EXHIBIT 99.1
Contacts:
Clete T. Brewer, Chairman and CEO or Kim Polan/Susan Burns
Terry C. Bellora, Chief Financial Officer Citigate Sard Verbinnen
(501) 973-6084 (212) 687-8080
Edgewater Technology Announces 4th Quarter and 2000 Results
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Fayetteville, Ark., February 21, 2001 - Edgewater Technology, Inc. (NASDAQ:
EDGW) today reported financial results for the fourth quarter and fiscal year
ended December 31, 2000.
Fourth Quarter Consolidated Results
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Revenue from continuing operations for the fourth quarter 2000 was $16.3
million, a 46% increase over revenue of $11.1 million for the same period in
1999. Results for continuing operations exclude four divested units (Commercial
Services, Robert Walters, Strategic Legal and IntelliMark) but include a fifth
announced divestiture (ClinForce) whose completion is subject to a stockholder
vote set for March 14, 2001. Upon completion of the ClinForce sale, the
eSolutions segment will be Edgewater Technology's sole business. The eSolutions
segment was acquired
effective April 1, 1999. For comparability, consolidated results for 1999
include pre-acquisition data for the first quarter of 1999.
Gross profit from continuing operations during the fourth quarter of 2000 was
$6.2 million, or 38.4% of revenues, compared to $4.3 million, or 38.6% of
revenues, during the 1999 comparable quarter. Excluding restructuring and other
nonrecurring charges of $1.5 million, earnings before interest, taxes,
depreciation and amortization ("EBITDA") was $0.6 million for the 2000 fourth
quarter, compared to $0.7 million in the comparable 1999 quarter. Earnings per
share from continuing operations before goodwill amortization and restructuring
and other nonrecurring charges were $0.00 for the quarter and for the fourth
quarter of 1999. Net loss from continuing operations excluding restructuring
and other nonrecurring charges was $1.1 million, or a loss of $0.04 per share,
for the 2000 quarter, compared to a loss of $0.3 million, or a loss of $0.01 per
share, in the same quarter last year. The loss in 2000 was primarily related to
$1.4 million of non-deductible goodwill amortization from the eSolutions
business being recorded as part of the tax provision for the quarter. However,
the tax provision will not be paid out in cash, as the Company will utilize net
operating losses to offset such taxes. This net operating loss relates to the
sale of the Company's non-eSolutions businesses and divisions resulting in a
deferred tax asset of approximately $26.1 million for use in future years and a
receivable of approximately $16.1 million for the recoverability of prior years'
taxes.
"The strong increase in revenue during the fourth quarter was driven by 62%
growth in our eSolutions segment. We have already divested four non-strategic
businesses and returned $130 million in cash to our shareholders through a
tender offer, and are well on our way to establishing Edgewater as a pure play
eSolutions business," said Clete Brewer, Chairman and Chief Executive Officer.
"Revenue growth in this segment was up significantly during the fourth quarter,
reflecting continued demand for e-business solutions targeted at middle market
enterprises, as these companies seek cost-effective ways to leverage the
Internet to improve productivity, reduce operational costs and increase market
competitiveness. Project backlog for our eSolutions business was $10.9 million
at December 31, 2000, up 37.7% compared to a year ago. Although we expect some
residual effects on our business due to the December 26 tragedy at Edgewater's
Wakefield, Massachusetts
headquarters, we expect eSolutions revenues in 2001 to grow in the 20-25% range
on a year-over-year basis, even though first quarter results are likely to lag
the results for the fourth quarter of 2000. We expect to be cash flow positive
for 2001 with related EBITDA margins in the low double digits, as we move on
from recent events."
Full-Year Consolidated Results
------------------------------
For fiscal 2000, revenues from continuing operations increased 30.0% to $60.2
million, up from $46.3 million in pro forma revenue in 1999. Gross profit for
fiscal 2000 was $24.7 million, or 41.0% of revenues, compared to $18.1 million
in pro forma gross profit, or 39.1% of revenues, in the year-earlier period.
