Exhibit 99.1
HALIFAX ANNOUNCES FOURTH QUARTER
AND FISCAL 2005 FINANCIAL RESULTS
Revenues Up 25% From Prior Year
ALEXANDRIA, VA - July 11, 2005 - Halifax Corporation (AMEX:HX) today
announced its financial results for the fourth quarter and fiscal year
ended March 31,
2005.
For the year, revenues were $62.0 million versus $49.5 million for
fiscal 2004, an increase of 25%. The revenue increase is a result of
growth in both High Availability Maintenance and Secure Network
Services. The operating loss for fiscal 2005 was $1.5 million versus
operating income of $1.1 million the prior year. The net loss was $1.4
million, or $0.46 per basic and diluted share, compared to net income
of $4.2 million, or $1.60 per basic and $1.54 per diluted share for the
previous year. The loss for the current year was due to previously
announced startup costs associated with a large enterprise maintenance
contract and a writedown of inventory. The net income for fiscal 2004
had included a non-recurring income tax benefit of $3.8 million.
For the quarter ended March 31, 2005, revenues were $18.2 million
versus $13.0 million for the comparable period in 2004, an increase of
39%. The revenue increase is a result of significant growth in both
High Availability Maintenance and Secure Network Services. The
operating loss for the 2005 fourth quarter was $624,000 compared to
operating income of $205,000 for the same quarter of 2004. The net
loss was $511,000, or $0.16 per basic and diluted share, compared to
net income of $3.8 million or $1.31 per basic and $1.24 per diluted
share for the same quarter a year ago. The loss for the current
quarter is primarily the result of inventory writedowns and higher-than-
planned operating costs on the large contract. Net income for the
fourth quarter of the previous year included a non-recurring income tax
benefit of $3.8 million.
Charles McNew, president and chief executive officer, stated, "Although
we're pleased with the revenue growth, particularly in our high
availability maintenance business, the enterprise maintenance contract
had a negative impact on earnings in the second half of the year. On
the positive side, the loss in the fourth quarter was well below that
of the prior quarter, and our team is working diligently to drive down
our service delivery costs and return the business to profitability."
He added, "The recently announced sale of our secure network service
business for $12.5 million has dramatically improved our balance sheet.
With this sale, our business model is now entirely focused on
enterprise maintenance solutions."
The Company will host a conference call for investors at 11 a.m. EDT on
Monday, July 11, 2005, to review the financial and operational results
for the quarter and year. The conference call phone number is 888-343-
7167 for U.S. callers and 415-537-1987 for international callers. The
conference call replay will be available from 1 p.m. EDT on Monday,
July 11, 2005, to 1 p.m. EDT on Tuesday, July 12, 2005. The replay
number is 800-633-8284 for U.S. callers and 402-977-9140 for
international callers. The reservation number is 21251631.
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 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 Thousands, except per share amounts)
Statement of operations For the three months For the years
ended March 31, ended March 31,
2005 2004 2005 2004
Revenues $18,151 $13,020 62,006 $49.537
Cost of Services 17,317 11,487 57,872 43,609
Selling, Marketing,
General & Administrative 1,458 1,328 5,496 4,859
Abandonment of facility - - 179 -
Operating (loss) income (624) 205 (1,541) 1,069
Interest expense (201) (172) (663) (591)
(Loss) income before
income taxes (825) 33 (2,204) 478
Income tax expense
(benefit) (314) (3,790) (793) (3,750)
Net (loss) income $(511) $3,823 $(1,411) $4,228
Earnings (loss) per
common share - basic $(.16) $1.31 $(.46) $1.60
Earnings (loss) per
common share - diluted $(.16) $1.24 $(.46) $1.54
Weighted average number
of common shares
outstanding
Basic 3,168 2,910 3,043 2,638
Diluted 3,227 3,094 3,095 2,787
Balance Sheets March 31, 2005 March 31, 2004
Current assets
Cash $1,264 $430
Trade accounts receivable, net 12,468 9,364
Inventory, net 5,600 5,845
Prepaid expenses and other
current assets 487 599
Deferred tax asset 3,814 1,204
Total current assets 23,633 17,442
Property and equipment, net 1,608 1,598
Goodwill and intangibles, net 7,438 4,606
Other assets 141 149
Defered tax asset 930 2,696
Total assets $33,750 $26,491
Liabilities and Stockholders'
Equity
Current liabilities
Accounts payable and accrued
expenses $10,731 $6,723
Deferred maintenance revenue 3,776 2,543
Current portion of long-term debt 679 523
Total current liabilities 15,186 9,789
Long-term bank debt 9,463 7,227
Other long-term debt 3 19
Subordinated debt - affiliate 2,400 2,400
Deferred income 278 337
Total liabilities 27,330 19,772
Stockholders' equity 6,420 6,719
Total liabilities and stockholders'
equity $33,750 $26,491