Data Dimensions reports third quarter results.

BELLEVUE, Wash.--(BUSINESS WIRE)--Oct. 31, 1996--

Third quarter net income was $211,000 on revenues of $4.0 million

Data Dimensions Inc. (NASDAQ:DDIM), the world's leading provider of Year 2000 (millennium) planning and update services, today announced financial results for the third quarter ended Sept. 30, 1996.

Revenues for the quarter were $4.0 million, a 160 percent increase from the same period a year ago. Net income was equal to $211,000, up from $56,000 last year, while earnings per share were 5 cents, compared to 2 cents per share reported on fewer shares in the same period last year.

Revenue for the nine months ended Sept. 30, 1996 was $9.6 million, compared with $3.9 million last year, an increase of 144 percent from a year ago, and net income rose 86 percent to $349,000, or 10 cents per share, compared with net income of $188,000, or 8 cents per share on fewer shares for the same period last year. Gross margin improved as a percent of revenue to 45 percent from 43 percent last year reflecting a shift in the sales mix toward higher-margin licensing revenue.

"We are pleased with our progress this past quarter and the improved financial results are indicative of the growing and positive response to our products and services for Year 2000 solutions," said Larry Martin, chairman and CEO of Data Dimensions.

"In the past quarter, we signed a number of new and significant contracts for Year 2000 services with large organizations including MCI and Frank Russell Co. We also introduced a new millennium product offering, ARDES 2K which, along with an accompanying licensing program, will be available to any organization to solve the millennium issue," he said. "Additionally, we added two new ARDES 2K licensees in the past quarter, Ascent Logic and Unysis South Pacific Division."

Martin noted that revenue improved during the quarter due to the increasing awareness of the Year 2000 issue, which in turn is creating greater demand for services and products to deal with the millennium problems.

"There are still a substantial number of companies, both domestic and international, that are just becoming aware of the problem and are looking for the best way to address the Year 2000, and they're beginning to understand that time is running out. The fact that Data Dimensions has created a leadership position in this category, and has invested significantly in products and consulting infrastructure will benefit us going forward," Martin said.

Net income per share for the quarter and nine months reflects the effect of a public offering of 1,380,000 shares of common stock, of which 1,331,666 shares were sold by the company and 48,334 shares were sold by selling shareholders. Shares outstanding and net income per share also were adjusted to reflect the effect of a 1-for-3 reverse stock split distributed on March 29, 1996.

Headquartered in Bellevue, Data Dimensions Inc. provides high-quality, knowledge-based and tools-assisted consulting services, including millennium update services based on the company's proprietary methodology, ARDES 2K(tm). The company began providing millennium consulting services in 1991 and has specialized exclusively in the service since 1993. The company's clients include multinational leaders in insurance, health care, manufacturing, financial services, public utilities and government. -0-

                        Data Dimensions Inc.
                   Condensed Statements of Income
          (Unaudited - In thousands, except per share data)

                           Three months ended     Nine months ended
                                Sept. 30,              Sept. 30,
                             1996       1995        1996     1995

Revenue                     $3,962     $1,524      $9,551   $3,912
Direct costs                 2,164        860       5,339    2,256
Gross margin                 1,798        664       4,212    1,656
General, selling & admin.
  exp.                       1,648        558       3,921    1,310
Income from operations         150        106         291      346
Other income (expense)         214        (50)        303     (158)
Income before taxes            364         56         594      188
Income taxes                   153          0         245        0
Net income                  $  211     $   56      $  349   $  188
Net income per share (1)    $  .05     $  .02      $  .10   $  .08
Weighted avg. shares
  outstanding (1)            3,931      2,488       3,395    2,475


(1) Adjusted to give effect to a 1-for-3 reverse stock split
and issuance of 1,331,666 of common shares pursuant to a common
stock offering on March 29, 1996.

CONTACT: Data Dimensions

Villette Nolon, 206/450-9965

or

Kaufer Miller Communications

John Snyder, 206/688-1000, [e-mail]