SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934
[Amendment No. ___________]
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/ / Confidential, for use of the Commission only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Sec. 240.14a-11(c) or Sec. 240.14a-12
Halifax Corporation
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
or Item 22(a)(2) or Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transactions applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing party:
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(4) Date filed: August 23, 1995
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<PAGE>
HALIFAX CORPORATION
Alexandria, Virginia
-----------------------------------
ANNUAL MEETING OF SHAREHOLDERS
Dear Shareholders:
You are cordially invited to attend the Annual Meeting of Halifax
Shareholders which will be held on September 15, 1995, at 2:00 p.m. local time
at our offices at 5250 Cherokee Avenue, Alexandria, VA 223l2.
In addition to the meeting purposes enumerated in the attached Notice, it
shall be our pleasure to entertain questions pertaining to the affairs of the
Company which affect the interests of Shareholders as a whole.
We encourage your attendance and look forward to seeing you.
Sincerely,
Howard C. Mills
President
August 15, 1995
<PAGE>
HALIFAX CORPORATION
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held September 15, 1995
To The Shareholders of Halifax Corporation:
NOTICE IS HEREBY GIVEN THAT the Annual Meeting of Shareholders of Halifax
Corporation (The "Company") will be held at its executive offices, 5250 Cherokee
Avenue, Alexandria, VA 22312 on Friday, September 15, 1995, at 2:00 p.m. local
time, for the purpose of considering and acting upon the following:
1.Election of seven (7) directors for the ensuing year.
2.Ratification of the Board of Directors' appointment of Ernst & Young
Certified Public Accountants, as the Company's independent accountants for the
fiscal year
ending March 31, 1996.
3.Transact such other business as may properly come before
the meeting.
The Board of Directors has fixed the close of business on Friday, August 4,
1995, as the record date for the determination of shareholders entitled to
notice of and vote at this meeting and any adjournments thereof, and only
shareholders of record at such time will be so entitled to vote.
Shareholders who will not attend the meeting in person are requested to
specify their choices and to date, sign, and return the enclosed Proxy in the
envelope provided. Prompt response is helpful, and your cooperation will be
appreciated.
By Order of the Board of Directors
Ernest L. Ruffner
Secretary
<PAGE>
HALIFAX CORPORATION
5250 Cherokee Avenue
Alexandria, Virginia 22312
--------------------------------------------------
PROXY STATEMENT
--------------------------------------------------
The Annual Meeting of Shareholders of Halifax Corporation (The "Company")
will be held on September 15, 1995, at the offices of the Company located at
5250 Cherokee Avenue, Alexandria, Virginia 22312. for the purposes set forth in
the accompanying Notice of Annual Meeting of Shareholders and described more
fully below.
The enclosed Proxy is solicited on behalf of the Board of Directors of the
Company.
The cost of preparing, assembling and mailing the Notice, Proxy Statement
and Proxy and miscellaneous costs with respect to the same will be paid by the
Company. The Company may, in addition, use the services of its officers,
directors and employees to solicit Proxies personally or by telephone and
telegraph, but at no additional salary or compensation. The Company intends to
request banks, brokerage houses and other custodians, nominees and fiduciaries
to forward copies of the proxy material to those persons for whom they hold
shares and to request authority for the execution of Proxies. The Company will
reimburse them for reasonable out-of-pocket expenses incurred by them in so
doing.
The Proxy may be revoked by the person giving it at any time before it has
been exercised by delivering written notice to the Company or by delivering a
later dated Proxy.
Unless instructed to the contrary on the Proxy, each Proxy will be voted
for the persons named below in the election of directors to the Company's Board
of Directors; for ratification of the appointment of Ernst & Young Certified
Public Accountants, to be the Company's independent accountants for fiscal 1996,
and with respect to such other matters which may properly come before the Annual
Meeting, the persons named as proxy holders will exercise their best judgment
with respect to such other matters. A shareholder who abstains from a vote by
registering an abstention vote will be deemed present at the meeting for quorum
purposes but will not be deemed to have voted on the particular matter. Manage-
ment knows of no other matters to come before the Annual Meeting at this time.
