Cambridge Technology Partners Announces Third Quarter 2000 Results; Global E-Solutions Revenue Reaches $97.1 Million for Quarter; Up 43% Year-Over-Year.

Business/Technology Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 25, 2000

Company Takes Steps to Accelerate Return to Profitability; Results

in One-Time Charge for Q3 2000

Cambridge Technology Partners (Massachusetts), Inc. (NASDAQ:CATP), a global e-Solutions provider, today announced 43% year-over-year revenue growth in e-Solutions to $97.1 million in the third quarter of 2000, up from $68.1 million in Q3 1999. E-Solutions accounted for nearly two thirds of the Company's revenues, which totaled $154.1 million for the quarter.

Cambridge also reported that it would take a one-time restructuring charge of $22.0 million in the third quarter to eliminate approximately 400 positions and reduce space requirements in both corporate headquarters and North American field locations. In addition, this charge is designed to take non-billable costs out of the organization.

Revenues for the third quarter of 2000 were $154.1 million versus $168.2 million for the same period of 1999 and $159.9 million for the second quarter of 2000. Revenues for the third quarter of 2000 were 8% lower than the same period of 1999. The impact of the strong U.S. dollar reduced Q3 `00 revenue by $7.2 million, or 4.3%, compared to Q3 1999. Revenues for the third quarter continued to be driven by increased demand for Cambridge's e-Solutions.

Net loss for the third quarter of 2000 was $27.8 million, or $.44 per share (basic and diluted) versus net income of $10.7 million, or $.18 per share (diluted) for the same period in 1999.

Loss from operations for the third quarter of 2000 was $48.5 million. This loss includes the one-time restructuring charge of $22.0 million as well as a $10.0 million provision for bad debts related primarily to dot-com clients. Loss from operations without these items would be $16.5 million.

Revenues for the first nine months of 2000 were $461.5 million versus $483.1 million for the same period in 1999. Revenues for the first nine months of 2000 were 4.5% lower than the same period of 1999. The impact of the strong U.S. dollar reduced 9-month revenue by $17.4 million, or 3.6%. Net loss for the first nine months was $43.1 million, or $.69 per share (basic and diluted) compared with net income of $19.4 million, or $.32 per share (diluted) for the same period in 1999.

"Our primary focus is on returning Cambridge to profitability as quickly as possible", said Jack Messman, President and Chief Executive Officer of Cambridge. "We believe that profits will be the most significant driver of market capitalization in the e-Services sector in 2001. We expect the restructuring charge and realignment of our cost structure will go a long way to reestablishing profitability at Cambridge."

"Our initiatives to improve employee engagement are beginning to pay off," Messman continued. "Employee turnover improved significantly this quarter to 26%, with September being 18%. This is especially good news for our clients because it translates into greater staff continuity on projects and better quality."

"Our transition to e-Solutions is almost complete. Our European business is 92% e-Solutions today and our North American business is now 71% e-Solutions. At current growth rates for e-Business, we expect to be substantially e-Solutions oriented by early next year," Messman added.

As expected, Cambridge's traditional services from custom client/server applications and implementations of software such as call centers and enterprise resource planning (ERP) applications continued to decline in revenue from $34.0 million in the second quarter of 2000 to $30.2 million in the third quarter.

Total costs and expenses for Q3 2000 were $202.6 million versus $156.8 million for the same period in 1999. Included in the $202.6 million of expenses was a $22.0 million restructuring charge and a $10.0 million reserve for bad debt.

On a strategic issue, last July Cambridge announced that it was considering alternatives to allow Cambridge Management Consulting (CMC), its UK-based management consulting unit, to operate more independently while maintaining a majority interest in the business. Part of the rationale for initiating this process was to create a more autonomous business unit, thereby positioning CMC for more rapid growth and enhancing its ability to attract and retain talent.

"Since the July announcement, we have completed much of the work necessary to restructure the ownership of the unit, although our efforts are not yet complete," Messman said. "In the near future, we expect to initiate communications with a discrete list of prospective private investors, which we hope will lead to a closing in the next 90 - 120 days. We are also considering the possibility of listing CMC on a European exchange for partial public ownership in mid-to-late 2001."

