EX-99.3 6 0006.txt UNAUDITED PRO FORMA FIN. STATEMENTS Exhibit 99.3 EDGEWATER TECHNOLOGY, INC. - FORM 8-K UNAUDITED PRO FORMA FINANCIAL STATEMENTS INTRODUCTION Edgewater Technology, Inc. ("Edgewater" or the "Company"), formerly known as StaffMark Inc., provides human resource and business solutions through four specialty platforms: IntelliMark information technology staffing and solutions; ClinForce clinical trials support services; Strategic Legal Resources legal staffing and Edgewater Technology, an e-business consulting firm. The Company recognizes revenues upon the performance of services. The Company generally compensates its associates and consultants only for hours actually worked; therefore, wages of the associates and consultants are a variable cost that increase or decrease as revenues increase or decrease. However, certain of the Company's professional and information technology consultants are full-time, salaried employees. Cost of services primarily consists of wages paid to associates, payroll taxes, workers' compensation and other related employee benefits. Selling, general and administrative expenses are comprised primarily of administrative salaries, benefits, marketing, rent and recruitment expenses. On July 13, 2000, the Company completed an initial public offering ("IPO") of 69,500,000 shares of its indirect wholly-owned subsidiary Robert Walters plc ("Robert Walters") at a price of 170 pence per share. The shares began trading on a conditional basis on the London Stock Exchange on July 6, 2000. The offering included 67,200,000 ordinary shares being sold by Edgewater, and 2,300,000 new shares being sold by Robert Walters. Edgewater has also granted the underwriters a thirty (30) day over-allotment option of an additional 10,400,000 ordinary shares. Edgewater's share of offering gross proceeds were $172.5 million prior to offering commissions, fees and expenses. With the exercise of the over-allotment option on July 14, 2000, Edgewater's share of offering gross proceeds were $199.2 million prior to offering commissions, fees and expenses. The following unaudited pro forma consolidated statements of income set forth the results of operations for the twelve months ended December 31, 1999 and for the three months ended March 31, 2000 as if the Robert Walters IPO had occurred at the beginning of fiscal 1999. The unaudited pro forma consolidated balance sheet sets forth the financial position as of March 31, 2000, as if the IPO had occurred as of that date. The pro forma results of operations are not necessarily indicative of future operations or the actual results that would have occurred had the Robert Walters IPO been completed at the beginning of fiscal 1999. These statements should be read in conjunction with the accompanying notes herein and the historical consolidated financial statements and related notes of the Company included in its 1999 Annual Report of Form 10-K and Quarterly Report on Form 10-Q for the three months ended March 31, 2000. Edgewater Technology, Inc. Unaudited Pro Forma Combined Balance Sheet As of March 31, 2000 (In Thousands)
Edgewater Commercial Pro Forma Technology, Inc. Division (a) Adjustments Pro Forma --------------------- -------------- --------------- ---------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 228 $ 6,717 $ (7,701) (b) $ 80,275 199,200 (d) (103,215) (e) (14,954) (f) Accounts receivable, net 186,837 (84,565) (49,144) (b) 53,128 Prepaid expenses and other 18,471 (3,407) (4,164) (b) 10,900 Deferred income taxes 5,992 (4,906) 528 (c) 1,614 --------- ---------- --------- --------- Total current assets 211,528 (86,161) 20,550 145,917 PROPERTY AND EQUIPMENT, net 30,055 (18,135) (4,424) (b) 7,496 INTANGIBLE ASSETS, net 433,222 (133,206) (9,620) (b) 290,396 OTHER ASSETS 2,700 (507) (34) (b) 2,159 --------- ---------- --------- --------- $ 677,505 $ (238,009) $ 6,472 445,968 ========= ========== ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and other accrued liabilities $ 35,390 $ (3,891) $ (18,530) (c) $ 12,969 Payroll and related liabilities 34,807 (19,028) (5,622) (c) 10,157 Reserve for workers' compensation claims 9,915 (9,795) - 120 Income taxes payable 9,675 2,026 (3,693) (c) 22,725 14,717 (g) --------- ---------- --------- --------- Total current liabilities 89,787 (30,688) (13,128) 45,971 LONG-TERM DEBT 288,268 (185,053) (103,215) (e) - OTHER LONG-TERM LIABILITIES 101 - - 101 DEFERRED INCOME TAXES 9,049 (8,728) (321) (c) - STOCKHOLDERS' EQUITY: Common stock 294 - 294 Paid-in capital 216,759 - 216,759 Retained earnings 78,406 (13,540) 123,136 (h) 188,002 Accumulated other comprehensive income (5,159) - (5,159) --------- ---------- --------- --------- Total stockholders' equity 290,300 (13,540) 123,136 399,896 --------- ---------- --------- --------- Total Liabilities and Stockholders' Equity $ 677,505 $ (238,009) $ 6,472 $ 445,968 ========= ========== ========= =========
