Cash received during the period:
Interest	$	1,740		$	2,761
Income taxes	$	342		$	729

Reconciliation Between Total Revenue and Organic Revenue (Unaudited)

(in thousands)

Organic revenue, as presented, is computed by comparing our reported revenue for the current period to revenue for the same period in the prior-year adjusted to include revenue of acquired businesses for the pre-acquisition period of the prior-year. In arriving at prior-year revenue, we include the revenue of acquired companies and remove the revenue of divested companies for the prior-year periods comparable to the current-year periods for which the companies are included in our reported revenue. The resulting rate is intended to represent our organic, or non-acquisitive, growth or decline year-over-year, including comparable period growth or decline attributable to acquired companies. We believe that this non-GAAP financial measure provides useful information because it allows investors to better assess the underlying growth rate of our business, including the post-acquisition activity of acquired companies. This non-GAAP financial measure is not used for any other purpose and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP.

	Three Months Ended
	31-Dec-08		31-Dec-07			% Increase
Total Revenue, as reported	$	369,323	$	382,015		(3.3	)%
Plus: Revenue from acquired companies for the comparable prior year period		—		16,650
Less: Revenue from divested companies for the comparable prior year period		—		(18,244	)
Organic Revenue	$	369,323	$	380,421		(2.9	)%