Exhibit 99.1
Hallwood Group Reports Results for the Fourth Quarter and Year Ended
December 31, 2002
DALLAS, April 15 /PRNewswire-FirstCall/ -- The Hallwood Group Incorporated
(Amex: HWG) today reported results for the fourth quarter and year ended
December 31, 2002.
For the quarter, the loss from continuing operations was $364,000, or
$0.27 per share (assuming dilution), compared to a loss of $3.9 million, or
$2.80 per share in 2001, on revenue of $25.8 million and $20.9 million,
respectively. The net loss for the quarter was $681,000 in 2002, or $0.50 per
share, compared to a net loss of $4.5 million, or $3.21 per share, in 2001.
The 2002 quarter included a $317,000 loss from discontinued operations. The
2001 quarter included an impairment charge of $1.4 million from the textile
products segment and a $575,000 loss from discontinued operations.
For the year, income from continuing operations was $3.4 million, or
$2.38 per share, compared to a loss of $5.5 million, or $3.89 per share, in
2001, on revenue of $97.2 million and $81.4 million, respectively. Net income
was $7.4 million in 2002, or $5.19 per share, compared to $4.2 million, or
$2.95 per share, in 2001. The 2002 results included income from discontinued
operations of $3.4 million, principally related to gains from the
extinguishment of debt on the disposition of two hotel properties. The 2001
results included income of $9.8 million from discontinued operations,
primarily resulting from a gain on the sale of the Company's investment in its
former Hallwood Energy Corporation affiliate.
Following is a comparison of results by business segment for the fourth
quarters and years ended December 31, 2002 and 2001:
Real Estate The real estate segment reported income of $769,000, on
revenue of $1.8 million in the 2002 quarter, compared to income of $641,000,
on revenue of $1.5 million in 2001.
For the year, the real estate segment reported income of $4.6 million, on
revenue of $7.1 million, compared to income of $3.2 million, after
$2.4 million of litigation expense, on revenue of $8.5 million in 2001.
Textile Products The textile products segment reported income of $777,000
in the 2002 quarter, on revenue of $23.2 million, compared to a loss of
$2.0 million in the 2001 quarter, on revenue of $18.4 million. The increase
was principally due to an impairment of goodwill of $1.4 million in 2001.
For the year, the textile products segment reported income of
$2.7 million, on revenue of $85.9 million, compared to a loss of $2.1 million,
which included an impairment charge of $1.4 million, on revenue of
$69.6 million in 2001.
Other The other segment which consists principally of deferred revenue
from a noncompetition agreement, less interest, administrative expenses and
additional cost of a Separation Agreement, reported losses of $1.5 million and
$1.0 million, for the 2002 and 2001 quarters, respectively.
For the 2002 and 2001 years, the loss was $1.6 million and $4.1 million,
respectively. The reduced loss in 2002 was primarily due to a full year of
amortization of deferred revenue from the noncompetition agreement, lower
interest expense and an $800,000 loss from extinguishment of debt in 2001.
Income Taxes The 2002 quarter income tax expense attributable to
continuing operations was $459,000 and included a non-cash, deferred federal
tax benefit of $20,000, a federal tax charge of $16,000 and state tax expense
of $463,000. The 2001 quarter income tax expense was $1.5 million and
included a deferred federal tax charge of $1.4 million, a $35,000 federal tax
charge and state tax expense of $81,000.
For the 2002 year, income taxes attributable to continuing operations was
$2.3 million, which included a deferred federal tax charge of $1.5 million, a
current federal tax charge of $50,000 and state tax expense of $813,000. For
the 2001 year, income taxes attributed to continuing operations were
$2.4 million, which included a deferred federal tax charge of $2.1 million,
current federal tax of $58,000 and state taxes of $244,000.
Discontinued Operations The loss from discontinued operations in the 2002
quarter was $317,000, compared to a loss of $575,000 in the 2001 quarter.
For the 2002 year, the discontinued hotels segment reported income of
$3.4 million, including gains from extinguishment of debt of $5.8 million less
a deferred tax charge of $1.8 million. For the 2001 year, the discontinued
hotels segment reported a loss of $1.4 million, including an impairment charge
of $935,000 less a net tax benefit of $500,000.
In May 2001, the Company sold its Hallwood Energy Corporation affiliate
and received $18.0 million in cash for its common stock. In June 2001, the
Company received an additional $7.25 million in cash for a noncompetition
agreement. For the 2001 year the discontinued energy segment reported income
of $11.1 million, including a gain on disposal in the amount of $8.7 million.
Cumulative Effect of Changes in Accounting Principles
Effective from the first quarter of 2002, the Company adopted Statement of
Financial Accounting Standards No. 142 - Goodwill and Other Intangible Assets.
The adoption resulted in the recording of $568,000 of income, which
represented the unamortized amount of negative goodwill associated with the
Company's investment in Hallwood Realty Partners, L.P.
The following table sets forth selected financial information for the
quarters and years ended December 31, 2002 and 2001, respectively.
THE HALLWOOD GROUP INCORPORATED
(In thousands, except per share amounts)
Quarter Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Revenue $25,827 $20,913 $97,156 $81,402
Income (loss) from
continuing operations
before income taxes $95 $(2,442) $5,711 $(3,042)
Income taxes 459 1,497 2,319 2,423
Income (loss) from
continuing operations (364) (3,939) 3,392 (5,465)
Income (loss) from
discontinued operations,
net of tax (317) (575) 3,402 9,750
Income (loss) before
cumulative effect of
changes in accounting
principles (681) (4,514) 6,794 4,285
Income (loss) from
cumulative effect of
changes in accounting
principles --- --- 568 (40)
Net income (loss) (681) (4,514) 7,362 4,245
Less: Preferred stock
dividend --- --- (50) (50)
Net income (loss)
available to common
stockholders $(681) $(4,514) $7,312 $4,195
PER COMMON SHARE
BASIC:
Income (loss) from
continuing operations $(0.27) $(2.80) $2.45 $(3.89)
Income (loss) from
discontinued
operations (0.23) (0.41) 2.50 6.87
Income (loss) from
cumulative effect of
changes in accounting
principles --- --- 0.42 (0.03)
Net income (loss) $(0.50) $(3.21) $5.37 $2.95
Weighted average
shares outstanding 1,361 1,407 1,361 1,420
ASSUMING DILUTION:
Income (loss) from
continuing operations $(0.27) $(2.80) $2.38 $(3.89)
Income (loss) from
discontinued
operations (0.23) (0.41) 2.41 6.87
Income (loss) from
cumulative effect of
changes in accounting
principles --- --- 0.40 (0.03)
Net income (loss) $(0.50) $(3.21) $5.19 $2.95
Weighted average
shares outstanding 1,361 1,407 1,415 1,420
Results include reclassifications of (i) extraordinary gains or loss from
early extinguishment of debt to continuing operations, as required by
Statement of Financial Accounting Standards No. 145, and (ii) the gross-up of
certain real estate expenses for parking, construction and tenant services
that were previously netted against revenues, as required by EITF No. 01-14
"Income Statement Characterization of Reimbursements Received for Out-of-
Pocket Expenses Incurred." The reclassifications had no effect on previously
reported net income.
Certain statements in this press release may constitute "forward-looking
statements", which are subject to known and unknown risks and uncertainties
including, among other things, certain economic conditions, competition,
development factors and operating costs that may cause the actual results to
differ materially from results implied by such forward-looking statements.
These risks and uncertainties are described in greater detail in the Company's
periodic filings with the SEC.