Exhibit 91.1
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HERLEY REPORTS THIRD QUARTER RESULTS
THIRD QUARTER REVENUES INCREASED 12.4% TO $30.2 MILLION
OPERATING INCOME INCREASED 12.1% WITH NET INCOME INCREASING 15.4%
BACKLOG INCREASED $9.0 MILLION SEQUENTIALLY
Lancaster, PA June 14, 2004 Herley Industries, Inc. (Nasdaq-HRLY) today reported
results for the third quarter ended May 2, 2004. Net sales for the quarter were
$30.2 million, up 12.4% from the third quarter of fiscal year 2003, and up 2.8%
sequentially from the second quarter of fiscal 2004.
Operating income for the third quarter was $5.4 million, or 17.7% of net sales,
up $579,000, or 12.1% from the third quarter of last year, and up $185,000, or
3.6% sequentially.
Net income for the third quarter was $3.9 million, or $0.26 per diluted share
compared to $0.23 per diluted share for the third quarter of fiscal 2003.
For the nine months ended May 2, 2004, net sales were $87.9 million, an 11.0%
increase over the same fiscal year period in 2003.
Net income increased 13.7% for the nine months of fiscal 2004 compared to the
same period in fiscal year 2003. Earnings per diluted share increased 15.2% to
$0.76 compared to the first nine months of fiscal year 2003.
Cash and cash equivalents at May 2, 2004 were $65.6 million, approximately $4.39
per diluted share outstanding. In the third quarter, Herley paid approximately
$14.9 million in cash to acquire Communication Techniques, Inc., generated $2.1
million in positive cash flow from operations, and did not repurchase any shares
of its common stock.
Capital expenditures for the third quarter of fiscal year 2004 were $1.1
million. Capital expenditures for the nine months ended May 2, 2004 were $4.3
million.
Bookings in the third quarter were $33.5 million, and $103.3 million for the
nine months ended May 2, 2004.
Backlog as of May 2, 2004 was $111.1 million, up $9.0 million from the $102.1
million in backlog at the end of the second quarter of fiscal year 2004.
John M. Kelley, President said, "We are pleased with the way we are executing
our business plan. Sequential revenue growth, healthy booking levels, increased
use of automation to improve efficiencies and lower costs all contributed to
strong margins and profits for the quarter."
Kelley continued, "Herley continues its focus on achieving durable growth by
improving the quality of our products, streamlining to reduce costs and looking
at ways to do a better job of marketing its products and capabilities."
Herley Industries, Inc. is a leader in the design, development and manufacture
of microwave technology solutions for the defense, aerospace and medical
industries worldwide. Based in Lancaster, PA, Herley has six locations and
approximately 700 employees worldwide. Additional information about the company
can be found on the Internet at www.herley.com
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For information at Herley contact: Tel: (717) 735-8117
Peg Guzzetti, Investor Relations www.herley.com
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Safe Harbor Statement - Except for the historical information contained herein,
this release may contain forward-looking statements. Such statements are
inherently subject to risks and uncertainties. The Company's results could
differ materially based on various factors, including, but not limited to
cancellation or deferral of customer orders, difficulties in the timely
development of new products, difficulties in manufacturing, increased
competitive pressures, and general economic conditions.