SHARES OUTSTANDING AND VOTING RIGHT
Shareholders of record at the close of business on August 4, 1995, will be
entitled to notice of and vote at the Annual Meeting. On that date there were
1,180,329 shares of the Company's Common Stock outstanding. The holders of these
shares are entitled to one vote per share.
Under the rules of the American Stock Exchange (AMEX) brokers who hold
shares in street name for customers have the authority to vote on certain items
when they have not received instruction from beneficial owners. Such votes are
known as "broker non-votes", and are counted for purposes of determining the
presence of a quorum, but are not counted for purposes of determining whether a
director has been elected or whether a proposal has been approved by the
shareholders.
Directors are elected by a plurality of the votes of the shares present or
represented at the meeting and entitled to vote. Approval of each other matter
to be voted upon requires the affirmative vote of a majority of the votes of
shares present or represented at the meeting and entitled to vote on such
matter.
FORM 10-K
The Annual Report on Form 10-K for the Company's fiscal year ended March
31, 1995, has been filed with the Securities and Exchange Commission.
Shareholders should they so desire may obtain without charge a copy of the Form
10-K from the Company by written request which should be made to Halifax
Corporation, 5250 Cherokee Avenue, Alexandria, Virginia 22312, Attention:
Corporate Secre- tary.
ELECTION OF DIRECTORS
The Bylaws of the Company provide that the Company shall be managed by a
Board of Directors consisting of between three and seven members, the precise
number of directors to be fixed from time to time by resolution of the Board of
Directors. The number of Directors has been fixed at seven.
It is, therefore, proposed to elect a Board of Directors of seven persons
to serve until the next annual meeting of Sharehold- ers or until the election
and qualification of their respective successors. Unless authority is withheld,
the proxies shall be voted for the election as directors of the following
persons, provided that if any of such nominees shall be unavailable for election
for any reason, the Proxies will be voted for the election of a substitute
nominee designated by management. All seven of the nominees are now serving as
directors and have agreed to serve if elected. Those nominees receiving a
majority of or the greatest number of votes cast at the Annual Meeting by
Shareholders entitled to vote will be elected to the Board of Directors.
Management has no reason to believe that any nominee will not be available
to serve, but if any nominee should be or become unable to serve, the shares
represented by Management proxies will be voted, instead, for the election of
another person recommended by the Board of Directors as a director.
The following table sets forth the name and age of each of the nominees to
the Board of Directors of the Company, together with respective periods of
service as directors and other positions with the Company:
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEES
<TABLE>
<CAPTION>
Date
First Principal Occupation and
Nominees Age Elected Employment; Other Background
<S> <C> <C> <C>
Arch C. Scurlock 75 1973 Arch C. Scurlock, presently
Chairman of the Board of
Directors, has been a Direc-
tor of the Company since
1973. He had served from
1969 to 1992 as Chairman of
the Board of TransTechnology
Corporation, a manufacturer
of aerospace defense, and
other industrial products.
Since 1968, he has been
President and a Director of
Research Industries Incor-
porated, a private investment
company.
Howard C. Mills 61 1984 Howard C. Mills has, since
October 16, 1984, been
President, Chief Executive
Officer and a Director of the
Company. Prior to that time
he served as Vice President
and Executive Vice President
of the Company.
John H. Grover 67 1984 John H. Grover became a
Director of the Company in
1984. He has served as Vice
President, Treasurer and
Director of Research
Industries Incorporated since
1968, and as a Director of
TransTechnology Corporation
from 1969 to 1992.
<PAGE>
Clifford M. Hardin 79 1985 Clifford M. Hardin has been a
Director of the Company since
1985. From 1981 to 1987, Dr.
Hardin served as a Director
of Stifel Financial
Corporation, the parent
corporation of Stifel,
Nicolaus & Company, a St.
