HALIFAX CORPORATION
FORM 10-Q
JUNE 30, 1995
<PAGE>
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 June 30, 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
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HALIFAX CORPORATION
CONTENTS
PART I. FINANCIAL INFORMATION
page
Item 1.
Financial Statements
Condensed Consolidated Balance Sheets - June 30, 1995
(Unaudited) and March 31, 1995 3
Condensed Consolidated Statements of Income - Three Months Ended
June 30, 1995 and 1994 (Unaudited) 4
Condensed Consolidated Statements of Stockholders' Equity -
Three Months Ended June 30, 1995 and 1994 (Unaudited) 5
Condensed Consolidated Statements of Cash Flows - Three
Months Ended June 30, 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
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HALIFAX CORPORATION
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1995 AND MARCH 31, 1995
JUNE 30, 1995 MARCH 31, 1995*
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 432,000 $18,000
Trade accounts receivable 9,123,000 11,077,000
Inventory 3,120,000 3,480,000
Prepaid expenses and other current assets 636,000 781,000
TOTAL CURRENT ASSETS 13,311,000 15,356,000
PROPERTY AND EQUIPMENT, at cost less accumulated
depreciation and amortization 4,669,000 4,717,000
INTANGIBLES AND OTHER ASSETS, net of accumulated
amortization 1,993,000 2,034,000
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $4,358,000 $5,916,000
Current portion of long-term debt 594,000 595,000
TOTAL CURRENT LIABILITIES 4,952,000 6,511,000
LONG-TERM DEBT 6,508,000 7,195,000
TOTAL LIABILITIES 1,460,000 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 4,907,000 4,795,000
8,826,000 8,714,000
Less treasury stock - at cost 313,000 313,000
STOCKHOLDERS' EQUITY 8,513,000 8,401,000
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $19,973,000 $22,107,000
<FN>
*Condensed from March 31, 1995 Audited Financial Statements
See notes to financial statements.
</TABLE>
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HALIFAX CORPORATION
<TABLE>
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1995, AND 1994 (unaudited)
<CAPTION>
Three Months Ended
June 30
1995 1994
<S> <C> <C>
Revenues $ 8,946,000 14,071,000
Operating costs and expenses:
Cost of services 7,717,000 12,765,000
Selling, general and administrative 812,000 827,000
Total operating costs and expenses 8,529,000 13,592,000
Operating income 417,000 479,000
Interest expense 108,000 175,000
Income before income taxes 309,000 304,000
Income taxes 121,000 117,000
Net income $ 188,000 $ 187,000
Net income per common share $.16 $ .16
Weighted average number of common shares
outstanding 1,180,329 1,197,429
<FN>
See notes to financial statements.
</TABLE>
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HALIFAX CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994 (unaudited)
<CAPTION>
Common Stock Additional Treasury Stock
Paid-In Retained
Shares Par Value Capital Earnings Shares Cost Total
<S> <C> <C> <C> <C> <C> <C> <C>
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
Balance
April 1, 199 41,480,015 $518,000 $3,401,000 $4,240,000 282,586 $(193,000) $7,966,000
Cash Dividends - - - ( 71,000) - - (71,000)
Net Income - - - 187,000 - - 187,000
Balance
June 30, 1994 1,480,015 $518,000 $3,401,000 $4,356,000 282,586 $(193,000) $8,082,000
<FN>
See notes to financial statements.
</TABLE>
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HALIFAX CORPORATION
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND 1994 (unaudited)
<CAPTION>
Three Months Ended
June 30
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $188,000 $ 187,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 145,000 154,000
Decrease in accounts receivable 1,954,000 2,952,000
Decrease in inventory 360,000 228,000
Decrease (increase) in other assets 159,000 428,000
(Decrease) in accounts payable and
accrued expenses (1,573,000) (2,931,000)
Total adjustment 1,045,000 831,000
Net cash provided by operating activities 1,233,000 1,018,000
Cash flows from investing activities:
Acquisition of property and equipment (56,000) (179,000)
Net cash used in investing activities (56,000) (179,000)
Cash flows from financing activities:
Proceeds from borrowing of long-term debt 2,108,000 7,488,000
Retirement of long-term debt (2,795,000) (8,374,000)
Cash dividends paid (76,000) ( 71,000)
Net cash used by financing activities (763,000) (957,000)
Net (decrease) increase in cash 414,000 (118,000)
Cash beginning of period 18,000 509,000
Cash end of period $ 432,000 $ 391,000
<FN>
See notes to financial statements.
