Exhibit 99.1
Contacts:
Kevin R. Rhodes, Chief Financial Officer
Barbara Warren-Sica, Investor Relations
(781) 246-3343
EDGEWATER TECHNOLOGY, INC. REPORTS
FIRST QUARTER 2002 FINANCIAL RESULTS
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Wakefield, MA, April 24, 2002 -- Edgewater Technology, Inc. (NASDAQ: EDGW,
www.edgewater.com, the "Company") today announced financial results for the
first quarter ended March 31, 2002. Revenue from operations for the first
quarter was $4.6 million, compared to revenue of $6.1 million during the fourth
quarter of 2001 and $7.7 million in the year earlier period. Gross profit from
operations for the first quarter was $1.2 million, compared to $2.4 million
during the fourth quarter of 2001 and $3.5 million in the year earlier period.
Net loss from continuing operations for the first quarter was $1.5 million,
compared to $1.0 million for the previous quarter and $0.7 million for the first
quarter of 2001.
"During the early stages of our first quarter 2002, we experienced soft
sales and continued delays in client spending, resulting in reduced utilization
and billable hours. Reacting to this early trend, we made a decision to reduce
expenses by rightsizing our workforce and to further concentrate efforts on team
selling through our blended sales model," said Shirley Singleton, President and
CEO of Edgewater Technology. "Our emphasis on the blended sales model, combining
consultative selling with our traditional sales methods, began to pay dividends
toward the end of the first quarter and has continued into April, as our team
has closed additional engagements in each of the last nine weeks. While we were
disappointed with lower revenues and gross profit in the first quarter, we
continue to focus on sales activity, and monitor our metrics of utilization,
pipeline and backlog. We expect, based on current information, that our revenues
will be flat to slightly higher in the second quarter. We also believe it is
important to recognize that the Company signed eight new clients in the first
quarter, compared to a total of seventeen new clients during all of 2001."
Singleton continued, "As we review our sales pipeline, we are seeing
increased sales activity with higher closure rates, as compared to the previous
quarter. We are hopeful for continued sales improvement, and if this trend
continues, we would expect to see increasing revenues, and utilization rates
steadily climbing back to historical levels, resulting in positive cash flow for
the year. Our backlog currently stands at $10.2 million."
Commenting on the workforce reduction, Singleton said, "As a result of the
reduction during the first quarter, the Company expects to reduce ongoing
expenses of approximately $700,000 per quarter, beginning in the second quarter
of 2002. We also recorded a one-time charge of approximately $350,000 in the
first quarter of 2002, related to severance pay and other associated costs."
Singleton concluded, "In addition to the challenges of the industry, we
have had to contend with the distractions related to the trial concerning the
murder of seven of our colleagues. As a result of the trial, many employees have
been diverted from business operations during March and April, preparing and
participating in the trial. We are hopeful that all associated with this tragedy
can gain some sense of closure at the conclusion of the trial and we at
Edgewater Technology can begin to regain our momentum."
The Company adopted Statement of Financial Accounting Standard No. 142
during the quarter ended March 31, 2002. In connection with the adoption of this
new standard, the company obtained an independent valuation of its business
during the first quarter of 2002. As a result of this evaluation, in which the
declining market values of the IT services sector played a major factor, the
Company recorded a non-cash, goodwill impairment charge of $12.5 million. This
impairment charge will have no impact on the Company's cash position and was
accounted for as a change in accounting principle. Including this impairment
charge, net loss in the first quarter of 2002 was $13.9 million. In addition,
SFAS 142 eliminates amortization of goodwill. The Company recorded goodwill
amortization of $1.1 and $4.3 million during the three months ended March 31,
2001 and the year ended December 31, 2001.
About Edgewater Technology, Inc.
Founded in 1992, the Company is an award-winning strategic consulting firm
that specializes in providing technical consulting, custom software development
and system integration services primarily to middle-market companies and
divisions of large Global 2000 companies. Headquartered in Wakefield,
Massachusetts, the Company has taken a partnership approach with its clients,
targeting strategic, mission-critical applications. The Company services its
client base by leveraging a combination of leading-edge technologies and proven
reengineering techniques provided by its network of strategically positioned
solutions centers. For further information, visit www.edgewater.com or call
781-246-3343.
