<PAGE>
Exhibit 99.2
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
five specialty platforms: IntelliMark information technology staffing and
solutions; Robert Walters finance/accounting staffing services; 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 June 29, 2000, the Company pursuant to a Purchase Agreement dated as
of May 16, 2000 by and between the Company and Stephens Group, Inc., an Arkansas
corporation (the "Buyer"), sold all of its subsidiaries and the assets and
liabilities of its Commercial Services Segment (the "Commercial Division") to
affiliate entities of the Buyer (the "Transaction"). As consideration, the
Company received gross proceeds payable in cash in the amount of $190.1 million.
As part of the Transaction, the Company sold the name "StaffMark" as that was
the name used by the Commercial Division. On June 29, 2000, the Company changed
its name from "StaffMark, Inc." to "Edgewater Technology, Inc."
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 disposition of the
Commercial Division 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 disposition 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 sale of
the Commercial Division been consummated 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.
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Edgewater Technology, Inc.
Unaudited Pro Forma Combined
Balance Sheet
As of March 31, 2000
<TABLE>
<CAPTION>
(In Thousands)
Edgewater Pro Forma
Technology, Inc. Adjustments Pro Forma
------------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 228 $ 6,717 (a) $ 6,945
190,100 (c)
(185,053)(d)
(5,047)(e)
Accounts receivable, net 186,837 (84,565)(a) 102,272
Prepaid expenses and other 18,471 (3,407)(a) 15,064
Deferred Income Taxes 5,992 (4,906)(a) 1,086
---------- --------- ----------
Total current assets 211,528 (86,161) 125,367
PROPERTY AND EQUIPMENT, net 30,055 (18,135)(a) 11,920
INTANGIBLE ASSETS, net 433,222 (133,206)(a) 300,016
OTHER ASSETS 2,700 (507)(a) 2,193
---------- --------- ----------
$ 677,505 $(238,009) $ 439,496
========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other accrued liabilities $ 35,390 $ (3,891)(b) $ 31,499
Payroll and related liabilities 34,807 (19,028)(b) 15,779
Reserve for workers' compensation claims 9,915 (9,795)(b) 120
Income taxes payable 9,675 2,026 (f) 11,701
---------- --------- ----------
Total current liabilities 89,787 (30,688) 59,099
LONG-TERM DEBT 288,268 (185,053)(d) 103,215
OTHER LONG-TERM LIABILITIES 101 - 101
DEFERRED INCOME TAXES 9,049 (1,820)(b) 321
(6,908)(f)
STOCKHOLDERS' EQUITY:
Common stock 294 - 294
Paid-in capital 216,759 - 216,759
Retained earnings 78,406 (13,540)(g) 64,866
Accumulated other comprehensive income (5,159) - (5,159)
---------- --------- ----------
Total stockholders' equity 290,300 (13,540) 276,760
---------- --------- ----------
Total Liabilities and Stockholders' Equity $ 677,505 $(238,009) $ 439,496
========== ========= ==========
</TABLE>
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EDGEWATER TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
AS OF MARCH 31, 2000
(a) Represents the assets of the Commercial Division that were sold by
Edgewater and assumed by the Buyer as a result of the Transaction.
(b) Represents the liabilities of the Commercial Division that were sold by
Edgewater and assumed by the Buyer as a result of the Transaction.
(c) Records the proceeds received by Edgewater for the sale of the
Commercial Division.
(d) Records the repayment of debt obligations with proceeds from the
Transaction.
(e) Records the payment of transaction fees associated with the
Transaction.
(f) Records the income tax obligation that resulted from the tax gain and
the tax benefit that resulted from the book loss on sale of the
Commercial Division.
(g) Records the book loss on sale of the Commercial Division.
