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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE TO
Tender Offer Statement
Under Section 14(d)(1) or 13(e)(1)
of the Securities Exchange Act of 1934
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Edgewater Technology, Inc.
(Name of Subject Company (Issuer) and Filing Person (Offeror)
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Common Stock, Par Value $0.01 Per Share
(Title of Class of Securities)
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852389 10 5
(CUSIP Number of Class of Securities)
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Gordon Y. Allison
Executive Vice President - General Counsel
Edgewater Technology, Inc.
234 East Millsap Road
Fayetteville, AR 72703
(501) 973-6000
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of the Bidder)
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Copies to:
Brian J. Lynch
Cooley Godward llp
One Freedom Square
Reston Town Center
11951 Freedom Drive
(703) 456-8000
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CALCULATION OF FILING FEE
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Transaction Valuation Amount of Filing Fee*
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<S> <C>
$ $
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* Not required in connection with this filing which contains solely
preliminary communications made before the commencement of a tender offer.
[_] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount Previously Paid: None Filing Party: N/A
Form or Registration No.: N/A Date Filed: N/A
[X] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
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Check the appropriate boxes below to designate any transactions to which the
statement relates:
[_] third-party tender offer subject to Rule 14d-1.
[X] issuer tender offer subject to Rule 13e-4.
[_] going-private transaction subject to Rule 13e-3.
[_] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [_]
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Contacts: Clete T. Brewer, Chairman and Chief Executive Officer
Terry C. Bellora, Chief Financial Officer
Edgewater Technology, Inc.
(501) 973-6084
Edgewater Technology, Inc. Announces Agreement to Sell its ClinForce Division
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and Announces Plan for a Tender Offer of $130 Million
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Fayetteville, Arkansas - December 15, 2000 - Edgewater Technology, Inc.
(NASDAQ: EDGW, www.edgewater.com, the "Company"), today announced that it has
entered into an agreement to sell ClinForce, its clinical trials support
services division, and that it plans to commence a fixed price issuer tender
offer to return cash to stockholders in the next few weeks.
ClinForce Sale
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The Company has executed a definitive agreement to sell ClinForce to Cross
Country TravCorps for approximately $31.0 million in cash, subject to potential
upward or downward post-closing adjustments (the "Sale Transaction"). Credit
Suisse First Boston Corporation served as the financial advisor to the Company.
The closing of the Sale Transaction is conditioned upon the Company's receipt of
stockholder approval and the satisfaction of other customary conditions to
closing. The Company will hold a Special Stockholders' Meeting to approve the
Sale Transaction. Proxy material for the Special Stockholders' Meeting will be
distributed to stockholders following clearance of the Company's proxy material
with the Securities and Exchange Commission and the establishment of a record
date for the Special Stockholders' Meeting. Subject to the receipt of
stockholder approval for the Sale Transaction, the Company anticipates that it
would receive proceeds from the Sale Transaction during the first quarter of
2001.
Clete Brewer, Chairman and Chief Executive Officer of the Company, commented,
"We are pleased with the ClinForce agreement, as we believe the price represents
a fair value for the business and we believe that the Sale Transaction is in the
best interests of our Company and our stockholders."
For the nine months ended September 30, 2000, ClinForce's revenues increased
0.8% to $20.6 million, gross profit increased 12.4% to $6.2 million and EBITDA
increased 6.5% to $2.8 million compared to results for the nine months ended
September 30, 1999. These results exclude the effect of charges related to
unallocated corporate expenses. As part of the transaction, Cross Country
TravCorps will assume all corporate expenses relating directly to ClinForce.
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Tender Offer
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The Company also announced that it plans to use $130 million, of its $145
million current cash balance, to repurchase its common stock through an issuer
tender offer. The Company plans to commence a fixed price issuer tender offer
through a disclosure document that will contain the detailed terms of its tender
offer, including the price per share and number of shares subject to the tender
offer in the next few weeks. It is currently anticipated that the tender offer
would be completed prior to the consummation of the Sale Transaction.
Mr. Brewer commented, "The sale of ClinForce and the announcement of the
tender offer is evidence of our commitment to return value to our stockholders.
With the announcement of the Sale Transaction, management and the Board of
Directors determined to proceed with the return of capital to stockholders as
expeditiously as possible instead of waiting for the stockholder vote which is
required in connection with the Sale Transaction."
Upon completion of the tender offer, the Company intends to use its
remaining cash balance for general working capital purposes and for
restructuring related disbursements. Proceeds from the Sale Transaction will be
evaluated following the closing of the Sale Transaction and, depending upon
market conditions, a portion of those proceeds may be used to repurchase shares
of the Company's common stock under its previously announced stock repurchase
program.
