Exhibit 99.2
EDGEWATER TECHNOLOGY, INC.
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
INTRODUCTION
We (Edgewater Technology, Inc. and our subsidiaries, or the "Company")
provide business solutions through our eSolutions segment, Edgewater Technology
(Delaware), Inc. (the "Edgewater Subsidiary"), which was acquired effective
April 1, 1999.
We have sold our interests in our Commercial staffing segment, Robert
Walters plc (finance and accounting staffing services), Strategic Legal
Resources (legal staffing) and IntelliMark (information technology staffing and
solutions). As a result of the above, the operating results for these segments
and divisions were included in discontinued operations in the financial
statements as of and for the twelve months ended December 31, 2000.
On December 21, 2000, we commenced an issuer tender offer (the "Tender
Offer"), which expired on January 23, 2001, and we acquired (effective January
30, 2001) 16.25 million shares of our common stock at $8.00 per share for
aggregate consideration of $130 million, and common stock subject to certain
vested in-the-money stock options for aggregate consideration of $0.2 million.
On March 16, 2001, we sold all of the outstanding shares of stock of our
wholly-owned subsidiaries, ClinForce, Inc. and CFRC, Inc. (collectively,
"ClinForce"), that comprised our clinical trials support services staffing
division, to Cross Country TravCorps, Inc. for $31 million in cash before fees
and expenses, subject to potential upward or downward post-closing adjustments
(collectively, the "Transaction").
The following unaudited pro forma consolidated statements of operation set
forth the results of operations for the twelve months ended December 31, 2000 as
if the Transaction and the Tender Offer had occurred at the beginning of fiscal
2000. The unaudited pro forma consolidated balance sheet sets forth the
financial position as of December 31, 2000, as if the Transaction and Tender
Offer had occurred as of that date.
The Edgewater Subsidiary had selling, general and administrative expenses
("SG&A") of $11.3 million for the twelve months ended December 31, 2000. In
addition to these segment costs, the accompanying pro forma statements of
operations include the costs that remain after the allocation of corporate costs
to the respective discontinued divisions. As these remaining corporate costs
were incurred in historical periods based on a larger public company and a
different corporate structure, these costs are not necessarily indicative of the
future corporate costs that will be necessary to operate the Edgewater
Subsidiary as a stand-alone public company.
The pro forma results of operations are not necessarily indicative of
future operations or the actual results that would have occurred had the
Transaction and Tender Offer been completed at the beginning of fiscal 2000.
These statements should be read in conjunction with the accompanying notes
herein and the audited consolidated financial statements and related notes
included in our 2000 Annual Report of Form 10-K filed with the Securities and
Exchange Commission on March 28, 2001.
EDGEWATER TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED
BALANCE SHEET
AS OF DECEMBER 31, 2000
(In Thousands)
Tender Offer
ClinForce and Other
Edgewater Pro Forma Pro Forma
Technology, Inc. Adjustments Adjustments Pro Forma
---------------- ---------------- ---------------- ----------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 145,326 $ 255 (a) $ (130,000) (f) $ 36,764
31,000 (b) (1,383) (g)
(1,614) (c) (11,070) (h)
4,250 (i)
Accounts receivable, net 10,819 (4,944) (a) - 5,875
Prepaid expenses and other 5,984 857 (a) (4,250) (i) 2,591
Income tax receivable 16,121 - - 16,121
Deferred income taxes 900 - - 900
---------------- ---------------- ---------------- ----------------
Total current assets 179,150 25,554 (142,453) 62,251
PROPERTY AND EQUIPMENT, net 2,578 (404) (a) - 2,174
INTANGIBLE ASSETS, net 48,310 (11,779) (a) - 36,531
DEFERRED INCOME TAXES 25,728 (6,033) (d) - 19,695
OTHER ASSETS 148 (30) (a) - 118
---------------- ---------------- ---------------- ----------------
$ 255,914 $ 7,308 $ (142,453) $ 120,769
================ ================ ================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities $ 14,037 $ (67) (a) $ (11,070) (h) $ 2,900
Payroll and related liabilities 4,342 (1,147) (a) - 3,195
---------------- ---------------- ---------------- ----------------
Total current liabilities 18,379 (1,214) (11,070) 6,095
OTHER LONG-TERM LIABILITIES 290 - - 290
STOCKHOLDERS' EQUITY:
Common stock 296 - - 296
Treasury stock (6,158) - (130,000) (f) (136,158)
Paid-in capital 217,838 - - 217,838
Retained earnings 25,269 8,522 (e) (1,383) (g) 32,408
---------------- ---------------- ---------------- ----------------
Total stockholders' equity 237,245 8,522 (131,383) 114,384
---------------- ---------------- ---------------- ----------------
Total Liabilities and Stockholders' Equity $ 255,914 $ 7,308 $ (142,453) $ 120,769
================ ================ ================ ================
EDGEWATER TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 2000
(a) Represents the assets and liabilities of ClinForce that were sold by the
Company as part of the Transaction.
