Invest in Technology We respond to technological advances and the rapid changes in the requirements of our clients
by committing substantial amounts of our resources to the operation of multiple hardware platforms, the customization
of products and services that incorporate new technology on a timely basis and the continuous training of our
Maximize Economies of Scale Our strategy is to develop and maintain a significant client and account/transaction
base to create sufficient economies of scale that enable us to achieve competitive costs.
Complete Strategic and Tactical Acquisitions Our acquisition strategy is to acquire companies to expand the products
and services we offer to existing clients, to obtain a presence in new, complementary markets and to expand our
Attract, Train and Retain Employees We believe that attracting, training, and retaining high quality employees is
essential to our growth. We seek to hire motivated individuals with strong character and leadership traits and provide
them with ongoing technological and leadership skills training. We emphasize retaining our employees with
challenging work assignments and incentive programs.
During the last three fiscal years, our revenues by segment were as follows (in thousands):
Year ended June 30,
2003 2002 2001
State and Local Governments
Federal Government (2)
(1) Includes $33.0 million and $37.3 million of revenues from divested companies for fiscal years 2002 and 2001, respectively.
(2) Includes $4.3 million of revenues from divested companies for fiscal year 2002.
For further information on our segments, see Note 17 to our Consolidated Financial Statements.
State and Local Governments
We are a leading provider of business process outsourcing services to state and local governments. Our services help state and
local agencies reduce operating costs, increase revenue streams and increase the quality of services to citizens.
Approximately 45% of our fiscal 2003 consolidated revenues were derived from contracts with state and local governments.
State and local government clients may terminate most of these contracts at any time, without cause, for convenience or lack
of funding. Additionally, government contracts are generally subject to audits and investigations by government agencies. If
the government finds that we improperly charged any costs to a contract, the costs are not reimbursable or, if already
reimbursed, the cost must be refunded to the government.
Pricing for our services in the state and local market is generally determined based on the number of transactions processed,
human services cases managed or, in instances where a systems development project is required in our state healthcare unit,
we generally price our services on a fixed fee basis for the development work.
We design, develop, implement, and operate large scale health and human services programs and the information technology
solutions that support those programs. Today, we operate fourteen state Medicaid programs and six state Child Health Insurance
Programs that cover approximately 19.4 million recipients, process over 397 million Medicaid healthcare claims annually and
disburse over $40 billion in provider payments. We also operate 25 state pharmacy benefits management programs that assist
states in controlling prescription drug costs, pharmacy intervention and surveillance and the processing of drug claims. We