HERLEY REPORTS SECOND QUARTER RESULTS
CONFERENCE CALL SCHEDULED FOR THURSDAY, MARCH 8, 2007
Lancaster, PA - March 6, 2007 Herley Industries, Inc. (Nasdaq: HRLY) today
reported financial results for the second quarter ended January 28, 2007.
Net sales for the thirteen weeks ended January 28, 2007 were approximately $38.0
million. Net income for the period was approximately $1.7 million.
John M. Kelley, Herley President, commented, "Herley is regaining pre-suspension
momentum and sales levels. Our book-to-bill for the quarter was 1.14 to 1.
Backlog at the end of the second quarter was $136 million. Additionally, we are
pleased that the scope of the U. S. defense budget includes areas where Herley
has experience, technical expertise, and proven products and capabilities. We
look forward to these opportunities to provide microwave hardware and solutions
to the U. S. Government and its prime military contractors."
Myron Levy, Chairman and CEO, said, "Herley took a "standing eight count" with
the suspension. With a cleared head, we are now moving forward, and expect
increasing revenues and profitability. We are pleased with these initial results
in Q2, and we anticipate continued improvement in Q3 and Q4. As we progress, we
will hold more frequent communications to share what we believe will be good
news with our friends, customers, and shareholders."
Mr. Kelley will host a conference call on March 8, 2007 at 10:00 a.m. Eastern
time to discuss financial results for the second quarter ended January 28, 2007.
To join the conference call dial 1 (888) 425-4188, referencing Conference ID
1338659.
A taped replay of the call will be available on March 8, 2007 at 11:00 a.m.
through March 15, 2007 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 Conference ID
1338659.
In addition, the conference call will be broadcast live over the Internet and
can be accessed through the following URL: http://www.videonewswire.com/event.
asp?id=38197. To listen to the live call on the Internet, go to the web site at
least 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 eight manufacturing
locations and more than 1000 employees. Additional information about the company
can be found on the Internet at www.herley.com
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Safe Harbor Statement - Except for the historical information contained herein,
this presentation may contain forward-looking statements. Such statements are
inherently subject to risks and uncertainties. When used in this report, words
such as "anticipated," "believes," "could," "estimates," "expects," "may,"
"plans," "potential," "thinks", "intends" and similar expressions, as they
relate to the Company or its management, identify forward-looking statements.
Such forward-looking statements are based on the belief of the Company's
management, as well as assumptions made by and information currently available
to the Company's management. 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, the effects of
the recently announced indictment of the Company and general economic
conditions. The Company undertakes no obligation to update forward-looking
statements as a result of future events or developments.
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For information at Herley contact:
Peg Guzzetti Tel: (717) 735-8117
Investor Relations www.herley.com
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
January 28,
2007 July 30,
(Unaudited) 2006
---------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 24,124 $ 22,303
Trade accounts receivable 28,438 30,600
Costs incurred and income recognized in excess
of billings on uncompleted contracts and claims 13,006 13,926
Other receivables 1,657 769
Inventories, net 53,984 52,909
Deferred income taxes and other 5,705 4,932
---------- -----------
Total Current Assets 126,914 125,439
Property, Plant and Equipment, net 30,027 30,478
Goodwill 73,862 73,612
Intangibles, net of accumulated amortization of $4,362
at January 28, 2007 and $3,468 at July 30, 2006 19,485 19,989
Other Assets 1,725 1,932
---------- -----------
$ 252,013 $ 251,450
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,321 $ 630
Current portion of employment settlement agreement -
(net of imputed interest of $331) 1,027 -
Accounts payable and accrued expenses 16,707 21,503
Billings in excess of costs incurred and
income recognized on uncompleted contracts 701 555
Income taxes payable 4,957 3,395
Accrual for contract losses 1,974 2,959
Accrual for warranty costs 1,150 986
Advance payments on contracts 4,840 3,323
---------- -----------
Total Current Liabilities 32,677 33,351
Long-term Debt 6,577 5,948
Long-term Portion of Employment Settlement Agreement -
(net of imputed interest of $665) 4,672 -
Other Long-term Liabilities 1,439 1,265
Deferred Income Taxes 5,390 7,416
---------- -----------
50,755 47,980
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Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized 20,000,000 shares;
