Exhibit 99.1
Edgewater Revises 2007 Earnings Metrics
Adjusted Upward for Deferred Tax Asset Adjustment
WAKEFIELD, Mass.--(BUSINESS WIRE)--Nov. 14, 2007--A technology
management consulting firm specializing in providing premium IT
services, Edgewater Technology, Inc. (NASDAQ: EDGW, www.edgewater.com,
"Edgewater" or the "Company"), today announced that it is revising the
Company's previously announced financial results, for its third
quarter ended September 30, 2007.
The Company's third quarter results, announced by press release on
October 24, 2007, included income tax expense related to a valuation
allowance on certain deferred tax benefits, which were recognized in
accordance with the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 123R, "Share-Based Payment." Subsequent to
Edgewater's third quarter 2007 earnings announcement, during the
preparation of our Form 10-Q filing, the Company and its independent
auditors reevaluated the Company's accounting for these deferred tax
assets. As a result, the Company determined that it was more than
likely that it would be able to derive future benefit from the
deferred assets, which negated the need for the valuation allowance,
and the additional income tax expense, that was included in the
determination of our previously announced results.
Accordingly, the Company is revising its previously issued
financial results and interim financial statements to reflect a $183
thousand decrease in its reported tax provision for the three- and
nine-months ended September 30, 2007. The adjustment, which results in
a corresponding increase to net income, improves the Company's
earnings per share by $0.01 and $0.02 per diluted share, to $0.08 and
$0.23 per diluted share, in the three- and nine-month periods of 2007,
respectively.
Edgewater's Chairman, President and CEO Shirley Singleton noted,
"Edgewater is fully committed to ensuring that our investors are
presented with timely and accurate financial information, which has
been prepared and presented in accordance with generally accepted
accounting principles. The adjustment we are making, which is being
effected after our third quarter earnings announcement, is an
affirmation of how strongly we believe in that commitment. The
adjustment had no effect on previously reported revenues or cash
flows."
The accompanying unaudited summary consolidated balance sheet, as
of September 30, 2007, and the unaudited consolidated statement of
operations for the three- and nine-month periods ended September 30,
2007, reflects the effects of the adjustment described above.
As of September 30, 2007, the Company, after effecting the
adjustment described above, maintains a valuation allowance against
the gross value of its deferred tax assets of $6.5 million. During the
fourth quarter, in connection with our annual review of the likelihood
of the expected future tax benefits to be generated from these assets,
we believe that we will recognize additional favorable adjustments to
our income tax provision that could have a significant impact upon our
fourth quarter and full-year net income and earnings per share.
About Edgewater Technology, Inc.
Edgewater is an innovative technology management consulting firm.
We provide a unique blend of premium IT services by leveraging our
proven industry expertise in strategy, technology and corporate
performance management. Headquartered in Wakefield, MA, we go to
market by vertical industry and provide our clients with a wide range
of business and technology offerings. To learn more, visit
www.edgewater.com or call 800-410-4014.
EDGEWATER TECHNOLOGY, INC.
Summary Consolidated Balance Sheet Information
(In thousands)
Sept 30, December 31,
2007 2006
(Unaudited) (Audited)
----------- ------------
ASSETS
Cash and marketable securities $ 31,835 $33,141
Accounts receivable, net 14,854 10,883
Deferred taxes, current 1,760 1,760
Prepaid expenses and other assets, current 476 441
----------- ------------
Total current assets 48,925 46,225
Fixed assets, net 4,861 3,391
Deferred taxes, net 15,346 16,789
Goodwill and intangible assets, net 34,755 29,163
Other assets 52 52
----------- ------------
Total Assets $ 103,939 $95,620
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 3,071 $ 3,914
Accrued payroll and related liabilities 4,397 4,242
Deferred revenue and other liabilities 959 252
Capital lease obligations, current 191 184
----------- ------------
Total current liabilities 8,618 8,592
Capital lease obligations 691 778
----------- ------------
Total liabilities 9,306 9,370
Stockholders' Equity: 94,630 86,250
----------- ------------
Total Liabilities and Stockholders' Equity $ 103,939 $95,620
=========== ============
Actual Shares Outstanding 12,338 11,522
=========== ============
EDGEWATER TECHNOLOGY, INC.