E-Business Projects in Q3 2000

During the third quarter of 2000, Cambridge partnered with well-recognized brand name clients to deploy e-Business solutions across the globe. A few of Cambridge's client engagements during the third quarter of 2000 included:

Fleet Capital Leasing ("FCL"), a strategic business unit of Fleet Capital Corporation and provider of direct equipment leasing, specialized leasing programs and global leasing services, engaged Cambridge Technology Partners, Inc. to provide an e-Market strategy. Cambridge's Digital Business Strategy group assisted FCL.

SITA is the world's leading provider of global telecommunications and information solutions to the air transport industry, serving over 700 members in 220 countries and territories, over the world's largest, most advanced integrated voice and data network. The company turned to Cambridge to implement an eCRM solution.

EPRI, a non-profit entity, was established in 1973 as a center for public interest energy and environmental research. EPRI's collaborative science and technology development program now spans nearly every area of power generation, delivery and use. The company recently engaged Cambridge in a Digital Business Strategy, which will enable EPRI to better serve its customers in the New Economy.

American Honda Motor Co., Inc., the North American sales and service operation for Honda of Japan, has chosen Cambridge to develop a customized implementation of Clarify to support its Customer Relationship Management System (CRMS). The custom application will enable Honda Customer Relations Specialists to effectively manage customer problems and questions regarding Honda products as well as technical questions and issues from Honda Dealers.

The six-month development of CRMS leverages Cambridge's Virtual Project Environment (VPE), and is based in Bangalore, India.

Cambridge was also given the American Honda Premier Partner Award in August, 2000. This award is presented annually to suppliers that embrace the Honda philosophy of exceeding customer expectations by demonstrating excellence in quality, service, cost effectiveness and partnering.

Interwoven Inc., the leading provider of enterprise-class content management software, selected Cambridge, based on its breadth of experience implementing BroadVision solutions, to develop the TeamSite BroadVision Interface 4.5 for its new product release.

Outlook for FY 2000/01

In the fourth Quarter of 2000, revenue is expected to increase 2%-3% year over year but decline 4%-5% sequentially, reflecting, in part, the reduction in dot-com business.

For the year 2001, Cambridge is budgeting its cost structure to be profitable even if the Company only achieves 10% top line revenue growth. The Company plans to make appropriate investments to stimulate growth and generate higher revenue. The Company's 2001 business plan includes the flexibility to increase spending if faster revenue growth occurs. Cambridge believes that actual revenue growth in 2001 could be as high as the 30%-40% industry growth rate now expected by Wall Street.

About Cambridge Technology Partners

Cambridge Technology Partners provides strategic and management consulting as well as systems integration services to transform its clients into e-Businesses. Working in collaboration with Global 1000 and high-velocity middle market companies, Cambridge combines a deep understanding of New Economy issues with integrated, end-to-end services, and a proven track record of shared risk and rapid, guaranteed delivery. Cambridge generated $628.1 million in revenue in 1999, with $243.3 million from its global e-Business solutions. Cambridge has approximately 4,000 employees and 53 offices worldwide. Cambridge is a Safeguard Scientifics (NYSE: SFE) partner company. Cambridge on the Web: (http://www.ctp.com).

FORWARD-LOOKING STATEMENTS

This Press Release includes forward-looking statements (statements that are not historical facts and relate to future performance), including statements about future strategies and financial expectations that involve risks and uncertainties. Forward-looking statements are neither promises nor guarantees and actual results may differ materially from those stated in any forward-looking statements based on a number of factors. These risks and uncertainties include, but are not limited to, the following: the success of executing the Company's planned transition to e-Business; the Company's reliance on key personnel to guide these efforts and its ability to attract and retain qualified employees; competitive forces in the labor market in which the Company participates; the Company's ability to execute on and realize the benefits of its cost reduction and budgeting initiatives; the Company's ability to win business in a competitive marketplace; the failure of industry growth rates to materialize as presented; the Company's ability to execute on its announced strategy for CMC; CMC's future financial performance; the reaction of the marketplace to the new strategic direction for CMC; general stock market and economic conditions, and other risks identified in the Company's SEC filings, including information under the heading "Forward-looking Statements" in its Form 10-K for the year ended December 31, 1999 and in the reports on Form 10-Q for the first and second quarters of 2000. Cambridge assumes no obligation to update the information contained in this Press Release.

