Exhibit 99.1
Digital Fusion Releases Fourth Quarter and Year 2005 Results; Revenue Increased
281% over the Same Quarter Last Year
HUNTSVILLE, Ala.--(BUSINESS WIRE)--Feb. 17, 2006--Digital Fusion,
Inc. (OTCBB: DIGF), an information technology ("IT"), research and
engineering, and acquisition and business support services provider
today announced financial results for the fourth quarter and year
ended December 31, 2005.
2005 Highlights
-- Year ended 2005 revenue of $20.9 million
-- Year ended 2005 net income of $7,000
-- Increased revenue for year ended 2005 of $14.2 million over
prior year
-- Earnings before interest, taxes, depreciation and amortization
(EBITDA) of $1,050,000
-- First profitable year since Digital Fusion became a public
company
Financial Comparisons
For the quarter ended December 31, 2005, revenues were $6.1
million compared to $5.8 million for the third quarter 2005 and $1.6
million for the same quarter in the previous year. The increase in
revenues during the fourth quarter 2005 compared to the prior quarter
was primarily due to growth in services revenue resulting from an
increase in the number of billable employees. The increase in revenues
during the fourth quarter 2005 compared to the same period last year
was primarily due to growth associated with the startup of the
contract with NASA's Marshall Space Flight center, growth in
engineering services and the acquisition of Summit Research. Net loss
for the quarter ended December 31, 2005 was $189,000 compared to a net
loss of $394,000 for the same quarter in the previous year. Loss per
share for the quarter ended December 31, 2005 was $0.02 compared to a
loss per share of $0.04 for the same quarter in the previous year. For
the year ended December 31, 2005, revenues were $20.9 million compared
to $6.8 million for the same period last year. The increase in
revenues during the year ended December 31, 2005, compared to the same
period last year was primarily due to growth in engineering services
and the acquisition of Summit Research. Net income for the year ended
December 31, 2005 was $7,000 compared to a net loss of $1,044,000 for
the same period in the previous year. Diluted income per share for the
year ended December 31, 2005 was $0.00 compared to a loss per share of
$0.13 for the previous year.
Business Discussion
Services revenue increased approximately $915,000 in the fourth
quarter of 2005 compared to the third quarter of 2005. The increase in
services revenues was primarily related to increases in the number of
billable employees. Reimbursed costs revenue increased approximately
$198,000 in the fourth quarter of 2005 compared to the third quarter
of 2005. The increase in reimbursed costs revenues was primarily
related to increases in billable expenses. Product revenue decreased
approximately $852 in the fourth quarter of 2005 compared to the third
quarter of 2005. Product revenue is cyclical and typically stronger in
the company's third quarter, which coincides with the government's
fiscal year-end.
Fourth quarter operating profit was negatively affected by the
holidays. Services revenue has historically been lower during the
fourth quarter as a result of holidays and vacations.
Management Comments
"We are pleased with our financial performance this year and
expect continued improvement throughout 2006," said Lt. Gen. (Ret.)
Frank Libutti, chairman of the board and chief executive officer. "We
had solid revenue growth in our core services business for every
quarter of 2005 and our strategy is working. We continue to leverage
our capabilities and expand our customer base."
"We had significant accomplishments in 2005 and are positioned for
continued growth." said Gary Ryan, president. "Our service revenues
were up 22.5% from the previous quarter and we continue to add
billable employees. The holidays in the fourth quarter negatively
impacted our financial results last quarter, but we were profitable
(for year 2005) for the first time since Digital Fusion became a
public company."
