EXHIBIT 99
HERLEY REPORTS 1ST QUARTER RESULTS
CONFERENCE CALL SCHEDULED FOR FRIDAY, DECEMBER 7, 2007
Lancaster, PA. December 6, 2007 Herley Industries, Inc. (Nasdaq: HRLY) reported
net sales for the first quarter of fiscal 2008 ended October 28, 2007 of $35.1
million, down $5.0 million or 12.4% from the first quarter of the prior fiscal
year.
Herley reported a loss of $0.19 per share including the impact of a litigation
settlement agreement with EADS Deutschland GmbH ("EADS"), as compared with a
loss of $0.43 for the thirteen weeks ended October 29, 2006, which included the
impact of employment contract settlement costs.
Excluding the impact of both the litigation settlement costs and the employment
contract settlement costs, basic and diluted earnings per common share would
have been $ 0.14 and $ 0.13, respectively for the thirteen weeks ended October
28, 2007 as compared to basic and diluted earnings per common share of $0.07 for
the thirteen weeks ended October 29, 2006. A reconciliation of the Non-GAAP
earnings per common share calculation is as follows:
Thirteen weeks ended
--------------------
Non-GAAP Measure* As Reported Under GAAP
----------------- ----------------------
October 28, October 29, October 28, October 29,
2007 2006 2007 2006
-------- ---------- ---------- ----------
Loss before income taxes ($4,319) ($7,561) ($4,319) ($7,561)
Litigation Settlement 6,042 - - -
Employment contract settlement costs - 8,914 - -
-------- ---------- ---------- ----------
Income (loss) before income taxes 1,723 1,353 (4,319) (7,561)
(Benefit) provision for income taxes (181) 381 (1,728) (1,550)
-------- ---------- ---------- ----------
Net income (loss) $1,904 $972 ($2,591) ($6,011)
======== ========== ========== ==========
Earnings (loss) per common share - Basic $0.14 $0.07 ($0.19) ($0.43)
======== ========== ========== ==========
Basic weighted average shares 13,965 13,862 13,965 13,862
======== ========== ========== ==========
Earnings (loss) per common share - Diluted $0.13 $0.07 ($0.19) ($0.43)
======== ========== ========== ==========
Diluted weighted average shares 14,384 14,148 13,965 13,862
======== ========== ========== ==========
<FN>
- ---
* The non-GAAP disclosure of net income and basic and diluted earnings per
common share is not preferable to GAAP net income and earnings per common share
but is shown as a supplement to such disclosure for comparability to the prior
year's results. Management believes that this information is important to
investors for a meaningful analysis of our financial performance.
</FN>
Myron Levy, Herley Chairman and CEO commented, "Herley is on a long road back
from a very difficult time. Net sales are down for the first quarter of fiscal
year 2008 as compared to the first quarter of fiscal year 2007, but we
experienced improved gross margins over the prior year, thanks to the focused
management team we have in place. We experienced a net loss due to the effect of
an agreement reached between Herley and EADS Deutschland GmbH ("EADS") to settle
a lawsuit filed in April of this year. The settlement agreement provides for a
guaranteed payment to EADS of the sum of $6,000,000 without interest over a
three-year period. We believe that this settlement agreement is in the best
interests of our Company not only because we will avoid extensive legal fees,
but we are now in a position to return to a healthy, productive business
relationship with one of the largest defense companies. The defense industry is
dominated by major contractors like Boeing, Lockheed, Northrop Grumman,
Raytheon, and EADS. EADS has been an excellent customer for Herley, but the
relationship was clouded by the multiple lawsuits initiated here and overseas.
With this agreement in place, we look forward to the increased opportunities
with EADS as a business partner and customer."
Mr. Levy continued, "On a positive note, the Company continues to book business
on major defense programs, building a strong backlog of new and long-term
programs in the U. S. Defense market as well as in the international market.
Jeff Markel, our new Chief Operating Officer, has been actively reviewing the
Company's eight operating locations and working with me and corporate officers
to reach the Company's goals of improved profitability and shareholder value."
A Conference Call has been scheduled for 9:00 a.m. Eastern Time on Friday,
December 7, 2007. Interested parties may join the conference by dialing: (888)
425-4188 referencing Conference ID # 25615779.
Replay of the conference call is scheduled to begin on December 7, 2007, one
hour after completion of the call, and end on December 14 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# 25615779.
This conference call will be broadcast live over the Internet and can be
accessed by interested parties through URL: http://www.videonewswire. com/event
..asp?id=44278
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 eight manufacturing
locations and approximately 953 employees. Additional information about the
company can be found on the Internet at www.herley.com.
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. 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 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.