issued 14,761,366 and outstanding 13,962,799 in 2007
issued 14,660,716 and outstanding 13,862,149 in 2006 1,476 1,466
Additional paid-in capital 115,128 113,418
Retained earnings 91,948 96,286
Treasury stock, 798,567 common shares at cost (9,044) (9,044)
Accumulated other comprehensive income 1,750 1,344
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Total Shareholders' Equity 201,258 203,470
---------- -----------
$ 252,013 $ 251,450
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HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
(Unaudited)
Thirteen weeks ended Twenty-six weeks ended
------------------------- -------------------------
January 28, January 29, January 28, January 29,
2007 2006 2007 2006
----------- ---------- ---------- -----------
Net sales $ 37,997 $ 45,839 $ 78,113 $ 87,777
----------- ---------- ---------- -----------
Cost and expenses:
Cost of products sold 28,010 32,351 57,841 60,164
Selling and administrative expenses 7,398 8,238 16,420 16,825
Employment contract settlement costs - - 8,914 -
----------- ---------- ---------- -----------
35,408 40,589 83,175 76,989
----------- ---------- ---------- -----------
Income (loss) from operations 2,589 5,250 (5,062) 10,788
----------- ---------- ---------- -----------
Other income (expense), net:
Investment income 263 199 479 309
Interest expense (222) (91) (365) (174)
Foreign exchange gain (loss) 266 (10) 283 103
----------- ---------- ---------- -----------
307 98 397 238
----------- ---------- ---------- -----------
Income (loss) before income taxes 2,896 5,348 (4,665) 11,026
Provision (benefit) for income taxes 1,223 1,384 (327) 3,087
----------- ---------- ---------- -----------
Net income (loss) $ 1,673 $ 3,964 $ (4,338) $ 7,939
=========== ========== ========== ===========
Earnings (loss) per common share - Basic $ .12 $ .27 $ (.31) $ .55
=========== ========== ========== ===========
Basic weighted average shares 13,902 14,474 13,882 14,460
=========== ========== ========== ===========
Earnings (loss) per common share - Diluted $ .12 $ .26 $ (.31) $ .52
=========== ========== ========== ===========
Diluted weighted average shares 14,405 15,091 13,882 15,173
=========== ========== ========== ===========
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Twenty-six weeks ended
----------------------
January 28, January 29,
2007 2006
--------------- ---------------
Cash flows from operating activities:
Net (loss) income $ (4,338) $ 7,939
--------------- ---------------
Adjustments to reconcile net (loss) income to
net cash provided by operating activities:
Depreciation and amortization 3,507 3,466
Stock-based compensation expense 225 213
Excess tax benefit from exercise of stock options (212) (244)
Employment contract settlement costs (includes $196 of
stock option modification costs) 5,914 -
Imputed interest related to employment settlement liability 111 -
Deferred taxes (2,307) (81)
Gain on sale of equipment (107) -
Foreign exchange gain (68) (36)
Inventory valuation reserve charges 424 488
Reduction in accrual for contract losses (664) -
Warranty reserve charges 634 167
Changes in operating assets and liabilities:
Trade accounts receivable 2,162 (1,291)
Costs incurred and income
recognized in excess of billings on
uncompleted contracts and claims 920 (2,865)
Other receivables (888) (228)
Inventories (1,499) (3,491)
Other current assets (315) (71)
Accounts payable and accrued expenses (5,266) (3,121)
Billings in excess of costs incurred and
income recognized on uncompleted contracts 146 457
Income taxes payable 1,774 1,174
Accrual for contract losses (321) 85
Advance payments on contracts 1,517 1,738
Other, net 209 259
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Total adjustments 5,896 (3,381)
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Net cash provided by operating activities 1,558 4,558
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Cash flows from investing activities:
Acquisition of technology license (179) (825)
Proceeds from sale of equipment 202 -
Capital expenditures (2,235) (2,785)
--------------- ---------------
Net cash used in investing activities (2,212) (3,610)
--------------- ---------------
Cash flows from financing activities:
Borrowings under bank line of credit 8,500 8,000
Borrowings - other 1,746 -
Proceeds from exercise of stock options 1,087 999
Excess tax benefit from exercises of stock options 212 244
Payments under employment contract settlement (130) -
Payments of long-term debt (440) (753)
Payments under bank line of credit (8,500) (8,000)
--------------- ---------------
Net cash provided by financing activities 2,475 490
--------------- ---------------
Net increase in cash and cash equivalents 1,821 1,438
Cash and cash equivalents at beginning of period 22,303 20,331
--------------- ---------------
Cash and cash equivalents at end of period $ 24,124 $ 21,769
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