Arlington Capital Partners Commits $75 Million to Federal Information Technology Services; Backs Veteran Management Team; Announces Closing of First Acquisition.

Business Editors

WASHINGTON--(BUSINESS WIRE)--April 10, 2003

Arlington Capital Partners, a $450 million Washington, DC-based private equity fund, in partnership with three veteran federal information technology executives, today announced the acquisition of ITS Services, Inc., a privately-held, leading provider of information technology (IT) solutions and network operations and support services to federal government agencies.

ITS Services is the first acquisition as part of Arlington's $75 million equity commitment to consolidate several federal IT services companies. The two executives who will be leading day to day operations of the company are Todd Stottlemyer, a former senior executive at BDM International, and Paul Leslie, who led BDM's systems development and integration business unit.

Stottlemyer will serve as the new Chief Executive Officer of ITS Services, and Leslie as President and Chief Operating Officer. Phil Odeen, the former President and CEO of BDM and more recently Chairman of TRW, will serve as Chairman of the Board of Directors.

The executive team each played key roles in the success of several major IT companies and, together, have more than 60 years of IT experience.

In addition to Arlington's investment, debt financing was arranged with Wachovia Bank, Allfirst Bank, Citizens Bank, and Allied Capital. Arlington plans to utilize the remaining capital to invest in the Company's organic growth and to make strategic acquisitions.

Jeffrey H. Freed, Managing Director of Arlington, said, "We are very excited to be partners with Phil Odeen, Todd Stottlemyer, and Paul Leslie. We believe this team brings a clear strategic vision and a solid track record of success leading and growing companies in the federal IT space. With ITS Services as the foundation company, we intend to create a premier, mid-tier IT services provider."

"We are convinced that the federal government will increasingly outsource information technology work to third-party contractors. We intend to fill the current void of large, yet nimble, contractors in the $200 to $500 million size range in order to meet the government's increasing needs," said Michael H. Lustbader, Vice President at Arlington.

ITS Services, which was founded in 1991, operates in three core IT areas: enterprise architecture; network services and operations; and software and applications development. The company has revenues of over $70 million.

Stottlemyer said, "ITS Services will be the foundation company for what is planned to become a major IT company supporting federal agencies involved in homeland security, law enforcement, national defense, and other areas critical to the nation."

"The fundamentals of ITS Services are solid and very impressive. ITS Services is strategically positioned in a number of key federal agencies, including the new Department of Homeland Security, through its significant work for the U.S. Customs Service," Odeen explained.

Angela Mason, who along with co-founder Ram Prasad, will remain shareholders of the company said: "We spent a lot of time with the new management team discussing our collective vision for the future and how we could continue to build and grow the company. We found that we shared a common vision and strategy for future growth, and we are very pleased that we will be transitioning leadership of the company to people who have the experience and commitment to lead the company forward. This experience, coupled with the backing of Arlington Capital Partners, will give ITS Services the ability to access capital and financial resources to ensure strong growth."

Details of the acquisition were not disclosed.

About ITS Services, Inc.

Founded in 1991, ITS Services (www.itssinc.com) is a leading provider of information technology solutions to the U.S. Government in three core areas: enterprise architecture; network services and operations; and software and applications development.

Current customers include: U.S. Customs Service, U.S. Census Bureau, U.S. Department of Agriculture, U.S. Secret Service, U.S. Small Business Administration, U.S. Mint, Drug Enforcement Administration, Internal Revenue Service, General Services Administration, Federal Highway Administration, National Institute of Standards and Technology, National Oceanic and Atmospheric Administration, National Nuclear Security Administration, and the Department of Veterans Affairs.

The company is headquartered in Springfield, Virginia.

About Arlington Capital Partners

Arlington Capital Partners (www.arlingtoncap.com) is a Washington, DC-based private equity fund with over $450 million of committed capital focused on middle market buyout and expansion equity investment opportunities in growth industries including: business services, outsourcing, IT services, aerospace/defense, media, communications, and related information products and services industries.

The firm's principals have a unique combination of operating and private equity experience that enables Arlington to be a value-added investor. Arlington invests in companies with high quality management teams that are motivated to establish and/or advance their company's position as leading competitors in their field.

Arlington's substantial operating experience resides with two of the firm's founders, each of whom have distinguished careers leading Fortune 500 companies to success: Raymond W. Smith, former Chairman and CEO of Bell Atlantic (now Verizon), and Paul G. Stern, former Chairman and CEO of Northern Telecom (now Nortel Networks) and former President and COO of Burroughs/Unisys.

The firm's principals also have significant private equity experience, completing over 100 transactions for aggregate consideration of over $15 billion over the past fifteen years.

About Phil Odeen

Phil Odeen, who will serve as Chairman of the Board of Directors, most recently was Chairman of TRW. Prior to that, Odeen held a number of executive leadership positions in the federal IT industry, including the executive responsible for TRW's Systems and Information Technology practice, President and CEO of BDM International, and Managing Partner of Coopers & Lybrand's Federal Consulting Practice.

Odeen has held significant industry and defense leadership positions, including Chair of the National Defense Panel, Vice Chair of the Defense Science Board, and Chairman of the Professional Services Council.

About Todd Stottlemyer

Todd Stottlemyer has more than 17 years of experience in the federal IT sector. He was Executive Vice President and Chief Financial and Administrative Officer at BTG Inc., and guided the company's restructuring and return to profitability.

Prior to joining BTG, Stottlemyer was Corporate Vice President at BDM International, playing a key role in the company's relationship with the financial community, and in the successful effort that led to BDM's acquisition by TRW. During Stottlemyer's 12 years with BDM, the company's annual revenue grew from $250 million to $1.1 billion.

About Paul Leslie

Paul Leslie has more than 25 years of federal IT experience. Leslie was Executive Vice President and Chief Operating Officer at BTG, where he was responsible for day-to-day operations of the company.

He began his career as a software engineer with EDS and later joined BDM, where he led the company's federal systems development and integration business unit, which grew organically from less than $10 million to $120 million in annual revenue within five years, and later managed a $230 million business unit.

Leslie was responsible for several major BDM programs, including the EDGAR electronic filing system for the U.S. Securities and Exchange Commission.