</TABLE>
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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, 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.
Note B - Contingent Matters
The Company is a co-defendant or is defendant in various lawsuits. In one
of these lawsuits the plaintiff seeks compensatory damages of $5,000,000 and
punitive damages of $12,000,000. The Company provides for costs related to
contingencies when a loss is probable and the amount is reasonably
determinable. It is the opinion of management, based on advice of counsel,
that the ultimate resolution of this contingency will not have a material
adverse effect on the financial condition of the Company.
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Managements' Discussion and Analysis
of Financial Conditions and
Results of Operations
Results of Operations
Revenues for the first quarter of fiscal 1996 of $8,946,000 represent a
decrease of approximately $5,100,000 or 36% over those in the first quarter
of fiscal 1995. The reduction was due primarily to the termination of the
Maritime Prepositioning Ship Contract (MPF).
Costs of services, as a percentage of revenue, improved from 91% in the first
quarter of 1995 to 86% in the first quarter of 1996 as a result of improved
contract density and profitability. Improvement in this margin also resulted
from the phase out of the low margin MPF contract.
Selling, general and administrative expenses as a percentage of revenue
increased from 6% in the first quarter of fiscal 1995 to 9% in the first
quarter of fiscal 1996. However, selling, general and administrative costs
in these periods decreased in amount from $827,000 in the first quarter of
1995 to $812,000 for the comparable period of 1996.
Net income for the quarter of $188,000 represents a $1,000 increase over the
first quarter in fiscal 1995. The comparable net income amounts for the two
quarters were attained despite lower revenues in fiscal 1996 as a result of
increased operating margins. Decreased interest expense reflects lower
borrowings and lower interest rates.
Liquidity and Sources of Capital
Cash flows from operations were $1,233,000 for the first quarter of fiscal
1996 as compared with a $1,018,000 in the comparable period of fiscal 1995.
Net income and decreases in working capital accounts in the first quarter of
fiscal 1996 generated cash flows sufficient to repay long term debt by
$687,000 and to pay normal dividend and purchase capital expenditures.
The Company expects that cash generated from operations and the Company's
line of credit will be sufficient to meet its normal operating requirements
in the foreseeable future.
Subsequent to June 30, 1995, the Company repurchased 12,100 shares of its own
stock for $77,000 as part of a previously announced plan to reacquire up to
60,000 shares. To date, 29,200 shares have been reacquired under this plan.
Contingent Matters
The Company is a co-defendant or is defendant in various law suits. In one
of these lawsuits, the plaintiff seeks compensatory damages of $5,000,000 and
punitive damages of $12,000,000. The Company provides for costs related to
contingencies when a loss is probable and the amount is reasonably
determinable. It is the opinion of management, based on advice of counsel,
that the ultimate resolution of this contingency will not have a material
adverse effect on the financial condition of the Company, however they are
expected to generate increased cost in legal service in the next few months.
<PAGE>
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
The following exhibits and reports included herein:
(a) Exhibits - Not applicable
(b) Reports on Form 8-K - No reports on Form 8K were filed for the
three months ended June 30, 1995
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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.
Date: August 11, 1995 By: s/Howard C. Mills
Howard C. Mills
President
Date: August 11, 1995 By: s/Richard J. Smithson
Richard J. Smithson
Vice President & Treasurer
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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.
Date: By:
Howard C. Mills
President
Date: By:
Richard J. Smithson
Vice President & Treasurer
