"Our Microsoft Dynamics AX ERP offering was particularly strong during the fourth quarter and helped secure many of the large-scale engagements we closed in late December. As we have stated, we will continue to expand our expertise in the Microsoft channel by using vertically focused intellectual property that can serve as a branded sales differentiator and delivery accelerant.

"Given the strength of our fourth quarter signings, we anticipate that service revenue in the first quarter of 2014 will be up sequentially and will experience high single-digit growth compared to the first quarter of 2013."

Income Tax Benefit

The Company has deferred tax assets that have arisen as a result of timing differences (primarily generated in connection with historical goodwill and intangible asset impairment charges), net operating loss carryforwards and tax credits. Since 2010, the Company has provided a full valuation allowance against its deferred tax assets, reducing the carrying value of these assets on its balance sheet to zero.

Edgewater is required to continually evaluate the need for a valuation allowance and has determined it is more likely than not that in the future the Company will generate sufficient pre-tax income to utilize substantially all of its deferred tax assets. An important factor in the assessment was that during 2013, the Company moved into a three-year cumulative pre-tax profit position. Therefore, as required by the applicable accounting rules, the Company reduced the previously established valuation allowance, which has resulted in a non-cash income tax benefit during the fourth quarter of $30.4 million.

Conference Call and Webcast Information

Edgewater has scheduled a conference call today (Wednesday, February 26, 2014) at 10:00 a.m. Eastern time to discuss its fourth quarter and full year 2013 results.

Date: Wednesday, February 26, 2014

Time: 10:00 a.m. Eastern Time

Dial-in number: 1-877-713-9347

Webcast: http://ir.edgewater.com/

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

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