EX-99.1 4 a4881953-ex991.txt EXHIBIT 99.1 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) ========= ======= CONTACT: Digital Fusion, Inc., Huntsville Roy E. Crippen, 256-837-2620 rcrippen@digitalfusion.com