Exhibit 99.1
------------
HERLEY 3RD QUARTER REVENUE INCREASED 36.5% TO $41.3 MILLION
3RD QUARTER EARNINGS WERE $0.24 PER DILUTED SHARE
BOOKINGS FOR THE QUARTER WERE $44.8 MILLION
BACKLOG INCREASED TO $131 MILLION
Lancaster, PA June 9, 2005. Herley Industries, Inc. (Nasdaq:HRLY) today
announced the results for the third quarter ended May 1, 2005. Net revenues for
the quarter were approximately $41.3 million, an increase of $11.0 million or
36.5% over the third quarter of fiscal 2004.
Net income for the third quarter of fiscal 2005 was $3.6 million, or $0.24 per
diluted share. This compares to net income of $3.9 million, or $0.26 per diluted
share for the third quarter last year. Net income for the second quarter of
fiscal 2005 was $2.1 million, or $0.14 per diluted share.
Operating income for the third quarter was $4.6 million of net sales or 11.0%,
representing an increase of 3.7% from the second quarter of fiscal 2005.
Cash and cash equivalents at May 1, 2005 were $20.0 million. The company
generated $2.9 million in cash provided from operations for the quarter. During
the quarter, in addition to the acquisition of two companies, Herley repurchased
105,641shares of common stock.
John M. Kelley, Herley President, stated, "We made very good progress on several
fronts during the quarter including:
o The engineering development projects are in line with expectations and
approximately on schedule. Most of this business should be in a production phase
in the fourth quarter of fiscal 2005.
o Our investment in corporate business development is generating tangible
financial results both domestically and internationally. Business development is
also gaining greater visibly for Herley's capabilities with customers.
o As a result of Herley's decision to make Micro Systems the Center of
Excellence for Command & Control, we are transitioning all new business and most
of Herley's legacy command & control business to our Ft. Walton Beach facility.
o Innovative Concepts continues to benefit from market acceptance of it's IDM
Technology (R), as today's military thinking parallels ICI's product offering of
mobile, interoperable, tactical data communications in hostile environments.
Herley plans to leverage its excellent business relationships with all branches
of the U.S. military which should generate new program and platform
opportunities for ICI products.
o Herley Power Amplifiers is completing several design projects and expects
production contracts to follow. Herley amplifiers have applications in
electronic warfare environments (jamming) and anti-IED solutions. We are
pursuing both of these markets and we expect to increase our level of activity
in the fourth quarter of fiscal 2005 and fiscal year 2006.
Kelley continued "Herley's organic revenue growth was 6.3% for the third quarter
of fiscal 2005 and we expect organic growth to continue its upward trend.
Backlog increased approximately $37 million to $131.2 million at the end of the
third quarter of fiscal 2005. Bookings for the third quarter of fiscal 2005 were
$44.9 million, reflecting a book - to - bill of 1.1 to 1."
Herley will host a Conference Call at 9:00 a.m. Eastern Time on Friday, June 10,
2005 to discuss the news. Participating in the call will be Lee Blatt, Chairman
of the Board, Myron Levy, Chief Executive Officer, John M. Kelley, President,
and Thomas V. Gilboy, Chief Financial Officer. Interested parties may join the
conference through InterCall Teleconference by dialing Phone Number: 1 (888)
425-4188, referencing Conference ID # 6853182.
Replay of the conference call is scheduled to begin on June 10, 2005 at 11:00
a.m. and end on June 17, 2005 at 11:59 p.m. Eastern Time. To listen to the
replay dial: 1 (800) 642 1687 (U.S.) or 1 (706) 645-9291 (International), and
reference Conference ID # 6853182.
This conference call will be broadcast live over the Internet and can be
accessed by interested parties through the following:
URL:http://phx.corporate-ir.net/playerlink.zhtml?c=111170&s=wm&e=1079827
To listen to the live call, please go to the Web site at least fifteen minutes
prior to the start of the call to register, download, and install any necessary
audio software. For those who are not available to listen to the live broadcast,
a replay will be available shortly after the call on the site.
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 nine manufacturing
locations and approximately 1000 employees. Additional information about the
company can be found on the Internet at www.herley.com.
