EXHIBIT 99.1
HALIFAX ANNOUNCES FIRST QUARTER
FINANCIAL RESULTS
Achieves 38% Revenue Growth Over Prior Year's First Quarter
ALEXANDRIA, VA - August 15, 2005 - Halifax Corporation (AMEX:HX) today
announced its financial results for the quarter ended June 30, 2005.
For the quarter just ended, the Company reported revenues from
continuing operations of $14.7 million compared to $10.7 million for
the same period a year ago, an increase of 38%. The revenue growth
resulted primarily from growth within existing contracts and the
inclusion of the AlphaNational acquisition, which closed September 30,
2004, in the current quarter results.
For the quarter ended June 30, 2005, the Company reported an operating
loss of $143,000 as compared to an operating loss of $285,000 for the
quarter ended June 30, 2004. The Company reported a loss from
continuing operations of $234,000 for the quarter ended June 30, 2005
compared to a loss from continuing operations of $276,000 for the first
quarter of the prior year. The Company has implemented a major cost
containment program and also has significantly reduced interest expense
on a going forward basis. These steps are designed to return the
Company to profitability on a near term basis.
Income from discontinued operations was $310,000 for the quarter ended
June 30, 2005 as compared to $367,000 for the quarter ended June 30,
2004. The Company announced the sale of its Secure Network Services
business on June 30, 2005 for $12.5 million and accordingly the
financial performance of this business area is being classified, for
accounting purposes, as a discontinued operation.
The net gain on the sale of approximately $5.8 million will be deferred
until certain contract novation contingencies are resolved.
For the quarter ended June 30, 2005, the Company reported a net income
of $76,000 or $0.02 per basic and diluted share as compared to $91,000
or $0.03 per basic and diluted share for the same quarter last year.
Charles McNew, president and chief executive officer, stated, "The cash
infusion from the sale of our Secure Network Services business has
significantly improved our financial position by allowing us to
substantially reduce our bank debt and high interest subordinated debt.
It also improves our ability to grow in the high availability
maintenance marketplace.
"We are proud of our growth record and have worked diligently with our
partners to make this happen. With revenues up 38% year on year from
continuing operations, we are one of the fastest growing players in our
industry.
"Our marketplace, characterized by pricing pressure and enhanced
service requirements, remains highly competitive. We have made some
difficult cost containment decisions and we continue to evaluate
various strategic alternatives to further position our Company for near-
term and long-term growth and profitability," McNew concluded.
The Company will host a conference call for investors at 10 a.m. EDT on
Monday, August 15, 2005, to review the financial and operational
results for the quarter. The conference call phone number is 888-753-
6315 for U.S. callers and 415-247-8537 for international callers. The
conference call replay will be available from 12 p.m. EDT on Monday,
August 15, 2005, to 12 p.m. EDT on Tuesday, August 16, 2005. The
replay number is 800-633-8284 for U.S. callers and 402-977-9140 for
international callers. The reservation number is 21257476.
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
ended June 30
2005 2004
Revenues $14,679 $10,668
Cost of services 13,497 9,574
Selling, marketing, general & administrative 1,325 1,379
Operating (loss) (143) (285)
Interest expense (217) (139)
(Loss) before income taxes (360) (424)
Income tax expense (benefit) (126) (148)
(Loss) from continuing operations (234) (276)
Income from discontinued operations (net) 310 367
Net income $76 $91
Earnings (loss) per common share - basic
Continuing operations $(.07) $(.09)
Discontinued operations .09 .12
.02 .03
Earnings (loss) per common share - diluted
Continuing operations $(.07) $(.09)
Discontinued operations .09 .12
.02 .03
Weighted average number of common
shares outstanding
Basic 3,171 2,913
Diluted 3,192 2,958
Balance Sheets June 30, March 31,
2005 2005
Current assets
Cash $491 $1,264
Trade accounts receivable, net 10,456 12,468
Accounts receivable-other 13,093 -
Inventory, net 5,848 5,600
Prepaid expenses and other current assets 243 487
Deferred tax asset 778 3,814
Total current assets 30,909 23,633
Property and equipment, net 1,424 1,608
Goodwill and intangibles, net 7,359 7,438
Other assets 139 141
Defered tax asset 956 930
Total assets $40,787 $33,750
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $11,173 $10,731
Deferred gain on sale 5,810 -
Deferred maintenance revenue 3,856 3,776
Current portion of long-term debt 180 679
Total current liabilities 21,019 15,186
Long-term bank debt 10,605 9,463
Other long-term debt 1 3
Subordinated debt - affiliate 2,400 2,400
Deferred income 263 278
Total liabilities 34,288 27,330
Stockholders' equity 6,499 6,420
Total liabilities and stockholders' equity $40,787 $33,750