-----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, OSqCFWQWzQIPlExCdk+PBaQIv1emj/jPVWSzS4WMUfIoG6j7jH/WYb7JKZOM8Fe1 63+KQVQkdT08WS1ssmVcrw== 0000720671-96-000002.txt : 19960216 0000720671-96-000002.hdr.sgml : 19960216 ACCESSION NUMBER: 0000720671-96-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 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: 96518329 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 December 31, 1995 FORM 10Q -- QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel. No. 34-26589. eff. 4/12/89.) 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 period ended December 31, 1995 ( ) 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. 1,168,229 HALIFAX CORPORATION CONTENTS PART I. FINANCIAL INFORMATION page Item 1. Financial Statements Condensed Consolidated Balance Sheets - December 31, 1995 (Unaudited) and March 31, 1995 3 Condensed Consolidated Statements of Income - Three and Nine Months Ended December 31, 1995 and 1994 (Unaudited) 4 Condensed Consolidated Statements of Stockholders' Equity - Nine Months Ended December 31, 1995 and 1994 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows - Nine Months Ended December 31, 1995 and 1994 (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. Default Upon Senior Securities 9 Item 4. Submission of Matters for a Vote of Security Holders 9 item 5. Other Information 9 Item 6. Exhibits and Reports on Form 8-K 9 HALIFAX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND MARCH 31, 1995
DECEMBER 31, 1995 MARCH 31, 1995* (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $554,000 $18,000 Trade accounts receivable 11,646,000 11,077,000 Inventory 3,041,000 3,480,000 Prepaid expenses and other current assets 473,000 781,000 TOTAL CURRENT ASSETS 15,714,000 15,356,000 PROPERTY AND EQUIPMENT, at cost less accumulated depreciation and amortization 4,615,000 4,717,000 INTANGIBLES AND OTHER ASSETS, net of accumulated amortization 2,112,000 2,034,000 TOTAL ASSETS $2,441,000 $22,107,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $4,734,000 $5,916,000 Current portion of long-term debt 556,000 595,000 TOTAL CURRENT LIABILITIES 5,290,000 6,511,000 LONG-TERM DEBT 8,648,000 7,195,000 TOTAL LIABILITIES 3,938,000 13,706,000 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common Stock 518,000 518,000 Additional paid-in capital 3,401,000 3,401,000 Retained earnings 4,972,000 4,795,000 8,891,000 8,714,000 Less treasury stock - at cost 388,000 313,000 STOCKHOLDERS' EQUITY 8,503,000 8,401,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $22,441,000 $22,107,000 *Condensed from March 31, 1995 Audited Financial Statements
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME For The Three and Nine Months Ended December 31, 1995 and 1994 (Unaudited)
Three Months Ended Nine Months Ended December 31 December 31 1995 1994 1995 1994 Revenues $11,217,000 $ 9,510,000 $29,239,000 $34,219,000 Operating costs and expenses: Cost of Services 9,874,000 8,278,000 25,422,000 30,523,000 Selling, general and administrative expenses 858,000 722,000 2,473,000 2,198,000 Total operating costs and expenses 10,732,000 9,000,000 27,895,000 32,721,000 Operating income 485,000 510,000 1,344,000 1,498,000 Litigation expense 34,000 - 294,000 - Interest expense 137,000 163,000 380,000 497,000 Income before income taxes 314,000 347,000 670,000 1,001,000 Income taxes 123,000 138,000 264,000 390,000 Net Income $ 191,000 $ 209,000 $ 406,000 $ 611,000 Net income per common share: $ 0.16 $ 0.18 $ 0.35 $ 0.51 Weighted average number of common shares outstanding 1,168,229 1,184,396 1,172,262 1,192,785 See notes to consolidated financial statements.
HALIFAX CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (Unaudited)
Common Stock Additional Treasury Stock Paid-In Retained Shares Par Value Capital Earnings Shares Cost Total Balance April 1, 1995 1,480,015 $518,000 $3,401,000 $4,795,000 299,686 $(313,000) $8,401,000 Cash Dividends - - - (229,000) - - (229,000) Purchase of Treasury Stock - - - - 12,100 (75,000) (75,000) Net Income - - - 406,000 - - 406,000 Balance December 31, 1995 1,480,015 $518,000 $3,401,000 $4,972,000 311,786 (388,000) $8,503,000 Balance April 1, 1994 1,480,015 $518,000 $3,401,000 $4,240,000 282,586 $(193,000) $7,966,000 Cash Dividends - - - (226,000) - - (226,000) Purchase of Treasury Stock 17,100 (120,000) (120,000) Net Income - - - 611,000 - - 611,000 Balance December 31, 1994 1,480,015 $518,000 $3,401,000 $4,625,000 299,686 $(313,000) $8,231,000
HALIFAX CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 1995 AND 1994 (Unaudited)
Nine Months Ended December 31 1995 1994 Cash flows from operating activities: Net income $406,000 $611,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 443,000 431,000 Decrease (Increase) in accounts receivable (569,000) 3,444,000 Decrease in inventory 439,000 746,000 Decrease in other assets 106,000 165,000 (Decrease) in accounts payable and accrued expenses (1,182,000) (2,362,000) Total adjustments (763,000) 2,424,000 Net cash provided (used) by operating activities (357,000) 3,035,000 Cash flows from investing activities: Acquisition of property and equipment (219,000) (302,000) Proceeds from sale of property and equipment 2,000 - Net cash used in investing activities (217,000) (302,000) Cash flows from financing activities: Proceeds from borrowing of long-term debt 12,587,000 14,770,000 Retirement of long-term debt (11,173,000) (17,232,000) Cash dividends paid (229,000) (226,000) Purchase of treasury stock (75,000) (120,000) Proceeds from sale of stock upon exercise of stock options - - Net cash (used) provided by financing activities 1,110,000 (2,808,000) Net decrease in cash 536,000 (75,000) Cash beginning of period 18,000 509,000 Cash end of period $554,000 434,000
