UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10 Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended August 31, 2004
Commission File Number 0 9599
HIA, INC.
(Exact name of Registrant as specified in its charter)
New York 16 1028783
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification Number
4275 Forest Street
Denver, Colorado 80216
(Address of principal executive offices, zip code)
(303) 394 6040
(Registrant's telephone number, including area code)
_____________________________________________________________________
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes__x__ No___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 9,273,535 shares
of the Registrant's $.01 par value common stock were outstanding at
August 31, 2004.
HIA, INC.
INDEX
Part I. Financial Information
Item 1. Consolidated Financial Statements. . . . . . . . . 3
Item 2. Management's Discussion and Analysis or
Financial Condition and Results of Operations . . 10
Item 3. Quantitative and Qualitative Disclosure
about Market Risk . . . . . . . . . . . . 14
Item 4. Controls and Procedures. . . . . . . . . . . . . 15
Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . .. 16
Item 2. Changes in Securities and Use of Proceeds. . . . . 16
Item 3. Defaults upon Senior Securities . . . . . . . . 16
Item 4. Submission of Matters to a Vote of
Security Holders .. . . . . . . . . . . . . . . . 16
Item 5. Other Information . . . . . . . . . . . . . . . 16
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . 16
SIGNATURES .. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Part 1.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of August 31, 2004
and November 30, 2003. . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations for the three and nine
months ended August 31, 2004 and 2003 . . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows for the nine months
ended August 31, 2004 and 2003 . . . . . . . . . . . . . . . . 7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 8
Forward Looking Statements
Statements made in this Form 10-Q that are historical or current facts are
forward-looking statements made pursuant to the safe harbor provisions
of Section 27A of the Securities Act of 1933 ( The ACT ) and Section 21E
of the Securities Exchange Act of 1934. These statements often can be
identified by the use of terms such as may,will, expect, believes,
anticipate, estimated approximate,or continue, or the negative
thereof. The Company intends that such forward-looking statements be
subject to the safe harbors for such statements. The Company wishes to
caution readers not to place undue reliance on any such forward-looking
statements,which speak only as of the date made. Any forward-looking
statements represent managements best judgements as to what may occur in
the future. However, forward-looking statements are subject to risks,
uncertainties and important factors beyond the control of the Company that
could cause actual results and events to differ materially from historical
results of operations to revise any forward-looking statements to reflect
events or circumstances after the date of such statement or to reflect the
occurrence of anticipated or unanticipated events.
HIA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Information as of November 30, 2003 is based upon an audited balance sheet.
All other information is unaudited.)
August 31, November 30,
2004 2003
ASSETS
Current Assets:
Cash $ 7,000 1,000
Accounts receivable, net of
allowance for doubtful
accounts of $148,000 and $107,000 5,787,000 3,612,000
Inventories 6,019,000 4,079,000
Other current assets 168,000 270,000
--------- --------
Total current assets 11,981,000 7,962,000
---------- ---------
Property and equipment, at cost:
Land 40,000 - 0 -
Leasehold improvements 385,000 349,000
Equipment 1,039,000 1,405,000
--------- ---------
1,464,000 1,754,000
Less accumulated depreciation
and amortization 1,241,000 1,594,000
--------- ---------
Net property and equipment 223,000 160,000
Other assets 209,000 211,000
Goodwill, net of amortization 1,151,000 1,151,000
of $383,000 and $383,000
Non-compete agreement, net of amortization
of $78,750 and $67,500 71,000 83,000
-------- ---------
TOTAL ASSETS $13,635,000 $9,567,000
========== =========
The accompanying notes are an integral part of the consolidated
financial statements.
HIA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (Continued)
(Information as of November 30, 2003 is based upon an audited balance sheet.
All other information is unaudited).