Louis securities brokerage
firm registered with the
Securities and Exchange
Commission. Dr. Hardin is
also a Director of the
Gallup, Inc., Lincoln, Nebraska.
Ernest L. Ruffner 60 1985 Ernest L. Ruffner, elected
Director of the Company on
March 25, 1985, is an
attorney engaged in the
private practice of law as a
member of the firm of Pompan,
Ruffner & Werfel in Alexandria,
Virginia. Mr. Ruffner is a
Director of Research Industries
Incorporated. He was elected
Secretary of the Company
effective July 2, 1985 and
General Counsel on September 16,
1994.
Alvin E. Nashman 68 1993 Alvin E. Nashman is a Director
and Consultant of Computer
Sciences Corporation (CSC). For
27 years until his retirement in
1992, Dr. Nashman headed the
multi-division Systems Group
of CSC which under his leadership
experienced continued growth with
1992 revenues in excess of $1
billion. He served two terms
as Chairman of the Board of
the Armed Forces Communications
and Electronics Association
(AFCEA). He currently serves on
the Boards of NYMA Corporation
and MILTOPE Corporation, where he
is Chairman.
<PAGE>
John M. Toups 69 1993 John M. Toups served as
President and CEO of Planning
Research Corporation (PRC)
from 1978 to 1987. Prior to
that he served in various
executive positions with PRC.
For a short period of time in
1990, he served as interim
Chairman of the Board and CEO
of the National Bank of
Washington and Washington
Bancorp and is currently a
Director of CACI, Inter-
national, NVR, and Telepad.
</TABLE>
OTHER EXECUTIVE OFFICERS
In addition to President Mills and Secretary/General Counsel Ruffner, the
following persons are executive officers of the company.
Richard J. Smithson, age seventy-one, is Vice President and Treasurer of
the Company, responsible for all corporate financial activities. Mr. Smithson
has over forty years experience in varied executive financial positions
including twenty-two years with the Company.
Christopher K. Jones, age forty-three, is the Senior Vice
President for Business Development. He has been with the Company for
twelve years. He previously served as head of Electronics Services.
James L. Sherwood IV, age fifty-three, is Vice President Contracts and
Administration. He has been with the Company and its subsidiaries for sixteen
years. He previously served as a Vice President managing the Company's
Facilities Services Division.
Melvin L. Schuler, age fifty-one, is the Vice President
Communications Services Division. Mr. Schuler has been with the
Company for twenty-two years, serving in various management positions
within the Electronics Services line.
Donald R. Morrell, age thirty-seven, Vice President and Corporate
Controller, has been with the Company for seven years. Prior to joining Halifax,
Mr. Morrell was with Price Waterhouse where he served in various positions
including Audit Manager. He is a CPA.
<PAGE>
Raymond A. Castelhano, age fifty-nine, has been with Halifax two years and
is Vice President, Computer Services Division. Mr. Castelhano has thirty-seven
years experience in the computer hardware maintenance industry. Before joining
the company, Mr. Castelhano worked three years as a Consulting Associate with
VP, Inc. Prior to that, he was the Senior Vice President Support Services for
Decision Data Services, Inc., a nation-wide computer maintenance firm. For
fourteen years Mr. Castelhano worked as the Vice President Business Systems for
SORBUS, Inc., a third-party computer maintenance company. Previously, Mr.
Castelhano served in management and technical positions with Management
Assistance, Inc. and IBM.
James C. Dobrowolski, age thirty-two, joined Halifax as a result of the
Company acquiring EAI Services which he had managed for two years. Mr.
Dobrowolski currently serves as a Vice President, in charge of the Simulation
and Facilities Services Division. Prior to joining EAI as director of contracts
in April 1988, he was with Engineering and Professional Services, Inc., where he
served as Manager of Subcontract Administration for two years.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based on a review of SEC Forms 3, 4 & 5 and amendments thereto furnished to
the Company, to the best of the knowledge and belief of management, no person
who was required to file said forms failed to do so on a timely basis.
