EXHIBIT 99.1
Contacts:
Kevin Rhodes, Chief Financial Officer Kim Levy/Susan Burns
Barbara Warren-Sica, Investor Relations Citigate Sard Verbinnen
(781) 246-3343 (212) 687-8080
Edgewater TechnologY Announces Results
for Fourth Quarter and Full Year 2001
---------------------------------------------------
Wakefield, MA, February 13, 2002 -- 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,
2001.
Fourth Quarter Results
Revenue from operations for the fourth quarter was $6.1 million,
compared to revenue of $8.2 million for the same period last year. Gross profit
from operations for the fourth quarter 2001 was $2.4 million, compared to $3.8
million for the same period last year. Selling, general & administrative (SG&A)
expense for the fourth quarter was $2.3 million, which is consistent with
expenses during the previous quarter and $1.8 million less than a year ago.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") from
continuing operations was $0.1 million in the fourth quarter, compared to $(0.3)
million for the same period last year. Net loss from continuing operations for
the fourth quarter was $1.0 million, compared to net loss from continuing
operations of $1.3 million for the same period last year. Net Loss, including
discontinued operations, was $1.6 million for the fourth quarter, compared a net
loss of $7.9 million during the same period in 2000.
Full-Year Consolidated Results
Edgewater Technology reported revenue for 2001 of $26.6 million,
compared with $31.8 million for the prior year, down 16.3%. Gross profit for
fiscal 2001 was $10.8 million, or 40.8% of revenues, compared to $16.0 million,
or 50.2% of revenues, in the year-earlier period. EBITDA from continuing
operations was $0.3 million for the year ending December 31, 2001, compared to
$1.6 million for 2000. Net loss from continuing operations was $3.7 million, or
$0.29 per share for 2001, compared to net loss from continuing operations of
$1.7 million, or $0.06 per share, in 2000. Net income was $2.0 million or $0.15
per share in 2001, compared to a net loss of $51.2 million or $1.75 per share in
2000. This loss in 2000 was primarily due to gains on the sales of divisions
recognized in each period, which was more than offset by significant losses from
discontinued operations.
Effective January 1, 2002, as the result of a change in generally
accepted accounting principles, goodwill will no longer be amortized. Our
results of operations for the three months and year ending December 31, 2001,
excluding goodwill amortization, would have resulted in net income from
continuing operations of $.1 million or $.01 per share and $.7 million or $.05
per share, respectively.
"Overall, the year 2001 was a difficult one. Not only were we affected
by the shifting economy and the shakeout in the IT sector, but we also faced the
challenges associated with the murder of seven of our employees in December,
2000," said Shirley Singleton, President and CEO of Edgewater Technology.
"Despite these challenges, we added 17 new clients during the year and exited
2001 with revenue backlog of $12.3 million, which is 14% greater than the $10.8
million year-end backlog reported a year ago. In addition, the company was cash
flow positive for 2001, the direct result of our solid business fundamentals,
including a disciplined infrastructure, mature internal processes and a strong
balance sheet. This was achieved while we
retained our consultant base anticipating an up-tick in the economy, but
resulting in a larger bench and lower utilization and gross profit."
Singleton added, "As we enter 2002, we are still seeing signs of delays
and deferrals as clients continue to re-evaluate their IT spending, although
sales activity levels appear to be increasing. In addition to the issue of a
struggling economy, the Company must also contend with the distractions
associated with the upcoming murder trial. For these reasons, we expect to see
revenues tracking lower in the first half of 2002, but continue to remain
hopeful for the second half of the year. Given this, we will continue to
evaluate key metrics of backlog, utilization, and the sales pipeline and we are
prepared to take appropriate steps to maintain our commitment to sound fiscal
management."
Singleton continued, "2001 also marked a year of transition for
Edgewater Technology, with the relocation of our corporate headquarters from
Fayetteville, Arkansas to Wakefield, Massachusetts. With the transition
complete, we will maintain our focus on developing new client relationships in
2002, with an emphasis on partnerships that bring a total solution to our
clients while maintaining our competitive advantage. American Student
Assistance, one of our partners, is coupling their specific industry expertise
with Edgewater Technology's proficiency in technology to deploy large-scale
solutions to third parties."
Singleton concluded, "We will continue to leverage our vertical and
practice area expertise while continuing to evaluate strategic opportunities
that would augment our vertical businesses and/or increase our geographic
presence. While we have explored many acquisition possibilities, we intend to be
selective and look for opportunities that have a sound basis and will be
beneficial to our shareholders."
Significant Events Completed During 2001
. Issuer Tender Offer. On January 30, 2001, the Company completed an
issuer tender offer and repurchased 16.25 million shares for $130
million, reducing our share count down from 29.5 million shares to 13
million shares.
. Closing of ClinForce Transaction. On March 16, 2001, the Company
completed the sale of its wholly-owned subsidiaries, ClinForce, Inc.
and CFRC, Inc. to Cross Country TravCorps, Inc. for $31 million in
cash before fees and expenses, subject to post-closing adjustments. A
positive post-closing working capital adjustment was determined on
July 18, 2001, resulting in our receipt of an additional $1.4 million
in cash for overall gross transaction proceeds of $32.4 million.
