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Arlington Capital Partners Announces Acquisition of Science & Engineering Associates by Portfolio Company ITS Services, Inc.

Washington, D.C., January 22, 2004 — Arlington Capital Partners, a $450 million Washington, DC-based private equity fund, in partnership with its management team of veteran federal information technology executives, today announced the acquisition of Science & Engineering Associates, Inc. (SEA), headquartered in New Orleans, LA by ITS Services, Inc. (ITS Services) of Springfield, VA in a transaction valued at approximately $100 million.

SEA is the second acquisition as part of Arlington’s $75 million equity commitment, announced in March of last year, to consolidate several federal IT services companies and reflects Arlington’s strategy of combining strong organic growth with strategic acquisitions. The newly formed company has a revenue run rate in excess of $200 million with over 900 technology professionals. The firm will rank among the top 50 technology companies serving the federal government.

Jeffrey Freed, Partner at Arlington, said, “Since our acquisition of ITS Services, Arlington and management have evaluated numerous potential acquisition opportunities. Our objective has been consistent: gain additional scale, break into the Department of Defense market, strengthen higher-end IT technical capabilities and add additional management depth. We believe that SEA achieves each of our objectives. We still have roughly half of the initial capital commitment to Phil Odeen, Todd Stottlemyer and Paul Leslie available and expect to remain active acquirers.”

Phil Odeen, former Chairman of TRW and now Chairman of ITS Services, said, “This acquisition enables ITS Services to combine its significant presence with the Department of Homeland Security with SEA’s Department of Defense customers. The combined company is very well-positioned to experience significant organic growth, providing high-end services and solutions to two of the fastest-growing divisions of the federal government.”

ITS Services is a leading information technology services and solutions provider working on high profile federal programs, including the FAST (Free and Secure Trade) initiative within the Bureau of Customs and Border Protection (part of the Department of Homeland Security). Founded in 1980, SEA is the U.S. Navy’s lead contractor for the Space and Naval Warfare Information Technology Center. SEA’s service offerings include enterprise management, systems integration, program management, management consulting, and imaging, global positioning and laser technology products.

The combined company will deliver information technology, engineering, research and development, and managed network services to its customers. The customer base represents a solid balance of organizations within the homeland security, defense, intelligence, and federal civilian markets. The combined company’s largest customers include the Bureau of Customs and Border Protection within the Department of Homeland Security, U.S. Navy, Department of Energy, U.S. Census Bureau, Internal Revenue Service, and Department of Agriculture.

“We are going to focus on mission critical solutions with a new, broader range of capabilities, helping our government customers achieve desired performance improvements, provide for a strong national defense, and ensure the safety of our citizens,” said Todd Stottlemyer, CEO of ITS Services. “The key to our growth is to fully align our proven capabilities and execution with critical national priorities. We are now well-positioned for significant prime contractor opportunities, enabling us to compete on a new level.”

Bobby Savoie, CEO of SEA, amplified this objective: “The next phase in increasing and rapidly growing SEA’s federal presence required new opportunities and a broader array of mission critical services and solutions. We are delighted to have found solid, complementary capabilities and the same core values in ITS Services. We are bringing together two organizations that have historically outperformed growth rates within our industry and anticipate significant cross-selling that will accelerate revenue growth.”

“The combined company has the breadth of service offerings and customers to take full advantage of the federal government’s increased reliance upon third-party contractors. Our management team has set a fast pace at ITS Services and are prepared to integrate the complementary services of SEA, thus accelerating the company’s already strong organic growth,”said Michael Lustbader, Vice President at Arlington.
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 investment opportunities in growth industries including the business services and outsourcing, aerospace/defense, IT and engineering services, media, education and training, healthcare services, and specialized manufacturing and related industries. The firm’s professionals have a unique combination of operating and private equity experience that enables Arlington to be a value-added investor. Arlington invests in companies in partnership with high quality management teams that are motivated to establish and/or advance their company‚s position as leading competitors in their field.

About ITS Services, Inc.

Founded in 1991 and privately held, ITS Services is backed by Washington, DC based private equity firm Arlington Capital Partners. ITS Services provides information technology solutions to government entities, and specializes in three core areas of business: network engineering and operations, software and systems development, and enterprise architecture. Current customers include the Bureau of Customs and Border Protection, Drug Enforcement Administration, U.S. Census Bureau, Department of Agriculture, and Internal Revenue Service. ITS Services is independently assessed at Level 2 under the Software Engineering Institute’s (SEI) Capability Maturity Model (CMM). The Company is headquartered in Springfield, VA. More information on ITS Services can be found at www.itssinc.com.

About SEA, Inc.

Founded in 1980, Science & Engineering Associates, Inc. (SEA) is a nationally recognized, employee-owned high technology company with offices across the United States. SEA staff offers a diverse collection of engineering, scientific, information technology, and managerial expertise that enables them to provide innovative and cost-effective solutions to government and commercial customers worldwide. From its beginnings in support of the Department of Energy labs in New Mexico, the SEA business portfolio has grown into advanced sensor development, environmental instruments, laser products, spectral imaging, medical instruments, security solutions, and system engineering analysis and design. More information on SEA can be found at www.seabase.com.

Contact: Jeffrey Freed
Michael Lustbader
Arlington Capital Partners
5425 Wisconsin Ave
Suite 200
Chevy Chase, MD 20815
(202) 337-7500
(202) 337-7525 (fax)
SOURCE: Arlington Capital Partners