-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P7/aJrerehsVpe99JjmbgAY2ZR3+qzsVe/odo+MqDdwTpQ/ckRwrLZ7fpusijuRd 40tjHD9M2w9wj1OauD8KOw== 0000047035-01-500006.txt : 20010613 0000047035-01-500006.hdr.sgml : 20010613 ACCESSION NUMBER: 0000047035-01-500006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010429 FILED AS OF DATE: 20010612 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HERLEY INDUSTRIES INC /NEW CENTRAL INDEX KEY: 0000047035 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 232413500 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-05411 FILM NUMBER: 1659049 BUSINESS ADDRESS: STREET 1: 10 INDUSTRY DR CITY: LANCASTER STATE: PA ZIP: 17603 BUSINESS PHONE: 7173972777 MAIL ADDRESS: STREET 1: 10 INDUSTRY DRIVE CITY: LANCASTER STATE: PA ZIP: 17603 FORMER COMPANY: FORMER CONFORMED NAME: HERLEY MICROWAVE SYSTEMS INC DATE OF NAME CHANGE: 19900510 FORMER COMPANY: FORMER CONFORMED NAME: HERLEY INDUSTRIES INC DATE OF NAME CHANGE: 19831103 10-Q 1 filing042901.txt THIRDQTR10Q042901 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended: April 29, 2001 -------------- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from .......... to .......... Commission File Number 0-5411 HERLEY INDUSTRIES, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE #23-2413500 - ------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 10 Industry Drive, Lancaster, Pennsylvania 17603 - ------------------------------------------ -------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: (717) 397-2777 -------------- -------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13, or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of June 6, 2001 - 7,021,086 shares of Common Stock. HERLEY INDUSTRIES, INC AND SUBSIDIARIES INDEX TO FORM 10-Q PART I - FINANCIAL INFORMATION PAGE - ----------------------------------- ---- Item 1 - Financial Statements: Consolidated Balance Sheets - April 29, 2001 and July 30, 2000 2 Consolidated Statements of Income - For the thirteen and thirty-nine weeks ended April 29, 2001 and April 30, 2000 3 Consolidated Statements of Cash Flows - For the thirty-nine weeks ended April 29, 2001 and April 30, 2000 4 Notes to Consolidated Financial Statements 5 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 10 PART II -OTHER INFORMATION 11 Signatures 12
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands except share data) April 29, July 30, 2001 2000 ---- ---- (Unaudited) (Audited) ASSETS Current Assets: Cash and cash equivalents $ 13,016 $ 7,665 Accounts receivable 16,499 14,315 Costs incurred and income recognized in excess of billings on uncompleted contracts -- 146 Other receivables 114 293 Inventories 31,728 23,045 Deferred taxes and other 2,713 2,795 ------- ------- Total Current Assets 64,070 48,259 Property, Plant and Equipment, net 19,640 18,004 Intangibles, net of amortization of $4,182 at April 29, 2001 and $3,095 at July 30, 2000 27,067 18,096 Available-For-Sale Securities 146 146 Other Investments 1,064 1,020 Other Assets 1,079 1,131 ------- ------- $113,066 $ 86,656 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 252 $ 282 Accounts payable and accrued expenses 15,744 9,602 Billings in excess of costs incurred and income recognized on uncompleted contracts 129 -- Income taxes payable 1,022 1,426 Reserve for contract losses 776 467 Advance payments on contracts 460 1,006 ------- ------- Total Current Liabilities 18,383 12,783 Long-term Debt 2,767 2,931 Deferred Income Taxes 5,451 5,571 ------- ------- 26,601 21,285 ------- ------- Commitments and Contingencies Shareholders' Equity: Common stock, $.10 par value; authorized 20,000,000 shares; issued and outstanding 7,020,686 at April 29, 2001 and 5,993,870 at July 30, 2000 702 599 Additional paid-in capital 45,491 29,808 Retained earnings 40,272 34,964 ------- ------- Total Shareholders' Equity 86,465 65,371 ------- ------- $113,066 $ 86,656 ======= =======
The accompanying notes are an integral part of these financial statements. 2
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands except per share data) Thirteen weeks ended Thirty-nine weeks ended -------------------- ----------------------- April 29, April 30, April 29, April 30, 2001 2000 2001 2000 ---- ---- ---- ---- Net sales $ 20,277 $ 19,248 $ 56,693 $ 51,604 ------ ------ ------ ------ Cost and expenses: Cost of products sold 13,528 11,867 37,134 31,845 Selling and administrative expenses 4,328 3,834 11,712 10,222 ------ ------ ------ ------ 17,856 15,701 48,846 42,067 ------ ------ ------ ------ Operating income 2,421 3,547 7,847 9,537 ------ ------ ------ ------ Other income (expense): Investment income 194 39 475 141 Interest expense (42) (421) (156) (1,002) ------ ------ ------ ------ 152 (382) 319 (861) ------ ------ ------ ------ Income before income taxes 2,573 3,165 8,166 8,676 Provision for income taxes 899 1,100 2,858 3,028 ------ ------ ------ ------ Net income $ 1,674 $ 2,065 $ 5,308 $ 5,648 ====== ====== ====== ====== Earnings per common share - Basic $ .24 $ .45 $ .80 $ 1.21 === === === ==== Basic weighted average shares 7,020 4,637 6,617 4,667 ====== ====== ====== ====== Earnings per common share - Diluted $ .23 $ .40 $ .73 $ 1.13 === === === ==== Diluted weighted average shares 7,363 5,220 7,259 5,000 ====== ====== ====== ======
