AMENDED RELEASE
HERLEY REPORTS 4TH QUARTER AND YEAR-END RESULTS
o Net Income for the Fourth Quarter was $ 0.25 per diluted share
o Revenues Down Slightly For the Year
o Backlog Up at Year End
Lancaster, PA, October 12, 2007. Herley Industries, Inc. (Nasdaq: HRLY) today
reported its financial results for the fourth quarter and fiscal year ended July
29, 2007.
Net income during the fourth quarter of 2007 was $3.6 million or $.25 per
diluted share, as compared to $713,000 or $.05 per diluted share in the fourth
quarter of 2006.
Net sales for the fourth quarter ended July 29, 2007 were $40.6 million, down
5.1% when compared to $42.8 million for the fourth quarter of fiscal year 2006.
Net sales for the fifty-two weeks ended July 29, 2007 were approximately $163.1
million compared to $176.3 million for fiscal 2006, a decrease of $13.2 million
or 7.5%.
Net income for the fifty-two weeks ended July 29, 2007 was approximately $3.1
million compared to $10.3 million for fiscal year 2006.
Myron Levy, Herley's Chairman and CEO, said, "This has been a tough year. Our
first quarter saw the departure of our founder and Chairman. In addition, the
Company was suspended for almost the entire first quarter. The suspension
permitted us to continue shipping from our backlog, but made it difficult to
book new business. As we were recovering after the suspension was lifted, and
getting our operations back on track, we were hit with a second suspension of
about six weeks, or almost half of the fourth quarter. It is difficult to focus
our energies on the Company's profitability in these times. Much of the efforts
of our management team, much of my efforts and those of our board of directors,
were focused on getting our suspension lifted and corrective actions
implemented. Fortunately, our customers, including all of the U. S. Defense
agencies, stayed with us and have remained good customers during this very
difficult period.
While we are not satisfied with the results for the fourth quarter and fiscal
year, it is important to note that despite the effects of the suspensions and
the costs associated with implementation of the Administrative Agreement, the
Company was able to report a profit for its fourth quarter and its fiscal year.
- --------------------------------------------------------------------------------
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. When used in this report, words
such as "anticipated," "believes," "could," "estimates," "expects," "may,"
"plans," "potential" and "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 previously 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.
- --------------------------------------------------------------------------------
Hopefully, we are past the rough times, and can now fully implement our growth
strategies and focus our attention to the bottom line. Our new management team,
headed up by Jeff Markel is taking hold, and we expect to see the results of the
new operating plans reflected as higher earnings as we go through fiscal 2008.
We begin the new fiscal year with a strong backlog of $137 million, up from $125
million at the end of last year, and bookings have been strong in the first
quarter. As we look into the future, we continue to work toward our goal of
increased international business and are targeting new long-term programs both
domestically and internationally."
A Conference Call was held at 9:00 a.m. Eastern Time on Friday, October 12,
2007.
Replay of the conference call is available through October 19, 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# 19657632. This conference
call was broadcast live over the Internet and can be accessed by interested
parties through URL:
http://www.videonewswire.com/event.asp?id=42933
-----------------------------------------------
for those who were not available to listen to the live broadcast.
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 approximately 975 employees. Additional information about the
company can be found on the Internet at www.herley.com.
For information at Herley contact: www.herley.com
Peg Guzzetti Tel: (717) 735-8117
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
July 29, July 30,
2007 2006
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 35,181 $ 22,303
Trade accounts receivable, net 28,058 30,600
Income Taxes Receivable 819 -
Costs incurred and income recognized in excess
of billings on uncompleted contracts and claims 14,448 13,926
Other receivables 2,816 769
Inventories, net 51,815 52,909
Deferred income taxes 4,254 3,745
Other current assets 1,069 1,187
------------ ------------
Total Current Assets 138,460 125,439
Property, Plant and Equipment, net 29,996 30,478
Goodwill 74,044 73,612
Intangibles, net of accumulated amortization of $5,256
in 2007 and $3,468 in 2006 18,431 19,989
Other Assets 1,662 1,932
------------ ------------
Total Assets $ 262,593 $ 251,450
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,346 $ 630
Current portion of employment settlement agreement -
(net of imputed interest) 1,113 -
Accounts payable and accrued expenses 19,049 21,503
Billings in excess of costs incurred and
income recognized on uncompleted contracts 99 555
Income taxes payable 3,518 3,395
Accrual for contract losses 1,564 2,959
Accrual for warranty costs 1,106 986
Advance payments on contracts 7,163 3,323
------------ ------------
Total Current Liabilities 34,958 33,351
Long-term Debt 5,951 5,948
Long-term Portion of Employment Settlement Agreement -
(net of imputed interest of $580) 4,117 -
Other Long-term Liabilities 1,311 1,265
Deferred Income Taxes 6,615 7,416
------------ ------------
Total Liabilities 52,952 47,980
------------ ------------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized 20,000,000 shares;
issued and outstanding 13,977,115 in 2007, and
issued 14,660,716 and outstanding 13,862,149 in 2006 1,398 1,466
Additional paid-in capital 107,094 113,418