Board of Directors; Committees
During the year ending March 31, 1995, the Board of Directors held five
meetings. During that year, all members who were directors at the time attended
at least 75% of the total number of meetings held by the Board and by each
committee of the Board of which he was a member.
Set forth below is certain information regarding the existing committees of
the Board of Directors:
Audit Committee. The Audit Committee reviews the results of, and the
suggestions provided in connection with, the Company's annual audit by its
independent public accountants; reviews internal audit and other accounting
procedures established by management; and considers the scope of the audit
and nonaudit services provided by the Company's independent public
accountants, including the fees charged for those services. The committee's
members are Messrs. Hardin, Toups and Nashman. The Audit Committee held two
meetings in Fiscal Year 1995.
Compensation and Incentive Committee. The Compensation and Incentive
Committee advises the Board of Directors with respect to compensation
levels and the issuance of stock options to key employees of the Company.
The committee members are Messrs. Scurlock, Grover, and Toups. During the
year ended March 31, 1995, the committee held one meeting.
Nominating Committee. The Nominating Committee was created by the Board of
Directors on May 21, 1993, for the purpose of considering individuals to be
nominated for election to the Board of Directors. Selections are presented
to the Board for inclusion in the slate of management nominees submitted to
the shareholders for election. The committee members are Messrs. Hardin,
Grover, and Ruffner. During the year ended March 31, 1995, the committee
held one meeting.
<PAGE>
PRINCIPAL SHAREHOLDERS AND DIRECTORS
The following tables set forth as of May 17, 1995 (1) the number of shares
of the Company's common stock owned beneficially by each person who owned of
record, or is known by the Company to have owned beneficially, more than 5% of
such shares then outstanding (2) the number of shares owned by each director of
the Company and (3) the number of shares owned beneficially by all officers and
directors as a group. Information as to the beneficial ownership is based upon
statements furnished to the Company by such persons.
<TABLE>
<CAPTION>
Name of Amount and Nature of
Beneficial Owner Beneficial Ownership Percent
<S> <C> <C>
Research Industries Incorporated (1)
123 N. Pitt Street
Alexandria, Virginia 22314 .................. 410,000 34.7
Howard C. Mills (5)
5250 Cherokee Avenue
Alexandria, Virginia 22312 ................... 43,578 3.7
Arch C. Scurlock (2)
123 N. Pitt Street
Alexandria, Virginia 22314 ................... 411,000 34.8
John H. Grover (3)
123 N. Pitt Street
Alexandria, Virginia 22314 ................... 1,000 0.1
Clifford M. Hardin
10 Roan Lane
St. Louis, Missouri 63124 .................... 1,000 0.1
Ernest L. Ruffner (4)
209 N. Patrick Street
Alexandria, Virginia 22314 ................... 100 0
Alvin E. Nashman
3170 Fairview Park Drive
Falls Church, Virginia 22042 .................. 3,000 0.3
John M. Toups
1209 Stuart Robeson Drive
McLean, Virginia 22101 ........................ 3,000 0.3
All officers and directors as
a group (14 persons) (2) ...................... 487,613 41.3
---------------------------
<FN>
(1) Research Industries Incorporated is 95% owned by Arch C.
Scurlock, chairman of the Company's Board of Directors.
(2) Includes 410,000 shares owned by Research Industries.
(3) Mr. Grover is also a 5% owner and director of Research
Industries Incorporated
(4) Mr. Ruffner is a director of Research Industries Incorporated.
(5) Includes 300 shares held by Mr. Mills' wife.