(b) Records the proceeds of $31 million received by the Company for the
Transaction.
(c) Records the payment of estimated transaction fees associated with the
Transaction.
(d) Records the income tax effects of the Transaction, which resulted in a
reduction of our deferred tax asset.
(e) Records the book gain generated from the Transaction.
(f) Records the use of $130 million to repurchase shares of our common stock
via the Tender Offer.
(g) Records the payment of estimated transaction fees, including the purchase
of shares subject to certain vested in-the-money stock options associated
with the Tender Offer.
(h) Adjustment to reflect payment of the accrued liabilities for certain
nonrecurring corporate charges and liabilities, costs related to the sale
of our non-eSolutions divisions and costs related to restructuring and
transition of our Fayetteville, Arkansas corporate headquarters and
movement to our Wakefield, Massachusetts office.
(i) Adjustment to record the January 2001 collection of the note receivable
from the sale of Strategic Legal Resources.
EDGEWATER TECHNOLOGY, INC.
UNAUDITED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED
DECEMBER 31, 2000
(In Thousands, Except Per Share Data)
Edgewater Previous Pro Forma
Technology, Inc. Dispositions (a) ClinForce (b) Adjustments Pro Forma
---------------- ---------------- ------------- ----------- ------------
SERVICE REVENUES $ 60,236 $ - $ (28,694) $ - $31,542
COST OF SERVICES 35,518 - (19,941) - 15,577
---------------- ---------------- ------------- ----------- ------------
Gross profit 24,718 - (8,753) - 15,965
OPERATING EXPENSES:
Selling, general and administrative 20,282 - (4,866) (1,005)(c) 14,411 (g)
Depreciation and amortization 5,762 - (684) - 5,078
Nonrecurring restructure charge 4,289 - - (4,289)(d) -
---------------- ---------------- ------------- ----------- ------------
Operating loss (5,615) - (3,203) 5,294 (3,524)
---------------- ---------------- ------------- ----------- ------------
OTHER INCOME (EXPENSE):
Interest income 1,975 - 286 2,120 (e) 4,381
Other, net 817 - - - 817
---------------- ---------------- ------------- ----------- ------------
(LOSS) INCOME BEFORE INCOME TAXES (2,823) - (2,917) 7,414 1,674
INCOME TAX PROVISION 477 - (1,050) 2,669 (f) 2,096 (h)
---------------- ---------------- ------------- ----------- ------------
(Loss) income from continuing operations (3,300) - (1,867) 4,745 (422)
DISCONTINUED OPERATIONS:
Loss from operations of discontinued
divisions (112,275) 112,275 - - -
Gain on sale of divisions 64,368 (64,368) - - -
---------------- ---------------- ------------- ----------- ------------
Net loss $ (51,207) $ 47,907 $ (1,867) $ 4,745 $ (422)
================ ================ ============= =========== ============
EARNINGS PER COMMON SHARE
BASIC $ (1.75) $ (0.03)
=============== ============
DILUTED $ (1.75) $ (0.03)
=============== ============
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 29,212 12,962 (i)
=============== ============
DILUTED 29,212 12,962 (i)
=============== ============
EDGEWATER TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000
(a) Adjustment to remove discontinued operations, which include results from
our Commercial staffing segment, Robert Walters, Strategic Legal Resources
and IntelliMark.
(b) Represents the unaudited financial results of ClinForce which was sold as
part of the Transaction.
(c) Represents an allocation of our corporate costs that relate to ClinForce.
(d) Adjustment to remove nonrecurring corporate charges that relate to our
restructuring, the sale of various divisions and costs incurred related to
the Wakefield tragedy in December 2000 where seven of our employees were
murdered.
(e) Adjustment to reflect interest income that would have resulted if the
Tender Offer and sale of the Commercial staffing segment, Robert Walters,
Strategic Legal Resources, IntelliMark and ClinForce had occurred
effective January 1, 2000.
(f) Records the provision for federal and state income taxes at an effective
combined tax rate of approximately 36%.
(g) This amount includes (i) SG&A of $11.3 million for the Edgewater
Subsidiary and (ii) other SG&A of $3.1 million, including costs that
remain after the allocation of corporate costs to the respective non-
eSolutions discontinued divisions. As the remaining corporate costs
referred to in clause (ii) above were incurred in historical periods based
on a larger public company and a different corporate structure, these
costs are not necessarily indicative of the future corporate costs that
will be necessary to operate the Edgewater Subsidiary as a stand-alone
public company.
(h) The income tax provision includes $1.4 million of nondeductible goodwill
amortization. These taxes will not be paid out in cash as we will utilize
net operating losses to offset these taxes.
(i) Reflects the actual weighted average basic shares outstanding for the
twelve months ended December 31, 2000 of 29.2 million adjusted to reflect
the repurchase as of January 1, 2000 of 16.25 million shares of our common
stock through the $130 million Tender Offer priced at $8.00 per share.