DALLAS, April 2, 2012 /PRNewswire/ -- The Hallwood Group
Incorporated (NYSE Amex-HWG) today reported results for the fourth
quarter and year ended December 31,
2011. For the fourth quarter, the Company reported a
net loss of $2.2 million, or
$1.42 per share, compared to a net
loss of $573,000, or $0.38 per share, in 2010. For the year,
the Company reported a net loss of $6.3
million, or $4.15 per share,
compared to net income of $9.9
million, or $6.48 per share,
in 2010.
Following is a comparison of results for the 2011 and 2010
periods:
Operating Income (Loss). For the 2011 and 2010 fourth
quarters, operating losses were $(2.8)
million and $(558,000), on
revenues of $38.4 million and
$36.5 million, respectively. For the
2011 and 2010 years, operating income (loss) was $(9.0) million and $16.2
million, on revenues of $139.4
million and $168.4 million,
respectively.
While revenue increased 5.1% in the 2011 fourth quarter, the
decrease in revenue of 17.1% in the 2011 annual period was
principally due to a decrease in sales of specialty fabric to U.S.
military subcontractors as a result of reductions in orders from
the military to Brookwood's customers, partially offset by
increased sales in other market segments. Sales of specialty
fabric to U.S. military contractors were $21,693,000 and $73,906,000 in the fourth quarter and year ended
December 31, 2011, as compared to
2010 sales of $21,020,000 and
$114,265,000, respectively. The
military sales represented 56.5% and 53.0% for the 2011 fourth
quarter and annual periods, respectively, compared to 57.6% and
67.9% for the 2010 fourth quarter and annual periods, respectively.
Military sales have historically been cyclical in nature. The
gross profit margin was 16.9% in 2011 versus 25.2% in 2010.
The lower gross profit margin for 2011 was attributed to the lower
sales volume, changes in product mix and higher royalty costs,
partially offset by manufacturing efficiencies such as reductions
in material working loss.
The results for the year ended December
31, 2011 include the earlier reported noncash accrual
reserve of $7.5 million in the second
quarter of 2011 for the Adversary Proceeding and an additional
reserve of $1.8 million in the 2011
fourth quarter for the settlement of the Hallwood Energy litigation
claims, other than the Adversary Proceeding. Effective February 14, 2012, the Company and certain other
parties entered into a Settlement Agreement to settle the Hallwood
Energy litigation claims other than the Adversary Proceeding.
The terms of the Settlement Agreement include the payment by
the Company of $1,800,000, in
addition to payments by other defendants and the Company's
insurance carrier. The Company paid the settlement amount to the
Plaintiffs on February 15, 2012. The
Adversary Proceeding remains pending. The United States District
Court is reviewing the objections that have been filed by all
parties in the Adversary Proceeding on a de novo basis and will
eventually accept the Proposed Findings of the Bankruptcy Court,
decline to adopt the Proposed Findings and issue its own findings,
or accept some of the Proposed Findings while declining to adopt
the remaining Proposed Findings and issuing its own findings in
their place. The District Court may also revise the damage awards.
The Company does not know when the United States District Court
will issue its decision or enter a final judgment.
Other Income (Loss). Other income (loss) consists of
interest expense, partially offset by interest and other income.
For the fourth quarter, other income (loss) was a loss of
$29,000 in 2011, compared to a loss
of $92,000 in 2010. For the year,
other income (loss) was a loss of $68,000, compared to a loss of $291,000 in 2010.
Income Tax Expense (Benefit). For the 2011 fourth
quarter, the income tax benefit was $713,000, which included a current federal tax
benefit of $1.0 million, a noncash
deferred federal tax expense of $69,000, and a current and deferred state tax
expense of $209,000 and $30,000, respectively.
For the 2010 fourth quarter, the income tax benefit was
$77,000, which included a current
federal tax benefit of $579,000, a
noncash deferred federal tax expense of $65,000, and a current and deferred state tax
expense of $9,000 and $428,000, respectively.
For the 2011 year, the income tax benefit was $2.7 million, which included a current federal
tax benefit of $623,000, a noncash
deferred federal tax benefit of $2.6
million, and current and deferred state tax expense of
$416,000 and $30,000, respectively.
For the 2010 year, the income tax expense was $6.0 million, which included a current federal
tax expense of $4.6 million, a
noncash deferred federal tax expense of $239,000, and current and deferred state tax
expense of $740,000 and $428,000, respectively.
For further information on factors that could impact the Company
and statements contained in this press release, reference should be
made to the Company's filings with the Securities and Exchange
Commission, including quarterly reports on Forms 10-Q, current
reports on Form 8-K and annual reports on Form 10-K. You can access
such filings at http://www.sec.gov.
The following table sets forth selected financial information
for the quarters and years ended December
31, 2011 and 2010.
THE HALLWOOD
GROUP INCORPORATED
|
|
(in
thousands, except per share amounts)
|
|
|
|
|
|
|
Quarter
Ended
|
Year
Ended
|
|
|
December
31,
|
December
31,
|
|
|
|
|
|
|
|
|
2011
|
2010
|
2011
|
2010
|
|
|
|
|
|
|
|
Revenue
|
$38,382
|
$36,506
|
$139,499
|
$168,354
|
|
|
|
|
|
|
|
Operating income
(loss)
|
$(2,842)
|
$(558)
|
$(9,009)
|
$16,156
|
|
|
|
|
|
|
|
Other income
(loss)
|
(29)
|
(92)
|
(68)
|
(291)
|
|
|
|
|
|
|
|
Income (loss) before income
taxes
|
(2,871)
|
(650)
|
(9,077)
|
15,865
|
|
Income tax expense
(benefit)
|
(713)
|
(77)
|
(2,746)
|
5,985
|
|
|
|
|
|
|
|
Net income (loss)
|
$(2,158)
|
$(573)
|
$(6,331)
|
$9,880
|
|
|
|
|
|
|
|
PER COMMON SHARE:
|
|
|
|
|
|
BASIC
|
|
|
|
|
|
Net income
(loss)
|
$(1.42)
|
$(0.38)
|
$(4.15)
|
$6.48
|
|
|
|
|
|
|
|
Weighted
average shares outstanding
|
1,525
|
1,525
|
1,525
|
1,525
|
|
|
|
|
|
|
|
DILUTED
|
|
|
|
|
|
Net income
(loss)
|
$(1.42)
|
$(0.38)
|
$(4.15)
|
$6.48
|
|
|
|
|
|
|
|
Weighted
average shares outstanding
|
1,525
|
1,525
|
1,525
|
1,525
|
|
|
|
|
|
|
Certain statements in this press release that are not
statements of historical fact, including but not limited to
statements or underlying assumptions concerning the Hallwood Energy
litigation, may constitute "forward-looking statements" or
information within the meaning of Section 37A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended. Such forward-looking statements or
information are subject to known and unknown risks and
uncertainties including, among other things, the outcome of the
Hallwood Energy litigation, 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. Additionally, the inability
to obtain funding for a significant, final judgment from the
Proposed Findings could have a material adverse effect on the
Company's financial position, results of operations and cash flows
and raise substantial doubt about the Company's ability to continue
as a going concern. These risks and uncertainties are
described in greater detail in the Company's periodic filings with
the Securities and Exchange Commission.
SOURCE The Hallwood Group Incorporated