Exhibit 99.1
HALIFAX ANNOUNCES THIRD QUARTER FINANCIAL RESULTS
Company Reports Third Successive Quarter of Profitability;
Gross Margin Improves to 11% from 2%
ALEXANDRIA, VA - February 12, 2007 - Halifax Corporation (AMEX:HX)
today announced its financial results for the quarter ended December
31, 2006.
Revenues for the third quarter of fiscal 2007 were $12.6 million versus
$13.4 million for the same period in fiscal 2006. The revenue
decrease, primarily due to the cessation of an unprofitable nationwide
contract in April 2006, was partially offset by new, more profitable
business.
The gross profit margin for this year's third quarter was $1.4 million,
or 11% of revenues, versus $314,000, or 2% of revenues, for the same
period a year ago. Operating income was $311,000 compared to an
operating loss of $1.1 million for the same period the prior year.
Income from continuing operations was $51,000 for the quarter ended
December 31, 2006, versus a loss of $783,000 for the same quarter of
last year.
The Company reported net income of $51,000, or $0.02 per basic and
diluted share, for the fiscal 2007 third quarter. In the fiscal 2006
third quarter, net income of $1.4 million had included a $2.2 million
gain on the sale of discontinued operations related to the sale of
Secure Network Services. The Company also reported that the
reclassification of goodwill resulted in a restatement for the third
quarter and first nine months of fiscal 2006. The restatement had no
effect on net income.
Charles McNew, president and chief executive officer, stated, "I'm
especially pleased that operating income rose 65% compared to the prior
quarter. This is a clear indication of the success of our strategic
effort to achieve overall profitability for each of our contracts, as
we've taken a number of steps to build customer satisfaction and
contain fixed costs.
"Despite the competitive marketplace, we are encouraged by the present
volume of potential new deals. In fact, the number of large-scale
opportunities we're pursuing is higher than we've seen in recent
quarters."
He added, "We're continuing to make progress on the balance sheet as
well, and it's important to note that working capital is approaching
$10 million."
For the nine months ended December 31, 2006, revenues were $37.7
million compared to $42.0 million for the same period last year.
Operating income for the first nine months of fiscal 2007 was $823,000
versus an operating loss of $1.4 million for the comparable period a
year ago. Income from continuing operations was $157,000 compared to a
loss from continuing operations of $1.2 million for the same period of
fiscal 2006. Net income for the nine months of this year was $157,000,
or $0.05 per basic and diluted share. The prior year's net income of
$1.3 million, or $ 0.41 per basic and diluted share, for the nine
months had included $310,000 of income from discontinued operations and
a gain on sale of discontinued operations of $2.2 million.
The Company will host a conference call for investors at 11 a.m. EST on
Monday, February 12, 2007, 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. EST on Monday,
February 12, 2007, to 1 p.m. EST on Tuesday, February 13, 2007. The
replay number is 800-633-8284 for U.S. callers and 402-977-9140 for
international callers. The reservation number is 213289938.
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. This web site
reference is intended to be an inactive textual reference, and the
information on this web site is not incorporated into this document.
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 Three Months Ended Nine Months Ended
amounts) December 31, December 31,
Statements of Operations 2006 2005 2006 2005
Restated Restated
Revenues $ 12,603 $ 13,390 $ 37,718 $ 42,027
Cost of services 11,202 13,076 33,516 39,437
Gross margin 1,401 314 4,202 2,590
Selling, marketing, general &
administrative 1,090 1,259 3,379 3,848
Severance costs - 144 - 144
Operating income (loss) 311 (1,089) 823 (1,402)
Other income 8 - 23 5
Interest expense (171) (135) (492) (458)
Income (loss) before income
taxes 148 (1,224) 354 (1,855)
Income tax expense (benefit) 97 (441) 197 (665)
Income (loss) from continuing
operations 51 (783) 157 (1,190)
Income from discontinued
operations - - - 310
Gain on sale of discontinued
operations - 2,182 - 2,182
Net income (loss) $ 51 $ 1,399 $ 157 $ 1,302
Income (loss) earnings per
common share - basic:
Continuing operations $ .02 $ (.25) $ .05 $ (.37)
Discontinued operations - - - .10
Gain on sale of
discontinued operations - .69 - .69
$ .02 $ .44 $ .05 $ 41
Income (loss) earnings per
common share - diluted:
Continuing operations $ .02 $ (.25) $ .05 $ (.37)
Discontinued operations - - - .10
Gain on sale of - .69 - .69
discontinued operations
$ .02 $ .44 $ .05 $ 41
Weighted average number of
common shares outstanding:
Basic 3,175 3,172 3,175 3,172
Diluted 3,179 3,183 3,179 3,188
Balance Sheets December 31, 2006 March 31, 2006
Current assets
Cash $ 112 $ 400
Restricted cash 665 625
Trade accounts receivable, net 10,928 11,415
Inventory, net 5,884 6,363
Prepaid expense and other current 383 722
assets
Deferred tax asset 985 1,332
Total current assets 18,957 20,857
Property and equipment, net 1,154 1,381
Goodwill and intangibles, net 3,945 4,213
Other assets 123 130
Deferred tax asset 977
828
Total assets $ 25,156 $ 27,409
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 6,070 $ 7,135
Deferred maintenance revenue 3,141 3,515
Notes payable - 168
Income tax payable 20 331
Current portion of long-term debt 33 34
Total current liabilities 9,264 11,183
Long-Term bank debt 6,444 6,891
Other long-term debt 128 154
Subordinated debt-affiliate 1,000 1,000
Deferred income 174 218
Total liabilities 17,010 19,446
Stockholders' equity 8,146 7,963
Total liabilities and stockholders' $ 25,156 $ 27,409
equity