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
Thirteen weeks ended Thirty-nine Forty
-------------------- weeks ended weeks ended
May 2, May 4, May 2, May 4,
2004 2003 2004 2003
-------- -------- -------- ---------
Net sales $ 30,233 $ 26,897 $ 87,908 $ 79,202
-------- -------- -------- --------
Cost and expenses:
Cost of products sold 19,465 18,046 56,135 52,487
Selling and administrative expenses 5,418 4,080 15,396 12,697
-------- -------- -------- --------
24,883 22,126 71,531 65,184
-------- -------- -------- --------
Operating Income 5,350 4,771 16,377 14,018
-------- -------- -------- --------
Other (expense) income, net:
Investment income 153 236 516 900
Interest expense (79) (81) (248) (258)
Foreign exchange gain (loss) 18 - (225) -
-------- -------- -------- --------
92 155 43 642
-------- -------- -------- --------
Income before income taxes 5,442 4,926 16,420 14,660
Provision for income taxes 1,566 1,567 5,057 4,662
-------- -------- -------- --------
Net income $ 3,876 $ 3,359 $ 11,363 $ 9,998
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Earnings per common share - Basic $ .27 $ .24 $ .81 $ .69
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Basic weighted average shares 14,129 14,218 14,072 14,449
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Earnings per common share - Diluted $ .26 $ .23 $ .76 $ .66
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Diluted weighted average shares 14,932 14,848 14,861 15,175
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HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands except share data)
May 2, August 3,
2004 2003
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(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 65,605 $ 81,523
Accounts receivable 19,587 16,525
Costs incurred and income recognized in excess
of billings on uncompleted contracts 16,023 6,960
Other receivables 849 827
Inventories, net of allowance of $3,640 in fiscal 2004
and $2,739 in fiscal 2003 44,677 37,545
Deferred taxes and other 3,416 3,207
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Total Current Assets 150,157 146,587
Property, Plant and Equipment, net 25,124 22,406
Goodwill 35,342 25,729
Intangibles, net of accumulated amortization of $624 in fiscal
2004 and $403 in fiscal 2003 4,665 1,542
Available-For-Sale Securities 75 75
Other Investments 112 162
Other Assets 947 1,063
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$ 216,422 $ 197,564
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 788 $ 686
Accounts payable and accrued expenses 16,836 14,026
Billings in excess of costs incurred and
income recognized on uncompleted contracts 478 -
Income taxes payable 3,332 2,670
Reserve for contract losses 1,129 736
Advance payments on contracts 865 856
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Total Current Liabilities 23,428 18,974
Long-term Debt 5,845 6,403
Deferred Income Taxes 4,936 4,945
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34,209 30,322
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Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
20,000,000 shares; issued and outstanding
14,164,499 at May 2, 2004 and 13,969,151 at August 3, 2003 1,416 1,397
Additional paid-in capital 106,919 104,551
Retained earnings 72,841 61,478
Accumulated other comprehensive income (loss) 1,037 (184)
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Total Shareholders' Equity 182,213 167,242
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$ 216,422 $ 197,564
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HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Thirty-nine Forty
weeks ended weeks ended
May 2, May 4,
2004 2003
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Cash flows from operating activities:
Net income $ 11,363 $ 9,998
-------- --------
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 3,048 3,005
Foreign exchange loss 182 -
Equity in income of limited partnership - (14)
Changes in operating assets and liabilities:
Increase in accounts receivable (1,846) (138)
(Increase) decrease in costs incurred and income
recognized in excess of billings on uncompleted contracts (9,063) 2,439
(Increase) in other receivables (22) (111)
(Increase) in inventories (5,737) (5,731)
(Increase) decrease in deferred taxes and other (122) 755
Increase (decrease) in accounts payable and accrued expenses 1,904 (2,266)
Increase in billings in excess of costs incurred and
income recognized on uncompleted contracts 478 -
Increase in income taxes payable 1,224 2,157
Increase (decrease) in reserve for contract losses 98 (554)
Increase in advance payments on contracts 9 265
Other, net 539 241
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Total adjustments (9,308) 48
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Net cash provided by operating activities 2,055 10,046
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Cash flows from investing activities:
Acquisition of business, net of cash acquired (14,914) (2,542)
Partial distribution from limited partnership 50 49
Capital expenditures (4,270) (2,994)
-------- --------
Net cash used in investing activities (19,134) (5,487)
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Cash flows from financing activities:
Proceeds from exercise of stock options 1,825 704
Payments of long-term debt (664) (188)
Purchase of treasury stock - (12,187)
-------- --------
Net cash provided by (used in) financing activities 1,161 (11,671)
-------- --------
Net decrease in cash and cash equivalents (15,918) (7,112)
Cash and cash equivalents at beginning of period 81,523 86,210
-------- --------
Cash and cash equivalents at end of period $ 65,605 $ 79,098
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