Exhibit 99.1
Edgewater Technology Announces Favorable Revision of Results for
Fourth Quarter and Full Year 2003; Revised Earnings Per Share of $0.08
for 2003
WAKEFIELD, Mass.--(BUSINESS WIRE)--March 18, 2004--Custom
development and system integration consulting firm, Edgewater
Technology, Inc. (NASDAQ: EDGW, www.edgewater.com, "Edgewater
Technology" or the "Company") today announced that it was reporting a
favorable revision of financial results for its fourth quarter and
fiscal year ended December 31, 2003.
On February 11, 2004, Edgewater Technology, Inc. reported its
results of operations for its fourth quarter ended December 31, 2003
and the full year 2003 (the "Earnings Announcement"), which included a
$7.4 million accrual (the "Tax Accrual") to discontinued operations
for IRS assessments related to the Company's former staffing
businesses (the "Tax Assessment").
The Company is currently announcing that it successfully resolved
a significant portion of the Tax Assessment, resulting in the reversal
of $6.4 million of the Tax Accrual. Therefore, the Company has revised
the fourth quarter and year-end 2003 results that were previously
announced in the Earnings Announcement (the "Revision").
The Tax Accrual was initially recorded for the Tax Assessment (1)
because the Company was not in possession of records related to the
Company's former staffing businesses that were necessary to resolve
certain discrepancies between amounts of withholding and employment
taxes reported on various employment tax returns and employee W-2s and
the related payroll tax deposits actually received by the IRS and (2)
due to the related uncertainty of the outcome of the IRS assessments
and the potential that a notice could have been issued by the IRS
demanding payment during 2004 while a search continued for the records
at issue.
Subsequent to the February 11, 2004 Earnings Announcement, the
Company received from the IRS a letter of abatement related to a
significant portion of the Tax Assessment. The abatement letter was
received well in advance of the time frame the Company was advised it
would be possible for resolving the issues surrounding the matter. The
Company, therefore, has reversed $6.4 million of the Tax Accrual to
reflect a revised accrual of $1.0 million, which relates to other
outstanding IRS assessments and related professional fees.
Accordingly, the Company's revised results are set forth in summary
fashion and in detail below:
Summary Statements of Operations
(In thousands)
Three Months Ended Twelve Months Ended
December 31, 2003 December 31, 2003
As of Revised As of Revised
Feb. 11, March 18, Feb. 11, March 18,
2004 2004 2004 2004
Net income (loss) from
continuing operations $1,609 $1,609 $1,994 $1,994
Loss from discontinued
operations, net (7,435) (1,020) (7,435) (1,020)
Net income (loss) ($ 5,826) $589 ($ 5,441) $974
BASIC EARNINGS PER SHARE:
From continuing operations $0.14 $0.14 $0.18 $0.18
Net income (loss) ($0.51) $0.05 ($0.48) $0.09
DILUTED EARNINGS PER SHARE:
From continuing operations $0.14 $0.14 $0.18 $0.17
Net income (loss) ($0.51) $0.05 ($0.48) $0.08
Summary Balance Sheets
(In thousands)
December 31, 2003
As of Revised
Feb. 11, March 18,
2004 2004
Accounts payable & accrued
liabilities $9,969 $3,554
Stockholders' Equity 74,469 80,884
The Company's full Revised Selected Financial Data is as follows:
EDGEWATER TECHNOLOGY, INC.
Revised Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Service revenues $6,773 $4,683 $25,054 $18,666
Cost of services 3,724 2,763 13,540 11,905
Gross profit 3,049 1,920 11,514 6,761
Selling, general and
administrative 2,623 1,898 10,080 8,833
Depreciation and amortization
expense 259 239 948 1,003
Impairment of goodwill - 7,411 - 7,411
Restructure costs - - - 349
Operating income (loss) 167 (7,628) 486 (10,835)
Interest income and other, net 132 160 455 777
Income (loss) before income taxes 299 (7,468) 941 (10,058)
Benefit from tax (1,310) - (1,053) -
Net income (loss) from
continuing operations 1,609 (7,468) 1,994 (10,058)
Loss from discontinued
operations, net (1,020) (950) (1,020) (950)
Change in accounting
principle, net - - - (12,451)
Net income (loss) $589 ($8,418) $974 ($23,459)
BASIC EARNINGS PER SHARE:
From continuing operations $0.14 ($0.65) $0.18 ($0.87)
Net income (loss) $0.05 ($0.73) $0.09 ($2.03)
DILUTED EARNINGS PER SHARE:
From continuing operations $0.14 ($0.65) $0.17 ($0.87)
Net income (loss) $0.05 ($0.73) $0.08 ($2.03)
Weighted Average Shares
Outstanding - Basic 11,401 11,507 11,381 11,575
Weighted Average Shares
Outstanding - Diluted 11,897 11,507 11,703 11,575
EDGEWATER TECHNOLOGY, INC.
Revised Summary Balance Sheet Information
(In thousands)
December 31, December 31,
2003 2002
Assets
Cash and marketable securities $44,259 $46,782
Accounts receivable, net 3,532 2,647
Fixed assets, net 1,309 1,606
Deferred tax asset, net 22,175 22,884
Intangible assets, net 13,135 11,614
Prepaid expenses and Other assets 2,121 960
Total Assets $86,531 $86,493
Liabilities and Equity
Accounts payable & accrued liabilities $3,554 $4,334
Accrued payroll & related liabilities 2,009 882
Other liabilities 84 240
Stockholders' Equity 80,884 81,037
Total Liabilities & Stockholders' Equity $86,531 $86,493
Shares Outstanding 11,366 11,485
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.
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 outlook
concerning estimated tax reserve accruals and potential penalties and
interest. 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: the failure to
obtain remaining predecessor entity tax records that are not in our
control and/or successfully resolve remaining outstanding tax disputes
and penalties. 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 28, 2003.
CONTACT: Edgewater Technology, Inc.
Kevin Rhodes or Barbara Warren-Sica, 781-246-3343