- global revenue breakdown and financials follow -

          CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                  REVENUE SUMMARY BY LINE OF BUSINESS
                                3Q 2000

                                                 % Change  % Change
                                                  3Q99 to   2Q00 to
                 3Q99        2Q00       3Q00        3Q00     3Q00


E-Business     $ 44,244    $ 61,346   $ 60,680       37%       -1%


E-Integration  $ 23,812    $ 30,948   $ 36,388       53%       18%

E-Solutions    $ 68,056    $ 92,294   $ 97,068       43%        5%

Traditional    $ 68,026    $ 34,033   $ 30,193      -56%      -11%

Change
 Management    $ 32,153    $ 33,523   $ 26,809      -17%      -20%

Total Revenues $168,235    $159,850    $154,070      -8%       -4%


    The following table presents unaudited revenue data for the
periods indicated. This information was derived from management's
estimate of the allocation of net revenues among the revenue
categories of e-business, e-integration and change management
services. This table should be read in conjunction with the historical
financial information also presented in this press release. These
estimates are not necessarily indicative of results for any prior or
future periods.

          CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                 CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except per share data)
                              (unaudited)


                         Three Months Ended        Nine Months Ended
                            September 30,            September 30,
                           2000        1999         2000       1999


Revenues               $ 154,070    $ 168,235   $ 461,512    $ 483,104
Costs and expenses:
 Project costs            88,529       90,399     265,926      268,620
 General and
 administration           70,727       49,545     196,446      144,784
 Sales and marketing      21,303       16,841      61,750       48,650
 Restructuring costs      22,000         --        22,000         --
 Total operating
  expenses               202,559      156,785     546,122      462,054

Income/(loss) from
 operations              (48,489)      11,450     (84,610)      21,050

Other income
 (expense):
 Interest income, net      1,162          867       2,574        2,030
 Gain on investments       6,432        4,396       7,620        8,045
 Gain on sale of
 asset                      --           --         7,661         --
 Foreign exchange
 gain                         22          604         425          140
Total other income         7,616        5,867      18,280       10,215

Income (loss)
 before income taxes     (40,873)      17,317     (66,330)      31,265
Provision (benefit)
 for income taxes        (13,033)       6,581     (23,216)      11,881

Net income (loss)      $ (27,840)   $  10,736   $ (43,114)   $  19,384

Basic net income
 (loss) per share      $   (0.44)   $    0.18   $   (0.69)   $     .33

Diluted net income
 (loss) per share      $   (0.44)   $    0.18   $   (0.69)   $     .32

Weighted average
 number of common
 shares outstanding       62,721       60,209      62,473       59,738

Weighted average
 number of common
 and common equivalent
 shares outstanding       62,721       61,205      62,473       62,229


    Certain financial statement items have been reclassified to
conform to the current period's format.


          CAMBRIDGE TECHNOLOGY PARTNERS (MASSACHUSETTS), INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (in thousands)

                                 September 30,  December 31,
                                     2000       1999

                                  (unaudited)

Cash and cash equivalents            $ 84,807   $ 62,288
Investments held to maturity           30,355     28,659
Accounts receivable, net              126,900    126,842
Other current assets                   54,951     51,893

 Total current assets                 297,013    269,682

Property and equipment, net            44,675     53,127
Other assets                           21,223     44,865
Total assets                         $362,911   $367,674

Accrued restructuring costs          $ 13,128   $   --
Other current liabilities             110,111     90,535
 Total current liabilities            123,239     90,535

Other liabilities                       1,500        103
Total stockholders' equity            238,172    277,036
 Total liabilities and
 stockholders' equity                $362,911   $367,674