Exhibit 99
HERLEY REPORTS 1ST QUARTER RESULTS
CONFERENCE CALL SCHEDULED FOR TUESDAY, DECEMBER 12, 2006
Lancaster, PA. December 11, 2006. Herley Industries, Inc. (Nasdaq:HRLY) reported
net sales for the first quarter ended October 29, 2006 of $40.1 million, down
$1.8 million or 4.3% from the first quarter of last year.
Herley reported a loss of ($0.43) per share which included the impact of
employment contract settlement costs for the Company's former Chairman.
Excluding the impact of the employment contract settlement costs, basic and
diluted earnings per common share would have been $.07 for the thirteen weeks
ended October 29, 2006 as compared to basic and diluted earnings per common
share of $.28 and $.26, respectively for the thirteen weeks ended October 30,
2005. 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 29, October 29, October 30,
2006 2006 2005
---- ---- ----
(Loss) income before income taxes ($7,561) ($7,561) $5,678
Employment contract settlement costs 8,914 - -
Income before income taxes 1,353 (7,561) 5,678
------ ------ ------
Provision (benefit) for income taxes 381 (1,550) 1,703
------ ------ ------
Net income (loss) $972 ($6,011) $3,975
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Earnings (loss) per common share - Basic $0.07 ($0.43) $0.28
====== ====== ======
Basic weighted average shares 13,862 13,862 14,446
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Earnings (loss) per common share - Diluted $0.07 ($0.43) $0.26
====== ====== ======
Basic weighted average shares 14,148 13,862 15,240
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John M. Kelley, Herley's President stated, "We are very pleased that the
suspension has been lifted and we are able to conduct business as usual. Since
the lifting of the suspension, order placement has been strong, as reflected by
our first quarter book to bill ratio of 1.12 to 1. We expect bookings to be
brisk as our customers submit orders unencumbered by the suspension."
Herley will host a conference call on Tuesday December 12, 2006 at 9:30 A.M.
Eastern Standard Time to discuss the quarter. To join the conference call dial 1
(888) 425-4188, referencing Conference ID 4210073. A taped replay of the call
will be available through December 19, 2006. To listen to the replay dial: 1
(800) 642 1687 (U.S.) or 1 (706) 645-9291 (International), and Conference ID
4210073.
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=36988
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 eight manufacturing
locations and approximately 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. 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 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.
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
October 29, July 30,
2006 2006
-------------- ----------
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 21,482 $ 22,303
Trade accounts receivable 30,930 30,600
Costs incurred and income recognized in excess
of billings on uncompleted contracts and claims 13,258 13,926
Other receivables 1,204 769
Inventories, net 52,172 52,909
Deferred income taxes and other 5,963 4,932
-------------- ----------
Total Current Assets 125,009 125,439
Property, Plant and Equipment, net 30,184 30,478
Goodwill 73,612 73,612
Intangibles, net of accumulated amortization of $3,915
at October 29, 2006 and $3,468 at July 30, 2006 19,721 19,989
Other Assets 2,037 1,932
-------------- ----------
$ 250,563 $ 251,450
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 1,278 $ 630
Current portion of employment settlement agreement -
(net of imputed interest of $342) 816 -
Accounts payable and accrued expenses 19,809 21,503
Billings in excess of costs incurred and
income recognized on uncompleted contracts 589 555
Income taxes payable 4,072 3,395
Accrual for contract losses 2,794 2,959
Accrual for warranty costs 1,068 986
Advance payments on contracts 3,584 3,323
-------------- ----------
Total Current Liabilities 34,010 33,351
Long-term Debt 6,909 5,948
Long-term Portion of Employment Settlement Agreement -
(net of imputed interest of $728) 4,920 -
Other Long-term Liabilities 1,390 1,265
Deferred Income Taxes 5,605 7,416
-------------- ----------
52,834 47,980
-------------- ----------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
20,000,000 shares; issued 14,660,716
and outstanding 13,862,149 1,466 1,466
Additional paid-in capital 113,730 113,418
Retained earnings 90,275 96,286
Treasury stock, 798,567 common shares at cost (9,044) (9,044)
Accumulated other comprehensive income 1,302 1,344
-------------- ----------
Total Shareholders' Equity 197,729 203,470
-------------- ----------
$ 250,563 $ 251,450
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HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands except per share data)
Thirteen weeks ended
October 29, October 30,
2006 2005
------------ ------------
Net sales $ 40,116 $ 41,938
------------ ------------
Cost and expenses:
Cost of products sold 29,831 27,813
Selling and administrative expenses 9,022 8,587
Employment contract settlement costs 8,914 -
------------ ------------
47,767 36,400
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(Loss) income from operations (7,651) 5,538
------------ ------------
Other income (expense), net:
Investment income 216 110
Interest expense (143) (83)
Foreign exchange gain 17 113
------------ ------------
90 140
------------ ------------
(Loss) income before income taxes (7,561) 5,678
(Benefit) provision for income taxes (1,550) 1,703
------------ ------------
Net (loss) income $ (6,011) $ 3,975
============ ============
(Loss) earnings per common share - Basic $ (.43) $ .28
============ ============
Basic weighted average shares 13,862 14,446
============ ============
(Loss) earnings per common share - Diluted $ (.43) $ .26
============ ============
Diluted weighted average shares 13,862 15,240
============ ============
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Thirteen weeks ended
--------------------
October 29, October 30,
2006 2005
--------------- ---------------
Cash flows from operating activities:
Net (loss) income $ (6,011) $ 3,975
--------------- ---------------
Adjustments to reconcile net (loss) income to
net cash (used in) provided by operating activities:
Depreciation and amortization 1,751 1,730
Stock-based compensation expense 116 78
Excess tax benefit from exercise of stock options - (216)
Employment contract settlement costs (includes $196 of
stock option modification costs) 5,914 -
Deferred tax assets and liabilities (2,301) (30)
Foreign exchange gain (27) (31)
Inventory valuation reserve charges 287 331
Changes in operating assets and liabilities:
Trade accounts receivable (330) (437)
Costs incurred and income
recognized in excess of billings on
uncompleted contracts and claims 668 (1,357)
Other receivables (435) 114
Inventories 450 (2,844)
Other current assets (649) (139)
Accounts payable and accrued expenses (1,695) (489)
Billings in excess of costs incurred and
income recognized on uncompleted contracts 34 218
Income taxes payable 677 1,681
Accrual for contract losses (165) (210)
Advance payments on contracts 261 145
Other, net 250 123
--------------- ---------------
Total adjustments 4,806 (1,333)
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Net cash (used in) provided by operating activities (1,205) 2,642
--------------- ---------------
Cash flows from investing activities:
Acquisition of technology license (179) (375)
Capital expenditures (1,016) (1,820)
--------------- ---------------
Net cash used in investing activities (1,195) (2,195)
--------------- ---------------
Cash flows from financing activities:
Borrowings under bank line of credit 4,500 4,000
Borrowings - other 1,746 -
Proceeds from exercise of stock options - 898
Payments of long-term debt (167) (727)
Payments under bank line of credit (4,500) (4,000)
Excess tax benefit from exercises of stock options - 216
--------------- ---------------
Net cash provided by financing activities 1,579 387
--------------- ---------------
Net (decrease) increase in cash and cash equivalents (821) 834
Cash and cash equivalents at beginning of period 22,303 20,331
--------------- ---------------
Cash and cash equivalents at end of period $ 21,482 $ 21,165
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