Exhibit 99
HERLEY REPORTS STRONG SECOND QUARTER RESULTS
-- Q2 Net Sales Increased 35.8% to $45.8 Million
-- Q2 Diluted Earnings Per Share was $0.26
-- 1.29 to 1 Book-to-Bill for Q2
Lancaster, PA, March 8, 2006. Herley Industries, Inc. (Nasdaq:HRLY) today
reported record financial results for the second quarter and six month period
ended January 29, 2006.
Net income for the second quarter was $4.0 million, or $0.26 per diluted share.
This compares to net income of $2.1 million or $0.14 per diluted share for the
second quarter of fiscal 2005.
Operating income for the second quarter of fiscal 2006 was $5.3 million, or
11.5% of net sales, up 112.1% from the second quarter of fiscal 2005. Net sales
for the second quarter of fiscal 2006 increased $12.1 million, up 35.8% from the
second quarter of fiscal 2005.
John M. Kelley, Herley's President, said, "We are very pleased with our second
quarter financial results and the Company's position in key market segments as
we enter the second half of our fiscal 2006."
Mr. Kelley continued, "Financial performance from Herley's first quarter to its
second quarter has historically fallen due to extended holiday vacation days in
November and December, effectively reducing the number of shipping days.
Improved execution and operational efficiencies in the second quarter allowed us
to overcome the lost days and increase revenues and earnings compared to
historical second quarter results. In addition, many of the engineering programs
underway in Q2 of fiscal 2005 were completed successfully and introduced to
production in Q2 2006. We are beginning to see the rise in revenues and earnings
that we expected."
For the six months ended January 29, 2006, net sales were $87.8 million, up
30.3% from the first six months of fiscal 2005. Operating income for the first
six months of fiscal 2006 was $10.8 million or 12.3% of net sales. Net income
for the first six months of fiscal 2006 was $7.9 million or $0.52 per diluted
share.
Cash and cash equivalents at January 29, 2006 were $21.8 million. During the
quarter, the Company generated $1.9 million in cash from operations, and had
approximately $1.0 million in capital expenditures.
Herley will host a conference call on Thursday, March 9, 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 # 6191756. A taped replay of the call will
be available through March 16, 2006. To listen to the replay dial: 1 (800)
642-1687 (U.S.) or 1 (706) 645-9291 (International), and Conference ID #
6191756.
In addition, the conference call will be broadcast live over the Internet
through PR Newswire at http://phx.corporate-ir.net/playerlink.zhtml?c=111170&s=
wm&e=1226692. 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 locations and over
a thousand employees worldwide. 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
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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.
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HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share data)
January 29, July 31,
2006 2005
------------ ---------------
ASSETS
Current Assets:
Cash and cash equivalents $ 21,769 $ 20,331
Trade accounts receivable 28,549 27,258
Costs incurred and income recognized in excess
of billings on uncompleted contracts, including claims 18,923 16,058
Other receivables 1,642 1,414
Inventories, net of allowance of $4,844 in fiscal 2006
and $4,492 in fiscal 2005 56,671 53,668
Deferred taxes and other 3,853 3,782
------------ ---------------
Total Current Assets 131,407 122,511
Property, Plant and Equipment, net 29,722 29,461
Goodwill 73,372 70,831
Intangibles, net of accumulated amortization of $2,574 in fiscal 2006
and $1,680 in fiscal 2005 20,497 20,554
Other Assets 703 744
------------ ---------------
$ 255,701 $ 244,101
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 219 $ 797
Accounts payable and accrued expenses 21,523 24,477
Billings in excess of costs incurred and
income recognized on uncompleted contracts 995 538
Income taxes payable 4,690 3,760
Reserve for contract losses 3,219 630
Advance payments on contracts 5,704 3,966
------------ ---------------
Total Current Liabilities 36,350 34,168
Long-term Debt 4,805 5,000
Other Long-term Liabilities 1,228 1,042
Deferred Income Taxes 6,263 6,254
------------ ---------------
48,646 46,464
------------ ---------------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
20,000,000 shares; issued and outstanding
