-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PbMmrU5zf8mTjZxmabSqTDjqivOAXlbZGOQt6/tUbXVbuMJnpMY3WDWUi8ckpxwm W7oT+nIRcuQHAITxYn09jg== 0000720671-96-000010.txt : 19960816 0000720671-96-000010.hdr.sgml : 19960816 ACCESSION NUMBER: 0000720671-96-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: HALIFAX CORP CENTRAL INDEX KEY: 0000720671 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 540829246 STATE OF INCORPORATION: VA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-08964 FILM NUMBER: 96614960 BUSINESS ADDRESS: STREET 1: 5250 CHEROKEE AVE CITY: ALEXANDRIA STATE: VA ZIP: 22312 BUSINESS PHONE: 7037502202 MAIL ADDRESS: STREET 1: 5250 CHEROKEE AVENUE CITY: ALEXANDRIA STATE: VA ZIP: 22312 FORMER COMPANY: FORMER CONFORMED NAME: HALIFAX ENGINEERING INC/VA DATE OF NAME CHANGE: 19911204 10-Q 1 HALIFAX CORPORATION FORM 10-Q JUNE 30, 1996 FORM 10Q -- QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel. No. 312905 eff. 4/26/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ( X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 ( )Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________________ to ___________________ Commission file Number 1-8964 Halifax Corporation (Exact name of registrant as specified in its charter) Virginia 54-0829246 (State or other jurisdiction of incorporation of organization) (IRS Employer Identification No.) 5250 Cherokee Avenue, Alexandria, VA 22312 (Address of principal executive offices) Registrant's telephone number, including area code (703) 750-2202 N/A (former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. (X)Yes ( )No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 1,311,359 as of June 13, 1996 HALIFAX CORPORATION CONTENTS PART I. FINANCIAL INFORMATION page Item 1. Financial Statements Condensed Consolidated Balance Sheets - June 30, 1996 (Unaudited) and March 31, 1996 Condensed Consolidated Statements of Income - Three Months Ended June 30, 1996 and 1995 (Unaudited) 4 Condensed Consolidated Statements of Stockholders' Equity - Three Months Ended June 30, 1996 and 1995 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows - Three Months Ended June 30, 1996 and 1995 (Unaudited) 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II OTHER INFORMATION Item 1.Legal Proceedings 9 Item 2.Changes in Securities 9 Item 3.Defaults Upon Senior Securities 9 Item 4.Submission of Matters to a Vote of Security Holders 9 item 5.Other Information 9 Item 6.Exhibits and Reports on Form 8-K 9 Item 1. Financial Statements HALIFAX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 30, 1996 AND MARCH 31, 1996
JUNE 30, 1996 MARCH 31, 1996* (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $ 241,000 $2,743,000 Trade accounts receivable 14,859,000 11,639,000 Inventory 5,311,000 2,792,000 Prepaid expenses and other current assets 1,469,000 814,000 TOTAL CURRENT ASSETS 21,880,000 17,988,000 PROPERTY AND EQUIPMENT, at cost less accumulated depreciation and amortization 5,930,000 4,527,000 INTANGIBLES AND OTHER ASSETS, net of accumulated amortization 2,902,000 2,313,000 TOTAL ASSETS $ 30,712,000 $ 24,828,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 8,375,000 $11,508,000 Current portion of long-term debt 605,000 556,000 TOTAL CURRENT LIABILITIES 8,980,000 12,064,000 LONG-TERM DEBT AND OTHER LIABILITIES 11,763,000 3,980,000 TOTAL LIABILITIES 20,743,000 16,044,000 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common Stock 519,000 518,000 Additional paid-in capital 4,226,000 3,401,000 Retained earnings 5,437,000 5,253,000 10,182,000 9,172,000 Less treasury stock - at cost 213,000 388,000 STOCKHOLDERS' EQUITY 9,969,000 8,784,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,712,000 $ 24,828,000 *Condensed from March 31, 1996 Audited Financial Statements. See Form 10-K filed June 28, 1996. See notes to Financial Statements.
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE THREE MONTHS ENDED JUNE 30, 1996, AND 1995 (Unaudited)
Three Months Ended June 30 1996 1995 Revenues $ 15,640,000 $ 8,946,000 Operating costs and expenses: Cost of services 12,651,000 7,717,000 Selling, general and administrative 2,341,000 812,000 Total operating costs and expenses 14,992,000 8,529,000 Operating income 648,000 417,000 Interest expense 213,000 108,000 Income before income taxes 435,000 309,000 Income taxes 166,000 121,000 Net income $ 269,000 $ 188,000 Net income per common share $ .21 $ .16 Weighted average number of common shares outstanding 1,309,612 1,180,329 See notes to Financial Statements.
