[EDGEWATER LOGO APPEARS HERE]
EXHIBIT INDEX
99.1 Edgewater Technology, Inc. Press Release dated February 12, 2003.
Contacts:
Kevin Rhodes, Chief Financial Officer
Barbara Warren-Sica, Investor Relations
(781) 246-3343
EDGEWATER TECHNOLOGY ANNOUNCES RESULTS
FOR FOURTH QUARTER AND FULL YEAR 2002
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Wakefield, MA, February 12, 2003 -- Custom development and system integration
consulting firm, Edgewater Technology, Inc. (NASDAQ: EDGW, www.edgewater.com,
"Edgewater Technology" or the "Company") today reported financial results for
the fourth quarter and fiscal year ended December 31, 2002.
Fourth Quarter Results
Actual financial results and utilization for the December 2002 quarter were
as follows:
o Revenue increased to $4.7 million, compared to $4.6 million in the third
quarter of 2002;
o Gross profit increased to $1.9 million, compared to $1.7 million in the
third quarter of 2002;
o Gross profit margin increased to 41%, compared to 38% in the third quarter
of 2002;
o Utilization improved to 74% for the fourth quarter, compared to 66% during
the third quarter 2002;
o Net loss from continuing operations was $7.5 million, or ($0.65) per share,
including a non-cash charge for goodwill impairment of $7.4 million and
depreciation and amortization of $.2 million, compared to a net loss from
continuing operations of $0.6 million, or ($.05) per share in the third
quarter of 2002, which included depreciation and amortization of $.2
million;
o Positive cash flow from operations for the third consecutive quarter.
Full-Year Consolidated Results
Actual financial results and utilization for the full year of 2002 were as
follows:
o Revenue for 2002 was $18.7 million, compared to $26.6 million for 2001;
o Gross profit was $6.8 million for 2002, compared to $10.8 million for 2001;
o Gross profit margin was 36% in 2002, compared to 41% in 2001;
o Net loss from continuing operations was $10.1 million, or ($0.87) per
share, including the non-cash charge for goodwill impairment of $7.4
million and depreciation and amortization of $1.0 million, compared to a
net loss of $3.7 million, or ($.29) per share in 2002, which included
depreciation and amortization of $5.5 million;
o Positive cash flow from operations for fiscal year ended December 31, 2002.
"We were pleased that our key metrics of gross profit margins and
utilization continued to climb during the fourth quarter," said Shirley
Singleton, President and CEO of Edgewater Technology. "While the past year
marked one of the most difficult climates for IT spending, we continued to show
signs of improvement with a strong increase in sales activity in the second half
of 2002 as customers decided to move forward on long-standing proposals."
During the fourth quarter, the Company recorded a non-cash, $7.4 million
charge for the impairment of goodwill in accordance with SFAS 142. The primary
factors related to the impairment charge were declining market values for IT
services companies and the Company's decline in revenue during 2002.
The Company has accrued a settlement amount in discontinued operations
during the fourth quarter of 2002 relating to the resolution of the Delaware
litigation matter. In order to eliminate management distraction and future
litigation costs, the Company agreed to a mutual settlement and release
agreement with the Stephens Group, Inc. and certain affiliates for a payment of
$950,000 to terminate and dismiss the Delaware litigation. This agreement
retains intact the Company's favorable summary judgment ruling received in
December 2002. As part of the settlement, the parties agreed that there was no
evidence of wrongdoing or liability related to the sale of the Company's former
commercial staffing business on June 28, 2000.
Outlook for 2003
Singleton concluded, "As we enter 2003 and review our sales pipeline, we
are optimistic that Edgewater Technology will achieve modest revenue growth and
profitability, resulting from an increase in sales activity associated with
larger-sized bidding opportunities. We attribute the up-tick in sales activity
to very focused vertical sales messages for both our existing offerings and
newly formalized offerings such as Higher Education, Insurance and Web services.
We continue to maintain our solid customer base, leveraging our core
competencies and expanding our services by capturing new revenue opportunities.
We remain encouraged with first quarter backlog of $4.8 million to date and
believe with strong business fundamentals, including a commitment to control
costs, Edgewater Technology is well positioned for the future."
Stock Repurchase Program
During 2002, the Company repurchased approximately 150,000 shares for $.6
million. As a part of the Company's existing stock repurchase program, the
Company has established a stock purchase program under Securities & Exchange
Commission Rule 10b5-1. Under this Rule, the repurchase program can operate
without regard to traditional blackout periods. The program becomes effective on
February 14, 2003 and will expire on December 31, 2003, unless terminated
earlier.
