Hallwood Group Reports Results For The Third Quarter And Nine
Months Ended September 30, 2012
DALLAS, Nov. 13, 2012 /PRNewswire/ -- The Hallwood Group
Incorporated (NYSE MKT: HWG) today reported results for the third
quarter and nine months ended September 30,
2012.
For the 2012 third quarter, the Company had a net loss of
$1.1 million, or $(0.70) per share, compared to net income of
$350,000, or $0.23 per share, in 2011, on revenue of
$27.1 million and $37.6 million, respectively. For the nine months
ended September 30, 2012, the net
loss was $11.8 million, or
$(7.76) per share, compared to a net
loss of $4.2 million, or $(2.74) per share, in 2011 on revenue of
$100.2 million and $101.1 million, respectively.
Following is a comparison of results for the 2012 and 2011
periods:
Operating Income (Loss). The operating income (loss) for
the 2012 and 2011 third quarter was $(1.4)
million and $652,000,
respectively. For the 2012 and 2011 nine month periods ended
September 30, operating income (loss)
was $(17.7) million and $(6.2) million, respectively.
Brookwood's textile products sales of $27.1 million decreased by $10.5 million, or 27.9%, in the 2012 third
quarter, compared to $37.6 million in
2011. Sales for the 2012 nine month period of $100.2 million decreased by $910,000, or 0.9%, compared to $101.1 million in 2011. The decreases in 2012
were principally due to a decrease in sales of specialty fabric to
U.S. military contractors as a result of decreases in orders from
the military to Brookwood's customers, as well as by reduced sales
in its other market segments. Military sales accounted for
$12.9 million and $54.2 million in the 2012 third quarter and nine
month periods, compared to $21.8
million and $52.2 million in
2011, respectively. The military sales represented 47.6% and 57.9%
of Brookwood's net sales in the 2012 and 2011 third quarters,
respectively, and 54.0% and 51.6% in the 2012 and 2011 nine month
periods, respectively. Military sales have historically been
cyclical in nature. Costs and expenses incurred by Brookwood
in its successful defense of the Nextec litigation were
$163,000 and $3,572,000 for the 2012 third quarter and nine
month periods and $1,464,000 and
$2,308,000 for the 2011 third quarter
and nine month periods, respectively. On June 1, 2012, the Court ruled from the bench
that, while Nextec's patents were valid, Brookwood had not
infringed any of the patents in the lawsuit. Nextec has since filed
a notice of appeal to the United
States Court of Appeals for the Federal Circuit; Brookwood
subsequently filed a notice of cross-appeal.
As previously disclosed, the 2012 first quarter results included
an additional charge of $13.2 million
as a result of the decision issued by the United States District
Court on April 24, 2012 in which it
entered a final judgment (the "Judgment") substantially adopting
the proposed findings that the Bankruptcy Court issued in
July 2011 in the Adversary
Proceeding. The Company satisfied the Judgment, including
prejudgment and postjudgment interest, in two payments;
$3,774,000 on May 4, 2012 and $17,947,000 on May 9,
2012. In addition, the Company will be required to pay
certain court costs and attorneys' fees incurred by the plaintiffs.
The parties settled the amount of court costs for approximately
$101,000, which was paid in August
2012. While the Company will be required to pay some
additional amount of money to the plaintiffs as compensation for
their attorney fees related to the breach of contract claim they
prosecuted against the Company, the amount and timing of that
payment are currently unresolved and will be determined by the
court. In addition, the Company is in the process of
appealing to the Fifth Circuit Court of Appeals the portions of the
Judgment awarding a combined $17,947,000 on the plaintiffs' tort claims. On
September 13, 2012, the Company filed
its appellate brief in the Fifth Circuit. It is difficult to
determine or even approximate when the Fifth Circuit will rule on
the Company's appeal, but it will likely be several months, if not
longer.
Other Income (Loss). Other income (loss) consists
of interest expense, and interest and other income. For the 2012
and 2011 third quarters, other income (loss) was $(178,000) and $(20,000), respectively. For the nine
months ended September 30, 2012 and
2011, other income (loss) was $(313,000) and $(39,000), respectively. The interest
expense component relates to Brookwood's revolving credit
facilities and Hallwood Group's loan with Hallwood Family (BVI),
L.P, which was entered into in May
2012.
Income Tax Expense (Benefit). For the 2012 third
quarter, the income tax benefit was $541,000, which included a $40,000 current federal tax benefit, a
$500,000 noncash deferred federal tax
benefit, and a state tax benefit of $1,000. For the 2011 third quarter ,
the income tax expense was $282,000,
which included a current federal tax expense of $208,000, a noncash deferred federal tax benefit
of $13,000, and state tax expense of
$87,000.
For the nine months ended September 30,
2012, the income tax benefit was $6.1
million, which included a current federal tax benefit of
$48,000, a noncash $6.1 million deferred federal tax benefit, and a
state tax benefit of $12,000. For the
nine months ended September 30, 2011,
the income tax benefit was $2.0
million, which included a current federal tax expense of
$398,000, a noncash deferred federal
tax benefit of $2.6 million, and
state tax expense of $207,000.
The following table sets forth selected financial information
for the three months and nine months ended September 30, 2012 and 2011.
THE
HALLWOOD GROUP INCORPORATED
|
(In
thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
Nine
Months Ended
|
|
September 30,
|
|
September 30,
|
|
2012
|
2011
|
|
2012
|
2011
|
|
|
|
|
|
|
Revenue
|
$27,146
|
$37,649
|
|
$100,207
|
$101,117
|
|
|
|
|
|
|
Operating
income (loss)
|
$
(1,426)
|
$
652
|
|
$
(17,651)
|
$
(6,167)
|
Other
income (loss)
|
(178)
|
(20)
|
|
(313)
|
(39)
|
|
|
|
|
|
|
Income
(loss) before income taxes
|
(1,604)
|
632
|
|
(17,964)
|
(6,206)
|
Income tax
expense (benefit)
|
(541)
|
282
|
|
(6,126)
|
(2,033)
|
|
|
|
|
|
|
Net income
(loss)
|
$(1,063)
|
$ 350
|
|
$(11,838)
|
$ (4,173)
|
|
|
|
|
|
|
PER COMMON
SHARE:
|
|
|
|
|
|
BASIC
|
|
|
|
|
|
Net income (loss)
|
$(0.70)
|
$ 0.23
|
|
$(7.76)
|
$(2.74)
|
Weighted average shares outstanding
|
1,525
|
1,525
|
|
1,525
|
1,525
|
|
|
|
|
|
|
DILUTED
|
|
|
|
|
|
Net income (loss)
|
$(0.70)
|
$ 0.23
|
|
$(7.76)
|
$(2.74)
|
Weighted average shares outstanding
|
1,525
|
1,525
|
|
1,525
|
1,525
|
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.
SOURCE The Hallwood Group Incorporated