SI International to acquire Shenandoah Electronic Intelligence

RESTON, Va., 12 January 2005. SI International, Inc., an information technology and network solutions (IT) company, announced today that it has signed a definitive stock purchase agreement to acquire Shenandoah Electronic Intelligence, Inc. (SEI) for $75 million.

Jan 13th, 2005

RESTON, Va., 12 January 2005. SI International, Inc., an information technology and network solutions (IT) company, announced today that it has signed a definitive stock purchase agreement to acquire Shenandoah Electronic Intelligence, Inc. (SEI) for $75 million.

The acquisition supports SI International's business strategy to secure consistent growth by broadening its customer base and expanding its portfolio of mission-critical solutions. The acquisition of SEI will enable SI International to strengthen its relationships with the Department of Homeland Security through providing additional mission-critical outsourcing services.

Based in Harrisonburg, Va., and founded by Walter Curt in 1986, SEI has approximately 1,600 employees with over 99 percent holding security clearances. SEI's primary client is the Department of Homeland Security (DHS). SEI provides business process outsourcing for DHS to include: records management and applications support services; secure optical card processing at one of the largest facilities of its kind; and, analytical support services.

"We believe that the acquisition of SEI will allow SI International to deepen its presence within the Department of Homeland Security and will expand our portfolio of service offerings through the introduction of complementary capabilities in the areas of business process outsourcing," said Ray Oleson, chairman and CEO of SI International. "SEI has a highly dedicated team of professionals with a proven track record of success in implementing mission-critical solutions.

Referring to the acquisition, Walter Curt, president and CEO of SEI, commented, "We are excited about the opportunities and benefits this combination will produce for our customers and employees. Our clients will have the ability to benefit from SI International's full array of IT solutions and from the additional resources of a larger company. Our employees will have greater opportunities for growth and professional development. SEI is a perfect match with SI International's corporate culture of building and maintaining long-term customer relationships, while providing state-of-the-practice solutions."

For the trailing 12 months ended September 30, 2004, SEI had revenues of approximately $73.9 million and operating profit of approximately $9.5 million. The terms of the definitive agreement provide that SI International will acquire SEI for $75 million in cash. SI International will pay the purchase price with its cash-on-hand and borrowings from a new credit facility which will replace its current credit facility and provide for borrowing for up to $150 million in committed funds.

The purchase price is subject to adjustment as a result of certain tax elections. The definitive stock purchase agreement also provides that the SEI stockholders will retain certain non-operating assets and contingent accounts receivable. SI International and SEI plan to complete the transaction within the next 30 to 60 days. SI International expects the proposed acquisition to be accretive to earnings immediately and will provide more detailed information regarding its financial outlook after the closing.

The consummation of the acquisition is subject to a number of conditions precedent, including SI International obtaining the approval of its board of directors, the satisfactory completion of its due diligence process, and SI International obtaining the necessary financing for the transaction. SI International has obtained a commitment letter for the financing from its senior lender. There can be no assurances that the acquisition will be consummated. SI International has successfully acquired six businesses since 1999.

SI International, a member of the Russell 2000 index, is a provider of information technology and network solutions (IT) primarily to the Federal government. The company combines technological and industry expertise to provide a full spectrum of state-of-the-practice solutions and services, from design and development to documentation and operations, to assist clients in achieving their missions. For more information see www.si-intl.com.

Through its subsidiary, SEI Technology, Inc., SEI performs facilities management functions for several government entities, produces personalized identification cards at the world's largest secure optical card processing facility which is considered one of DHS' "Centers of Excellence." The company specializes in providing federal agencies with critical business outsourcing services, including: data and records management; applications processing/file & mail management; data entry; file creation; secure identity card production; network installation/call center support; and analytical support services. Jefferies Quarterdeck acted as financial advisor to SEI.

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