EXHIBIT 99.1
Digital Fusion Releases First Quarter 2005 Results
HUNTSVILLE, Ala.--(BUSINESS WIRE)--May 5, 2005--Digital Fusion,
Inc. (OTCBB:DIGF), an information technology ("IT") and engineering
services provider today announced financial results for the first
quarter ended March 31, 2005.
First Quarter 2005 Highlights
-- Revenue $4.4 million
-- Net income $93,000
-- Earnings per share $0.01
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA) $280,000
-- Completed Summit Research acquisition
Financial Comparisons
For the quarter ended March 31, 2005, revenues were approximately
$4.4 million versus approximately $1.5 million for the same quarter in
the previous year. The increase in revenues during the first quarter
2005 compared to the same period last year was primarily due to the
acquisition of Summit Research and growth in engineering services. Net
income for the quarter ended March 31, 2005 was approximately $93,000
compared to a net loss of approximately $90,000 for the same quarter
in the previous year. Diluted earnings per share for the quarter ended
March 31, 2005 were $0.01 compared to a diluted loss per share of
$0.01 for the previous year.
Business Discussion
On January 3, 2005 Digital Fusion completed the acquisition of
Summit Research Corporation, a privately held federal services company
headquartered in Huntsville, Alabama. Summit's market focus is
technical support services for the US Army Aviation and Missile
Command, Redstone Arsenal, AL. Summit has technical expertise in
various engineering disciplines including modeling & simulation,
hardware-in-the-loop testing, mechanical design & prototype
fabrication, information technology and information management
systems, program analysis, and associated technology transfer into
production automation processes.
Services revenues increased approximately $2.1 million in the
first quarter of 2005 compared to the fourth quarter of 2004 primarily
due to the acquisition of Summit Research and growth in engineering
services.
Revenue from product sales through the company's General Services
Administration (GSA) schedule for the quarter ended March 31, 2005
increased $229,000 to $437,000 compared to the fourth quarter of 2004.
The company sells help desk management software and application
security software to federal Information Technology buyers.
Management Comments
"We are extremely pleased with our financial performance this
quarter and look for continued improvement throughout the year," said
Roy Crippen, Chairman and chief executive officer. "The integration
between Summit and Digital Fusion went very smoothly and was completed
with no loss of employees or customers. I want to thank Mike Wicks and
the entire Summit team for their positive contributions in the
successful integration of Summit into Digital Fusion"
"We have a healthy backlog of business as well as a strong
pipeline of potential new business," said Gary Ryan, president. "We
saw steady improvement each month of the first quarter and I fully
expect this positive trend to continue."
About Digital Fusion
Digital Fusion is an information technology and engineering
services company that helps its customers make the most of technology
to meet their business needs. Digital Fusion's IT Services provides
solutions to both government and commercial customers, focused in the
following areas: Business Process Automation, Application Development
and Data Management, Application Security, Web Portals and Digital
Dashboards, System Integration and IT Support. Digital Fusion's
Engineering Services support a variety of customers with
state-of-the-art solutions that include: Computational
Aerodynamics/CFD; Optical Systems Design, Development and Test;
Thermo/Structural Dynamics; Modeling and Simulations;
Hardware-in-the-Loop Testing; Program Analysis; and Ground/Flight
Planning, Execution, and Data Analysis. Based in Huntsville AL,
Digital Fusion also has offices in Washington D.C., Orlando, 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 "project",
"anticipate," "believe," "estimate," "expect," "plan", "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. Similarly, statements herein that describe the Company's
business strategy, outlook, objectives, plans, intentions or goals are
also 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; capacity and supply constraints or difficulties,
the Company's dependence on continued funding of U.S. government
programs; contract procurement and termination risks; competitive
factors such as pricing pressures and/or competition to hire and
retain employees, and material changes in laws or regulations
applicable to the Company businesses. 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. These statements reflect the Company's
current beliefs and are based upon information currently available to
it. Be advised that developments subsequent to this release are likely
to cause these statements to become outdated with the passage of time.
