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Edgewater Reports Third Quarter 2013 Results

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. Except as required by law, we undertake no obligation to update any of the forward-looking statements after the date of this Press Release to conform such statements to actual results.

EDGEWATER TECHNOLOGY, INC.
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
     
  September 30, December 31,
  2013 2012
 Assets    
Cash and cash equivalents  $ 17,487  $ 16,651
Accounts receivable, net 19,001 18,281
Prepaid expenses and other current assets 1,150 1,418
 Total current assets 37,638 36,350
Property and equipment, net 1,613 1,949
Goodwill and intangible assets, net 13,164 13,243
Other assets 249 247
 Total Assets  $ 52,664  $ 51,789
     
Liabilities and Stockholders' Equity    
Accounts payable  $ 598  $ 593
Accrued liabilities 14,369 14,280
Deferred revenue  1,462 2,969
 Total current liabilities 16,429 17,842
Other long-term liabilities 832 1,272
 Total liabilities 17,261 19,114
Stockholders' Equity 35,403 32,675
 Total Liabilities and Stockholders' Equity  $ 52,664  $ 51,789
     
Shares Outstanding 10,911 10,897
     
 
EDGEWATER TECHNOLOGY, INC.
Condensed Consolidated Statement of Operations
(In thousands, except per share amounts)
 (Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2013 2012 2013 2012
 Revenue:        
Service revenue  $ 21,389  $ 20,232  $ 62,684  $ 63,615
Software 2,260 2,032 8,568 7,038
Reimbursable expenses 1,750 1,901 5,523 5,980
Total revenue 25,399 24,165 76,775 76,633
         
Cost of revenue:        
Project and personnel costs  13,071 12,401 39,837 39,107
Software costs 921 1,051 4,577 4,709
Reimbursable expenses 1,750 1,901 5,523 5,980
Total cost of revenue 15,742 15,353 49,937 49,796
Gross profit 9,657 8,812 26,838 26,837
         
Selling, general and administrative  7,556 7,740 23,125 23,672
Embezzlement costs 34 5 106 575
Changes in fair value of contingent consideration   -- (246)  -- (246)
Depreciation and amortization 302 452 925 1,342
Operating income 1,765 861 2,682 1,494
         
Other (income) expense, net (81) (95) 92 10
Income before income taxes 1,846 956 2,590 1,484
         
Tax provision 74 163 293 382
Net income  $ 1,772  $ 793  $ 2,274  $ 1,102
         
BASIC EARNINGS PER SHARE:        
Basic earnings per share  $ 0.17  $ 0.07  $ 0.21  $ 0.10
Weighted average shares outstanding – Basic 10,732 11,137 10,800 11,258
         
DILUTED EARNINGS PER SHARE:        
Diluted earnings per share  $ 0.14  $ 0.07  $ 0.19  $ 0.10
Weighted average shares outstanding – Diluted 12,233 11,677 11,785 11,680
         
 
EDGEWATER TECHNOLOGY, INC.
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2013 2012 2013 2012
Cash flow provided by (used in):        
Operating activities  $ 5,870  $ 5,422  $ 2,319  $ 4,914
Investing activities (238) (124) (769) (528)
Financing activities 377 (1,224) (720) (1,746)
Effect of exchange rates on cash 11 7 6 1
Net increase in cash and cash equivalents  $ 6,020  $ 4,081  $ 836  $ 2,641

Non-GAAP Financial Measures

Edgewater reports its financial results in accordance with generally accepted accounting principles ("GAAP"). Management believes, however, that certain non-GAAP financial measures used in managing the Company's business may provide users of this financial information with additional meaningful comparisons between current results and prior reported results. Certain of the information set forth herein and certain of the information presented by the Company from time to time may constitute non-GAAP financial measures within the meaning of Regulation G adopted by the Securities and Exchange Commission. We have presented herein a reconciliation of these measures to the most directly comparable GAAP financial measure. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies. As noted below, the foregoing measures have limitations and do not serve as a substitute and should not be construed as a substitute for GAAP performance, but provide supplemental information concerning our performance that our investors and we find useful.

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