HALIFAX CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
Common Stock Additional Treasury Stock Paid-In Retained Shares Par Value Capital Earnings Shares Cost Total Balance April 1, 1996 1,480,015 $518,000 $3,401,000 $5,253,000 311,786 $(388,000) $8,784,000 Cash Dividends - - - ( 85,000) - - ( 85,000) Net Income - - - 269,000 - - 269,000 Stock Options 3,500 1,000 22,000 - - - 23,000 CMSA Acq. - - 803,000 - (139,630) 175,000 978,000 Balance June 30, 1996 1,483,515 $ 519,000 $4,226,000 $5,437,000 172,156 $(213,000) $ 9,969,000 Balance April 1, 1995 1,480,015 $518,000 3,401,000 $4,795,000 299,686 $(313,000) $8,401,000 Cash Dividends - - - ( 76,000) - - ( 76,000) Net Income - - - 188,000 - - 188,000 Balance June 30, 1995 1,480,015 $ 518,000 $3,401,000 $4,907,000 299,686 $(313,000) $8,513,000 See notes to Financial Statements.
HALIFAX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995 (Unaudited)
Three Months Ended June 30 1996 1995 Cash flows from operating activities: Net income $ 269,000 $ 188,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 257,000 145,000 Decrease in accounts receivable 369,000 1,954,000 Decrease in inventory 34,000 360,000 Decrease (increase) in other assets (587,000) 159,000 (Decrease) in accounts payable and accrued expenses (10,413,000) (1,573,000) Total adjustments (10,340,000) 1,045,000 Net cash (used) provided by operating activities (10,071,000) 1,233,000 Cash flows from investing activities: Acquisition of property and equipment (140,000) (56,000) Net cash used in investing activities (140,000) (56,000) Cash flows from financing activities: Proceeds from borrowing of long-term debt 12,199,000 2,108,000 Retirement of long-term debt (4,429,000) (2,795,000) Cash dividends paid (85,000) (76,000) Stock options exercised 24,000 - Net cash provided (used) by financing activities 7,709,000 (763,000) Net (decrease) increase in cash (2,502,000 414,000 Cash beginning of period 2,743,000 18,000 Cash end of period $ 241,000 $ 432,000 See notes to Financial Statements.
Halifax Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Financial Statements Note A - Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended June 30, 1996 are not necessarily indicative of the results that maybe expected for the year ending March 31, 1997. For further information refer to the consolidated financial statements and footnotes thereto included in the Halifax Corporation Annual Report on Form 10-K for the year ended March 31, 1996. Note B - Acquisition In accordance with a Plan of Merger ("Plan") which was duly adopted by the board of directors of both parties to the merger, CMS Automation, Inc. ("CMS"), a Virginia corporation, merged into CMSA Acquisition Corporation ("CMSA"), a Virginia corporation wholly owned by Halifax Corporation, a Virginia corporation. CMS merged into CMSA on the following basis. Pursuant to the Plan, each issued and outstanding share of CMS common stock was converted into, and became exchangeable for, the number of sharesof validly issued, fully paid and nonassessable common stock of Halifax equal to aconversion ratio meaning a fraction, the numerator of which is 139,630 and the denominator of which is equal to the sum of the number of shares of CMS issued and utstanding on the effective date of the merger plus the number of shares that would be represented by the conversion of $450,000 worth of debt to equity. In this regard, CMS shareholders who held promissory notes of CMS in the amount of $450,000 converted said debt to equity in CMS. In addition to the initial issuance of 139,630 shares of Halifax stock to CMS shareholders which was based on the net equity value of CMS, Halifax stock will be awarded annually for three (3) years subsequent of the merger to the CMS shareholders on a pro-rate basis, excluding Halifax stock issued as a result of the conversion of debt to equity, having a value equal to one-third of the net after tax income of CMSA operating as a wholly owned subsidiary of Halifax. The assets acquired included accounts receivable and the inventory and equipment used in conducting and operating the business of CMS which consists of computer systems integration including wide area and local area networking, consulting, application development and training. Closing of the transaction took place on April 1, 1996 with a Certificate of Merger issued by the State Corporation Commission of Virginia effective April 9, 1996. Results of CMSA operations have been included since the date of the transactions. Note C - Pro Forma Financial Information The following unaudited pro forma combined summary statement of operations information presents the historical results of operation of the Company and CMSA for the three month periods ended June 30, 1996 and 1995, with pro forma adjustments as if the acquisition transaction had been consummated as of the beginning of the periods presented. The pro forma information is based upon certain estimates and assumptions the management of the Company believes are reasonable in the circumstances. The unaudited pro forma information is not necessarily indicative of what the results of operations actually would have been if the transaction had occurred on the date indicated. Moreover, they are not intended to be indicative of future results of operations.
