-----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, Hmp8asTYfthTdcw5vxSJarfZn4zNOK3LqRLZznRLTSZyH27a0Ze+cUAWHxJCQL7Z XWb3rh9rkXk6NIziIXgBhg== 0000720671-99-000003.txt : 19990217 0000720671-99-000003.hdr.sgml : 19990217 ACCESSION NUMBER: 0000720671-99-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990216 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: 99540647 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, 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 Act of 1934. For the period ended December 31, 1998 (x) 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 filled 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 filings 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 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 the latest practicable date 2,013,406 as of January 31, 1999. HALIFAX CORPORATION CONTENTS PART I FINANCIAL INFORMATION Item 1. Financial Statements page Condensed Consolidated Balance Sheets - December 31, 1998 (Unaudited) and March 31, 1998 3 Condensed Consolidated Statements of Earnings - Three and Nine Months Ended December 31, 1998 and 1997 (Unaudited) 4 Condensed Consolidated Statements of Stockholders' Equity - Nine Months Ended December 31, 1998 and 1997 (Unaudited) 5 Condensed Consolidated Statements of Cash Flows - Nine Months Ended December 31, 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
Item 1. FINANCIAL STATEMENTS HALIFAX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1998 AND MARCH 31, 1998 December 31, MARCH 31, 1998 1998* (Unaudited) (Audited) ASSETS CURRENT ASSETS Cash $ 0 $ 67,000 Accounts receivable 27,699,000 20,814,000 Inventory 9,763,000 8,203,000 Prepaid expenses and other current assets 2,187,000 2,298,000 39,649,000 31,382,000 TOTAL CURRENT ASSETS PROPERTY AND EQUIPMENT, at cost less accumulated 3,162,000 3,578,000 depreciation and amortization OTHER ASSETS AND COST IN EXCESS OF NET ASSETS ACQUIRED, net of accumulated 2,906,000 3,015,000 amortization TOTAL ASSETS $ 45,717,000 $ 37,975,000 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued $ 14,168,000 $ 10,233,000 expenses Current portion of long-term debt & mortgage note payable 500,000 786,000 TOTAL CURRENT LIABILITIES 14,668,000 11,019,000 LONG-TERM DEBT AND OTHER LIABILITIES 20,068,000 16,348,000 TOTAL LIABILITIES 34,736,000 27,367,000 STOCKHOLDERS' EQUITY Common stock 549,000 544,000 Additional paid-in capital 4,409,000 4,399,000 Retained earnings 6,235,000 5,877,000 11,193,000 10,820,000 Less treasury stock at cost 212,000 212,000 TOTAL STOCKHOLDERS' EQUITY 10,981,000 10,608,000 TOTAL LIABILITIES AND STOCKHOLDERS' $ 45,717,000 $ 37,975,000 EQUITY
*Condensed from March 31, 1998 Audited Financial Statements. See Form 10-K/A filed July 10, 1998. See notes to condensed consolidated financial statements.
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1998 AND 1997 (UNAUDITED) Three Months Ended Nine Months Ended December 31, December 31, 1998 1997 1998 1997 Revenues $23,016,000 $18,232,000 $58,586,000 $54,940,000 Operating costs and expenses: Cost of services 20,426,000 52,480,000 49,970,000 16,246,000 Disposal of Inventory - 600,000 - 600,000 Selling, general and administrative expenses 1,379,000 1,325,000 3,905,000 3,689,000 Total operating costs 21,805,000 56,385,000 and expenses 18,171,000 54,259,000 Operating income 1,211,000 61,000 2,201,000 681,000 Other Income - 776,000 48,000 776,000 Interest expense 391,000 385,000 1,066,000 1,193,000 Income before income 820,000 1,183,000 taxes 452,000 264,000 Income taxes 343,000 178,000 523,000 104,000 Net earnings $477,000 $274,000 $ 660,000 $ 160,000 Net earnings per common $ 0.24 $ 0.14 $ 0.33 $ 0.08 share - basic Net earnings per common $ 0.23 $ 0.13 $ 0.32 $ 0.08 share - diluted Weighted average number of common shares outstanding - basic 2,013,406 2,009,675 2,012,351 2,005,334 Weighted average number of common shares outstanding - diluted 2,044,111 2,084,223 2,054,496 2,067,774
See notes to condensed consolidated financial statements.
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 AND 1997 (UNAUDITED) Common Additional Treasury Stock Stock Paid-In Retained Shares Par Value Capital Earnings Shares Cost Total Balance $544,000 April 1, 2,267,166 $ 4,399,000 $ 5,877,000 256,684 $(212,000) $10,608,000 1998 Net Income 660,000 - - - - - 660,000 Cash (302,000) - (302,000) Dividends - - - - Exercise of - Stock 2,924 5,000 10,000 Options - - 15,000 Balance December $549,000 $ 4,409,000 $ 6,235,000 256,684 $ (212,000) $10,981,000 31, 1998 2,270,090 Balance April 1, 2,258,866 $ 542,000 $ 4,358,000 $ 5,836,000 258,234 $ (213,000) $10,523,000 1997 Net Income - - - - 160,000 - 160,000 Cash (302,000) - (302,000) Dividends - - - - Exercise of Stock 8,300 2,000 42,000 - - - 44,000 Options Issuance of Treasury - - - - (1,550) 1,000 1,000 Stock Balance December 2,267,166 $ 544,000 $ 4,400,000 $ 5,694,000 256,684 $ (212,000) $10,426,000 31, 1997 See notes to condensed consolidated financial statements.