The accompanying notes are an integral part of these financial statements. 3
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Thirty-nine weeks ended ----------------------- April 29, April 30, 2001 2000 ---- ---- Cash flows from operating activities: Net income $ 5,308 $ 5,648 ----- ----- Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 3,393 2,964 Equity in income of limited partnership (44) (51) Decrease (increase) in deferred tax assets 39 (120) (Decrease) increase in deferred tax liabilities (120) 439 Changes in operating assets and liabilities: (Increase) in accounts receivable (977) (666) Decrease in costs incurred and income recognized in excess of billings on uncompleted contracts 146 -- Decrease in other receivables 179 90 (Increase) in inventories (7,211) (2,097) Decrease (increase) in prepaid expenses and other 43 (153) Increase in accounts payable and accrued expenses 1,528 857 Increase in billings in excess of costs incurred and income recognized on uncompleted contracts 129 -- (Decrease) increase in income taxes payable (404) 1,027 (Decrease) in reserve for contract losses (591) (484) (Decrease) in advance payments on contracts (546) (300) Other, net (11) 8 ----- ----- Total adjustments (4,447) 1,514 ----- ----- Net cash provided by operating activities 861 7,162 ----- ----- Cash flows from investing activities: Acquisition of businesses, net of cash acquired (8,373) (6,020) Proceeds from sale of fixed assets 16 4,124 Capital expenditures (2,098) (2,303) ------ ----- Net cash (used in) investing activities (10,455) (4,199) ------ ----- Cash flows from financing activities: Borrowings under bank line of credit 2,941 12,000 Proceeds from exercise of stock options and warrants 15,980 935 Payments under lines of credit (2,700) (7,500) Payments of long-term debt (1,082) (1,759) Purchase of treasury stock (194) (7,565) ------ ------ Net cash provided by (used in) financing activities 14,945 (3,889) ------ ------ Net increase in cash and cash equivalents 5,351 (926) Cash and cash equivalents at beginning of period 7,665 2,741 ----- ----- Cash and cash equivalents at end of period $ 13,016 $ 1,815 ====== ======
The accompanying notes are an integral part of these financial statements. 4 Herley Industries, Inc. and Subsidiaries Notes to Consolidated Financial Statements - (Unaudited) 1. The consolidated financial statements include the accounts of Herley Industries, Inc. and its subsidiaries, all of which are wholly-owned. All significant inter-company accounts and transactions have been eliminated in consolidation. In the opinion of the Company, the accompanying consolidated financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly the results of operations and cash flows for the periods presented. These financial statements (except for the balance sheet presented at July 30, 2000) are unaudited and have not been reported on by independent public accountants. Results of operations for interim periods are not necessarily indicative of the results of operations for a full year due to external factors which are beyond the control of the Company. 2. The Company entered into an agreement effective as of the close of business September 30, 2000, to acquire all of the issued and outstanding common stock of Terrasat, Inc. ("Terrasat"), a California corporation. The transaction provides for the payment of $6,000,000 in cash, $3,000,000 which was paid in December 2000 and $3,000,000 to be paid in December 2001, and the assumption of approximately $1,025,000 in liabilities. In addition, the agreement provides for additional cash payments in the future up to $2,000,000, based on gross revenues through December 31, 2001. The transaction has been accounted for under the purchase method. Accordingly, the consolidated balance sheet includes the assets and liabilities of Terrasat at April 29, 2001, and the consolidated statement of income includes the results of Terrasat operations from October 1, 2000. Excess cost over the fair value of net assets acquired of approximately $4,996,000 is being amortized over 20 years. The Company entered into an agreement as of September 1, 2000 to acquire certain assets and the business, subject to the assumption of certain liabilities, of American Microwave Technology, Inc., ("AMT"), a California corporation, which is being operated as a division of Herley Industries, Inc. The transaction provided for the payment of $5,400,000 in cash, and the assumption