</FN>
</TABLE>
<PAGE>
EXECUTIVE COMPENSATION
REPORT OF THE COMPENSATION AND INCENTIVE COMMITTEE
The overall philosophy regarding compensation of the Company's executive
officers is based upon the concept that in order to achieve the Company's
objectives of progress, growth and profitability it is necessary to attract and
retain qualified executives who are moti- vated to provide a high level of
performance. A vital element in this motivation is to offer an executive
compensation program that is not only competitive but rewards those executives
whose efforts enable the Company to achieve its goals. To accomplish this
objective, the Committee has an established policy whereby a significant segment
of an executive's total compensation is related directly to performance
resulting in the interest of the Company's executives being in parallel with the
interest of its shareholders.
The executive compensation program includes three elements which are
intended to constitute a flexible and balanced method of establishing total
compensation. These are base salary, annual bonus, and stock options. When
combined, these elements are intended to provide key executives sufficient
motivation and incentives so that their efforts will maximize corporate
performance thereby enhancing shareholder value. In accomplishing this
objective, the compensation program seeks to balance performance rewards with
what is reasonable under the total circumstances including the competitiveness
of the executive market place.
The primary component of the Company's executive compensation program is
base salary. The base salaries of the executive officers are a reflection of the
size of the Company, the scope of responsibility of each individual and the
extent of experience in their particular position. Reviewed annually, base
salaries are related indirectly to the Company's performance and marginally
related to the cost of living.
The base salary of Howard Mills, the Company's president and chief
executive officer since 1984, is largely based on the performance of the
Company, both for the fiscal year and since he has been CEO. The other criteria
considered to a lessor degree is the annual change in the cost of living. During
the last fiscal year, the Company's total return, as displayed in the
accompanying five year cumulative performance graph, decreased 13 percent,
however the Company was able to maintain earnings per share comparable to the
previous year in spite of substantially reduced revenues. Reflecting the
Company's stated compensation policy, in August Mr. Mills base salary was
increased by three percent to $151,700. He also participated in the Company's
Profit Sharing Bonus Plan and Key Employees Stock Option Plan, to the extent set
forth below.
The second component of the executive compensation program is an annual
bonus determined in accordance with the Company's Profit Shar- ing Bonus Plan
approved annually by the Board of Directors based upon projected profit goals
set for each year. The Company creates separate profit pools related to project,
division and corporate performance. Employees in the Plan are monetarily
rewarded if the profitability of their profit pool meets specified threshold
goals, and further rewarded for exceeding these goals based upon a fixed
formula. As a result of the Company's performance during the previous fiscal
year, Mr. Mills received a bonus from the corporate profit pool that was equal
to approximately 18% of his base salary which was paid in fiscal year 1995.
The final component of the executive compensation program is a Key
Employee Stock Option Plan ("Plan") which was adopted and approved by the
Company's shareholders at the 1994 annual meeting and is for the benefit of the
Company's key employees, including officers, who meet certain criteria. The
purpose of the Plan is to attract, motivate, and retain those highly competent
individuals upon whose judgment, initiative, and leadership, the continued
success of the Company depends. The Plan is administered by a committee of three
members of the Board of Directors who are not eligible to participate in the
Plan. Subject to the provisions of the Plan, the Committee has sole discretion
and authority to determine from among eligible employees those to whom and time
or times at which, options may be granted, the numbers of shares of Common Stock
to be subject to each option, and the type of option to be granted. During the
past year the Committee considered it appropriate and justified to motivate and
reward Mr. Mills with regard to decisions influencing future growth of the
Company and therefore granted Mr. Mills stock options for 9,600 shares of common
stock at an exercise price of $7.00 per share expiring September 16, 1999.
In addition, the Committee determined it was appropriate to enter into an
Executive Severance Agreement ("Agreement") with Mr. Mills in recognition of his
position of high responsibility and the substan- tial contributions he has made
to the Company over many years. The Agreement provides benefits under certain
circumstances including a change in control of the Company, the purpose being to
enable him to perform his duties and responsibilities without the distracting
uncertainty associated with a change in control.