August 31, November 30,
LIABILITIES 2004 2003
Current Liabilities:
Note payable to bank $3,366,000 $1,288,000
Current maturities of long-term
obligations 115,000 215,000
Accounts payable 1,631,000 974,000
Checks written in excess of deposits 102,000 342,000
Accrued expenses and other current
liabilities 1,868,000 963,000
--------- ---------
Total current liabilities 7,082,000 3,782,000
--------- ---------
Long-term Obligations:
Notes payable, less current maturities 561,000 646,000
--------- ---------
Total long-term obligations 561,000 646,000
--------- ---------
TOTAL LIABILITIES 7,643,000 4,428,000
--------- ---------
COMMITMENTS
STOCKHOLDERS' EQUITY
Common stock of $.01 par value;
authorized 20,000,000 shares: issued
13,108,196; outstanding 9,273,525217
and 9,303,310 131,000 131,000
Additional paid in capital 3,109,000 3,109,000
Retained earnings 4,117,000 3,247,000
--------- ---------
7,357,000 6,487,000
Less treasury stock: 3,834,661 and
3,246,671 shares at cost (1,365,000) (1,348,000)
--------- ---------
Total stockholders' equity 5,992,000 5,139,000
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $13,635,000 $9,567,000
========== =========
The accompanying notes are an integral part of the consolidated
financial statements.
HIA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Nine Months Ended Three Months Ended
Aug 31, 2004 Aug 31, 2003 Aug 31, 2004 Aug 31, 2003
,
Net sales $26,849,000 $23,703,000 12,321,000 11,943,000
Cost of sales 17,664,000 15,848,000 8,227,000 7,985,000
---------- ---------- ----------- ----------
Gross profit 9,185,000 7 ,855,000 4,094,000 3,958,000
Selling, general
& administrative
expenses 7,768,000 6,723,000 3,171,000 2,656,000
--------- --------- --------- ---------
Operating income 1,417,000 1,132,000 923,000 1,302,000
Other income (expense):
Interest income 64,000 46,000 30,000 19,000
Interest expense (128,000) (139,000) (49,000) (51,000)
Misc. income
(expense) 26,000 30,000 11,000 11,000
------- ------- ------ ------
Total other
expense (38,000) (63,000) (8,000) (21,000)
Income before income
tax expense 1,379,000 1,069,000 915,000 1,281,000
Income tax expense (509,000) (392,000) (339,000) (470,000)
-------- -------- ------- -------
NET INCOME 870,000 $677,000 $576,000 $811,000
======= ======== ======== =======
Net income per share
Basic $ .09 $ .07 $ .06 $ .08
Diluted $ .09 $ .07 $ .06 $ .08
Weighted average common
shares outstanding:
Basic 9,320,834 10,029,882 9,332,680 10,171,092
Dilutive 9,348,463 10,029,882 9,400,862 10,171,092
The accompanying notes are an integral part of the consolidated financial
statements.
HIA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the Nine Months Ended
Aug 31, 2004 Aug 31, 2003
OPERATING ACTIVITIES:
Interest Income $870,000 $677,000
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 105,000 129,000
Inventory Reserve 27,000 28,000
Changes in current assets and
current liabilities:
Accounts receivable (2,175,000) (3,146,000)
Inventories (1,967,000) (1,390,000)
Other current assets 102,000 (19,000)
Accrued expenses and other
current liabilities 906,000 466,000
Accounts payable 657,000 1,548,000
--------- ---------
NET CASH USED IN
OPERATING ACTIVITIES (1,475,000) (1,707,000)
--------- ---------
INVESTING ACTIVITIES:
Purchases of property and equipment (156,000) (30,000)
NET CASH USED IN
INVESTING ACTIVITIES (156,000) (30,000)
--------- ---------
FINANCING ACTIVITIES:
Proceeds from note payable to bank 8,884,000 8,064,000
Payments on borrowings on note
payable to bank (6,805,000) (6,590,000)
Repayments of long-term debt (185,000) (228,000)
Payments on capital lease obligations 0 (108,000)
Increase in checks written in
excess of deposits (240,000) 418,000
Purchase of treasury stock (17,000) (8,000)
Sale of treasury stock 0 187,000
----------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 1,637,000 1,735,000
NET DECREASE IN CASH 6,000 (2,000)
CASH, BEGINNING OF PERIOD 1,000 7,000
--------- ---------
CASH, END OF PERIOD $ 7,000 $ 5,000
========= =========
The accompanying notes are an integral part of the consolidated
financial statements
HIA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis for Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions of Form 10 Q and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statement. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for fair presentation have been included. Operating results for the nine
months ended August 31, 2004 are not necessarily indicative of the results
that may be obtained for the year ending November 30, 2004. These statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Registrations Form 10-K for the year ended
November 30, 2003 filed with the Securities and Exchange Commission on
February 25, 2004.