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<TABLE>
<CAPTION>
Edgewater 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 Pro Forma Total
Technology, Inc. Division (a) Adjustments Adjustments Pro Forma
---------------- ---------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES $ 294,285 $ 154,113 $ - $ 154,113 $ 140,172
COST OF SERVICES 221,268 121,681 44(b) 121,725 99,543
---------------- ---------------- --------------- --------------- -------------
Gross profit 73,017 32,432 (44) 32,388 40,629
OPERATING EXPENSES:
Selling, general and administrative 58,655 23,528 2,201(b) 25,729 32,926
Depreciation and amortization 6,586 1,780 - 1,780 4,806
---------------- ---------------- --------------- --------------- -------------
Operating income 7,776 7,124 (2,245) 4,879 2,897
---------------- ---------------- --------------- --------------- -------------
OTHER INCOME (EXPENSE):
Interest expense (5,444) - (3,447)(c) (3,447) (1,997)
Other, net 503 (72) - (72) 575
---------------- ---------------- --------------- --------------- -------------
INCOME BEFORE INCOME TAXES 2,835 7,052 (5,692) 1,360 1,475
INCOME TAX PROVISION 904 2,249 (1,815)(d) 434 470
---------------- ---------------- --------------- --------------- -------------
Net income (loss) $ 1,931 $ 4,803 $ (3,877) $ 926 $ 1,005
================ ================ =============== =============== =============
NET INCOME PER COMMON SHARE
BASIC $ 0.07 $ 0.03
================ =============
DILUTED $ 0.07 $ 0.03
================ =============
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 29,461 29,461
================ =============
DILUTED 29,676 29,676
================ =============
</TABLE>
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EDGEWATER TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(a) Represents the unaudited financial results of the Commercial Division,
which was sold in the Transaction.
(b) Represents an allocation of Edgewater's corporate costs that relate to
the Commercial Division.
(c) Adjustment to reflect a reduction in interest expense that results from
using the Transaction proceeds to repay debt obligations.
(d) Records the provision for federal and state income taxes at an
effective combined tax rate of approximately 31.9%.
<PAGE>
Edgewater Technology, Inc.
Unaudited Pro Forma Combined
Statement of Income
for the Twelve Months Ended
December 31, 1999
<TABLE>
<CAPTION>
(In Thousands, Except Per Share Data) Disposition Related Adjustments
---------------------------------------------------
Edgewater Commercial Pro Forma Total
Technology, Inc. Division (a) Adjustments Adjustments Pro Forma
----------------- --------------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
SERVICE REVENUES $ 1,220,852 $ 608,807 $ - $ 608,807 $ 612,045
COST OF SERVICES 918,574 480,683 (1,603) (b) 479,080 439,494
----------------- --------------- ------------ ------------ -----------
Gross profit 302,278 128,124 1,603 129,727 172,551
OPERATING EXPENSES:
Selling, general and administrative 214,824 85,468 7,475 (b) 92,943 121,881
Depreciation and amortization 21,448 6,964 - 6,964 14,484
Non-recurring charges 2,153 - - - 2,153
----------------- --------------- ------------ ------------ -----------
Operating income 63,853 35,692 (5,872) 29,820 34,033
----------------- --------------- ------------ ------------ -----------
OTHER INCOME (EXPENSE):
Interest expense (17,419) - (12,084) (c) (12,084) (5,335)
Other, net (227) - - - (227)
----------------- --------------- ------------ ------------ -----------
INCOME BEFORE INCOME TAXES 46,207 35,692 (17,956) 17,736 28,471
INCOME TAX PROVISION 15,994 12,354 (6,215) (d) 6,139 9,855
----------------- --------------- ------------ ------------ -----------
Net income (loss) $ 30,213 $ 23,338 $ (11,741) $ 11,597 $ 18,616
================= =============== ============ ============ ===========
NET INCOME PER COMMON SHARE
BASIC $ 1.03 $ 0.64
================= ===========
DILUTED $ 1.02 $ 0.63
================= ===========
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 29,280 29,280
================= ===========
DILUTED 29,526 29,526
================= ===========
</TABLE>
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EDGEWATER TECHNOLOGY, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1999
(a) Represents the unaudited financial results of the Commercial Division,
which was sold in the Transaction.
(b) Represents an allocation of Edgewater's corporate costs that relate to
the Commercial Division.
(c) Adjustment to reflect a reduction in interest expense that results from
using the Transaction proceeds to repay debt obligations.
(d) Records the provision for federal and state income taxes at an effective
combined tax rate of 34.6%.