Halifax Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) Condensed Consolidated Financial Statements 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 and nine month periods ended December 31, 1995 are not necessarily indicative of the results that may be expected for the year ended March 31, 1996. 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, 1995. Managements' Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net revenues increased 18% in the third quarter of fiscal 1996 to $11.2 million, up $1.7 million over the third quarter of fiscal 1995. The increase was primarily due to improved revenues on communication service contracts. For the first nine months of fiscal 1996, net revenues of $29 million were $5 million or 15% less than the same period in fiscal 1995. The nine month period decrease resulted from the completion of a large U.S. Marine Corp. contract in fiscal 1995. The contact contributed $5.5 million of revenues in the first quarter of the prior year. Net income for the third quarter of fiscal 1996 was $191,000, down slightly from $209,000 for the same quarter last year. For the nine months ending December 31, 1995, net income was $406,000, or 34% less than the comparable period of the prior year. The reduction in income is primarily the result of litigation expenses of $294,000 associated with a trial and lawsuit described below. Operating margins for the year to date through December 31, 1995, remained comparable to the same period for the prior year. However, operating margins for the third quarter were lower than those of the prior year due to increased resale revenues associated with one of the communication contracts. Decreased interest expense reflects lower borrowing levels and lower interest rates in the current year. Liquidity and Sources of Capital Cash flows used by operations were $357,000 for the first nine months ended December 31, 1995 as compared with $3,035,000 provided by operations in the comparable period of the prior year. The $406,000 increase in net income for the period was offset by other changes in working capital accounts. Accounts payable and accrued expenses declined during the period by $1,182,000 and accounts receivable increased $569,000. These uses of cash were partly offset by decreased inventory balances and non-cash depreciation and amortization expense. The Company's financial position continued to improve in the third quarter ended December 31, 1995. The Company's current ratio improved to 2.97 at December 31, 1995. This current ratio compares with 2.36 at March 31, 1995. Long-term borrowings increased approximately $2.4 million in the third quarter to finance increased revenues. The debt to equity ratio of 1.64:1 at December 31, 1995 remains comparable to the debt to equity ratio of 1.63:1 at March 31, 1995. The Company has approximately $2.3 million of its $7 million credit facility available to finance future growth. The Company is confident that cash generated from normal operations and the corporation's line of credit will be sufficient to meet its normal operating requirements in the foreseeable future. The Company's funded backlog for services as of December 31, 1995 was $30,000,000 as compared to $17,000,000 at March 31, 1995. As of December 31, 1995, based on total amounts bid on contracts awarded, the company's five year potential revenues for work remaining to be performed under existing contracts are approximately $106,000,000. Contingent Matters The Company is a defendant or co-defendant in various law suits. In one of these lawsuits, the plaintiff sought damages for alleged interference with its business expectency. As previously reported on October 27, 1995, a jury awarded the plainfiff $435,177 for compensatory damages plus interest from January 14, 1990. On January 16, 1996, a final judgement was entered in Halifax's favor by the court, which granted Halifax's post-trial motion to set aside the earlier jury verdict. The plaintiff has filed an appeal of this judgement. The Company provides for costs related to contingencies when a loss is probable and the amount is reasonably determinable. It continues to be the belief of management, based on advice from counsel, that the ultimate resolution of this contingency will not have a material adverse effect on the financial condition of the Company. Part II. Other Information Item 1. Legal Proceedings Commercial Business Systems, Inc. v. Halifax Corporation, et al. Plaintiff's claim, which has been the subject of judicial proceedings since August of 1990 and was consolidated with a similar claim against BellSouth, went to trial on October 18, 1995, resulting in a jury verdict against Halifax, a former employee and a non-employee, for wrongful interference with a prospective business relationship. The jury award for compensatory damages plus interest has been overturned by the judge in the case and final judgment entered in favor of Halifax. The plaintiff has appealed this decision. 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 The following exhibits and reports included herein: (a) Exhibits - Not applicable (b) Reports on Form 8-K - None 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 February 12, 1996 By:s/Howard C. Mills Howard C. Mills President Date: February 12, 1996 By:s/Richard J. Smithson Richard J. Smithson Vice President Administration & Treasurer For a menu of Halifax Corporation new 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-DECEMBER-1995
5 10Q-DECEMBER-1995 1 0 MAR-31-1996 APR-1-1995 DEC-31-1995 9-MOS 1 554,000 0 11,646,000 0 3,041,000 15,714,000 4,615,000 0 22,441,000 5,290,000 0 0 0 518,000 7,985,000 8,503,000 29,239,000 29,239,000 25,422,000 27,895,000 294,000 0 380,000 670,000 264,000 406,000 0 0 0 406,000 .35 .35
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