Excluding restructuring and other nonrecurring charges of $4.3 million, EBITDA
for fiscal 2000 was $4.4 million, up 31.5% from $3.4 million in pro forma EBITDA
for fiscal 1999. Earnings per share from continuing operations before goodwill
amortization and restructuring and other nonrecurring charges were $0.13 for the
year, compared with $0.04 for pro forma 1999. Net loss from continuing
operations excluding restructuring and other nonrecurring charges was $0.5
million, or $0.02 per share, for 2000, compared to pro forma net income of $0.1
million, or $0.00 per share, in 1999. The loss in 2000 was primarily related to
$1.4 million of non-deductible goodwill amortization from the eSolutions
business being recorded as part of the tax provision for the quarter.
eSolutions Segment Results
--------------------------
The eSolutions segment had revenues of $8.1 million in the fourth quarter of
2000, an increase of 62.2% over the $5.0 million recorded in the fourth quarter
of 1999. Gross margins for the eSolutions segment were 47.2% for the quarter,
and EBITDA was $0.3 million, or 3.8% of revenues, compared with EBITDA of $1.2
million, or 24.8% of revenues, during the same period in 1999.
The eSolutions segment had fiscal 2000 revenues of $31.5 million, an increase
of 59.1% compared to pro forma revenues of $19.8 million for fiscal 1999. Gross
margins were 50.9% for the year and EBITDA was $4.7 million, or 15.0% of
revenues, compared to pro forma EBITDA of $5.5 million, or 27.8% of revenues, in
1999.
Decreased EBITDA during the fourth quarter and full year of 2000 primarily
reflects increased investments in sales and marketing and facilities to support
the Company's aggressive growth efforts, as well as the decreased revenue
resulting from the Wakefield tragedy. Management estimates that approximately
$0.5 million in revenues, gross profit and EBITDA was lost during the quarter as
a result of closed offices due to the incident.
ClinForce Segment Results
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The remaining business in the Company's continuing operations is ClinForce,
which had revenues of $8.1 million for the fourth quarter of 2000, up 33.2% from
$6.1 million during the same period in 1999. Gross margins for the segment were
30.5% for the fourth quarter, compared with 28.7% in the comparable 1999
quarter. EBITDA for the ClinForce segment increased 40% to $1.0 million in the
fourth quarter of 2000, compared to $0.7 million in the 1999 quarter.
ClinForce reported fiscal 2000 revenues of $28.7 million, an increase of 8.4%
over revenues of $26.5 million in 1999. Gross margins were 30.4% for fiscal
2000, compared with 27.5% in fiscal 1999. EBITDA in 2000 was $3.8 million, an
increase of 13.8% over $3.4 million in 1999.
Review of Fiscal 2000 Events and Change of Business Model
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After evaluating the Company's traditional businesses, its eSolutions business
and its working capital position, management and the Board of Directors chose to
take decisive action to focus future growth initiatives on the Company's
historically profitable eSolutions business. This decision resulted in the
following actions taken during fiscal 2000:
Sale of Commercial Services Division -- On June 29, 2000, the Company sold its
Commercial Services Division (including assets, liabilities and the "StaffMark"
name) to affiliates of Stephens Group, Inc. for approximately $190 million in
cash before fees, expenses and taxes.
Name Change to Edgewater Technology -- On June 29, 2000 the Company changed
its name to from "StaffMark, Inc." to "Edgewater Technology, Inc." and its stock
symbol from "STAF" to "EDGW," reflecting its new focus on the eSolutions
business.
IPO of Robert Walters -- On July 6, 2000, the Company completed an initial
public offering of its Robert Walters division on the London Stock Exchange,
resulting in approximately $199 million in total gross proceeds before
commissions, expenses and taxes.
Gross proceeds from the Commercial Services Division and Robert Walters
transactions were used to repay all the Company's bank debt of approximately
$288 million and to invest approximately $90 million in cash and short-term
marketable securities.
Initiated Share Repurchase Plan -- On July 20, 2000, the Board of Directors
authorized management to repurchase up to $30 million shares of common stock.
To date, the Company has repurchased 943,000 shares of its common stock for
approximately $6.2 million.
