ALEXANDRIA, Va., July 11 /PRNewswire-FirstCall/ -- Halifax Corporation
(Amex: HX) today announced its financial results for the fourth quarter and
fiscal year ended March 31, 2007.
Revenues for fiscal 2007 were $50.7 million compared to prior fiscal
2006 revenues of $54.9 million. The revenue decrease, which was primarily
due to the cessation of an unprofitable nationwide contract in April 2006,
was partially offset by new more profitable business.
Halifax reported gross margins of $4.4 million, or 9% of revenues, for
the 2007 fiscal year, versus $3.7 million, or 7% of revenues, for the
previous year. The margin improvement in fiscal 2007 was due to a better
mix of more profitable business. The Company's current year margins were
negatively impacted as a result of a contract loss in the fourth quarter
and a non-cash charge of $640,000 taken in the fourth quarter related to
inventory reserves. In fiscal 2006, margins were negatively impacted by the
unprofitable nationwide contract referenced above. This contract was
concluded in April 2006.
The Company reported breakeven results for operating profit in fiscal
2007, versus an operating loss of $1.5 million for the prior year. Halifax
also recognized a gain of $2.5 million on the sale of its Secure Network
Services business in fiscal 2006.
The net loss for fiscal 2007 was $2.8 million, or $0.88 per share. The
principal reason for the loss was a non-cash charge of approximately $2.2
million related to recording a full valuation allowance against a deferred
tax asset, which had been carried on the balance sheet. For fiscal 2006 the
Company reported net income of $1.5 million, or $0.48 per basic and diluted
share.
According to Charles McNew, president and chief executive officer,
"Were it not for certain non-cash adjustments, we would have reported a
marginally profitable year for fiscal 2007, as contrasted to a loss from
continuing operations of $1.3 million for fiscal 2006. From an operational
standpoint, we have a healthy backlog and as mentioned in recent releases,
despite the competitive marketplace, we are encouraged by the present
volume of potential new deals."
McNew added, "We are continuing to evaluate various strategic
alternatives to further position our Company for near and longer term
growth opportunities."
For the quarter ended March 31, 2007, revenues were $13.0 million
compared to $12.9 million for the same period last year. Gross margin was
$225,000 for the quarter ended March 31, 2007, compared to gross margin of
$1.1 million for the same period last year. The primary reason for the
decrease in gross margin was a non-cash charge for inventory obsolescence
and a loss on a contract that has been terminated. The operating loss for
the quarter ended March 31, 2007, was $822,000 as compared to an operating
loss of $74,000 for the same period last year. Primarily as a result of the
non-cash deferred tax asset adjustment, the Company reported a net loss of
$2.9 million for the quarter ended March 31, 2007, or $0.93 per share, as
compared to net income of $233,000, or $0.07 per basic and diluted share,
for the same period last year, which included a gain on the sale of
discontinued operations.
The Company will host a conference call for investors at 11:00 a.m. EDT
on Wednesday, July 11, 2007, to review the financial and operational
results for the quarter. The conference call phone number is 800-926-6531
for U.S. callers and 415-226-5360 for international callers. The conference
call replay will be available from 1 p.m. EDT on Wednesday, July 11, 2007,
to 1 p.m. EDT on Thursday, July 12, 2007. The replay number is 800-633-8284
for U.S. callers and 402-977-9140 for international callers. The
reservation number is 21343980.
Founded in 1967, Halifax Corporation is an enterprise maintenance
solutions company providing a wide range of technology services to
commercial and government customers throughout the United States. The
Company's principal products are high availability hardware maintenance
services, technology deployment and integration services. More information
on Halifax can be found at http://www.hxcorp.com.
Certain statements made by the Company which are not historical facts
may be considered forward-looking statements, including, without
limitation, statements as to trends, management's beliefs, views,
expectations and opinions, which are based upon a number of assumptions
concerning future conditions that ultimately may prove to be inaccurate.
Such forward-looking statements are subject to risks and uncertainties and
may be affected by various factors described in the Risk Factors Section in
the Company's Annual Report on Form 10-K that may cause actual results to
differ materially from those in the forward-looking statements. For further
information that could affect the Company's financial statements, please
refer to the Company's reports filed with the Securities and Exchange
Commission.
Halifax Corporation
Summary Financial Data
(in 000's except per share amounts)
For the three months For the year ended
Statements of operations ended March 31, March 31,
2007 2006 2007 2006
Revenues $12,977 $12,884 $50,695 $54,911
Cost of services 12,752 11,774 46,268 51,211
Gross margin 225 1,110 4,427 3,700
Selling, marketing, general &
administrative 1,047 1,184 4,427 5,032
Severance costs - - - 144
Operating loss (822) (74) - (1,476)
Other income 9 - 32 6
Interest expense (181) (125) (673) (583)
Loss before income taxes (994) (199) (641) (2,053)
Income tax expense (benefit) 1,953 (112) 2,149 (777)
Loss from continuing operations (2,947) (87) (2,790) (1,276)
Income from discontinued
operations - - - 310
Gain on sale of discontinued
operations - 320 - 2,502
Net (loss) income $(2,947) $233 $(2,790) $1,536
Earnings per common share -
basic:
Continuing operations $(.93) $(.03) $(.88) $(.40)
Discontinued operations - - - .09
Gain on sale of discontinued
operations - .10 - .79
$(.93) $.07 $(.88) $.48
Earnings per common share -
diluted:
Continuing operations $(.93) $(.03) $(.88) $(.40)
Discontinued operations - - - .09
Gain on sale of discontinued
operations - .10 - .79
$(.93) $.07 $(.88) $.48
Weighted average number of common
shares
outstanding:
Basic 3,175 3,172 3,175 3,174
Diluted 3,180 3,183 3,180 3,188
Balance Sheets March 31, March 31,
2007 2006
Current assets
Cash $1,078 $400
Restricted cash 673 625
Trade accounts receivable, net 11,345 11,415
Inventory, net 4,946 6,363
Prepaid expenses and other current
assets 584 722
Deferred tax asset - 1,332
Total current assets 18,626 20,857
Property and equipment, net 1,225 1,381
Goodwill and intangibles, net 3,865 4,213
Other assets 121 130
Deferred tax asset - 828
Total assets $23,837 $27,409
Liabilities and stockholders' equity
Current liabilities
Accounts payable and accrued
expenses $6,375 $7,135
Deferred maintenance revenue 3,058 3,515
Notes payable - 168
Income tax payable 11 331
Bank debt 6,880 -
Auxiliary line of credit 1,000 -
Current portion of long-term debt 31 34
Total current liabilities 17,355 11,183
Long-term bank debt - 6,891
Other long-term debt 120 154
Subordinated debt - affiliate 1,000 1,000
Deferred income 159 218
Total liabilities 18,634 19,446
Stockholders' equity 5,203 7,963
Total liabilities and stockholders'
equity $23,837 $27,409
SOURCE Halifax Corporation
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Related links:
http://www.hxcorp.com/
http://www.prnewswire.com/comp/391950.html/
CONTACT:
Karen Vahouny of Qorvis Communications,
+1-703-744-7809, kvahouny@qorvis.com, for Halifax Corporation
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