Retained earnings 99,404 96,286
Treasury stock, 798,567 common shares, at cost - (9,044)
Accumulated other comprehensive income 1,745 1,344
------------ ------------
Total Shareholders' Equity 209,641 203,470
------------ ------------
Total Liabilities and Shareholders' Equity $ 262,593 $ 251,450
============ ============
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share data)
Thirteen weeks ended Fifty-two weeks ended
-------------------- ---------------------
July 29, July 30, July 29, July 30,
2007 2006 2007 2006
--------------- -------------- --------------- --------------
Net sales $ 40,626 $ 42,802 $ 163,140 $ 176,268
--------------- -------------- --------------- --------------
Cost and expenses:
Cost of products sold 29,306 33,021 118,834 127,921
Selling and administrative expenses 8,875 9,181 34,190 34,966
Employment contract settlement costs - - 8,914 -
--------------- -------------- --------------- --------------
38,181 42,202 161,938 162,887
--------------- -------------- --------------- --------------
Operating Income 2,445 600 1,202 13,381
--------------- -------------- --------------- --------------
Other income (expense), net:
Investment income 332 262 1,186 840
Interest expense (212) (77) (790) (319)
Foreign exchange gain (loss) 23 158 501 431
--------------- -------------- --------------- --------------
143 343 897 952
--------------- -------------- --------------- --------------
Income before income taxes 2,588 943 2,099 14,333
(Benefit) provision for income taxes (990)(1) 230 (1,019) 3,979
--------------- -------------- --------------- --------------
Net income $ 3,578 (1) $ 713 $ 3,118 $ 10,354
=============== ============== =============== ==============
Earnings per common share - Basic $ .26 (1) $ .05 $ .22 $ .72
=============== ============== =============== ==============
Basic weighted average shares 13,977 14,363 13,927 14,463
=============== ============== =============== ==============
Earnings per common share - Diluted $ .25 (1) $ .05 $ .22 $ .69
=============== ============== =============== ==============
Diluted weighted average shares 14,480 14,828 14,395 15,097
=============== ============== =============== ==============
<FN>
</FN>
NOTE (1)
The (Benefit) provision for income taxes, net income, Earnings per
common share - Basic, and Earnings per common share - Diluted, for the
thirteen weeks ended July 29, 2007 were prevously reported as
($1,256), $3,844, $0.28, and $0.27, respectively.
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Fifty-two weeks ended
---------------------
July 29, July 30, July 31,
2007 2006 2005
------------ ----------- ------------
Cash flows from operating activities:
Net Income $ 3,118 $ 10,354 $ 10,781
------------ ----------- ------------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 7,177 7,096 5,683
Stock-based compensation costs 1,007 453 -
Excess tax benefit from exercises of stock options (256) (703) -
Employment contract settlement costs (includes $196 of
stock option modification costs) 8,914 - -
Imputed interest related to employment settlement liability 283 - -
Foreign exchange transaction (gains) losses (501) (431) 291
Inventory valuation reserve charges 1,283 1,475 804
Reduction in accrual for contract losses (1,144) - -
Warranty reserve charges 1,304 726 965
Gain on sale of fixed assets (105) - (8)
Equity in income of limited partnership - (52) (54)
Deferred tax provision (1,310) 218 1,099
Changes in operating assets and liabilities:
Trade accounts receivable 2,542 (3,342) 2,590
Income Taxes Receivable (819) - -
Costs incurred and income recognized in excess
of billings on uncompleted contracts and claims (522) 2,132 (1,626)
Other receivables (2,047) 645 (576)
Inventories, net (189) (2,794) (2,515)
Other current assets 118 157 (430)
Accounts payable and accrued expenses (3,246) (2,357) 350
Billings in excess of costs incurred and
income recognized on uncompleted contracts (456) 17 (1,596)
Income taxes payable 379 338 2,306
Accrual for contract losses (251) (175) (500)
Employment settlement agreement (3,771) - -
Advance payments on contracts 3,840 1,435 (4,827)
Other, net 327 136 221
------------ ----------- ------------
Total adjustments 12,557 4,974 2,177
------------ ----------- ------------
Net cash provided by operating activities 15,675 15,328 12,958
------------ ----------- ------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired - - (51,407)
Acquisition of technology license (179) (1,256) (2,300)
Proceeds from sale of securities - - 165
Proceeds from sale of fixed assets 204 - 17
Partial distribution from limited partnership - 111 109
Capital expenditures (4,972) (6,227) (5,404)
------------ ----------- ------------
Net cash used in investing activities (4,947) (7,372) (58,820)
------------ ----------- ------------
Cash flows from financing activities:
Borrowings under bank line of credit 17,900 16,500 -
Borrowings - other 1,746 - -
Proceeds from exercise of stock options 1,219 3,171 3,534
Excess tax benefit from exercises of stock options 256 703 -
Payments of long-term debt (1,038) (805) (804)
Payments under bank line of credit (17,900) (16,500) -
Purchase of treasury stock (26) (9,044) (2,728)
------------ ----------- ------------
Net cash provided by (used in) financing activities 2,157 (5,975) 2
------------ ----------- ------------
Effect of exchange rate changes on cash (7) (9) 10
------------ ----------- ------------
Net increase (decrease) in cash and cash equivalents 12,878 1,972 (45,850)
Cash and cash equivalents at beginning of period 22,303 20,331 66,181
------------ ----------- ------------
Cash and cash equivalents at end of period $ 35,181 $ 22,303 $ 20,331
============ =========== ============
Supplemental cash flow information:
Financing of computer software and maintenance $ 1,627
===========
Retirement of 800,231 shares of treasury stock $ 9,070
============