. Transition of Corporate Headquarters. The Company completed transition
of its corporate headquarters from Fayetteville, Arkansas to
Wakefield, Massachusetts.
. Other Share Repurchases. During 2001, not including the tender offer,
the Company repurchased 922,500 shares for $3.7 million. As a result
of both the tender offer and the continuing stock repurchase program,
Edgewater Technology has reduced shares outstanding from 28.7 million
shares of common stock outstanding to 11.6 million shares as of
December 31, 2001. The Company is authorized to repurchase up to an
additional $20 million worth of the Company's outstanding common stock
through August, 2003, unless shortened or extended by its Board of
Directors.
. Singleton Elected to Board of Directors. During the Annual
Stockholders' Meeting on June 6, 2001, Shirley Singleton, the
Company's President, was elected to the Board of Directors.
. Tax Refund. On August 9, 2001, the Company received a tax refund for
the amount of $15.8 million and an additional tax refund for $0.3
million on September 5, 2001.
. Transition Plan Completed. Singleton Appointed to CEO; Rhodes
Appointed to CFO. On January 9, 2002, the Company that announced the
final step of the transition plan was completed with the appointment
of Shirley Singleton to Chief Executive Officer (CEO) and Kevin Rhodes
to Chief Financial Officer (CFO).
5
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. 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.
6
Selected Financial Data:
EDGEWATER TECHNOLOGY, INC.
Statements of Operation
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
------------ ------------ ------------ --------------
Revenues (1) $6,053 $8,172 $26,574 $31,799
Cost of services 3,677 4,416 15,733 15,834
------------ ------------ ------------ --------------
Gross profit 2,376 3,756 10,841 15,965
Selling, general and administrative 2,256 4,048 10,551 14,411
------------ ------------ ------------ --------------
EBITDA 120 (292) 290 1,554
Depreciation and amortization 1,356 1,817 5,465 5,078
------------ ------------ ------------ --------------
Operating (loss) income (1,236) (2,109) (5,175) (3,524)
Interest income (expense) and other, net 338 1,939 2,090 3,078
------------ ------------ ------------ --------------
Loss before income taxes (898) (170) (3,085) (446)
Income tax provision 101 1,156 593 1,234
------------ ------------ ------------ --------------
Net loss from continuing operations (999) (1,326) (3,678) (1,680)
(Loss) income from discontinued operations (562) (7,065) (904) (113,535)
Gain (loss) on sale of divisions - 811 6,514
64,368
(Loss) Income from Extraordinary Item - (360) (27) (360)
------------ ------------ ------------ --------------
Net (loss) income ($1,561) ($7,940) $1,905 ($51,207)
============ ============ ============ ==============
BASIC AND DILUTED EARNINGS PER SHARE
From continuing operations ($0.09) ($0.05) ($0.29) ($0.06)
Net income ($0.14) ($0.28) $0.15) ($1.75)
============ ============ ============ ==============
Proforma continuing operations (2) $0.01 $0.01 $0.05 $0.09
============ ============ ============ ==============
AVERAGE SHARES OUTSTANDING 11,605 28,686 12,858 29,212
(1) Revenues and Cost of Services have been adjusted in accordance with
Emerging Issues Task Force No. D-103, "Income Statement
Characterization of Reimbursements Received for "Out of Pocket"
Expenses Incurred.
(2) Effective January 1, 2002, as the result of a change in generally
accepted accounting principles, goodwill will no longer be amortized.
Proforma EPS excludes goodwill amortization expense of $1.1 million and
$1.6 million for the three months ended December 31, 2001 and 2000,
respectively; and excludes goodwill amortization expense of $4.3
million for the twelve months ended December 31, 2001 and 2000.
Summary Balance Sheet Information at December 31, 2001
(In thousands)
(Unaudited)
Assets Liabilities and Equity
- ------ ----------------------
Cash and Cash Equivalents $ 51,501 Accounts Payable & Accrued Reserves $ 6,785
Accounts Receivable, Net 4,045 Accrued Payroll & Liabilities 629
Fixed Assets, Net 2,056 Long Term Liabilities & Other 441
Deferred Tax Asset 22,523 Stockholders Equity 104,992
----------
Intangible Assets 31,807 Liabilities & Shareholders Equity $ 112,847
==========
Prepaid and Other Assets 915
Shares Outstanding 11,594
---------
Total Assets $ 112,847
=========
# # #
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 2002 outlook concerning utilization, revenues, sales,
and cash flow, as well growth opportunities and plans The forward looking
statements included in the Press Release relate to future events or our future
financial conditions or performance, Words such as "helping," "hopeful," "will,"
"obtain," "seek," "reduce," "improve," "going," "view," "prospects," "expect,"
"intend," "provide," "begin," "focus," "believe," "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; (7)
the inability to maintain, sustain or grow revenues; (8)the strength or
visibility of the Company's backlog of business of $12.3 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 (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 30, 2001.
# # #
8