Specifically, the Agreement is for one year beginning August 1, 1995 and
is automatically renewed from year to year. It confirms that employment is at
will and provides for termination without additional compensation in the event
of death, resignation, retirement or for cause. Except in connection with a
change of control, termination for any other reason results in compensation
equal to eighteen (18) months salary. In the event of termination within one (1)
year after a change in control, Mr. Mills would receive compensation equal to
thirty-six (36) months salary subject to statutory limitations. Should he resign
or retire during the first ninety (90) days after a change in control, the
compensation would revert to the level of eighteen (18) months salary.
No member of the Compensation and Incentive Committee is a former or
current officer or employee of the Company or any of its subsidiaries.
Arch C. Scurlock John M. Toups John H. Grover
<PAGE>
SUMMARY COMPENSATION TABLE
The following table sets forth information on compensation paid in fiscal
year 1995 and the two prior fiscal years to the Company's Chief Executive
Officer and the Company's three other executive officers whose income exceeded
$100,000.
<TABLE>
<CAPTION>
Long-Term Compensation
-------------------------------------
Awards Payouts
------------------------ Long-Term
Annual Compensation Other Restricted Incentive
Name and -------------------------- Annual Stock Options/ Plan All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Award(s)($) SARs(#) Payouts($) Compensation($)
------------------ ---- -------- ------- ----------------- ----------- -------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Howard C. Mills 1995 150,188 27,067 3,331 none 9,600 none 2,604(2)
CEO/President 1994 134,811 20,276 2,971 none 2,000 none 2,692(2)
1993 122,580 19,505 3,799 none none none 2,452(2)
Christopher K. Jones 1995 115,118 15,467 3,007 none 4,800 none 2,302(2)
Senior Vice President 1994 101,512 none 3,153 none 1,000 none 3,103(2)
1993 92,706 none none none none none 1,964(2)
James L. Sherwood, IV 1995 96,962 21,886 none none 3,600 none 1,939(2)
Vice President 1994 88,554 14,227 none none 600 none 7,966(3)
1993 82,904 15,020 none none none none 1,751(2)
James C. Dobrowolski 1995 95,099 23,672 2,400 none 3,600 none 5,855(3)
Vice President
---------------
<FN>
(1) Value of Company furnished automobile.
(2) Amounts contributed to officer under 401(k) plan
(3) Amounts contributed to officer under 401(k) plan and paid
vacation.
</FN>
</TABLE>
<PAGE>
DIRECTOR COMPENSATION
Directors who are not officers of the Company receive an annual fee of
$1,000. During the fiscal year ended March 31, 1995, Directors also received
$2,000 and reimbursement of expenses incurred for each meeting of the Board of
Directors which they attended.
The following two tables present further details on stock options:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Value at Assumed
Precent Total Annual Rates of Stock
Options/SARs Price Appreciation
Granted to Exercise for Option Term(2)
Options/SARs Employees in or Base Expiration -------------------
Name Granted(#) Fiscal Year(1) Price($) Date 5%($) 10%($)
------------------ ------------ -------------- -------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Howard C. Mills 9,600 30.0 7.00 9/14/99 18,566 41,026
President/CEO
Christopher K. Jones 4,800 15.0 7.00 9/16/99 9,283 20,513
Senior Vice President
James L. Sherwood, IV 3,600 11.3 7.00 9/16/99 6,962 15,385
Vice President
James C. Dobrowolski 3,600 11.3 7.00 9/16/99 6,962 15,385
Vice President
-----------
<FN>
(1) This column will not total 100% because employees other than those named
received options during the year.
(2) Discloses the potential realizable value assuming that the market price of
the underlying security appreciates at annualized rates of 5 and 10 percent
over the term of the award.
</FN>
</TABLE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END VALUES OF UNEXERCISED OPTIONS/SARs
<TABLE>
<CAPTION>
Shares Number of Unexercised Value of Unexercised In-The-
Acquired on Value Options at Year-end Money Options at Year-end ($)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable(1)
-------------- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Howard C. Mills -- -- 3,000 12,600 -- --
President/CEO
Christopher K. Jones -- -- 2,250 6,550 -- --
Senior Vice President
James L.Sherwood, IV -- -- 2,250 4,950 -- --
Vice President
---------
<FN>
(1) Based on the fair market value of the Common Stock on March 31, 1995, of
$6.88 less the option exercised price.