DIGITAL FUSION, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share data)
March 31, December 31,
2005 2004
unaudited
------------ ------------
ASSETS
Current Assets
Cash and cash equivalents $1 $252
Accounts receivable
(net of allowance for doubtful accounts) 4,445 1,050
Unbilled revenue and other current assets 313 27
------------ ------------
Total Current Assets 4,759 1,329
Property and equipment, net 507 417
Prepaid acquisition costs and acquisition
deposit 285
Intangible assets, net 7,869 3,347
Other assets 22 13
------------ ------------
TOTAL ASSETS $13,157 $5,391
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $1,082 $609
Accrued compensation and related expenses 536 97
Deferred revenue 118 21
Current maturities of long-term debt 1,316 647
Other current liabilities 275 266
------------ ------------
Total Current Liabilities 3,327 1,640
Long-term debt, less current maturities 4,365 81
Pension obligation 302 302
------------ ------------
Total Liabilities 7,994 2,023
------------ ------------
Stockholders' Equity
Preferred Stock, $.01 par value,
authorized 1,000,000 shares, no shares
issued and outstanding - -
Common Stock, $.01 par value; authorized
16,000,000 shares, 10,800,548 and
9,721,244 shares issued and outstanding
at March 31, 2005 and December 31, 2004,
respectively 108 97
Additional paid in capital 43,741 42,050
Accumulated deficit (38,686) (38,779)
------------ ------------
Total Stockholders' Equity 5,163 3,368
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $13,157 $5,391
============ ============
DIGITAL FUSION, INC.
Condensed Consolidated Statements of Operations
For the three months ended March 31, 2005 and 2004
(unaudited, in thousands)
2005 2004
---------- ------------
Revenues
Services and fees $ 3,495 $ 1,268
Reimbursed costs 509 13
Product 437 205
---------- ------------
Total Revenues 4,441 1,486
---------- ------------
Cost of services and goods sold
Services 2,663 930
Reimbursed costs 476 13
Product 422 189
---------- ------------
Total cost of services and goods
sold 3,561 1,132
---------- ------------
Gross profit (loss) 880 354
Selling, general and administrative 638 410
---------- ------------
Operating income (loss) 242 (56)
---------- ------------
Other expenses:
Interest expense 47 34
Amortization of discount on debt and
intrinsic value of convertible debt 102 -
---------- ------------
Total other expenses 149 34
---------- ------------
Net income (loss) before income
taxes 93 (90)
Income tax benefit - -
---------- ------------
Net income (loss) $ 93 $ (90)
========== ============
Basic earnings (loss) per share $ 0.01 $ (0.01)
========== ============
Basic weighted average common shares
outstanding 10,446 7,168
========== ============
Dilute earnings (loss) per share $ 0.01 $ (0.01)
========== ============
Diluted weighted average common shares
outstanding 12,758 7,168
========== ============
Earnings before interest, income taxes, depreciation, and
amortization (EBITDA)
(unaudited in thousands)
EBITDA is not a measure of financial performance under United
States generally accepted accounting principles ("US GAAP") and should
not be considered as an alternative to net income, operating income or
any other performance measures derived in accordance with US GAAP or
as an alternative to cash flow from operating activities as a measure
of liquidity. Management believes EBITDA provides additional, useful
information regarding Digital Fusion's ability to meet our debt
service, capital expenditure and working capital requirements. EBITDA
is a traditional measure of a business' ability to generate cash flows
irrespective of financing costs and is presented as a supplemental
financial measurement in the evaluation of our business.
For the three
months ended
March 31,
------------------
2005 2004
--------- -------
Net income (loss) $ 93 $ (90)
Interest expense 47 34
Income tax expense - -
Depreciation 38 8
Amortization of discount on debt and
intrinsic value of convertible debt 102 -
--------- -------
EBITDA $ 280 $ (48)
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CONTACT: Digital Fusion, Inc., Huntsville
Roy E. Crippen, 256-837-2620
rcrippen@digitalfusion.com