HERLEY REPORTS 1ST QUARTER RESULTS
REVENUES INCREASED 24.9% TO $41.9 MILLION
EARNINGS PER DILUTED SHARE WERE $0.26
Lancaster, PA. December 13, 2005. Herley Industries, Inc. (Nasdaq:HRLY) today
reported net sales for the first quarter ended October 30, 2005 were $41.9
million, up 24.9% from the first quarter of fiscal year 2005.
Net income for the quarter was $4.0 million, or $0.26 per diluted share. This
compares to $3.6 million, or $0.24 per diluted share, for the first quarter of
fiscal 2005, and $1.5 million, or $0.10 per diluted share, for the fourth
quarter of fiscal 2005.
The effective tax rate for the first quarter of fiscal 2006 was 30.0% compared
to 31.0% for the first quarter of fiscal 2005, and 29.7% for the fourth quarter
of fiscal 2005.
Operating income for the first quarter of fiscal 2006 was $5.5 million or 13.2%.
Operating income for the first quarter of 2005 was $5.0 million or 14.9% and
$2.6 million, or 6.2% for the fourth quarter of fiscal 2005.
Cash and cash equivalents at October 30, 2005 were $21.2 million. During the
quarter, Herley generated $2.6 million in cash from operations and had $1.8
million in capital expenditures.
John M. Kelley, Herley President, said, "We are very pleased with the progress
made during the quarter on a number of projects, including I-CAP III, E/A-18G,
and Trident D-5. Herley has hardware and software on a significant number of
major weapon systems and missile and munitions for the U.S. and allied
countries. The programs are very important to the U.S. government, and we expect
funding will continue for many years. New production programs along with our
legacy business should drive revenue growth in fiscal 2006 and the out-years."
Kelley continued, "Herley is nearing completion of the integration process of
our recent acquisitions. It is important to note that the acquisitions we make
are not bolt-on or isolated from the activities at our other divisions. As a
result, we have overlapping manufacturing capability. The integration process
requires that we make each of our divisions complementary to each other, while
eliminating the competitive areas.
"We expect our acquisitions to contribute to the competitiveness and overall
effectiveness of the company. We work hard to do it right, because when the
process is completed successfully, the benefits flow, not just to Herley, but
also to our customers, making us more visible and more valuable to them."
Herley will host a conference call on Wednesday, December 14, 2005 at 9:00 A.M.
Eastern Time to discuss this news. To join the conference call dial 1 (888)
425-4188, referencing Conference ID 3408664. A taped replay of the call will be
available through December 21, 2005. To listen to the replay dial: 1 (800) 642
1687 (U.S.) or 1 (706) 645-9291 (International), and Conference ID 3408664.
In addition, the conference call will be broadcast live over the Internet and
can be accessed through the following URL:
http://phx.corporate-ir.net/playerlink.zhtml?c=111170&s=wm&e=1178392
To listen to the live call on the Internet, go to the web site 15 minutes early
to register, download and install any necessary audio software.
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 over 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 (UNAUDITED)
(In thousands, except share data)
October 30, July 31,
2005 2005
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ASSETS
Current Assets:
Cash and cash equivalents $ 21,165 $ 20,331
Trade accounts receivable 27,695 27,258
Costs incurred and income recognized in excess
of billings on uncompleted contracts, including claims 17,415 16,058
Other receivables 1,300 1,414
Inventories, net of allowance of $4,687 in fiscal 2006
and $4,492 in fiscal 2005 56,181 53,668
Deferred taxes and other 3,921 3,782
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Total Current Assets 127,677 122,511
Property, Plant and Equipment, net 30,023 29,461
Goodwill 70,880 70,831
Intangibles, net of accumulated amortization of $2,127 in fiscal 2006
and $1,680 in fiscal 2005 20,499 20,554
Other Assets 727 744
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$ 249,806 $ 244,101
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 218 $ 797
Accounts payable and accrued expenses 23,988 24,477
Billings in excess of costs incurred and
income recognized on uncompleted contracts 756 538
Income taxes payable 5,225 3,760
Reserve for contract losses 420 630
Advance payments on contracts 4,111 3,966
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Total Current Liabilities 34,718 34,168
Long-term Debt 4,840 5,000
Other Long-term Liabilities 1,143 1,042
Deferred Income Taxes 6,261 6,254
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46,962 46,464
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Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
20,000,000 shares; issued and outstanding
14,468,875 in fiscal 2006 and 14,389,625 in fiscal 2005 1,447 1,439
Additional paid-in capital 110,302 109,118
Retained earnings 89,907 85,932
Accumulated other comprehensive income 1,188 1,148
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Total Shareholders' Equity 202,844 197,637
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$ 249,806 $ 244,101
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HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
Thirteen weeks ended
October 30, October 31,
2005 2004
------------ ------------
Net sales $ 41,938 $ 33,590
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Cost and expenses:
Cost of products sold 27,813 22,784
Selling and administrative expenses 8,587 5,802
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36,400 28,586
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Income from operations 5,538 5,004
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Other income (expense), net
Investment income 110 224
Interest expense (83) (79)
Foreign exchange gain 113 -
------------ ------------
140 145
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Income before income taxes 5,678 5,149
Provision for income taxes 1,703 1,596
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Net income $ 3,975 $ 3,553
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Earnings per common share - Basic $ .28 $ .25
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Basic weighted average shares 14,446 14,252
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Earnings per common share - Diluted $ .26 $ .24
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Diluted weighted average shares 15,240 14,936
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HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UAUDITED)
(In thousands)
Thirteen weeks ended
October 30, October 31,
2005 2004
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Cash flows from operating activities:
Net income $ 3,975 $ 3,553
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Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 1,730 1,149
Stock-based compensation expense 78 -
Increase in deferred tax assets (30) -
Foreign exchange gain (31) -
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable (437) 4,126
(Increase) decrease in costs incurred and income
recognized in excess of billings on
uncompleted contracts, and claims (1,357) 175
Decrease (increase) in other receivables 114 (265)
Increase in inventories (2,513) (766)
Increase in deferred taxes and other (139) (473)
Decrease in accounts payable
and accrued expenses (489) (60)
Increase (decrease) in billings in excess of
costs incurred and income recognized
on uncompleted contracts 218 (624)
Increase in income taxes payable 1,465 1,041
Decrease in accrual for contract losses (210) (327)
Increase (decrease) in advance payments on contracts 145 (231)
Other, net 123 160
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Total adjustments (1,333) 3,905
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Net cash provided by operating activities 2,642 7,458
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Cash flows from investing activities:
Acquisition of businesses, net of cash acquired - (3,753)
Acquisition of technology license (375) -
Partial distribution from limited partnership - 10
Capital expenditures (1,820) (2,044)
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Net cash used in investing activities (2,195) (5,787)
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Cash flows from financing activities:
Borrowings under bank line of credit 4,000 -
Proceeds from exercise of stock options 898 559
Payments of long-term debt (727) (727)
Payments under bank line of credit (4,000) -
Income tax benefit from exercise of stock options 216 200
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Net cash provided by financing activities 387 32
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Net increase in cash and cash equivalents 834 1,703
Cash and cash equivalents at beginning of period 20,331 66,181
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Cash and cash equivalents at end of period $ 21,165 $ 67,884
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