Consolidated Statement of Operations
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
------------------ -----------------
Sept 30, Sept 30, Sept 30, Sept 30,
2007 2006 2007 2006
--------- -------- -------- --------
Revenue:
Service revenue $15,652 $14,367 $47,244 $41,943
Software 18 225 1,849 732
Reimbursable expenses 682 571 2,109 1,686
--------- -------- -------- --------
Total revenue 16,352 15,163 51,202 44,361
Cost of revenue:
Project and personnel costs (a) 8,724 7,872 26,264 24,377
Software costs 10 176 1,559 613
Reimbursable expenses 682 571 2,109 1,686
--------- -------- -------- --------
Total cost of revenue 9,416 8,619 29,932 26,676
--------- -------- -------- --------
Gross profit 6,936 6,544 21,270 17,685
Selling, general and
administrative (a) 5,203 4,621 15,991 14,046
Depreciation and amortization 599 454 1,734 1,260
--------- -------- -------- --------
Operating income 1,134 1,469 3,545 2,379
Interest income and other, net 428 304 1,236 885
--------- -------- -------- --------
Income before income taxes 1,562 1,773 4,781 3,264
Provision for income taxes 465 709 1,801 1,305
--------- -------- -------- --------
Net income $ 1,097 $ 1,064 $ 2,980 $ 1,959
========= ======== ======== ========
BASIC EARNINGS PER SHARE:
Basic earnings per share $ 0.09 $ 0.10 $ 0.26 $ 0.18
========= ======== ======== ========
Weighted Average Shares
Outstanding - Basic 11,822 11,132 11,614 10,914
========= ======== ======== ========
DILUTED EARNINGS PER SHARE:
Diluted earnings per share $ 0.08 $ 0.09 $ 0.23 $ 0.17
========= ======== ======== ========
Weighted Average Shares
Outstanding - Diluted 13,134 11,659 13,172 11,868
========= ======== ======== ========
(a) - Amount of stock-based
compensation expense included in
each of the respective expense
categories reported above:
Cost of revenue - Project and
personnel costs
$ 95 $ 46 $ 297 $ 207
Selling, general and
administrative expenses
266 196 694 747
--------- -------- -------- --------
Total $ 361 $ 242 $ 991 $ 954
========= ======== ======== ========
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 deferred tax
asset and valuation allowance reserves, and future net income and
earnings per share. The forward looking statements included in the
Press Release relate to future events or our future financial
conditions or performance. In some cases, you can identify
forward-looking statements by terminology such as "may," "should,"
"believe," "anticipate," "future," "forward," "potential," "estimate,"
"encourage," "opportunity," "goal," "objective," "quality," "growth,"
"leader," "could", "expect," "intend," "plan," "planned" "expand,"
"focus," "build," "through," "strategy," "expiration," "provide,"
"offer," "maximize," "allow," "allowed," "represent," "commitment,"
"create," "implement," "result," "seeking," "increase," "add,"
"establish," "pursue," "feel," "work," "perform," "make," "continue,"
"can," "will," "ongoing," "include" or the negative of such terms or
comparable terminology. These forward-looking statements inherently
involve certain risks and uncertainties, although they are based on
our current plans or assessments which 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, forecasted, estimated, anticipated, planned
or budgeted in such forward-looking statements include, among others,
the following possibilities: (1) inability to execute upon growth
objectives, including growth in entities acquired by our Company; (2)
failure to obtain new customers or retain significant existing
customers; (3) the loss of one or more key executives and/or
employees; (4) changes in industry trends, such as a decline in the
demand for Business Intelligence ("BI") and Corporate Performance
Management ("CPM") solutions, custom development and system
integration services and/or delays in industry-wide information
technology ("IT") spending, whether on a temporary or permanent basis
and/or delays by customers in initiating new projects or existing
project milestones; (5) adverse developments and volatility involving
geopolitical or technology market conditions; (6) unanticipated events
or the occurrence of fluctuations or variability in the matters
identified under "Critical Accounting Policies"; (7) delays in, or the
failure of, our sales pipeline being converted to billable work and
recorded as revenue; (8) failure of the middle market and the needs of
middle-market enterprises for 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) failure to expand outsourcing services
to generate additional revenue; (11) any changes in ownership of the
Company or otherwise that would result in a limitation of the net
operating loss carry forward under applicable tax laws; and/or (12)
the failure of the marketplace to embrace CPM or BI services. In
evaluating these statements, you should specifically consider various
factors described above as well as the risks outlined under Item I
"Business - Factors Affecting Finances, Business Prospects and Stock
Volatility" in our 2006 Annual Report on Form 10-K filed with the SEC
on March 14, 2007. These factors may cause our actual results to
differ materially from those contemplated, projected, anticipated,
planned or budgeted in any such forward-looking statements.
Although we believe that the expectations in the forward-looking
statements are reasonable, we cannot guarantee future results, levels
of activity, performance, growth, earnings per share or achievements.
However, neither we nor any other person assumes responsibility for
the accuracy and completeness of such statements. We are under no duty
to update any of the forward-looking statements after the date of this
Press Release to conform such statements to actual results.
CONTACT: Edgewater Technology, Inc.
Kevin R. Rhodes, Chief Financial Officer
Timothy R. Oakes, Investor Relations
781-246-3343
ir@edgewater.com