8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported) March 31, 2008

The Hallwood Group Incorporated

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State or Other Jurisdiction of Incorporation)

1-8303	51-0261339
(Commission File Number)	(IRS Employer Identification No.)

3710 Rawlins, Suite 1500, Dallas, Texas	75219
(Address of Principal Executive Offices)	(Zip Code)

(214) 528-5588

(Registrant’s Telephone Number, Including Area Code)

(Former Name or Former Address, if Changed Since Last Report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

THE HALLWOOD GROUP INCORPORATED

TABLE OF CONTENTS

ITEM 2.02	RESULTS OF OPERATIONS AND FINANCIAL CONDITION
ITEM 9.01	FINANCIAL STATEMENTS AND EXHIBITS
SIGNATURE
Exhibit 99.1	Press release dated March 31, 2008, announcing the results of operations of The Hallwood Group Incorporated for the fourth quarter and year ended December 31, 2007.
Press Release

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Item 2.02 Results of Operations and Financial Condition.

     On March 31, 2008, The Hallwood Group Incorporated issued a press release announcing its results of operations for the fourth quarter and year ended December 31, 2007. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

     The information in this Current Report on 8-K, including the exhibit, is provided under Item 2.02 of Form 8-K and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. Furthermore, the information in this Current Report on Form 8-K, including the exhibit, shall not be deemed to be incorporated by reference into the filings of the registrant under the Securities Act of 1933 regardless of any general incorporation language in such filings.

Item 9.01 Financial Statements and Exhibits.

     The following exhibits are furnished in accordance with the provisions of Item 601 of Regulations S-K:

Exhibit
Number		Description of Exhibit
	99.1	Press release issued by The Hallwood Group Incorporated on March 31, 2008, announcing its results of operations for the fourth quarter and year ended December 31, 2007.

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THE HALLWOOD GROUP INCORPORATED

SIGNATURE

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, thereunto duly authorized.

Dated: April 1, 2008

THE HALLWOOD GROUP INCORPORATED
By:	/s/ Melvin J. Melle
Name:		Melvin J. Melle
Title:		Vice President & Chief Financial Officer

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THE HALLWOOD GROUP INCORPORATED

EXHIBIT INDEX

Exhibit Number		Name
	99.1	Press release dated March 31, 2008, announcing the results of operations of The Hallwood Group Incorporated for the fourth quarter and year ended December 31, 2007.

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EX-99.1

EXHIBIT 99.1

The Hallwood Group Incorporated

3710 Rawlins, Suite 1500 • Dallas, Texas 75219 • 214/528-5588 • Fax: 214/522-9254

FOR IMMEDIATE RELEASE

Contact:	Melvin Melle, Chief Financial Officer
	(800) 225-0135 • (214) 528-5588

HALLWOOD GROUP REPORTS RESULTS FOR THE
FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2007

Dallas, Texas, March 31, 2008 — The Hallwood Group Incorporated (AMEX-HWG) today reported results for the fourth quarter and year ended December 31, 2007.

For the quarter, Hallwood reported a net loss of $24.6 million, or $16.15 per share, compared to a net loss of $5.8 million, or $3.86 per share, in 2006.

For the year, Hallwood’s net loss was $32.8 million, or $21.61 per share, compared to net loss of $6.7 million, or $4.44 per share, in 2006.

The loss for the quarter and year included equity losses from the Company’s 23% owned Hallwood Energy, L.P. affiliate in the amount of $42.3 million and $56.0 million, respectively. Hallwood Energy reported a net loss of $221.8 million and $276.4 million for the quarter and year, which was principally attributable to an impairment of its oil and gas properties of $191.3 million and $223.0 million, compared to a net loss of $34.7 million and $41.4 million for the 2006 quarter and year, respectively.

Following is a comparison of results for the 2007 and 2006 periods:

Operating Income (Loss). For the 2007 and 2006 quarters, operating income (loss) was income of $5.2 million and a loss of $18,000, on revenues of $39.5 million and $27.6 million, respectively.

For the 2007 and 2006 years, operating income was $7.3 million and $772,000, on revenues of $132.5 million and $112.2 million, respectively. The increases in 2007 revenue and operating income were primarily due to an increase in military sales, which were $23.4 million and $70.0 million for the quarter and year, compared to $13.4 million and $53.9 million for the quarter and year in 2006, respectively.

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Other Income (Loss). Other income (loss) consists of equity in its Hallwood Energy affiliate, interest income and expense and other income and expense.

For the quarter, other income (loss) was a loss of $42.6 million, compared to a loss of $8.8 million in 2006, including equity losses from Hallwood Energy of $42.3 million and $8.7 million, respectively.

For the year, other income (loss) was a loss of $56.7 million, compared to a loss of $10.5 million in 2006, including equity losses from Hallwood Energy of $56.0 million and $10.4 million, respectively.

Income Tax Expense (Benefit). For the 2007 quarter, the income tax benefit was $12.8 million, which included a current federal tax benefit of $14.3 million, a non-cash deferred federal tax expense of $1.3 million, and state tax expense of $194,000.

For the 2006 quarter, the income tax benefit was $2.9 million, which included a current federal tax benefit of $2.0 million, a non-cash deferred federal tax benefit of $786,000 and state tax benefit of $195,000.

For the 2007 year, the income tax benefit was $16.6 million, which included a current federal tax benefit of $14.3 million, a non-cash deferred federal tax benefit of $3.0 million, and state tax expense of $663,000.

For the 2006 year, the income tax benefit was $3.0 million, which included a current federal tax benefit of $2.2 million, a non-cash deferred federal tax benefit of $1.0 million and state tax expense of $233,000.

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The following table sets forth selected financial information for the quarters and years ended December 31, 2007 and 2006.

THE HALLWOOD GROUP INCORPORATED

(In thousands, except per share amounts)

	Quarter Ended						Year Ended
	December 31,						December 31,
	2007			2006			2007			2006
Revenue	$	39,548		$	27,626		$	132,497		$	112,154
Operating income (loss)	$	5,207		$	(18	)	$	7,250		$	772
Other income (loss)		(42,607	)		(8,764	)		(56,704	)		(10,485	)
Loss before income taxes		(37,400	)		(8,782	)		(49,454	)		(9,713	)
Income tax (benefit)		(12,839	)		(2,940	)		(16,629	)		(2,988	)
Net (loss)	$	(24,561	)	$	(5,842	)	$	(32,825	)	$	(6,725	)
PER COMMON SHARE:
BASIC
Net (loss)	$	(16.15	)	$	(3.86	)	$	(21.61	)	$	(4.44	)
Weighted average shares outstanding		1,521			1,515			1,519			1,514
DILUTED
Net (loss)	$	(16.15	)	$	(3.86	)	$	(21.61	)	$	(4.44	)
Weighted average shares outstanding		1,521			1,515			1,519			1,514

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.

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