-----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, MapcTdSUzdDe8/oPTBK6hoyZVdfwdpIVF46pWXcV50ptbue+P71HKhKg/irSUBrJ jBfSLllhA4SJRcr/5Fiscw== 0000720671-98-000010.txt : 19980817 0000720671-98-000010.hdr.sgml : 19980817 ACCESSION NUMBER: 0000720671-98-000010 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: SEC FILE NUMBER: 001-08964 FILM NUMBER: 98690107 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, 1998 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 Actof 1934 For the quarterly period ended June 30, 1998 ( ) 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. 2,013,406 as of August 5, 1998 HALIFAX CORPORATION CONTENTS PART I. FINANCIAL INFORMATION page Item 1. Financial Statements Condensed Consolidated Balance Sheets - June 30, 1998 (Unaudited) and March 31, 1998 3 Condensed Consolidated Statements of Earnings - Three Months Ended June 30, 1998 and 1997 (Unaudited) 4 Condensed Consolidated Statements of Stockholders' Equity - Three MonthsEnded June 30, 1998 and 1997 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows - Three Months Ended June 30, 1998 and 1997 (Unaudited) 6 Notes to Condensed Consolidated Financial Statements (Unaudited) 7 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations 9 PART II OTHER INFORMATION Item 6.Exhibits and Reports on Form 8-K 10 Item 1. FINANCIAL STATEMENTS
HALIFAX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS JUNE 30, 1998 AND MARCH 31, 1998 June 30, 1998 March 31, 1998* (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $ 138,000 $ 67,000 Accounts receivable 22,231,000 20,814,000 Inventory 9,002,000 8,203,000 Prepaid expenses and other current assets 2,081,000 2,298,000 TOTAL CURRENT ASSETS 33,452,000 31,382,000 PROPERTY AND EQUIPMENT, at cost less accumulated 3,476,000 3,578,000 depreciation and amortization OTHER ASSETS AND COST IN EXCESS OF NET ASSETS ACQUIRED, net of accumulated amortization 3,002,000 3,015,000 TOTAL ASSETS $39,930,000 $ 37,975,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 10,678,000 $ 10,233,000 Current portion of long-term debt & mortgage note payable 500,000 786,000 TOTAL CURRENT LIABILITIES 11,178,000 11,019,000 LONG-TERM DEBT AND OTHER LIABILITIES 18,090,000 16,348,000 TOTAL LIABILITIES 29,268,000 27,367,000 STOCKHOLDERS' EQUITY Common stock 544,000 544,000 Additional paid-in capital 4,403,000 4,399,000 Retained earnings 5,927,000 5,877,000 10,874,000 10,820,000 Less treasury stock at cost 212,000 212,000 TOTAL STOCKHOLDERS' EQUITY 10,662,000 10,608,000 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 39,930,000 $37,975,000
*Condensed from March 31, 1998 Audited Financial Statements. See Form 10-K /A filed June 30, 1998. See notes to Condensed Consolidated Financial Statements.
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited) Three Months Ended June 30 1998 1997 Revenues $ 17,264,000 $ 18,035,000 Operating costs and expenses: Cost of services 15,323,000 16,813,000 Selling, general and 1,306,000 1,181,000 administrative Total operating costs and 16,629,000 17,994,000 expenses Operating income 635,000 41,000 Interest expense 355,000 425,000 Income before income taxes 280,000 (384,000) Income taxes (129,000) (152,000) Net earnings $ 151,000 $ (232,000) Net earnings per common share -basic $ .08 $ (.12) Net earnings per common share - diluted $ .07 $ (.12) Weighted average number of common shares 2,010,597 2,001,951 outstanding - basic Weighted average number of common shares 2,058,900 2,001,951 outstanding - diluted
See notes to Condensed Consolidated Financial Statements.
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited) Additional Common Treasury Stock Stock Paid-In Retained Shares Par Value Capital Earnings Shares Cost Total Balance April 1, 2,267,16 $ 544,000 $ 4,399,000 $5,877,000 256,684 $(212,000) $10,608,000 1998 6 Cash - - - (101,000) - - (101,000) Dividends Net income - - - 151,000 - - 151,000 Exercise of Stock 750 - 4,000 - - - 4,000 Options Balance June 30, 2,267,916 $ 544,000 $ 4,403,000 $5,927,000 256,684 (212,000) $10,662,000 1998 Balance April 1, 2,258,866 $ 542,000 $ 4,358,000 $5,836,000 258,234 $(213,000) $ 10,523,000 1997 Cash - - - (101,000) - - (101,000) Dividends Net Income - - - (232,000) - - (232,000) Exercise of Stock Options 3,000 1,000 16,000 - - - 17,000 Balance June 30, 2,261,866 $ 543,000 $ 4,374,000 $5,503,000 258,234 $ (213,000) $ 10,207,000 1997
See notes to Condensed Consolidated Financial Statements.