Pro Forma Information Three Months Ended June 30, 1996** 1995 Revenue $ 15,640,000 $ 13,645,000 Net Income $ 269,000 $ 187,000 Earnings Per common Share $ .21 $ .14 Weighted Average Number of Common Share Outstanding 1,309,612 1,319,959 ** Actual Results for the period
Note D - Contingent Matters The Company is a co-defendant or is defendant in various lawsuits. The Company provides for costs related to contingencies when a loss is probable and the amount is reasonably determinable. In the opinion of management, based on advice of counsel, that the ultimate resolution of any contingencies, to the extent not previously provided for, will not have a material adverse effect on the financial condition of the Company. However, depending on the amount and timing of an unfavorable resolution of these contingencies, it is possible that the Company's future results of operation or cash flows could be materially affected in a particular quarter. Note E - New Accounting Pronouncements The Company adopted Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of," effective April 1, 1996. SFAS No. 121 requires that certain long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Additionally, SFAS No. 121 requires that certain long-lived assets to be disposed of be reported at the lower of carrying amount or fair value less cost to sell. The adoption of this standard did not have a material effect on the Company's consolidated earnings and financial condition. Item 2 Managements' Discussion and Analysis of Financial Conditions and Results of Operations Results of Operations Revenues for the first quarter of fiscal 1997 of $15,640,000 represent an increase of approximately $6,694,000 or 75% over those in the first quarter of FY 1996. The increase was due largely to the acquisition of CMSA although 18% of the growth came from existing lines of business. Costs of services, as a percentage of revenue, decreased from 86% in the first quarter of 1996 to 81% in the first quarter of FY 1997. Improvement in this margin resulted from the combination of a different cost mix at CMSA. Selling, general and administrative expenses as a percentage of revenue increased from 9% in the first quarter of fiscal 1996 to 15% in the first quarter of FY 1997. This increase also resulted from the combination of the different cost mix of CMSA. Net income for the quarter of $269,000 or 21 cents per share represents an increase over the first quarter of FY 1995 of $81,000 and 5 cents per share or 43% and 31% respectively. Interest expense in both periods was 1% of revenue. This relationship was maintained in FY 1997 by combined borrowing under the Company's new borrowing agreement representing significant interest rate reductions over CMSA's prior credit. Financial Condition The financial condition of the Company remains strong with working capital of $12,900,000 and a current ratio of 2.43:1. Liquidity and Sources of Capital Net cash outflows from operations were $10,071,000 for the first quarter of FY 1997 as compared with net cash inflows of $1,233,000 in the comparable period of FY 1996. The paydown of accrued liabilities for a large hardware delivery order made in the fourth quarter of FY96 accounted for the significant outflow of cash in the first quarter of FY 1997. Long-term debt and cash balances provided the financing for this significant reduction of current accounts payable. At FY end 1996, the Company's Long-term debt had been significantly reduced and cash balances increased by prepayments received for the aforementioned hardware delivery order. The Company expects that cash generated from operations and the Company's line of credit will be sufficient to meet its normal operating and dividend requirements in the foreseeable future. Part II. Other Information Item 1. Legal Proceedings - Not applicable Item 2. Changes in Securities - Not applicable Item 3. Defaults upon Senior Securities - Not applicable Item 4. Submission of Matters to a Vote of Security Holders - Not applicable Item 5. Other Information - Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits - Not applicable (b) Reports on Form 8-K - Reports on Form 8-K disclosing the acquisition of CMS Automation, Inc. ("CMSA") were filed on April 15, 1996 and June 17, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HALIFAX CORPORATION (Registrant) Date: August 14, 1996 By: s/Howard C. Mills Howard C. Mills President Date: August 14, 1996 By: s/John D. D'Amore John D. D'Amore Vice President & Controller For a menu of Halifax Corporation news releases available by fax 24 hours (no charge) or to retrieve a specific release, please call 1-800-758-5804, ext. 391950, or access the address http://www.prnewswire.com on the Internet. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HALIFAX CORPORATION (Registrant) Date: By: Howard C. Mills President Date: By: John D. D'Amore Vice President & Controller For a menu of Halifax Corporation news releases available by fax 24 hours (no charge) or to retrieve a specific release, please call 1-800-758-5804, ext. 391950, or access the address http://www.prnewswire.com on the Internet. EX-27 2 10Q-JUNE-1996
5 10Q-JUNE-1996 1 0 MAR-31-1997 APR-1-1996 JUN-30-1996 3-MOS 1 241,000 0 14,859,000 0 5,311,000 21,880,000 5,930,000 0 30,712,000 8,980,000 0 0 0 519,000 9,450,000 30,712,000 15,640,000 15,640,000 12,651,000 14,992,000 0 0 213,000 435,000 166,000 269,000 0 0 0 269,000 .21 .21
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