</FN>
</TABLE>
<PAGE>
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN*
AMONG HALIFAX CORPORATION, THE S & P 500 INDEX
AND THE S & P HIGH TECH COMPOSITE INDEX
[This space contains a stock performance graph. The Graph is a comparison of
fuve year cumulative total return among Halifax Corporation, the S & P 500 Index
and the S & P High Tech Composite index. The Cumulative Total Return data is
shown below.]
* $100 INVESTED ON 03/31/90 IN STOCK OR INDEX - INCLUDING
REINVESTMENT OF DIVIDENT FISCAL YEAR ENDING MARCH 31.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
CUMULATIVE TOTAL RETURN
---------------------------------------------------------------------------------------
3/90 3/91 3/92 3/93 3/94 3/95 0353EHX
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HALIFAX CORPORATION - HX 100 126 178 154 181 157 05/18/95
-------------------------------------------------------------------------------------------------------------------------------
S & P 500 - I500 100 114 127 146 149 172 03533500
-------------------------------------------------------------------------------------------------------------------------------
S & P HIGH TECH COMPOSITE - IHTC 100 109 112 123 144 183 03533HTC
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
TRANSACTIONS WITH MANAGEMENT
On May 1, 1986, Ernest L. Ruffner, a director of the Company, joined the
law firm of Pompan, Ruffner & Werfel. Jacob Pompan of that firm has represented
Halifax in its government contract affairs since 1984. During the fiscal year
ended March 31, 1995, the firm received fees of $14,000 from the Company.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed the firm of Ernst & Young, independent
accountants, subject to the ratification of such appointment by the
Shareholders, to serve as independent accountants for the Company and its
subsidiaries for the year ending March 31, 1996.
This year's financial statements were audited by Ernst & Young who replaced
Grant Thornton on September 16, 1994. The change was made by recommendation of
the Audit Committee.
The report of Grant Thornton on the Company's financial statements for the
years ended March 31, 1993 and March 31, 1994 did not contain an adverse opinion
or a disclaimer of opinion and were not qualified or modified as to uncertainty,
audit scope or accounting principles. During the Company's two most recent
fiscal years and the subsequent interim periods preceding such change, (1) the
Company had no disagreements with Grant Thornton on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure which, if not resolved to Grant Thornton satisfaction, would have
caused it to make reference to the subject matter of the disagreements in
connection with its report, and (2) no "reportable event" (as described in
Regulation S-K, Item 304(a)(1)(V)(A-D) occurred.
The Company is advised that no member of Ernst & Young has any direct or
indirect interest in the Company or any of its subsidiaries or has had, since
its appointment, any connection with the Company or any of its subsidiaries in
the capacity of promoter, underwriter, voting trustee, director, officer or
employee. Representatives of Ernst & Young will be invited to the annual meeting
and, if present, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
SHAREHOLDERS' PROPOSALS
Any proposal which a shareholder wishes to have presented at the next
annual meeting of shareholders should be sent to the Secretary of the Company at
5250 Cherokee Avenue, Alexandria, Virginia 22312, and must be received not later
than the close of business on April 1, 1996. Material filed with the Company in
a timely manner will be considered, pursuant to the requirements of all
applicable laws and regulations, for inclusion in the Company's 1996 proxy
materials for such annual meeting.
TRANSFER AGENT AND REGISTRAR
The First National Bank of Maryland, is the Company's transfer agent and
registrar.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of no
additional matters to be presented for vote of the shareholders at the Annual
Meeting, nor has it been advised that others will present any other matters.
Should any matters be properly presented at the Annual Meeting for a vote of the
shareholders, the proxies will be voted in accordance with the best judgment of
the proxy holder.
By Order of the Board of Directors
Ernest L. Ruffner
Secretary
