Exhibit 99.1
Digital Fusion Reports Third Quarter Results
HUNTSVILLE, Ala.--(BUSINESS WIRE)--Nov. 7, 2003--Digital Fusion,
Inc. (OTCBB:DIGF), a business and information technology (IT) services
provider, today announced financial results for the third quarter
ended September 30, 2003.
Financial Comparisons
For the quarter ended September 30, 2003, revenues were $1.7
million versus $2.1 million for the same quarter in the previous year.
The decrease in revenues during the third quarter 2003 compared to the
same period last year was primarily due to the reduction in IT
spending by our customers. Net loss for the quarter ended September
30, 2003 was ($34,000) versus ($261,000) for the same quarter in the
previous year. During the quarter ended September 30, 2003, accrued
liabilities were reduced $91,000 as part of the quarterly review
process. The net loss for the quarter ended September 30, 2003
excluding the liabilities reduction was ($125,000).
For the nine months ended September 30, 2003, revenues were $4.9
million versus $7.5 million for the nine-month period in the previous
year. The decrease in revenues during the nine months ended September
30, 2003 compared to the same period last year was primarily due to
the reduction in IT spending by our customers. Net loss for the nine
months ended September 30, 2003 was ($563,000) compared to net income
for the nine months ended September 30, 2002 of $1,016,000. During the
nine months ended September 30, 2002, the Company recorded a gain on
forgiveness of legacy debts of $1.6 million and reduced its severance
and restructuring accrual by $182,000. The net loss excluding these
items for the nine months ended September 30, 2002 was ($751,000).
Business Discussion
Revenues between the second and third quarter of 2003 were flat at
approximately $1.6 million. Consulting operating margins decreased
slightly from 27% to 26.4% between the second and third quarter of
2003. However, the month of September 2003 consulting operating margin
increased to 29%. Excluding the $91,000 gain from the accrued
liabilities reduction, selling, general and administrative expenses as
a percentage of revenue for the quarter ended September 30, 2003 fell
to 29% from 37% and 33% in the first and second quarter respectively.
Revenue from product sales through the company's General Services
Administration (GSA) schedule for the quarter ended September 30, 2003
increased 300% to $174,000 compared to the second quarter 2003. The
company expects to increase product revenue through its GSA schedule
and commercially in fiscal year 2004. The company sells help desk
management software to Information Technology buyers and follows up
these sales by introducing the new clients to its consulting services
offerings.
Management Comments
"I'm very pleased with Digital Fusion's continued operating
improvements and steady progress, particularly in the month of
September when we returned to profitability," said Nick Loglisci,
Chairman of the Board. "The priority of the management team is
properly set on increasing sales, keeping consultant utilization rates
high and containing costs."
"We are seeing growth in our commercial and government consulting
pipelines," said Roy Crippen, president and chief executive officer.
"We believe this is a result of our increased sales investment and,
more importantly, technology spending beginning to increase. Customers
are beginning to re-evaluate projects that were previously shelved due
to lack of funding."
About Digital Fusion
Digital Fusion is a business and information technology consulting
company helping its customers make the most of technology to access
business information, enhance the performance of their human resources
and meet their business needs.
Digital Fusion provides a range of services in business process
and application strategy and development, including Application
Development and Data Management, Systems Integration and IT Support.
Based in the eastern U.S., Digital Fusion has offices in Washington
D.C., Philadelphia, Orlando, Huntsville, and New Jersey. For
additional information about Digital Fusion visit
http://www.digitalfusion.com.
Forward Looking Statements. All statements other than statements
of historical fact included in this release are forward-looking
statements. When used in this release, words such as "anticipate,"
"believe," "estimate," "expect," "intend" and similar expressions, as
they relate to the Company or its management, as well as assumptions
made by and information currently available to the Company's
management, identify forward-looking statements. Actual results could
differ materially from those contemplated by the forward-looking
statements as a result of certain factors including, but not limited
to: the effect of business and economic conditions; the impact of
competitive products and pricing; and capacity and supply constraints
or difficulties. Such statements reflect the current views of the
Company with respect to future events and are subject to these and
other risks, uncertainties and assumptions relating to the operations,
results of operations, growth strategy and liquidity of the Company.
DIGITAL FUSION, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
September 30,
2003 December 31,
ASSETS (unaudited) 2002
------------- -------------
Current assets:
Cash and cash equivalents $ 285 $ 653
Accounts receivable (net of allowance
for doubtful accounts of $357 in
2003 and $325 in 2002) 891 978
Other current assets 55 87
------------- -------------
Total current assets 1,231 1,718
Property and equipment, net 36 185
Intangible assets, net 3,347 3,347
Other assets 12 28
------------- -------------
Total assets $ 4,626 $ 5,278
============= =============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 786 $ 930
Current maturities of long-term debt 611 808
Deferred revenue 21 21
------------- -------------
Total current liabilities 1,418 1,759
Interest payable - long term 27 86
Long-term debt, less current maturities 813 517
Pension obligation 280 280
------------- -------------
Total liabilities 2,538 2,642
------------- -------------
Stockholders' equity:
Common stock, $.01 par value, authorized
16,000,000 shares, 7,167,671 shares
issued and outstanding 72 72
Additional paid in capital 39,919 39,904
Accumulated deficit (37,903) (37,340)
------------- -------------
Total stockholders' equity 2,088 2,636
------------- -------------
Total liabilities and stockholders'
equity $ 4,626 $ 5,278
============= =============
DIGITAL FUSION, INC.
Condensed Consolidated Statements of Operations
For the three and nine months ended September 30, 2003 and 2002
(unaudited, in thousands, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
--------------------- ---------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
Revenues:
Consulting $ 1,484 $ 2,131 $ 4,672 $ 7,497
Product 174 - 232 -
---------- ---------- ---------- ----------
Total revenue 1,658 2,131 4,904 7,497
---------- ---------- ---------- ----------
Cost of services and
goods sold:
Consulting 1,092 1,696 3,577 5,771
Product 165 - 220 -
---------- ---------- ---------- ----------
Total cost of
services and goods
sold 1,257 1,696 3,797 5,771
---------- ---------- ---------- ----------
Gross profit 401 435 1,107 1,726
---------- ---------- ---------- ----------
Operating expenses:
Selling, general and
administrative 386 724 1,516 2,438
Severance and
restructuring - - - (182)
Gain on forgiveness of
debt - (46) - (1,585)
---------- ---------- ---------- ----------
Total operating
expenses 386 678 1,516 671
---------- ---------- ---------- ----------
Operating income
(loss) 16 (243) (408) 1,055
Interest expense, net 49 18 154 39
---------- ---------- ---------- ----------
Income (loss) before
income taxes (34) (261) (563) 1,016
Income tax benefit - - - -
---------- ---------- ---------- ----------
Net income (loss) $ (34) $ (261) $ (563) $ 1,016
========== ========== ========== ==========
Basic earnings (loss) per
share $ (0.00) $ (0.04) $ (0.08) $ 0.14
========== ========== ========== ==========
Basic weighted average
common shares
outstanding 7,168 7,164 7,168 7,164
========== ========== ========== ==========
Diluted earnings (loss)
per share $ (0.00) $ (0.04) $ (0.08) $ 0.13
========== ========== ========== ==========
Diluted weighted average
common shares
outstanding 7,168 7,164 7,168 7,693
========== ========== ========== ==========
CONTACT: Digital Fusion, Inc., Huntsville
Roy E. Crippen, 256/837-2620
rcrippen@digitalfusion.com