B. Net Income Per Common Share
Statement of Financial Accounting Standards No. 128, Earnings Per Share,
provides for the calculation of Basic and Diluted earnings per share.
Basic earnings (loss) per share includes no dilution and is computed by
dividing income (loss) available to common stockholders by the
weighted-average number of shares outstanding during the period (9,320,834
and 9,332,680 for the nine months and three months ended August 31, 2004).
Diluted earnings per share reflect the potential of securities that could
share in the earnings of the Company, similar to fully diluted earnings per
share.
The following table represents a reconciliation of the shares used to
calculate basic and diluted earnings per share for the respective periods
indicated.
Nine Months Ended Three Months Ended
Aug 31, 2004 Aug 31, 2003 Aug 31, 2004 Aug 31, 2003
Numerator:
Net Income (Loss) $870,000 $677,000 $576,000 $811,000
======= ======= ======= =======
Denominator:
Denomiator for
basic earnings
per share -
weighted average
shares Effect of
dilutive securities 9,320,834 10,029,882 9,332,680 10,171,092
Employee Stock
Option 27,629 -0- 68,182 -0-
--------- --------- -------- ---------
Denominator for diluted
earnings pershare-adjusted
weighted average
shares and assumed
conversion 9,348,463 10,029,882 9,400,862 10,171,092
========= ========== ========= ==========
Earnings (loss) per share:
Basic $ .09 $ .07 $ .06 $ .08
========= ========== ========== =========
Diluted $ .09 $ .07 $ .06 $ .08
========= ========== ========== =========
C. Stockholders Equity
Purchase of Treasury Stock
On September 15, 2003, the Company sent a tender offer to all its shareholders
which offered to re-purchase up to 1 million shares of HIA, Inc. common stock,
for $.50 per share. The expiration date of the offer was October 13, 2003.
On October 10, 2003 the Company sent a letter to all its shareholders amending
the original expiration date from October 13, 2003 to October 31, 2003 at
5:00 p.m., Mountain Time. On October 16, 2003 the Company sent a letter to
all its shareholders amending the original offer to re-purchase 1 million
shares of its common stock to 1.5 million shares of its common stock (an
increase of 500,000 shares) at the same purchase price and the same
expiration date.
A preliminary accounting was made by the Companys transfer agent during
January of 2004 whereby the Company was issued a certificate for 1,430,390
shares of common stock (treasury stock). The Company paid a total of $735,000
(including $20,000 of legal and transfer fees) for the 1,430,390 shares of
common stock at an average price of $.51 per share. At the time of
reconciliation in January there still remained 14,224 shares of stock,
representing 13 shareholders, for which the proper documentation had
not been completed by the representative shareholders per the requirements
of the tender offer. A final settlement of those outstanding shares were
made during the second quarter of 2004 by the receipt of a certificate for
8,200 shares from the transfer agent for the purchase price of $4,100 or
$.50 per share (the option to purchase expired on the remaining 6,024 shares).
On January 8, 2004, the Board of Directors granted common stock options to
the officers of the Company and 3 senior managers to purchase a total of
750,000 shares of treasury stock at $.50 per share to expire December 31,
2005. As of August 31, 2004, none of the shares have been subscribed to
by the officers or senior management. The options exercise price was equal
to or greater than the common stock market price at the date of grant.
During fiscal 2004 the Company purchased 21,575 shares of common stock from
non-affiliated stockholders for $.50 per share, a total purchase price
of $10,788.
Stock Option Plans The Company applies Accounting Principles Board (APB)
Opinion 25, Accounting for Stock Issued to Employees, and the related
interpretations in accounting for all stock option plans. During the 3rd
quarter of 2004 there were no stock options granted to employees
under the plan.
D. Supplemental Disclosure of Cash Flow Information
Cash payments for interest were $128,000 and $139,000 for the nine months
ended August 31, 2004 and August 31, 2003. Cash payments for income taxes
were $170,000 and $232,000 for the nine months ended August 31, 2004 and
August 31, 2003.