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997 (Unaudited) Three Months Ended June 30 1998 1997 Cash flows from operating activities: Net income $ 151,000 $ (232,000) Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 330,000 295,000 Decrease (increase) in accounts (1,417,000) 3,150,000 receivable Decrease (increase) in inventory (799,000) (334,000) Decrease (increase) in other 163,000 213,000 assets (Decrease) increase in accounts payable and accrued expenses 434,000 (2,453,000) Total adjustments (1,289,000) 871,000 Net cash provided (used) by operating activities (1,138,000) 639,000 Cash flows from investing activities: Acquisition of property and equipment, net of purchased operations (166,000) (255,000) Net cash used in investing activities (166,000) (255,000) Cash flows from financing activities: Proceeds from borrowing of long- 23,611,000 9,136,000 term debt Retirement of long-term debt (22,139,000) (9,609,000) Cash dividends paid (101,000) (100,000) Proceeds from sale of stock upon exercise of stock options 4,000 17,000 Net cash provided (used) by financing activities 1,375,000 (556,000) Net (decrease) increase in cash 71,000 (172,000) Cash at beginning of period 67,000 267,000 Cash at end of period $ 138,000 $ 95,000
See notes to Condensed Consolidated 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, 1998 are not necessarily indicative of the results that may be expected for the year ending March 31, 1999. For further information refer to the consolidated financial statements and footnotes thereto included in the Halifax Corporation Annual Report on Form 10-K/A for the year ended March 31, 1998. Note B - Earnings per Share The following table sets forth the computation of basic and diluted earnings per share.
Three Months Ended June 30, 1998 1997 Numerator: Net earnings $ 151,000 $ (232,000) Numerator for basic earnings per share - income available to common $ 151,000 $ (232,000) stockholders Numerator for diluted earnings per share -income available to common stockholders after assumed conversions $ 151,000 $ (232,000) Denominator: Denominator for basic earnings per share - weighted-average shares 2,010,597 2,001,951 Effect of dilutive securities: Employee stock options 44,150 - Contingent stock- 4,153 - acquisition 7% Convertible Subordinated - - Debenture Dilutive potential common shares 48,303 - Denominator for diluted earnings per share - adjusted weighted- average shares and assumed 2,058,900 2,001,951 conversions Basic earnings per share $ 0.08 $ (0.12) Diluted earnings per share $ 0.07 (0.12)
Note C - Contingent Matters The Company is a co-defendant or is defendant in various lawsuits wherein any potential liability is fully insured against. 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, the ultimate resolution of any contingencies, to the extent not previously provided for, will not have a material adverse effect on the financial position or results of operations 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. Item 2 Management's' Discussion and Analysis of Financial Conditions and Results of Operations Results of Operations Revenues for the first quarter of fiscal 1999 of $17,264,000 represent a decrease of approximately $771,000 or 4% from those in the first quarter of fiscal 1998. The decrease was due to not receiving significant expected orders on large communications contracts held by the Company with the Federal Government which have been adversely impacted by Year 2000 issues in the Federal Government.. Cost of services, as a percentage of revenue, decreased from 93% in the first quarter of fiscal 1998 to 89% in the first quarter of fiscal 1999. The improvement in this margin resulted from the combination of lower direct costs, especially parts usage and labor, in the Company's computer-printer maintenance business and a cost mix at HTSC which emphasized higher margin services work. Selling, general and administrative expenses as a percentage of revenue was 7.6% in the first quarter of fiscal 1999 as contrasted to 6.5% in the first quarter of fiscal 1998. Interest expense in the fiscal 1999 period was 2.0% of revenue versus 2.4% in fiscal 1998. Financial Condition The financial condition of the Company remains sound with working capital of $22,300,000 and a current ratio of 2.99:1. Liquidity and Sources of Capital Net cash outflows from operations were $1,138,000 for the first quarter of fiscal 1999 as compared with net cash inflows of $639,000 in the comparable period of fiscal 1998. 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. As reported on Form 10K/A dated March 31, 1998, the Company signed a new banking agreement on June 25, 1998 which restructured the Company's debt as presented at March 31, 1998 except for the "7% Convertible Subordinated Debenture" and the "Other Notes Payable." The new debt structure consists of a revolving line of credit and two term loans which in total make $17.5 million of credit available to the Company. Year 2000 Compliance As a service provider to commercial and government entities for the assessment, remediation, and testing for year 2000 readiness of computer desktop devices and networks, the Company does not certify "Compliance" in its contract agreements. The Company provides customers with test results which it represents to be correct as backed up by test documentation. Halifax has established and is implementing a program for compliance of its own hardware, software, and files. The Company is planning for the remediation of in-house systems associated with accounting/finance, service call management, local and wide area networks, messaging systems, and administration. Some of these features are being taken care of as a by-product of the Company's program to web-enable (Internet) many of its systems to meet customer requirements and/or promote efficiency and competitive advantage. Activities are currently underway assessing the Company's systems and applications. In order to judge the stability of its business supply chain, the Company has initiated a comprehensive process of contacting clients, vendors and suppliers to ascertain their preparation for this issue. The Company estimates its costs to be fully compliant by mid-1999 at $200,000. Forward-Looking Statements The above may contain certain forward-looking statements which are based on management's current views and assumptions regarding future events and financial performance. Reference should be made to Item 7 of Halifax Corporation's Annual Report on Form 10- K/A for the fiscal year ended March 31, 1998 concerning "forward- looking statements" for a description of the important factors that could cause actual results to differ materially from those discussed above. Part II. Other Information Item 6. Exhibits and Reports on Form 8-K (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: August 14, 1998 By: s/Howard C. Mills Howard C. Mills President & CEO Date: August 14, 1998 By: s/John D. D'Amore John D. D'Amore Vice President Finance & CFO 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-1998
5 10Q-JUNE-1998 1 0 MAR-31-1999 APR-1-1998 JUN-30-1998 3-MOS 1 138,000 0 22,231,000 0 9,002,000 33,452,000 3,476,000 0 39,930,000 11,278,000 0 0 0 544,000 10,330,000 39,930,000 17,264,000 17,264,000 15,323,000 16,629,000 0 0 355,000 280,000 (129,000) 151,000 0 0 0 151,000 (.08) (.07)
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