Exhibit 99.1
HALIFAX ANNOUNCES FIRST QUARTER
FINANCIAL RESULTS
Company Reports Return to Profitability, with Diluted EPS of $0.03;
Gross Margin Increases to 12% from 8%
ALEXANDRIA, VA - August 15, 2006 - Halifax Corporation (AMEX:HX) today
announced its financial results for the quarter ended June 30, 2006.
The Company reported revenues of $12.7 million compared to $14.7
million for the same period a year ago. The revenue decrease was
primarily due to the cessation of an unprofitable nationwide contract.
Halifax reported a gross margin of $1.5 million, or 12% of revenues,
for the first quarter of fiscal 2007. This compares to a gross margin
of $1.2 million, or 8% of revenues, for the comparable quarter a year
ago.
Operating income was $326,000 for the first fiscal quarter of 2007
compared to an operating loss of $143,000 for the first fiscal quarter
of 2006. Income from continuing operations for the first quarter of
fiscal 2007 was $84,000 as compared to a loss from continuing
operations of $234,000 for the same period a year ago.
The Company reported net income of $84,000, or $0.03 per basic and
diluted share, in the first quarter of 2007 versus $76,000, or $0.02
per basic and diluted share, for the quarter ended June 30, 2005. Net
income for the first quarter of last year included $310,000 of income
from discontinued operations.
Charles McNew, president and chief executive officer, stated, "As
anticipated, we have returned the Company to profitability and our
aggressive cost containment program has resulted in meaningful
improvement in our gross margins. The recent announcement of several
new contracts, coupled with our delivery systems enhancement efforts,
should have us on target for additional bottom line enhancement."
The Company also reported continuing balance sheet improvement, with
bank debt declining and shareholders equity in excess of $8 million.
McNew added, "Our confidence in our long-term business prospects
remains high. The managed services marketplace is ripe with
opportunity, particularly with the evolving industry consolidation. We
continue to seek and evaluate various strategic alternatives to further
position Halifax for near and long term growth."
The Company will host a conference call for investors at 11 a.m. EDT on
Tuesday, August 15, 2006, to review the financial and operational
results for the quarter. The conference call phone number is 888-898-
1327 for U.S. callers and 706-679-5341 for international callers. The
conference call replay will be available from 1 p.m. EDT on Tuesday,
August 15, 2006, to 1 p.m. EDT on Wednesday, August 16, 2006. The
replay number is 800-633-8284 for U.S. callers and 402-977-9140 for
international callers. The reservation number is 21301345.
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
2006 2005
Revenues $12,746 $14,679
Cost of services 11,270 13,497
Gross Profit 1,476 1,182
Selling, marketing, general &
Administrative 1,150 1,325
Operating income (loss) 326 (143)
Other income 1 -
Interest expense (163) (217)
Income (loss) before income taxes 164 (360)
Income tax expense (benefit) 80 (126)
Income (loss) from continuing operations 84 (234)
Income from discontinued operations (net) - 310
Net income $ 84 $ 76
Earnings (loss) per common share - basic:
Continuing operations $ .03 $ (.07)
Discontinued operations - .09
.03 .02
Earnings (loss) per common share -
diluted:
Continuing operations $ .03 $ (.07)
Discontinued operations - .09
.03 .02
Weighted average number of common
shares outstanding:
Basic 3,175 3,172
Diluted 3,180 3,193
Balance Sheets June 30, 2006 March 31, 2006
Current assets
Cash $ 344 $ 400
Restricted cash 649 625
Trade accounts receivable, net 9,878 11,415
Inventory, net 6,038 6,363
Prepaid expenses and other
current assets 805 722
Deferred tax asset 1,289 1,332
Total current assets 19,003 20,857
Property and equipment, net 1,253 1,381
Goodwill and intangibles, net 4,118 4,213
Other assets 128 130
Defered tax asset 807 828
Total assets $25,309 $27,409
Liabilities and stockholders'
equity
Current liabilities
Accounts payable and accrued
expenses $6,816 $7,135
Income tax payable 32 331
Deferred maintenance revenue 2,826 3,515
Current portion of long-term debt 34 202
Total current liabilities 9,708 11,183
Long-term bank debt 6,203 6,891
Other long-term debt 148 154
Subordinated debt - affiliate 1,000 1,000
Deferred income 203 218
Total liabilities 17,262 19,446
Stockholders' equity 8,047 7,963
Total liabilities and stockholders'
equity $25,309 $27,409