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
Liquidity and Capital Resources
The net cash used in operating activities decreased by $232,000 for the nine
months ended August 31, 2004 as compared the nine months ended August 31, 2003
primarily due to an increase in net income of $193,000, a decrease in accounts
receivable of $971,000, an increase in inventories of $577,000, a decrease in
accounts payable of $891,000 and an increase in accrued expenses and other
current liabilities of $440,000. The decrease in accounts receivables were
primarily due to the substantially lower beginning balance of receivables as
of November 30, 2002 as compared to November 30, 2003 in the amount of
$910,000. The increase in inventories was primarily due to price increases
on replacement inventories for the 1st nine months of fiscal 2004 averaging
approximately 5% and an increase in sales for the same period. The decrease
in accounts payable was primarily due to a decrease in inventory purchases
(during the winter and spring periods of 2004) with extended dating terms
resulting in a decrease average days outstanding on trade payables. The
increase in accrued expenses and other current liabilities was primarily
due to the increase in the accrual of management bonuses of approximately
$305,000 and income taxes of $117,000 when compared to the ending balance
as of August 31, 2003.
The net cash used in investing activities increased by $126,000 primarily
due to the increase in purchases of property, plant and equipment. In the
first fiscal quarter of 2004 the Company disposed of $446,000 of computer
equipment which was fully depreciated. The reason for the write-off was
that the Company purchased new enterprise software and hardware equipment
in the second quarter of 2000, which replaced equipment, previously purchased
and completely disposed of at the end of 2003.
The net cash provided by financing activities decreased by $98,000 primarily
due to the increase in net borrowings to the bank of $605,000 and the increase
in checks written in excess of deposits of $658,000. The increase in the net
proceeds from the note payable to bank was primarily due to the decrease of
checks written in excess of deposits.
On September 15, 2003, the Company sent a tender offer to all its shareholders
which offered to re-purchase up to 1 million shares of HIA, Inc. common stock,
for $.50 per share. The expiration date of the offer was October 13, 2003.
On October 10, 2003 the Company sent a letter to all its shareholders amending
the original expiration date from October 13, 2003 to October 31, 2003 at
5:00 p.m., Mountain Time. On October 16, 2003 the Company sent a letter to
all its shareholders amending the original offer to re-purchase 1 million
shares of its common stock to 1.5 million shares of its common stock
(an increase of 500,000 shares) at the same purchase price and the same
expiration date.
A preliminary accounting was made by the Companys transfer agent during
January of 2004 whereby the Company was issued a certificate for 1,430,390
shares of common stock (treasury stock). The Company paid a total of $735,000
(including $20,000 of legal and transfer fees) for the 1,430,390 shares of
common stock at an average price of $.51 per share. At the time of
reconciliation in January there still remained 14,224 shares of stock,
representing 13 shareholders, for which the proper documentation had not
been completed by the representative shareholders per the requirements of
the tender offer. A final settlement of those outstanding shares were made
during the second quarter of 2004 by the receipt of a certificate for 8,200
shares from the transfer agent for the purchase price of $4,100 or $.50 per
share (the option to purchase expired on the remaining 6,024 shares).
On January 8, 2004, the Board of Directors granted common stock options to
the officers of the Company and 3 senior managers to purchase a total of
750,000 shares of treasury stock at $.50 per share to expire December 31,
2005. As of August 31, 2004, none of the shares have been subscribed to
by the officers or senior management. The options exercise price was equal
to or greater than the common stock market price at the date of grant.
During fiscal 2004 the Company purchased 21,575 shares of common stock
from non-affiliated stockholders for $.50 per share, a total purchase
price of $10,788.
The following is a summary of working capital and current ratio for
the periods presented:
August 31, 2004 November 30, 2003
Working Capital $4,899,000 $4,180,000
Current Ratio 1.69 to 1 2.11 to 1
The Companys working capital increased by $719,000 during the nine months
ended August 31, 2004 as compared to November 30, 2003 primarily as a result
of the increase in net income of $870,000 for the nine months. Management
believes that the present working capital is adequate to conduct its present
operations.
As of August 31, 2004, the Company and its subsidiary have an available
line-of-credit of $5,750,000 of which $2,384,000 is unused. On June 30, 2004,
the Company executed a new loan agreement under primarily the same terms and
conditions which extended the borrowing commitment to July 1, 2006. The new
agreement included a provision for a term commitment on the new building, not
to exceed $2,800,000. On September 3, 2004, the Company executed a new credit
agreement with Wells Fargo Bank which specifically delineated terms and
conditions of construction and permanent financing on the new facility
(principally as described in preceding paragraphs).