Conference Call
Edgewater Technology will host a conference call today, Wednesday, February
12, at 10:00 a.m. (EST) to discuss the Company's fourth quarter and 2002
year-end results. To listen to the live call via the Internet, you can
participate by logging onto the Web cast at www.edgewater.com - Investor
Relations section or you can dial 800-388-8975 approximately 15 minutes prior to
start of the call. A replay of the call can be accessed via www.edgewater.com -
Investor Relations section or by dialing 800-428-6051 (pass code 272933) from
12:00 p.m. EST Wednesday, February 12 through 11:59 p.m. EST Monday, February
11.
About Edgewater Technology, Inc.
Founded in 1992, Edgewater Technology, Inc. is an award-winning consulting and
systems integration firm that specializes in tailored technology solutions for
middle-market companies and divisions of Global 2000 companies. Headquartered in
Wakefield, Massachusetts, the company has taken a partnership approach with its
clients, targeting strategic, mission-critical applications. Edgewater
Technology services its client base by leveraging a combination of leading-edge
technologies and proven reengineering techniques provided by its network of
national solutions centers strategically positioned across the United States.
For further information, visit www.edgewater.com or call 781-246-3343.
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[EDGEWATER LOGO APPEARS HERE]
Selected Financial Data:
EDGEWATER TECHNOLOGY, INC.
Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
-------- -------- --------- --------
Service revenues $4,683 $6,053 $18,666 $26,574
Cost of services 2,763 3,677 11,905 15,733
-------- -------- --------- --------
Gross profit 1,920 2,376 6,761 10,841
Selling, general and administrative 1,898 2,256 8,833 10,551
Depreciation expense 156 197 671 831
Amortization expense 83 1,159 332 4,634
Impairment of goodwill 7,411 - 7,411 -
Restructure costs - - 349 -
-------- -------- --------- --------
Operating loss (7,628) (1,236) (10,835) (5,175)
Interest income and other, net 160 338 777 2,090
-------- -------- --------- --------
Loss before income taxes (7,468) (898) (10,058) (3,085)
Provision for tax - 101 - 593
-------- -------- --------- --------
Net loss from continuing operations (7,468) (999) (10,058) (3,678)
Loss from discontinued operations, net (950) (562) (950) (904)
Gain on sale of divisions, net - - - 6,514
Change in accounting principle, net - - (12,451) -
Loss from extraordinary item, net - - - (27)
-------- -------- --------- --------
Net (loss) income ($8,418) ($1,561) ($23,459) $1,905
======== ======== ========= ========
BASIC EARNINGS PER SHARE
From continuing operations ($0.65) ($0.09) ($0.87) ($0.29)
Net (loss) income ($0.73) ($0.14) ($2.03) $0.15
DILUTED EARNINGS PER SHARE
From continuing operations ($0.65) ($0.09) ($0.87) ($0.29)
Net (loss) income ($0.73) ($0.14) ($2.03) $0.15
Pro forma continuing operations (1) ($0.65) $0.01 ($0.87) $0.05
AVERAGE SHARES OUTSTANDING 11,507 11,605 11,575 12,859
(1) Effective January 1, 2002, as the result of a change in generally accepted
accounting principles in accordance with SFAS No. 142, goodwill should no
longer be amortized. Proforma EPS from continuing operations excludes
goodwill amortization expense of $1.1 million for the three months ended
December 31, 2001; and excludes goodwill amortization expense of $4.3
million for the twelve months ended December 31, 2001.
Summary Balance Sheet Information at December 31, 2002
(In thousands)
(Unaudited)
Assets Liabilities and Equity
- ------ ----------------------
Cash and Cash Equivalents $ 46,782 Accounts Payable & Accrued Liabilities $ 4,662
Accounts Receivable, Net 2,647 Accrued Payroll & Liabilities 554
Fixed Assets, Net 1,606 Long Term Liabilities & Other 240
Deferred Tax Asset 22,884 Stockholders' Equity 81,037
Intangible Assets 11,614 -------
Prepaid and Other Assets 960 Liabilities & Stockholders' Equity $86,493
--------- =======
Total Assets $ 86,493 Shares Outstanding 11,485
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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 our 2003 outlook concerning utilization, revenues, sales,
profitability, backlog and cash flow;,ll growth opportunities and plans; and IT
spending trends. The forward looking statements included in the Press Release
relate to future events or our future financial conditions or performance, Words
such as "will," "provide," "focused," "believe," "continue," "remain,"
"optimistic," and "emerge," 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
custom development and system integration services and/or spending delays with
existing information technology services projects; (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 information technology services and/or
spending delays for existing information technology services; (5) failure of the
general economy or IT services spending to rebound or otherwise improve; (6)
lack of available growth opportunities; (7) the inability to maintain, sustain
or grow revenues; (8)the strength or visibility of the Company's backlog of
business for 2003; 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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