14,478,975 in fiscal 2006 and 14,389,625 in fiscal 2005 1,448 1,439
Additional paid-in capital 110,564 109,118
Retained earnings 93,871 85,932
Accumulated other comprehensive income 1,172 1,148
------------ ---------------
Total Shareholders' Equity 207,055 197,637
------------ ---------------
$ 255,701 $ 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 Twenty-six weeks ended
-------------------- ----------------------
January 29, January 30, January 29, January 30,
2006 2005 2006 2005
-------------- -------------- -------------- --------------
Net sales $ 45,839 $ 33,754 $ 87,777 $ 67,344
-------------- -------------- -------------- --------------
Cost and expenses:
Cost of products sold 32,351 24,405 60,164 47,189
Selling and administrative expenses 8,238 6,874 16,825 12,676
-------------- -------------- -------------- --------------
40,589 31,279 76,989 59,865
-------------- -------------- -------------- --------------
Operating Income 5,250 2,475 10,788 7,479
-------------- -------------- -------------- --------------
Other income (expense), net:
Investment income 199 292 309 516
Interest expense (91) (58) (174) (137)
Foreign exchange gain (loss) (10) 185 103 185
-------------- -------------- -------------- --------------
98 419 238 564
-------------- -------------- -------------- --------------
Income before income taxes 5,348 2,894 11,026 8,043
Provision for income taxes 1,384 817 3,087 2,413
-------------- -------------- -------------- --------------
Net income $ 3,964 $ 2,077 $ 7,939 $ 5,630
============== ============== ============== ==============
Earnings per common share - Basic $ .27 $ .14 $ .55 $ .39
============== ============== ============== ==============
Basic weighted average shares 14,474 14,335 14,460 14,294
============== ============== ============== ==============
Earnings per common share - Diluted $ .26 $ .14 $ .52 $ .38
============== ============== ============== ==============
Diluted weighted average shares 15,091 15,044 15,173 14,990
============== ============== ============== ==============
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Twenty-six weeks ended
----------------------
January 29, January 30,
2006 2005
------------ ------------
Cash flows from operating activities:
Net income $ 7,939 $ 5,630
------------ ------------
Adjustments to reconcile net income to
net cash provided by operations:
Depreciation and amortization 3,466 2,389
Stock-based compensation expense 213 -
Increase in deferred tax assets (81) -
Foreign exchange (gain) loss (36) 22
Gain on sale of securities - (20)
Equity in income of limited partnership - (6)
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable (1,291) 6,610
Increase in costs incurred and income
recognized in excess of billings on
uncompleted contracts, and claims (2,865) (2,593)
Increase in other receivables (228) (123)
(Increase) decrease in inventories (3,003) 484
Increase in deferred taxes and other (71) (549)
Decrease in accounts payable
and accrued expenses (2,954) (3,121)
Increase (decrease) in billings in excess of
costs incurred and income recognized
on uncompleted contracts 457 (1,022)
Increase in income taxes payable 930 1,708
Increase in accrual for contract losses 85 22
Increase (decrease) in advance payments on contracts 1,738 (281)
Other, net 248 220
------------ ------------
Total adjustments (3,392) 3,740
------------ ------------
Net cash provided by operating activities 4,547 9,370
------------ ------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired - (3,753)
Acquisition of technology license (825) (1,000)
Deposit on purchase price of acquired business - (1,014)
Proceeds from sale of securities - 165
Partial distribution from limited partnership 11 78
Capital expenditures (2,785) (3,274)
------------ ------------
Net cash used in investing activities (3,599) (8,798)
------------ ------------
Cash flows from financing activities:
Borrowings under bank line of credit 8,000 -
Proceeds from exercise of stock options 999 1,599
Payments of long-term debt (753) (734)
Payments under bank line of credit (8,000) -
Income tax benefit from exercise of stock options 244 330
------------- -------------
Net cash provided by financing activities 490 1,195
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Net increase in cash and cash equivalents 1,438 1,767
20,331 66,181
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$ 21,769 $ 67,948
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