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 28,
2007 July 29,
(Unaudited) 2007
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 34,643 $ 35,181
Trade accounts receivable, net 25,585 28,058
Income Taxes Receivable 819 819
Costs incurred and income recognized in excess
of billings on uncompleted contracts and claims 17,495 14,448
Other receivables 2,353 2,816
Inventories, net 53,424 51,815
Deferred income taxes 6,513 4,254
Other current assets 1,860 1,069
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Total Current Assets 142,692 138,460
Property, Plant and Equipment, net 30,623 29,996
Goodwill 74,102 74,044
Intangibles, net of accumulated amortization of $5,819 at October 28,
2007 and $5,256 at July 29, 2007 17,879 18,431
Other Assets 616 1,662
---------- ----------
Total Assets $ 265,912 $ 262,593
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,361 $ 1,346
Current portion of employment settlement agreement -
(net of imputed interest of $203 at October 28, 2007 and
$245 at July 29, 2007) 1,154 1,113
Current portion of litigation settlement (net of imputed
interest of $59) 3,941 -
Accounts payable and accrued expenses 20,736 19,049
Billings in excess of costs incurred and
income recognized on uncompleted contracts 641 99
Income taxes payable 158 3,518
Accrual for contract losses 889 1,564
Accrual for warranty costs 1,081 1,106
Advance payments on contracts 7,118 7,163
---------- ----------
Total Current Liabilities 37,079 34,958
Long-term Debt 5,533 5,951
Long-term Portion of Employment Settlement Agreement -
(net of imputed interest of $542 at October 28, 2007 and $580
at July 29, 2007) 3,854 4,117
Long-term portion of litigation settlement (net of imputed interest
of $242) 1,758 -
Other Long-term Liabilities 1,341 1,311
Deferred Income Taxes 7,120 6,615
Accrued Income Taxes Payable 3,139 -
---------- ----------
Total Liabilities 59,824 52,952
---------- ----------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized 20,000,000 shares;
issued and outstanding 13,896,671 at October 28, 2007, and
13,977,115 at July 29, 2007 1,390 1,398
Additional paid-in capital 106,108 107,094
Retained earnings 96,813 99,404
Accumulated other comprehensive income 1,777 1,745
---------- ----------
Total Shareholders' Equity 206,088 209,641
---------- ----------
Total Liabilities and Shareholders' Equity $ 265,912 $ 262,593
========== ==========
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except per share data)
Thirteen weeks ended
--------------------
October 28, October 29,
2007 2006
--------------- ---------------
Net sales $ 35,133 $ 40,116
--------------- ---------------
Cost and expenses:
Cost of products sold 25,140 29,831
Selling and administrative expenses 8,820 9,022
Litigation settlement 6,042 -
Employment contract settlement costs - 8,914
--------------- ---------------
40,002 47,767
--------------- ---------------
Loss from operations (4,869) (7,651)
--------------- ---------------
Other income (expense):
Investment income 429 216
Interest expense (25) (143)
Foreign exchange transaction gain 146 17
--------------- ---------------
550 90
--------------- ---------------
Loss before income taxes (4,319) (7,561)
Benefit for income taxes (1,728) (1,550)
--------------- ---------------
Net loss $ (2,591) $ (6,011)
=============== ===============
Loss per common share - Basic $ (0.19) $ (0.43)
=============== ===============
Basic weighted average shares 13,965 13,862
=============== ===============
Loss per common share - Diluted $ (0.19) $ (0.43)
=============== ===============
Diluted weighted average shares 13,965 13,862
=============== ===============
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Thirteen weeks ended
October 28, October 29,
2007 2006
------------- --------------
Cash flows from operating activities:
Net Loss $ (2,591)$ (6,011)
------------- --------------
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities:
Depreciation and amortization 1,846 1,751
Stock-based compensation costs 247 116
Excess tax benefit from exercises of stock options (13) -
Litigation settlement costs 5,942 -
Employment contract settlement costs (includes $196 of
stock option modification costs) - 8,914
Imputed interest related to employment settlement liability 80 19
Foreign exchange transaction gains (146) (17)
Inventory valuation reserve charges 481 287
Reduction in accrual for contract losses (826) -
Warranty reserve charges 348 266
Deferred tax benefit (1,742) (2,301)
Changes in operating assets and liabilities:
Trade accounts receivable 2,379 (330)
Costs incurred and income recognized in excess
of billings on uncompleted contracts and claims (3,047) 668
Other receivables 463 (435)
Inventories (2,173) 450
Other current assets (791) (649)
Accounts payable and accrued expenses 1,687 (1,961)
Billings in excess of costs incurred and
income recognized on uncompleted contracts 542 34
Income taxes payable (208) 677
Accrual for contract losses 151 (165)
Employment settlement agreement (302) (3,000)
Advance payments on contracts (45) 261
Other, net (188) 218
------------- --------------
Total adjustments 4,685 4,803
------------- --------------
Net cash provided by (used in) operating activities 2,094 (1,208)
------------- --------------
Cash flows from investing activities:
Acquisition of technology license - (179)
Capital expenditures (966) (1,016)
------------- --------------
Net cash used in investing activities (966) (1,195)
------------- --------------
Cash flows from financing activities:
Borrowings under bank line of credit 4,900 4,500
Borrowings - other - 1,746
Proceeds from exercise of stock options 34 -
Excess tax benefit from exercises of stock options 13 -
Payments of long-term debt (425) (167)
Payments under bank line of credit (4,900) (4,500)
Purchase of treasury stock (1,288) -
------------- --------------
Net cash (used in) provided by financing activities (1,666) 1,579
------------- --------------
Effect of exchange rate changes on cash - 22
------------- --------------
Net decrease in cash and cash equivalents (538) (802)
Cash and cash equivalents at beginning of period 35,181 22,303
------------- --------------
Cash and cash equivalents at end of period $ 34,643 $ 21,501
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