EDGEWATER TECHNOLOGY, INC. NOTES TO UNAUDITED PRO FORMA BALANCE SHEET AS OF MARCH 31, 2000 (a) Represents the pro forma adjustments made by Edgewater for the sale of its Commercial Division effective June 29, 2000. (b) Represents the assets of Robert Walters that were sold by Edgewater via the IPO on the London Stock Exchange. (c) Represents the liabilities of Robert Walters that were sold by Edgewater via the IPO on the London Stock Exchange. (d) Records the proceeds received by Edgewater for the IPO. (e) Records the repayment of debt obligations with proceeds from the IPO. (f) Records the payment of transaction fees associated with the IPO. (g) Records the income tax obligation that resulted from the tax gain on IPO. (h) Records the book gain generated from the IPO. Eedgewater Technology, Inc. Unaudited Pro Forma Combined Statement of Income for the Three Months Ended March 31, 2000 (In Thousands, Except Per Share Data)
Disposition Related Adjustments ------------------------------------------ Edgewater Commercial Robert Pro Forma Total Technology, Inc. Division (a) Walters (b) Adjustments Adjustments Pro Forma ------------------ -------------- ------------- ------------- ------------- ------------ SERVICE REVENUES $294,285 $(154,113) $(68,971) $ - $ (68,971) $71,201 COST OF SERVICES 221,268 (121,725) (49,301) - (49,301) 50,242 -------- ---------- -------- -------- --------- ------- Gross profit 73,017 (32,388) (19,670) - (19,670) 20,959 OPERATING EXPENSES: Selling, general and administrative 58,655 (25,729) (15,482) - (15,482) 17,444 Depreciation and amortization 6,586 (1,780) (499) - (499) 4,307 -------- ---------- -------- -------- --------- ------- Operating income 7,776 (4,879) (3,689) - (3,689) (792) -------- ---------- -------- -------- --------- ------- OTHER INCOME (EXPENSE): Interest expense (5,444) 3,447 19 2,991 (c) 3,010 1,013 Other, net 503 72 49 - 49 624 -------- ---------- -------- -------- --------- ------- INCOME BEFORE INCOME TAXES 2,835 (1,360) (3,621) 2,991 (630) 845 INCOME TAX PROVISION 904 (434) (1,155) 954 (d) (201) 269 -------- ---------- -------- -------- --------- ------- Net income (loss) $ 1,931 $ (926) $ (2,466) $ 2,037 $ (429) $ 576 ======== ========== ======== ======== ========= ======= NET INCOME PER COMMON SHARE BASIC $ 0.07 $ 0.02 ======== ======= DILUTED $ 0.07 $ 0.02 ======== ======= WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 29,461 29,461 ======== ======= DILUTED 29,676 29,676 ======== =======
EDGEWATER TECHNOLOGY, INC. NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2000 (a) Represents the pro forma adjustments made by Edgewater for the sale of its Commercial Division effective June 29, 2000. (b) Represents the unaudited financial results of Robert Walters, which was sold by Edgewater via the IPO on the London Stock Exchange. (c) Adjustment to reflect the net interest income that results from investing cash in excess of the amounts necessary to repay debt obligations. (d) Records the provision for federal and state income taxes at an effective combined tax rate of approximately 31.9%. Edgewater Technology, Inc. Unaudited Pro Forma Combined Statement of Income for the Twelve Months Ended December 31, 1999
(In Thousands, Except Per Share Data) Disposition Related Adjustments ------------------------------- Edgewater Commercial Robert Pro Forma Total Technology, Inc. Division (a) Walters (b) Adjustments Adjustments Pro Forma ---------------- ----------- ----------- ----------- ----------- --------- SERVICE REVENUES $ 1,220,852 $ (608,807) $ (291,038) $ $ (291,038) $ 321,007 COST OF SERVICES 918,574 (479,080) (214,442) - (214,442) 225,052 ------------ ----------- ----------- -------- ----------- --------- Gross profit 302,278 (129,727) (76,596) - (76,596) 95,955 OPERATING EXPENSES: Selling, general and administrative 214,824 (92,943) (56,564) - (56,564) 65,317 Depreciation and amortization 21,448 (6,964) (1,520) - (1,520) 12,964 Non-recurring charges 2,153 - - - 2,153 ------------ ----------- ----------- -------- ----------- --------- Operating income 63,853 (29,820) (18,512) - (18,512) 15,521 ------------ ----------- ----------- -------- ----------- --------- OTHER INCOME (EXPENSE): Interest expense (17,419) 12,084 518 8,261 (c) 8,779 3,444 Other, net (227) - 22 - 22 (205) ------------ ----------- ----------- -------- ----------- --------- INCOME BEFORE INCOME TAXES 46,207 (17,736) (17,972) 8,261 (9,711) 18,760 INCOME TAX PROVISION 15,994 (6,139) (6,221) 2,859 (d) (3,361) 6,494 ------------ ----------- ----------- -------- ----------- --------- Net income (loss) $ 30,213 $ (11,597) $ (11,751) $ 5,402 $ (6,349) $ 12,267 ============ =========== =========== ======== =========== ========= NET INCOME PER COMMON SHARE BASIC $ 1.03 $ 0.42 ============ ========= DILUTED $ 1.02 $ 0.42 ============ ========= WEIGHTED AVERAGE SHARES OUTSTANDING BASIC 29,280 29,280 ============ ========= DILUTED 29,526 29,526 ============ =========
EDGEWATER TECHNOLOGY, INC. NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999 (a) Represents the pro forma adjustments made by Edgewater for the sale of its Commercial Division effective June 29, 2000. (b) Represents the unaudited financial results of Robert Walters, which was sold by Edgewater via the IPO on the London Stock Exchange. (c) Adjustment to reflect the net interest income that results from investing cash in excess of the amount necessary to repay debt obligations. (d) Records the provision for federal and state income taxes at an effective combined tax rate of approximately 34.6%.