... tables follow
For information at Herley contact:
Peg Guzzetti Tel: (717) 735-8117
Investor Relations www.herley.com
---------------------------------------------------------------------------
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
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
May 1, August 1,
2005 2004
------------ ------------
(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents $ 19,987 $ 66,181
Trade accounts receivable 24,852 24,664
Costs incurred and income recognized in excess
of billings on uncompleted contracts 18,005 14,210
Other receivables 1,107 576
Inventories, net of allowance of $4,489
in fiscal 2005 and $3,412 in 2004 50,516 44,909
Deferred taxes and other 4,155 3,579
------------ ------------
Total Current Assets 118,622 154,119
Property, Plant and Equipment, net 30,329 25,968
Goodwill 80,638 35,165
Intangibles, net of accumulated amortization of $1,161
in fiscal 2005 and $752 in 2004 10,585 4,555
Other Investments 62 264
Other Assets 737 900
------------ ------------
$ 240,973 $ 220,971
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 846 $ 804
Accounts payable and accrued expenses 24,374 16,934
Billings in excess of costs incurred and
income recognized on uncompleted contracts 973 1,303
Income taxes payable 4,954 2,091
Accrual for contract losses 753 954
Accrual for warranty costs 786 580
Advance payments on contracts 1,837 1,180
------------ ------------
Total Current Liabilities 34,523 23,846
Long-term Debt 5,047 5,845
Other Long-term Liabilities 1,020 932
Deferred Income Taxes 4,850 4,848
------------ ------------
45,440 35,471
------------ ------------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
20,000,000 shares; issued and outstanding
14,277,084 in fiscal 2005 and 14,220,508 in 2004 1,428 1,422
Additional paid-in capital 108,043 107,671
Retained earnings 84,408 75,151
Accumulated other comprehensive income 1,654 1,256
------------ ------------
Total Shareholders' Equity 195,533 185,500
------------ ------------
$ 240,973 $ 220,971
============ ============
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
Thirteen weeks ended Thirty-nine weeks ended
-------------------- -----------------------
May 1, May 2, May 1, May 2,
2005 2004 2005 2004
------ ------ ------ ------
Net sales $ 41,266 $ 30,233 $ 108,610 $ 87,908
--------- --------- --------- ---------
Cost and expenses:
Cost of products sold 27,845 19,465 75,034 56,135
Selling and administrative expenses 8,865 5,418 21,541 15,396
--------- --------- --------- ---------
36,710 24,883 96,575 71,531
--------- --------- --------- ---------
Operating Income 4,556 5,350 12,035 16,377
--------- --------- --------- ---------
Other income (expense), net:
Investment income 253 153 769 516
Interest expense (74) (79) (211) (248)
Foreign exchange gain (loss) 79 18 264 (225)
--------- --------- --------- ---------
258 92 822 43
--------- --------- --------- ---------
Income before income taxes 4,814 5,442 12,857 16,420
Provision for income taxes 1,187 1,566 3,600 5,057
--------- --------- --------- ---------
Net income $ 3,627 $ 3,876 $ 9,257 $ 11,363
========= ========= ========= ==========
Earnings per common share - Basic $ .25 $ .27 $ .65 $ .81
========= ========= ========= =========
Basic weighted average shares 14,313 14,129 14,300 14,072
========= ========= ========= =========
Earnings per common share - Diluted $ .24 $ .26 $ .62 $ .76
========= ========= ========= =========
Diluted weighted average shares 14,936 14,932 14,972 14,861
========= ========= ========= =========
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Thirty-nine weeks ended
-----------------------
May 1, May 2,
2005 2004
---- ----
Cash flows from operating activities:
Net income $ 9,257 $ 11,363
------ ------
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 3,825 3,048
Foreign exchange loss 31 182
Gain on sale of securities (22) -
Equity in income of limited partnership (54) -
Changes in operating assets and liabilities:
Decrease (increase) in trade accounts receivable 4,996 (1,846)
(Increase) in costs incurred and income
recognized in excess of billings
on uncompleted contracts (3,569) (9,063)
(Increase) in other receivables (269) (22)
(Increase) in inventories (3,341) (5,737)
(Increase) in deferred taxes and other (400) (122)
Increase in accounts payable
and accrued expenses 1,677 1,904
(Decrease) increase in billings in excess of
costs incurred and income recognized
on uncompleted contracts (1,206) 478
Increase in income taxes payable 3,187 1,224
(Decrease) increase in accrual for contract losses (377) 98
(Decrease) increase in advance payments on contracts (1,410) 9
Other, net 293 539
------ ------
Total adjustments 3,361 (9,308)
------ ------
Net cash provided by operating activities 12,618 2,055
------ ------
Cash flows from investing activities:
Acquisition of business, net of cash acquired (51,391) (14,914)
Acquisition of technology license (2,000) -
Proceeds from sale of securities 165 -
Partial distribution from limited partnership 109 50
Capital expenditures (4,948) (4,270)
------ ------
Net cash used in investing activities (58,065) (19,134)
------ ------
Cash flows from financing activities:
Proceeds from exercise of stock options 1,803 1,825
Payments of long-term debt (780) (664)
Purchase of treasury stock (1,770) -
------ ------
Net cash (used in) provided by financing activities (747) 1,161
------ ------
Net decrease in cash and cash equivalents (46,194) (15,918)
Cash and cash equivalents at beginning of period 66,181 81,523
------ ------
Cash and cash equivalents at end of period $ 19,987 $ 65,605
====== ======