EXHIBIT 99.7
Digital Fusion Reports Second Quarter Results
HUNTSVILLE, Ala.--(BUSINESS WIRE)--Aug. 13, 2004--Digital Fusion,
Inc. (OTCBB:DIGF), a business and information technology (IT) services
provider, today announced financial results for the second quarter
ended June 30, 2004.
Financial Comparisons
For the quarter ended June 30, 2004, revenues were $1.6 million
versus $1.6 million for the same quarter in the previous year. Net
loss for the quarter ended June 30, 2004 was $233,000 compared to a
net loss of $164,000 for the same quarter in the previous year.
For the six months ended June 30, 2004, revenues were $3.1 million
versus $3.2 million for the six-month period the previous year. Net
loss for the six months ended June 30, 2004 was $323,000 compared to
net loss for the six-month period the previous year of $530,000.
Business Discussion
Consulting revenues were down approximately $100,000 in the second
quarter of 2004 compared to the first quarter primarily due to planned
reductions in spending by the company's historically largest customer.
Revenue from that customer for the quarter ended June 30, 2004 was
$189,000 verses $461,000 for the same quarter the previous year.
Consulting operating margins decreased to 17.8% in second quarter 2004
compared to 26.4% in the first quarter because of reduced consultant
utilization.
Revenue from product sales through the company's General Services
Administration (GSA) schedule for the quarter ended June 30, 2004
increased $266,000 to $471,000 compared to the first quarter of 2004.
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.
Debt Restructuring
During the quarter ended June 30, 2004, Digital Fusion fully
redeemed approximately $560,000 of secured convertible debt and
entered into a secured revolving line of credit with First Commercial
Bank in Huntsville, Alabama, an affiliate of Synovus Financial Corp.
(NYSE:SNV). The First Commercial Bank line of credit has an interest
rate of prime plus one percent and is secured by Digital Fusion's
receivables and certain guarantees. The redeemed secured convertible
debt had an interest rate of ten percent and certain conversion rights
on registered Digital Fusion common stock at an average price
substantially below the current trading range.
Management Comments
"Our dependence on what had historically been our largest customer
is gone," said Roy Crippen, chief executive officer. "We have
successfully transitioned our focus and expertise to high-end
application consulting for both the commercial and government markets.
We expect the results of our ongoing strategic realignment to yield
improved revenue and earnings during the fourth quarter of this year."
"The strategic plans we put into place the past few months have
begun to produce opportunities for top line growth," said Gary Ryan,
president. "Our major initiative for the fourth quarter of this year
is to broaden our high-end service offerings to include engineering
services that support federal programs."
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)
June 30, December 31,
2004 2003
ASSETS unaudited
---------- ------------
Current assets:
Cash and cash equivalents $ 444 $ 419
Accounts receivable (net of allowance for
doubtful accounts of $90 in 2004 and 2003) 1,026 737
Other current assets 83 39
---------- ------------
Total current assets 1,553 1,195
Property and equipment, net 20 29
Intangible assets, net 3,347 3,347
Other assets 13 13
---------- ------------
Total assets $ 4,933 $ 4,584
========== ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 834 $ 658
Current maturities of long-term debt 875 46
Deferred revenue 21 21
---------- ------------
Total current liabilities 1,730 725
Interest payable - long term 62 39
Long-term debt, less current maturities 389 1,269
Pension obligation 295 295
---------- ------------
Total liabilities 2,476 2,328
---------- ------------
Stockholders' equity:
Common stock, $.01 par value, authorized
16,000,000 shares, 7,984,904 issued and
outstanding 80 72
Additional paid in capital 40,434 39,919
Accumulated deficit (38,057) (37,735)
---------- ------------
Total stockholders' equity 2,457 2,256
---------- ------------
Total liabilities and stockholders'
equity $ 4,933 $ 4,584
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DIGITAL FUSION, INC.
Condensed Consolidated Statements of Operations
For the three and six months ended June 30, 2004 and 2003
(unaudited, in thousands, except per share amounts)
Three months Six months
ended June 30, ended June 30,
-------------- ---------------
2004 2003 2004 2003
------ ------ ------ -------
Revenues:
Consulting $1,165 $1,576 $2,446 $ 3,188
Product 471 58 676 58
------ ------ ------ -------
Total revenue 1,636 1,634 3,122 3,246
------ ------ ------ -------
Cost of services and goods sold:
Consulting 959 1,151 1,902 2,485
Product 444 55 633 55
------ ------ ------ -------
Total cost of services and goods
sold 1,403 1,206 2,535 2,540
------ ------ ------ -------
Gross profit 233 428 587 706
------ ------ ------ -------
Operating expenses:
Selling 93 72 190 181
General & Administrative 334 467 647 950
------ ------ ------ -------
Total operating expenses 427 539 837 1,131
------ ------ ------ -------
Operating income (loss) (194) (111) (236) (425)
Interest expense, net 39 53 73 105
------ ------ ------ -------
Income (loss) before income taxes (233) (164) (323) (530)
Income tax benefit - - - -
------ ------ ------ -------
Net income (loss) $ (233) $ (164) $ (323) $ (530)
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Basic earnings (loss) per share $(0.03) $(0.02) $(0.04) $ (0.07)
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Basic weighted average common shares
outstanding 7,985 7,168 7,985 7,168
====== ====== ====== =======
Diluted earnings (loss) per share $(0.03) $(0.02) $(0.04) $ (0.07)
====== ====== ====== =======
Diluted weighted average common shares
outstanding 7,985 7,168 7,985 7,168
====== ====== ====== =======
CONTACT: Digital Fusion, Inc., Huntsville
Roy E. Crippen, 256-837-2620
rcrippen@digitalfusion.com