-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PN3RRDxeS3xMVKiXc+Mv4JbysGJtqxtlgradFK1Q7iDMVtWqePyxD0ys0JHHkHvP CWUlD55brYn7UhNpczLNzw== 0001157523-07-004011.txt : 20070425 0001157523-07-004011.hdr.sgml : 20070425 20070425091149 ACCESSION NUMBER: 0001157523-07-004011 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070425 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070425 DATE AS OF CHANGE: 20070425 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EDGEWATER TECHNOLOGY INC/DE/ CENTRAL INDEX KEY: 0001017968 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 710788538 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20971 FILM NUMBER: 07786188 BUSINESS ADDRESS: STREET 1: 20 HARVARD MILL SQUARE CITY: WAKEFIELD STATE: MA ZIP: 01880 BUSINESS PHONE: 781-213-9854 MAIL ADDRESS: STREET 1: 20 HARVARD MILL SQUARE CITY: WAKEFIELD STATE: MA ZIP: 01880 FORMER COMPANY: FORMER CONFORMED NAME: STAFFMARK INC DATE OF NAME CHANGE: 19960702 8-K 1 a5385694.txt EDGEWATER TECHNOLOGY, INC. 8-K - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------ FORM 8-K Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): April 25, 2007 EDGEWATER TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) Delaware 0-20971 71-0788538 (State or other jurisdiction (Commission File No.) (IRS Employer of incorporation) Identification No.) 20 Harvard Mill Square Wakefield, Massachusetts 01880 Registrant's telephone number, including area code: (781) 246-3343 Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2-(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) - -------------------------------------------------------------------------------- ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION On April 25, 2007, Edgewater Technology, Inc. (the "Company") reported its results of operations for its first quarter ended March 31, 2007. A copy of the press release issued by the Company concerning the foregoing results is furnished herewith as Exhibit 99.1 and is incorporated herein by reference in its entirety. The information contained herein and in the accompanying exhibit is being "furnished," as opposed to being "filed" pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act") and shall not be incorporated hereafter by reference into any filing of the Company, where made before or after the date hereof, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference to such filing. The information in this report, including the exhibit incorporated hereto, shall not be deemed to be "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (a) Exhibits. Exhibit Number Description of Exhibit - -------------- ---------------------- 99.1 Edgewater Technology, Inc. Press Release dated April 25, 2007. SIGNATURES: Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: April 25, 2007 EDGEWATER TECHNOLOGY, INC. By: /s/ Kevin R. Rhodes ------------------------------- Name: Kevin R. Rhodes Title: Chief Financial Officer (Principal Financial and Accounting Officer) EX-99.1 2 a5385694ex991.txt EXHIBIT 99.1 Exhibit 99.1 Edgewater Reports Another Solid Quarter WAKEFIELD, Mass.--(BUSINESS WIRE)--April 25, 2007--A technology management consulting firm specializing in providing premium IT services, Edgewater Technology, Inc. (NASDAQ: EDGW, www.edgewater.com, "Edgewater Technology" or the "Company"), today announced financial results for its first quarter ended March 31, 2007. First Quarter Results Actual financial results and utilization for the quarter ended March 31, 2007: -- Total revenue increased 13.7% to $16.3 million, compared to $14.3 million in the first quarter of 2006. -- Service revenue increased 12.8% to $15.2 million, compared to $13.5 million in the first quarter of 2006; -- Gross profit was $6.8 million, or 41.7% of total revenue, compared to $5.2 million, or 36.1% of total revenue in the first quarter of 2006; -- Gross profit margin related to service revenue was 44.0%, compared to 38.0% in the first quarter of 2006; -- Utilization was 82.2%, compared to 78.8% during the first quarter of 2006; -- Net income increased 82% to $0.84 million, or $0.07 per diluted share, compared to net income of $0.46 million, or $0.04 per diluted share in the first quarter of 2006; -- Cash Net Income increased 58% to $1.2 million, or $0.09 per diluted share during the first quarter of 2007 compared to $0.07 million, or $0.06 per diluted share, during the first quarter of 2006; -- EBITDA increased 100% to $1.6 million, or $0.13 per diluted share during the first quarter of 2007 compared to $0.8 million, or $0.07 per diluted share, during the first quarter of 2006; and Cash Net Income, Cash Earnings per Diluted Share, and EBITDA per Diluted Share are Non-GAAP financial measures. A reconciliation of these measures to their most directly comparable GAAP measures is included in the financial data accompanying this press release. Shirley Singleton, President and CEO of Edgewater Technology commented on first quarter 2007 financial results, "We are pleased with the improvement in our operating metrics. We leveraged higher utilization rates to achieve 31% growth in gross profit and 82% growth in net income." As covered and anticipated in the fourth quarter earnings conference, first quarter operating cash flow turned negative. Cash flow used in operating activities was $(1.2) million in the first quarter of 2007, compared to cash flow provided by operating activities of $1.4 million during the first quarter of 2006. This change is primarily attributable to: an increase in accounts receivable in the first quarter of 2007 that is associated with the increase in revenues for 2007; an expected increase in 2006 bonus payments (paid in 2007) over 2005 bonus payments (paid in 2006), due to the significant increase in profitability metrics for fiscal 2006 over fiscal 2005; and changes in current assets and liabilities, most notably an increase in prepaid expenses. The Company's average days' sales outstanding metric improved to 40 days, for the first quarter of 2007, compared to 43 days, for the first quarter of 2006. Singleton continued, "It is apparent that our go-to-market strategy is working. We have realized success by consolidating our premium IT services and emphasizing three major synergistic offerings: (1) business consulting, (2) Corporate Performance Management ("CPM") and (3) technical consulting which is strategically positioning Edgewater for further premium IT services growth. While bid activity during the first quarter 2007 was consistent on a year-over-year basis, our win rate ratio was higher compared to the first quarter 2006. In addition, our CPM offering experienced 26% year-over-year growth, in spite of a slow January start, and is tracking nicely as second quarter unfolds. Sales activity in our technical and business consulting offerings continues to be robust as we experienced growth in both offerings on a year-over-year basis. Taking everything into account, there continues to be strong market demand for our premium IT services." Singleton concluded, "We are optimistic that the activity in our three offerings can support continued revenue growth and profitability in the second quarter." First Quarter Conference Call Details Edgewater Technology will host a conference call on Wednesday, April 25, at 10:00 a.m. (ET) to discuss first-quarter 2007 financial results. To listen to the call, you can participate by webcast at www.edgewater.com - Investor Relations section or you can dial 800-561-2601 (pass code 49831632) approximately 10 minutes prior to the call start. A replay of the call can be accessed via www.edgewater.com -- Investor Relations section or by dialing 888-286-8010 (pass code 91541418) from 12:00 p.m. ET Wednesday, April 25 through 11:59 p.m. ET Wednesday, May 9. About Edgewater Technology, Inc. Edgewater Technology, Inc. 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. Selected Financial Data: EDGEWATER TECHNOLOGY, INC. Consolidated Statement of Operations (In thousands, except per share amounts) (Unaudited) Three Months Ended ----------------- March March 31, 31, 2007 2006 -------- -------- Revenue: Service revenue $15,226 $13,502 Software 375 293 Reimbursable expenses 672 513 -------- -------- Total revenue 16,273 14,308 Cost of revenue: Project and personnel costs (a) 8,530 8,368 Software costs 290 267 Reimbursable expenses 672 513 -------- -------- Total cost of revenue 9,492 9,148 -------- -------- Gross profit 6,781 5,160 Selling, general and administrative (a) 5,160 4,352 Depreciation and amortization 567 345 -------- -------- Operating income 1,054 463 Interest income and other, net 407 299 -------- -------- Income before income taxes 1,461 762 Provision for income taxes 624 302 -------- -------- Net income $837 $460 ======== ======== BASIC EARNINGS PER SHARE: Basic earnings per share $0.07 $0.04 ======== ======== Weighted Average Shares Outstanding - Basic 11,344 10,635 ======== ======== DILUTED EARNINGS PER SHARE: Diluted earnings per share $0.07 $0.04 ======== ======== Weighted Average Shares Outstanding - Diluted 12,449 11,335 ======== ======== (a) - Amount of stock-based compensation expense included in each of the respective expense categories reported above: Cost of revenue - Project and personnel costs $77 $93 Selling, general and administrative expenses 180 150 -------- -------- Total $257 $243 ======== ======== Edgewater's management believes that cash performance is the primary driver of long-term share value. As such, Edgewater views Cash Net Income, Cash Earnings per Diluted Share, EBITDA and EBITDA per Diluted Share as important indicators of performance that help investors gain a meaningful understanding of the Company's core operating results and future prospects, consistent with the manner in which management measures and forecasts the Company's performance. EDGEWATER TECHNOLOGY, INC. Reconciliation of Non-GAAP Financial Measures (In thousands, except per share amounts) (Unaudited) Reconciliation of GAAP Net Income to Cash Net Income, Cash Earnings Per Diluted Share (Non-GAAP): Three Months Ended ---------------- March March 31, 31, 2007 2006 ------- ------ Reported GAAP Net Income $837 $460 Add: Amortization of Intangibles 314 217 Add: Stock-based Compensation 257 243 Less: Related Tax Effect (244) (184) ------- ------ Cash Net Income(1) $1,164 $736 ======= ====== Cash Earnings per Diluted Share(1) $0.09 $0.06 ======= ====== Reconciliation of GAAP Net Income EBITDA and EBITDA Per Diluted Share (Non-GAAP): Reported GAAP Net Income $837 $460 Add: Income Tax Provision 624 302 Add: Depreciation and Amortization Expense 567 345 Less: Interest Income and Other Net (407) (299) ------- ------ EBITDA(2) $1,621 $808 ======= ====== EBITDA per Diluted Share(2) $0.13 $0.07 ======= ====== 1 - Cash Net Income and Cash Earnings per Diluted Share are Non-GAAP performance measures and are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, GAAP Diluted Earnings per Share. Cash Net Income and Cash Earnings per Diluted Share measures presented may not be comparable to similarly titled measures presented by other companies. Cash Earnings per Diluted Share is defined as Net Income, plus Amortization of Intangibles and Stock-based Compensation, less related stock effect, divided by shares used in computing Diluted Net Income per share. 2 - EBITDA and EBITDA per Diluted Share are Non-GAAP performance measures and are not intended to be performance measures that should be regarded as an alternative to, or more meaningful than, either GAAP Operating Income, GAAP Net Income and Diluted Net Income per Share. EBITDA and EBITDA per Diluted Share measures presented may not be comparable to similarly titled measures presented by other companies. EDGEWATER TECHNOLOGY, INC. Summary Consolidated Balance Sheet Information (In thousands) March 31, December 31, 2007 2006 (Unaudited) (Audited) ----------- ------------ Assets Cash and marketable securities $31,504 $33,141 Accounts receivable, net 12,681 10,883 Deferred taxes, current 1,760 1,760 Prepaid expenses and other assets, current 869 441 ----------- ------------ Total current assets 46,814 46,225 Fixed assets, net 4,132 3,391 Deferred taxes, net 16,292 16,789 Goodwill and intangible assets, net 29,734 29,163 Other assets 52 52 ----------- ------------ Total Assets $97,024 $95,620 =========== ============ Liabilities and Stockholders' Equity - ---------------------------------------------- Accounts payable and accrued liabilities $4,779 $3,914 Accrued payroll and related liabilities 2,242 4,242 Deferred revenue and other liabilities 283 252 Capital lease obligations, current 213 184 ----------- ------------ Total current liabilities 7,517 8,592 Capital lease obligations 729 778 ----------- ------------ Total liabilities 8,246 9,370 Stockholders' Equity 88,778 86,250 ----------- ------------ Total Liabilities and Stockholders' Equity $97,024 $95,620 =========== ============ Shares Outstanding 11,804 11,522 =========== ============ 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 for sales activity, revenue and profitability. 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) failure of our sales pipeline to be 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 Rhodes, 781-246-3343 Chief Financial Officer or Barbara Warren-Sica, 781-246-3343 Investor Relations ir@edgewater.com -----END PRIVACY-ENHANCED MESSAGE-----