of approximately $1,153,000 in liabilities. In addition, the Company entered into an exclusive license agreement for certain products providing for a royalty of 10% on the net shipments of such products through October 2004. The transaction has been accounted for under the purchase method. Accordingly, the consolidated balance sheet includes the assets and liabilities of AMT at April 29, 2001, and the consolidated statement of income includes the results of AMT's operations from September 1, 2000. Excess cost over the fair value of net assets acquired of approximately $4,109,000 is being amortized over 20 years. The allocation of the aggregate estimated purchase price in connection with these acquisitions will be revised as additional information concerning asset and liability valuations is obtained. Adjustments, which could be significant, will be made during the allocation period based on detailed reviews of the fair values of assets acquired and liabilities assumed and could result in a substantial change in the excess of cost over the fair value of net assets acquired. 5 3. Inventories at April 29, 2001 and July 30, 2000 are summarized as follows (in thousands): April 29, 2001 July 30, 2000 -------------- ------------- Purchased parts and raw materials $ 16,023 $ 12,804 Work in process 14,434 9,358 Finished products 1,271 883 ------- -------- $ 31,728 $ 23,045 ====== ====== 4. In February 2001, the Company entered into an amendment to its revolving loan agreement with a bank that provides for a revolving unsecured loan in the aggregate principal amount of $30,000,000 which may be used for general corporate purposes, including business acquisitions. The revolving credit facility requires the payment of interest only on a monthly basis and payment of the outstanding principal balance on January 31, 2003. Interest is set at 1.65% over the FOMC Federal Funds Target Rate based on tangible net worth in excess of $25,000,000, or at an increment of 1.80% if tangible net worth is less than $25,000,001. The FOMC Federal Funds Target Rate was 4.50% at April 29, 2001. There is a fee of 15 basis points per annum on the unused portion of the credit line in excess of $20,000,000 payable quarterly. There were no borrowings outstanding as of April 29, 2001 and July 30, 2000. The credit facility also provides for the issuance of stand-by letters of credit with a fee of 1.0% per annum of the amounts outstanding under the facility. At April 29, 2001, stand-by letters of credit aggregating $2,898,134 were outstanding under this facility. The agreement contains various financial covenants, including, among other matters, minimum tangible net worth, debt to tangible net worth, debt service coverage, and restrictions on other borrowings. 5. The following table shows the calculation of basic earnings per share and earnings per share assuming dilution (in thousands except per share data): Thirteen weeks ended -------------------- April 29, April 30, 2001 2000 ---- ---- Numerator: Net Income $ 1,674 $ 2,065 ===== ===== Denominator: Basic weighted-average shares 7,020 4,637 Effect of dilutive securities: Contingently issuable shares 32 - Employee stock options and warrants 311 583 ----- ----- Diluted weighted-average shares 7,363 5,220 ===== ===== Options to purchase 1,058,528 shares of common stock, with exercise prices ranging from $14.75 to $20.50, were outstanding during the third quarter of fiscal 2001, but were not included in the computation of diluted EPS because the exercise price is greater than the average market price of the common shares. The options, which expire at various dates through May 26, 2010, were still outstanding as of April 29, 2001. Options and warrants to purchase 85,422 shares of common stock, with exercise prices ranging from $16.88 to $17.88, were outstanding during the third quarter of fiscal 2000 but were not included in the computation of diluted EPS because the exercise prices are greater than the average market price of the common shares. 6 Approximately 946,300 of the warrants which were called for redemption as of November 13, 2000 were exercised during the second quarter at $15.60 per share of common stock resulting in proceeds of approximately $14,762,000. The proceeds have been invested in a short term money fund. Thirty-nine weeks ended ----------------------- April 29, April 30, 2001 2000 ---- ---- Numerator: Net Income $ 5,308 $ 5,648 ===== ===== Denominator: Basic weighted-average shares 6,617 4,667 Effect of dilutive securities: Contingently issuable shares 32 - Employee stock options and warrants 610 333 ----- ----- Diluted weighted-average shares 7,259 5,000 ===== ===== Options to purchase 235,667 shares of common stock, with exercise prices ranging from $17.75 to $20.50, were outstanding during the first nine months of fiscal 2001, but were not included in the computation of diluted EPS because the exercise price is greater than the average market price of the common shares. The options, which expire at various dates through April 28, 2010, were still outstanding as of April 29, 2001. Options and warrants to purchase 2,501,875 shares of common stock, with exercise prices ranging from $13.88 to $17.88, were outstanding during the first nine months of fiscal 2000 but were not included in the computation of diluted EPS because the exercise prices are greater than the average market price of the common shares. As of June 6, 2001, 7,021,086 shares of common stock were outstanding. 