Sale of Strategic Legal Resources -- On September 22, 2000 the Company sold
all of the outstanding stock of its Strategic Legal Resources subsidiary, its
legal staffing division, to a group of investors including MidMark Capital II,
L.P. and Edward Stone & Company for $13.25 million.
Sale of IntelliMark -- On November 16, 2000, the Company sold all of the
outstanding stock of its IntelliMark subsidiary, its information technology
staffing and solutions division, to an affiliate of Charlesbank Equity Fund V
Limited Partnership for approximately $42.7 million in cash, subject to
potential upward or downward post-closing adjustments.
Agreement to Sell ClinForce -- On December 15, 2000, the Company executed a
definitive agreement to sell ClinForce, its clinical trials staffing and support
services segment, to Cross Country TravCorps for approximately $31 million in
cash, subject to potential upward or downward post-closing adjustments. The
closing of the ClinForce sale is conditioned on Edgewater stockholder approval
and the satisfaction of other customary closing conditions. The Company will
hold a Special Stockholders' Meeting on March 14, 2001 to approve the sale.
Proxy material was mailed on February 7, 2001 to stockholders of record as of
February 5, 2001.
Completion of Tender Offer -- On January 23, 2001, the Company's tender offer
expired with the Company acquiring 16.25 million shares of its outstanding
common stock at a price of $8.00 per share. Approximately 24.4 million shares
were tendered and not withdrawn, thereby resulting in the Company purchasing
shares from each tendering stockholder on a pro rata basis of approximately
66.65%. All shares that were tendered and not purchased were promptly returned
to the stockholders. As a result of the offer, the Company now has 12,477,684
shares of common stock outstanding.
About Edgewater
---------------
Edgewater Technology, Inc. is a holding Company, which owns a portfolio of
business service brands. Its primary brand is Edgewater Technology, a national
full-service provider of tailored Internet-centric solutions, which assists
clients through proven methodology, including eStrategy, eSolutions and Internet
Outsourcing. Edgewater Technology, Inc.'s other specialty platform is
ClinForce, which provides clinical trials support services. Find more
information at www.edgewater.com.
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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 the closing of, or amount of proceeds from the ClinForce
sale transaction, planned eSolutions unit positioning and focus initiatives, the
growth in eSolutions revenues, maintaining low double digit EBITDA margins, the
amount, use and availability of net operating loss carry-forwards, and the
anticipated consummation of the Sale Transaction. The forward looking
statements included in the Press Release relate to future events or our future
financial conditions or performance, Words such as "plan," "will," "anticipate,"
"intend," "increasing," "pursue," "provide," "begin," "should," "would,"
"focus," "believe," "expect," "continue," and "plan," 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) the inability to consummate the
ClinForce sale transaction; (2) changes in industry trends, such as decline in
the demand for or supply of clinical trials support services, whether on a
temporary or permanent basis, or eSolutions services; (3) adverse developments
and volatility involving debt, equity, currency or technology market conditions;
(4) the occurrence of lawsuits or adverse results in litigation matters; (5)
failure to obtain new customers or retain significant existing customers; (6)
loss of key executives; (7) 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; (8) failure of the middle market and
the needs of middle market enterprises for e-business services to develop as
anticipated; (9) inability to recruit and retain professionals with the high
level of information technology skills and experience needed to provide our
services; (10) the inability to collect the $16.1 million receivable relating to
the use of net operating losses to recover prior years' taxes; and/or (11) 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, which is referred to as a deferred tax asset of approximately $26.1
million in this Press Release. 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 (A) under the headings "Summary -
Risks of Not Approving the Transaction", "Summary - Recent Events", "Edgewater
Following Completion of the Transaction", "Factors Affecting Edgewater Following
the Transaction" and "Forward looking Statements" in the Company's Proxy
Statement filed with the Securities and Exchange Commission on February 6, 2001
and (B) 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 20, 2000.
- TABLES TO FOLLOW -
EDGEWATER TECHNOLOGY, INC.
Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
---------- ---------- --------- -----------
Service revenues $16,267 $11,123 $60,236 $41,536
Cost of services 10,027 6,826 35,518 26,112
---------- ---------- --------- -----------
Gross profit 6,240 4,297 24,718 15,424
Selling, general and administrative 5,626 3,623 20,282 13,518
---------- ---------- --------- -----------
EBITDA 614 674 4,436 1,906
Depreciation and amortization 2,033 603 5,762 1,472
Restructuring and other nonrecurring charges 1,486 - 4,289 -
---------- ---------- --------- -----------
Operating (loss) income (2,905) 71 (5,615) 434
Interest (income) expense and other, net (1,939) 557 (2,792) 1,597
---------- ---------- --------- -----------
Loss before income taxes (966) (486) (2,823) (1,163)
Income tax provision (benefit) 1,188 (158) 477 (403)
---------- ---------- --------- -----------
Net loss from continuing operations (2,154) (328) (3,300) (760)
(Loss) income from discontinued operations (6,596) 5,553 (112,275) 30,973
Gain on sale of divisions 811 - 64,368 -
---------- ---------- --------- -----------
Net (loss) income ($7,939) $ 5,225 ($51,207) $30,213
---------- ---------- --------- -----------
BASIC EARNINGS PER SHARE
From continuing operations ($0.08) ($0.01) ($0.11) ($0.03)
From continuing operations excluding ($0.04) ($0.01) ($0.02) ($0.03)
restructuring and other nonrecurring charges
Including discontinued operations ($0.28) $ 0.18 ($1.75) $ 1.03
DILUTED EARNINGS PER SHARE
From continuing operations ($0.08) ($0.01) ($0.11) ($0.03)
From continuing operations excluding ($0.04) ($0.01) ($0.02) ($0.03)
restructuring and other nonrecurring charges
Including discontinued operations ($0.28) $ 0.18 ($1.75) $ 1.02
AVERAGE SHARES OUTSTANDING - BASIC 28,686 29,379 29,212 29,280
AVERAGE SHARES OUTSTANDING - DILUTED 28,709 29,435 29,349 29,526
EDGEWATER TECHNOLOGY, INC.
Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 (1) 1999 2000 (1) 1999 (2)
------- ------- ------- -------
Service revenues
Edgewater $ 8,126 $ 5,009 $31,541 $15,040
ClinForce 8,141 6,114 28,695 26,496
------- ------- ------- -------
Total service revenues 16,267 11,123 60,236 41,536
------- ------- ------- -------
Gross profit
Edgewater 3,756 2,545 16,002 8,128
ClinForce 2,484 1,752 8,716 7,296
------- ------- ------- -------
Total gross profit 6,240 4,297 24,718 15,424
------- ------- ------- -------
EBITDA (excluding corporate restructure charges)
Edgewater 306 1,240 4,718 4,045
ClinForce 1,026 733 3,850 3,384
------- ------- ------- -------
Segment EBITDA 1,332 1,973 8,568 7,429
Less: Corporate EBITDA 718 1,299 4,132 5,523
------- ------- ------- -------
Total EBITDA 614 674 4,436 1,906
------- ------- ------- -------
Operating (loss) income
Edgewater (1,495) 799 (344) 3,151
ClinForce 870 587 3,276 2,852
------- ------- ------- -------
Segment operating (loss) income (625) 1,386 2,932 6,003
Less: Corporate expenses 2,280 1,315 8,547 5,569
------- ------- ------- -------
Total Operating (loss) income ($2,905) $71 ($5,615) $ 434
------- ------- ------- -------
(1) Edgewater, the Company's eSolutions business, was closed for the last
week of 2000 as a result of the tragedy previously mentioned. Management
estimates that revenue of approximately $0.5 million was lost during this time.
(2) Edgewater, the Company's eSolutions business, was acquired effective
April 1, 1999.
Summary Balance Sheet Information at December 31, 2000
(In thousands)
Cash and Cash Equivalents $145,326
Accounts Receivable $ 10,819
Total Assets $256,403
Current Liabilities & Payables $ 18,374
Total Debt $ 0
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