The line-of-credit agreement limits the payment of dividends by CPS
Distributors, inc. and its subsidiaries (CPS) to HIA, Inc. CPS is the
wholly-owned subsidiary of HIA, Inc. The line-of-credit agreement also limits
the payment of any expenses of HIA, Inc. by CPS in excess of $50,000 during
any twelve-month period. This restriction does not have a significant impact
on HIA, Inc.s ability to meet its cash needs as its cash needs are minimal.
The decrease in the current ratio as of August 31, 2004 as compared to November
30, 2003 is primarily attributable to the relative increase in accounts
receivable of $2,175,000 and the increase in inventories of $1,940,000 as
compared to the increase of notes payable to bank of $2,078,000 and the
increase of $1,322,000 in accounts payable, checks written against future
deposits and accrued expenses resulting in a net change of the current
ratio of .4 for the nine month period.
Management believes that the present working capital is adequate to conduct its
present operations.
On April 13, 2004 the Company entered into a contract with a construction
management company to design and build a new corporate and warehouse facility.
The new structure will be built on 8.27 acres of land located in the
north-central part of metropolitan Denver. The facility consists of 45,000
square feet of offices and warehouse space. The estimated cost, including
land is approximately $3,800,000 (including interest and financing costs).
The Company has secured financing on the proposed building and site through
Wells Fargo Bank based upon a completed appraisal of $3,800,000. The terms
of the permanent loan will be: maximum 80% loan to value, 15 year fixed
principal-plus-interest amortization and a 6.6% interest rate for the life
of the loan. The down payment and construction loan will also be carried
by Wells Fargo at prime interest rate less one half percent on the line of
credit for the down payment and construction advances based upon LIBOR
plus 2%.
The company purchased the land on September 3, 2004 for $855,000 plus financing
and closing costs of approximately $24,000. Of the total purchase price,
approximately $817,000 was drawn from the existing line-of-credit with Wells
Fargo Bank and the balance was applied to the construction loan.
When the building is completed, the Company will allow its current lease on
the Forest Street location in Denver to expire on February 28, 2005 and move
into the new facility on or before that date. It is not expected that the
additional monthly loan payments for the facility ($17,000 principal plus
interest on the remaining loan balance; $17,000 the first month for interest;
less the $12,000 currently paid on leased property on Forest Street, Denver)
will have a material negative effect on the ability of the Company to meet
its normal working capital needs. The Company plans on closing one of its
branch operations, which is located within close proximity to the new
facility saving the company approximately $20,000 monthly in overhead costs.
Income Taxes
As of August 31, 2004, the Company has recorded a current net deferred tax
asset totaling $138,000 and has recorded a noncurrent net deferred tax asset
totaling $62,000. Based upon the Companys recent history of taxable income
and its projections for future earnings, management believes that it is more
likely than not that sufficient taxable income will be generated in the near
term to utilize the net deferred tax assets.
Results of Operations
Three Months Ended August 31, 2004 Compared to Three Months Ended
August 31, 2003.
Net sales for the three months ended August 31, 2004 were up $378,000 or
3.17% as compared to the three months ended August 31, 2003 primarily due to
the increase in prices on goods sold at an average annual rate of 5% and
better overall economic conditions.
Cost of Sales were up $242,000 for the three months ended August 31, 2004 as
compared to the three months ended August 31, 2003 primarily as a result of
the relative increase in sales during the three months of fiscal 2004 as
compared to the three months of fiscal 2003.
Gross profit was 33.2% during the three months ended August 31, 2004 as
compared to 33.1% during the three months ended August 31, 2003.
Selling, general and administrative expenses increased $515,000 for the
three months ended August 31, 2004 as compared to August 31, 2003 primarily
due to the increase in accrued management bonuses and employer contributions
to profit sharing of $388,000 and the general increase in expenses relative
to sales of approximately $100,000.
Other expenses decreased by $13,000 for the three months ended August 31, 2004
as compared to the three months ended August 31, 2003 primarily due to an
increase in interest income of $11,000 (service charges charged to customers).
Net income decreased by $235,000 for the three months ended August 31, 2004
as compared to the three months ended August 31, 2003 primarily due to the
increase in gross profit of $136,000 and the decrease in income taxes of
$131,000 more than offset by the increase in selling, general and
administrative of $515,000.