About Digital Fusion
Digital Fusion, Inc., headquartered in Huntsville, Alabama, is an
information technology, research and engineering, and acquisition and
business support services company that helps its customers make the
most of technology to meet their business needs. Digital Fusion
provides state-of-the-art solutions to both government and commercial
customers. Digital Fusion's core competencies are focused in the
following broad areas: Application Development, Architecture and
Security; Network Security; Data Management and Business Intelligence;
System Migration and Integration; Sensor Systems Development and
Analysis; Aerodynamic Design, Analysis, and Support;
Thermal-Structural Modeling; Test and Evaluation; Systems Engineering;
Modeling and Simulation; Control System Design and Analysis;
Mechanical Design and Analysis; and Program Management Support. 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)
December December
30, 31,
2005 2004
(Unaudited)
------------ --------
ASSETS
Current Assets:
Cash and cash equivalents 1 252
Short-term investment $ 66 $ -
Accounts receivable (net of allowance
for doubtful accounts of $26 and $54
for 2005 and 2004, respectively) 5,277 1,050
Unbilled receivables 256 -
Prepaid expenses and other current assets 70 27
------------ --------
Total current assets 5,670 1,329
Property and equipment, net of accumulated
depreciation of $1,111 for 2005 and $952
for 2004 492 417
Prepaid acquisition costs and acquisition
deposit - 285
Goodwill 5,861 3,347
Purchased intangible assets, net 1,634 -
Other assets 18 13
------------ --------
Total assets $ 13,675 $ 5,391
============ ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 3,041 $ 647
Accounts payable 1,121 609
Deferred revenue 212 21
Accrued compensation and related expenses 1,470 97
Other current liabilities 71 266
------------ --------
Total current liabilities 5,915 1,640
Long-term debt, less current maturities 1,685 81
Pension obligation 341 302
------------ --------
Total liabilities 7,941 2,023
------------ --------
Stockholders' Equity:
Preferred Stock - $.01 par value;
authorized 1,000 shares, no shares
issued and outstanding - -
Common Stock - $.01 par value; authorized
30,000 shares; 11,247 and 9,721 shares
issued and outstanding at December 31,
2005 and December 31, 2004, respectively 112 97
Additional paid in capital 44,393 42,050
Accumulated deficit (38,771) (38,779)
------------ --------
Total stockholders' equity 5,734 3,368
------------ --------
Total liabilities and stockholders'
equity $ 13,675 $ 5,391
============ ========
DIGITAL FUSION, INC.
Condensed Consolidated Statements of Operations
For the quarter and year ended December 31, 2005 and 2004
(unaudited, in thousands except share data)
Fourth quarter
ended Year ended
December 31, December 31,
------- ------ ------- -------
2005 2004 2005 2004
------- ------ ------- -------
Revenues
Services and fees $ 4,975 $1,206 $16,082 $ 4,343
Reimbursed costs 1,013 187 3,006 648
Product 111 208 1,839 1,775
------- ------ ------- -------
Total Revenues 6,099 1,601 20,927 6,766
------- ------ ------- -------
Cost of services and goods sold
Services 4,252 1,287 12,857 3,814
Reimbursed costs 1,024 151 2,896 521
Product 106 195 1,714 1,673
------- ------ ------- -------
Total cost of services and goods
sold 5,382 1,633 17,467 6,008
------- ------ ------- -------
Gross profit 717 (32) 3,460 758
Selling, general and administrative 735 346 2,660 1,655
------- ------ ------- -------
Operating income (loss) (18) (378) 800 (897)
Other income (expenses):
Interest expense, net (49) (16) (186) (147)
Other income 67 - 88 -
Amortization of intangible assets (107) - (308) -
Amortization of discount on debt and
intrinsic value of convertible debt (82) - (387) -
Total other expenses (171) (16) (793) (147)
------- ------ ------- -------
Net income (loss) before income
taxes (189) (394) 7 (1,044)
Income tax benefit - - - -
------- ------ ------- -------
Net income (loss) $ (189)$ (394)$ 7 $(1,044)
======= ====== ======= =======
Basic earnings (loss) per share $ (0.02)$(0.04)$ 0.00 $ (0.13)
======= ====== ======= =======
Basic weighted average common shares
outstanding 11,093 9,294 10,868 8,025
======= ====== ======= =======
Diluted earnings (loss) per share $ (0.02)$(0.04)$ 0.00 $ (0.13)
======= ====== ======= =======
Diluted weighted average common shares
outstanding 11,093 9,294 13,071 8,025
======= ====== ======= =======
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.
Fourth quarter
ended Year ended
December 31, December 31,
------------- --------------
2005 2004 2005 2004
----- ----- ------ -------
Net income (loss) $(189) $(394) $ 7 $(1,044)
Interest expense 49 16 186 147
Income tax expense - - - -
Depreciation and amortization 44 36 162 99
Amortization of intangible assets 107 - 308 -
Amortization of discount on debt and
intrinsic value of convertible debt 82 - 387 -
----- ----- ------ -------
EBITDA $ 93 $(342) $1,050 $ (798)
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CONTACT: Digital Fusion Inc., Huntsville
Elena Crosby, 256-837-2620
ir@digitalfusion.com