Selected Financial Data:
EDGEWATER TECHNOLOGY, INC.
Statements of Operation
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2002 2001
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Service revenues $4,582 $7,757
Cost of services 3,405 4,241
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Gross profit 1,177 3,516
Selling, general and administrative 2,218 3,440
Depreciation Expense 207 214
Amortization Expense 83 1,159
Restructure Costs 349 -
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Operating (loss) income (1,680) (1,297)
Interest income (expense) and other, net 220 937
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Loss before income taxes (1,460) (360)
Income tax provision (benefit) - 310
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Net Income (loss) from continuing operations (1,460) (670)
(Loss) gain related to discontinued operations - 5,504
Income (Loss) from Extraordinary Item - (156)
Income (Loss) from Change in Accounting Principle (12,451) -
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Net income (loss) ($13,911) $ 4,678
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BASIC EARNINGS PER SHARE
From continuing operations ($0.13) ($0.04)
Net income (loss) ($1.20) $0.28
DILUTED EARNINGS PER SHARE
From continuing operations ($0.13) ($0.04)
Net income (loss) ($1.20) $0.28
AVERAGE SHARES OUTSTANDING - BASIC 11,607 16,497
AVERAGE SHARES OUTSTANDING - DILUTED 11,607 16,506
Summary Balance Sheet Information at March 31, 2002
(In thousands)
(Unaudited)
Assets Liabilities and Equity
- ------ ----------------------
Cash and Marketable Securities $ 48,630 Accounts Payable & Accrued Reserves $ 4,304
Accounts Receivable, Net 2,676 Accrued Payroll & Liabilities 745
Fixed Assets, Net 1,897 Long Term Liabilities & Other 346
Tax Receivable - Stockholders Equity 91,120
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Deferred Tax Asset 23,164 Liabilities & Shareholders Equity $ 96,515
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Intangible Assets 19,274
Prepaid and Other Assets 874 Shares Outstanding 11,607
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Total Assets $ 96,515
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This Press Release contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including statements
made with respect to potential future sales, utilization, revenue and cash flow
levels,, sales activity trends, , revenue, backlog, utilization rates and growth
goals. The forward looking statements included in the Press Release relate to
future events or our future financial conditions or performance. Words such as
"estimate," "seek," "should," "plan," "believe," "expect," "hopeful,"
"continue," and "sustain," or the negative thereof or variations thereon and
similar expressions are intended to identify forward-looking statements. These
forward-looking statements inherently involve certain risks and uncertainties,
although they are based on our current plans or assessments that are believed to
be reasonable as of the date of this Press Release. Factors that may cause
actual results, goals, targets or objectives to differ materially from those
contemplated, projected, forecast, estimated, anticipated, planned or budgeted
in such forward-looking statements include, among others, the following
possibilities: (1) changes in industry trends, such as decline in the demand for
ebusiness services and/or information technology services; (2) failure to obtain
new customers or retain significant existing customers; (3) loss of key
executives; (4) general economic and business conditions (whether foreign,
national, state or local) which include but are not limited to changes in
interest or currently exchange rates and the overall demand for ebusiness
services and/or spending for information technology services; (5) failure of the
general economy or IT services spending to rebound or otherwise improve; (6)
lack of available growth opportunities at reasonable values; (7) the inability
to grow revenues, backlog, utilization or market share; (8) the strength or
visibility of the company's backlog of business of $10.2 million; and (9) any
changes in ownership of the Company or otherwise that would result in a
limitation on the use of the net operating loss carry forward under applicable
tax laws. Actual events or results may differ materially from those discussed,
contemplated, forecasted, estimated, anticipated, planned or implied in the
forward-looking statements as a result of the various factors described above
and those further set forth under the heading "Business- Factors Affecting
Finances, Business Prospects and Stock Volatility" in the Company's Form 10-K
filed with the Securities and Exchange Commission on March 27, 2002.
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