Company Information and Outlook
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Mr. Brewer commented, "Once the issuer tender offer and the Sale
Transaction are complete, which is expected to be in the first quarter of 2001,
we will be able to focus all of our energies and resources on Edgewater
Technology, our eSolutions division."
Edgewater Technology is a national full-service provider of tailored
Internet-centric solutions, which assists clients through proven methodologies,
including eStrategy, eSolutions and Internet Outsourcing. Edgewater Technology
has focused its efforts on the middle-market, comprised of companies (or
divisions of companies) that have between $100 million and $1 billion in annual
revenues. For the nine months ended September 30, 2000, Edgewater Technology
posted revenues of $23.4 million, an increase of 58.0% over the same period in
1999. Gross profit was $12.2 million, or 52.1% of revenues, compared to $8.3
million in the prior year. EBITDA, excluding unallocated corporate overhead,
was $4.4 million, or 18.8% of revenues, compared to $1.0 million in 1999.
The Company anticipates that Edgewater Technology will conclude the fiscal
year 2000 with revenues of approximately $31 million with gross margin in the
50% range and with EBITDA margins in the mid-teen range before unallocated
corporate expenses. It is expected that Edgewater's 2001 revenue growth will be
at or above 30% and that the related EBITDA margin will be in the low double
digits as Edgewater Technology continues on its growth plan and as it picks up
the costs of being a stand-alone public company.
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Find more information at www.edgewater.com.
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The contemplated tender offer that is referred to in this announcement has not
yet commenced. Once the tender offer commences, Edgewater will file a tender
offer statement (including an offer to purchase, letter of transmittal and
related tender offer documents) with the Securities and Exchange Commission.
Edgewater stockholders are strongly encouraged to read the tender offer
statement when it becomes available because it will contain important
information about the offer. The tender offer statement and other filed
documents will be available for no charge on the SEC's website at
http://www.sec.gov and will also be made available without charge to all
stockholders of the Company by contacting the information agent for the offer as
designated in the tender offer documents disseminated to the Company's
stockholders.
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 the amount of proceeds from the ClinForce sale and the
commencement of and the potential terms of the proposed self-tender offer.
Words such as "plan," "will," "anticipate," "intend," "increasing," "pursue,"
"provide," "begin," "should," "would," "focus," "believe," "expect," "continue,"
and "plan," or the negative thereof or variations thereon and similar
expressions are intended to identify forward-looking statements. These forward-
looking statements inherently involve certain risks and uncertainties, although
they are based on our current plans or assessments that 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, forecast, estimated, anticipated, planned or budgeted
in such forward-looking statements include, among others, the following
possibilities: (i) an inability to satisfy all of the conditions to or otherwise
complete the Sale Transaction; (ii) an inability to launch or complete the
proposed tender offer/stock repurchases (including a determination by the
Company not to pursue such tender offer/stock repurchases or to change the
amount of such tender offer/stock repurchases); (iii) the inability of Edgewater
Technology, the Company's eSolutions division to achieve fiscal year 2000
revenues of $31 million, gross margins in the 50% range and EBITDA margins in
the mid-teen range; (iv) the inability of Edgewater Technology, the Company's
eSolutions division, to achieve 30% or higher revenue growth in fiscal 2001 and
related EBITDA margins in the low double digits in fiscal 2001; (v) changes in
the Company's stock price; (vi) changes in the Company's operating results;
(vii) changes in the estimated or projected capital requirements or competitive
and strategic positioning and growth goals of the Edgewater eSolutions
consultancy; (viii) inability to repurchase common stock on terms acceptable to
the Company; (ix) changes in industry trends, such as changes in the demand for
or supply of clinical trials support services, whether on a temporary or
permanent placement basis, or eSolutions services; (x) adverse developments
involving debt, equity, currency or technology market conditions; (xi) adverse
results in litigation matters; (xii) failure to obtain new customers or retain
significant existing customers; (xiii) loss of key executives; and/or (xiv)
changes in general economic and business conditions. Actual events or results
may differ materially from those discussed, contemplated, forecasted, estimated,
anticipated, planned or implied in the forward-looking statements as a result of
the
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various factors described above and those further set forth under the headings
"Management Discussion and Analysis - Special Note Regarding Forward Looking
Statements" in the Company's Quarterly Report on Form 10-Q filed with the
Securities & Exchange Commission on November 14, 2000 and under the heading
"Business- Factors Affecting Finances, Business Prospects and Stock Volatility"
in the Company's Form 10-K filed with the Securities and Exchange Commission on
March 20, 2000.
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