Nine Months Ended August 31, 2004 Compared to Nine Months Ended
August 31, 2003.
Net sales increased by $3,146,000 for the nine months ended August 31, 2004
as compared to August 31, 2003 primarily due to the increase in prices on goods
sold at an average annual rate of 5% and better overall economic conditions.
Cost of Sales increased by $1,816,000 for the nine months ended August 31,
2004 as compared to August 31, 2003 which was primarily due to the relative
increase in sales decreased in part by the increase in gross profit
percentage for the nine months of 1.1%.
Gross profit was 34.2% during the nine months ended August 31, 2004 as
compared to 33.1% during the nine months ended August 31, 2003 an increase
of 1.1% primarily due to better pricing from vendors including volume
pricing and rebates.
Selling, general and administrative expenses increased by $1,045,000 during
the nine months ended August 31, 2004 as compared to August 31, 2003 primarily
due to the increase in accrued management bonuses and employer contributions
to profit sharing of $358,000 and the general increase in expenses relative
to sales of approximately $600,000.
Other expenses decreased by $25,000 during the nine months ended August 31,
2004 as compared to August 31, 2003 primarily due to an increase in interest
income of $18,000 (service charges charged to customers).
Net income increased $193,000 for the nine months ended August 31, 2004 as
compared to the nine months ended August 31, 2003 primarily due to the
increase in gross profit of $1,330,000 partially offset by the increase
in selling, general and administrative expenses of $1,045,000, offset
partially by the increase in income tax of $117,000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk through interest rates related to its
investment of current cash and cash equivalents. These funds are generally
highly liquid with short-term maturities, and the related market risk is not
considered material. The Companys note payable to bank has a variable
interest rate equal to Wells Fargos exiting bank prime rate (4.25% as of
August 31, 2004). A 10% increase in short-term interest rates on the note
payable to bank of $3,366,000 would increase the Companys yearly interest
expense by approximately $14,000, assuming borrowed amounts remain
outstanding at current levels. The Companys management believes that
fluctuation in interest rates in the near term will not materially affect
the Companys consolidated operating results, financial position or cash flow.
Item 4. Controls and Procedures
The Company maintains a set of disclosure controls and procedures that are
designed to ensure that information required to be disclosed in the reports
filed by the Company under the Securities Exchange Act of 1934, as amended
is recorded, processed, summarized and reported within the time periods
specified in the SECs rules and forms. As of the end of the quarterly
period covered by this report, the Company carried out an evaluation,
under the supervision of the President and Chief Financial Officer, of
the effectiveness of the design and operation of our disclosure controls
and procedures pursuant to Rule 13a-14 of the Exchange Act. Based on that
evaluation, the President and Chief Financial Officer concluded that our
disclosure controls and procedures are effective.
There have been no significant changes in the Companys internal controls
or other factors that could significantly affect those controls subsequent
to the date of their evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.
Part II
Item 1. Legal Proceedings
NONE
Item 2. Changes in Securities and Use of Proceeds
NONE
Item 3. Defaults Upon Senior Securities
NONE
Item 4. Submission of Matters to a Vote of Security Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
a.) The following documents are filed as
exhibits to this Form 10Q:
Exhibit (32) Section 1350 Certification
Exhibit (31) Rule 13a-14(a)/15d-14(a) Certification
b.) Reports of Form 8-K
NONE
Exhibit 32
Certification Pursuant to Section 1350 of Chapter 63
Of Title 18 of the United States Code
I, Alan C. Bergold, the President and Chief Financial Officer of HIA, Inc.,
certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that: (i) the report fully complies
with the requirements of Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 and (ii) the information contained in the report fairly presents,
in all material respects, the financial condition and results of operations
of HIA, Inc.
________/s/__________________
Alan C. Bergold
President &
Chief Financial Officer
_______________________________________________________________________________
Exhibit 31
CERTIFICATION
I, Alan C. Bergold, certify that:
1. I have reviewed this report on Form 10-Q of HIA, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered
by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial reporting;
and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal
control over financial reporting.
Date: October 13, 2004____________ _____/s/__________________
Alan C. Bergold, President and
Treasurer and Director
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HIA, INC.
Date: October 13, 2004____________ __________/s/__________
Alan C. Bergold
Chief Financial Officer &
President