In August 2003, we announced an agreement to sell the majority of our federal government business to Lockheed Martin
Corporation for approximately $658 million, which includes $70 million payable pursuant to a five year non compete
agreement. Revenues from the federal business to be divested were approximately $685 million for fiscal 2003. We will
retain our business process outsourcing contract with the Department of Education, with current annual revenues of $172
million. Additionally, our commercial and state and local government operations will continue to serve as a subcontractor on
portions of the transferred business. In addition, we will acquire Lockheed Martin Corporation's commercial information
technology business, with trailing, recurring annual revenues of approximately $240 million, for approximately $107 million.
These transactions, which are subject to certain closing conditions, are expected to be completed during the second quarter of
fiscal 2004. The expected after tax proceeds from the divestiture will generally be used to pay down debt, to fund our share
repurchase program (See Item 5) and for general corporate purposes.
The demand for our services has grown substantially in recent years, and we believe that this will continue to increase in the
future as a result of strategic, financial and technological factors. These factors include:
the desire of organizations to focus on their core competencies;
the increasing desire by organizations to drive process improvements and improve the speed of and reduce the cost of
the desire by organizations to have a workforce that is able to expand and contract in relation to their business volumes;
the increasing acceptance by organizations to utilize offshore resources for business process outsourcing;
the increasing complexity of information technology systems and the need to connect electronically with clients,
suppliers, and other external and internal systems;
the increasing requirements for rapid processing of information and the instantaneous communication of large amounts
of data to multiple locations; and
the desire by organizations to take advantage of the latest advances in technology without the cost and resource
commitment required to maintain in house systems.
The key components of our business strategy include the following:
Expand Client Base We seek to develop long term relationships with new clients by leveraging our subject matter
expertise, world wide data manufacturing capabilities and infrastructure of information technology products and
services. Our primary focus is to increase our revenues by obtaining new clients with recurring requirements for
business process and information technology services.
Expand Existing Client Relationships We seek to expand existing client relationships by increasing the scope and
breadth of services we provide.
Build Recurring Revenues We seek to enter into long term relationships with clients to provide services that meet
their ongoing business requirements while supporting their mission critical business process or information technology
Provide Flexible Solutions We offer custom tailored business process and information technology solutions using a
variety of proprietary and third party licensed software on multiple hardware and systems software platforms and
domestic and international workforces that are able to expand and contract in relation to clients business volumes.