HALIFAX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 1998 AND 1997 (UNAUDITED) Nine Months Ended December 31, 1998 1997 Cash flows from operating activities: Net income $ 660,000 $ 160,000 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 992,000 983,000 (Gain) on disposal of property, - (776,000) plant & equipment Decrease (increase) in accounts (6,885,000) 2,577,000 receivable Decrease (increase) in inventory (1,561,000) (559,000) Decrease (increase) in other 94,000 (232,000) assets (Decrease) increase in accounts payable and accrued expenses 3,894,000 (2,507,000) Total adjustments (3,466,000) (514,000) Net cash provided by (used) in operating activities (2,806,000) (354,000) Cash flows from investing activities: Proceeds from sale of - 4,855,000 property and equipment Acquisition of property and equipment net of purchased (393,000) (1,202,000) operations Net cash provided by (used in) investing activities (393,000) 3,653,000 Cash flows from financing activities: Proceeds from borrowing of long- 42,717,000 26,329,000 term debt Retirement of long-term debt (39,298,000) (28,497,000) Cash dividends paid (302,000) (302,000) Proceeds from sale of stock upon exercise of stock options 15,000 44,000 Net cash provided (used) by financing activities 3,132,000 (2,426,000) Net (decrease) increase in cash (67,000) 873,000 Cash at beginning of period 67,000 268,000 Cash at end of period $ 0 $ 1,141,000
See notes to condensed consolidated financial statements. Halifax Corporation Notes to Condensed Consolidated Financial Statements (Unaudited) 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 and nine month periods ended December 31, 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 Nine Months Ended December 31, December 31, 1998 1997 1998 1997 Numerator: Net earnings $477,000 $ 274,000 $660,000 $ 160,000 Numerator for basic earnings per share - income available to common $477,000 $ 274,000 $660,000 $ 160,000 stockholders Numerator for diluted earnings per share - income available to common stockholders after assumed $477,000 $ 274,000 $660,000 $ 160,000 conversions Denominator: Denominator for basic earnings per share - weighted-average 2,013,406 2,009,675 2,012,351 2,005,334 shares Effect of dilutive securities: Employee stock options 21,755 71,117 34,075 57,865 Contingent stock- 8,950 3,431 8,070 4,575 acquisition 7% Convertible - - - - subordinated debenture Dilutive potential 30,705 74,548 42,145 62,440 common shares Denominator for diluted earnings per share - adjusted weighted-average shares and assumed 2,044,111 2,084,223 2,054,496 2,067,774 conversions Basic earnings per share $ 0.24 $ 0.14 $ 0.33 $ 0.08 Diluted earnings per share $ 0.23 $ 0.13 $ 0.32 $ 0.08
Note C - Contingent Matters The Company is a co-defendant or is a defendant in various lawsuits wherein any potential liability is fully insured against. The Company provides for cost 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. Part 1, Item 2. Management's' Discussion and Analysis of Financial Condition and Results of Operations Results of Operations: Revenues for the third quarter and nine months ended December 31, 1998 of $23,016,000 and $58,586,000 represent increases of $4,784,000 or 26% and $3,646,000 or 7% respectively over those in the comparable periods ended December 31, 1997. The increases are due primarily to phase-in of the LTLCS Digital Switch Support contract as previously reported. Total operating costs and expenses as a percentage of revenues were 95% and 99% for the third quarter and 96% and 99% for the nine months of FY 1999 and FY 1998 respectively. General & Administrative expense was 6.7% for both of the nine month periods of FY 1999 and FY 1998. These percentages reflect the absorption of indirect costs by the Company's expanding contract base during the third quarter of 1999. As previously reported, these percentages at September 30, 1998 were 7% and 6% respectively. Now that anticipated contracts and orders have been awarded, the second half net income is expected to grow at a higher rate than revenue as indirect costs should increase only slightly. Compared to FY 1998, interest expense for the third quarter and nine months of FY 1999 decreased from 2.1% to 1.7% and 2.2% to 1.8% of revenue respectively. In addition to normal operating income, the Company reported two separate events occurring during the quarter ended December 31, 1997 which affected income. The sale of its office complex in Alexandria, Virginia for $5,250,000 resulted in other income of $1,490,000 of which $714,000 will be amortized over the 12 year lease-back of its headquarters building. Under FASB 121, the Company also evaluated the carrying value of its assets based on certain operational changes resulting in an inventory disposal program where value for unused but useful items will be realized. This program resulted in additional operating expense charges of $600,000 in the quarter. Financial Condition The financial condition of the Company remains steady with working capital of $24,981,000 and a current ration of 2.7:1.0 Liquidity and Sources of Capital Net cash outflows from operations were $2,806,000 for the nine months ended December 31, 1998 as compared with net cash outflows of $354,000 in the comparable period of FY 1998. In the FY 1998 third quarter, the net proceeds from the office-complex sale were used to retire mortgage debt of $2,454,000 and pay down operating lines-of-credit. Long-term debt financed these December 31, 1998 operating cash outflows. At December 31, 1998, the Company's Long-term debt increased by 3,720,000 over March 31, 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 immediate future. During the fiscal quarter, the Company issued $2,000,000 of subordinated debentures to Research Industries, Inc. to serve as working capital bridge loans while the Company pursued junior capital financing. The due date of these debentures is April 1, 2000. 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 16, 1999 By: s/Howard C. Mills Howard C. Mills President & CEO Date: February 16, 1999 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-DECEMBER-1998
5 10Q-DECEMBER-1998 1 0 MAR-31-1999 APR-1-1998 DEC-31-1998 9-MOS 1 0 0 27,699,000 0 9,763,000 39,649,000 3,162,000 0 45,717,000 14,668,000 0 0 0 549,000 10,432,000 45,717,000 58,586,000 58,586,000 52,480,000 56,385,000 (48,000) 0 1,066,000 1,183,000 523,000 660,000 0 0 0 660,000 .33 .32
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