6. Supplemental cash flow information is as follows (in thousands): Thirty-nine weeks ended ----------------------- April 29, April 30, 2001 2000 ---- ---- Cash paid during the period for: Interest $ 224 $ 956 Income Taxes 3,333 1,585 Cashless exercise of stock options - 47 Common stock issued for business acquired - 514 Tax benefit related to stock options - 257 7. In connection with the acquisition of Robinson Laboratories, Inc. in January 2000, the Company is obligated to issue 32,000 shares of Common Stock based on new orders booked through January 31, 2001. The additional shares will be valued at the closing price of the common stock on the date of issue. The contingently issuable shares have been included in the calculation of diluted weighted-average shares. 7 Item 2: Management's Discussion and Analysis of Financial Condition and Results ----------------------------------------------------------------------- of Operations ------------- Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 The statements contained in this report which are not historical fact are "forward-looking statements" that involve various important assumptions, risks, uncertainties and other factors which could cause the Company's actual results for fiscal 2001 and beyond to differ materially from those expressed in such forward-looking statements. These important factors include, without limitation, competitive factors and pricing pressures, changes in legal and regulatory requirements, technological change or difficulties, product development risks, commercialization and trade difficulties and general economic conditions, as well as other risks previously disclosed in the Company's securities filings and press releases. Results of Operations - --------------------- Thirteen weeks ended April 29, 2001 and April 30, 2000 - ------------------------------------------------------ Net sales for the thirteen weeks ended April 29, 2001 were approximately $20,277,000 compared to $19,248,000 in the third quarter of fiscal 2000. The sales increase of $1,029,000 (5.3%) is attributable to increased revenue in commercial products of $4,675,000, offset by a decrease of $3,542,000 in microwave systems revenue and a decrease in revenue of $104,000 from microwave products. Included in commercial products are revenues of $2,998,000 attributable to businesses acquired during the first quarter of fiscal 2001. The gross profit margin of 33.3% in the thirteen weeks ended April 29, 2001 was lower than the margin of 38.3% in the third quarter of the prior year primarily due to the shift in volume to commercial products as noted above, with lower gross margins, and the investment in new product development related to commercial applications. Selling and administrative expenses for the thirteen weeks ended April 29, 2001 increased approximately $494,000 as compared to the third quarter of fiscal 2000 primarily from businesses acquired. Investment income increased approximately $155,000 from the prior year third quarter primarily from the investment of proceeds from the exercise of warrants in May and November 2000. Interest expense decreased $379,000 as compared to the third quarter of fiscal 2000 due to the repayment of bank borrowings out of the proceeds of the exercise of the warrants. Bank borrowings outstanding at April 30, 2000 were $17,000,000. There was no bank debt outstanding during the quarter ended April 29, 2001. Thirty-nine weeks ended April 29, 2001 and April 30, 2000 - --------------------------------------------------------- Net sales for the thirty-nine weeks ended April 29, 2001 were approximately $56,693,000 compared to $51,604,000 in the first nine months of fiscal 2000. The sales increase of $5,089,000 (9.9%) is attributable to an increase in revenue of $3,044,000 from microwave products, and $10,804,000 in commercial products, offset by a decrease of $8,759,000 in microwave systems revenue. Included in commercial products are revenues of $7,015,000 attributable to businesses acquired during the first quarter of fiscal 2001. The gross profit margin of 34.5% in the thirty-nine weeks ended April 29, 2001 was lower than the margin of 38.3% in fiscal 2000 primarily due to the shift in volume to commercial products as noted above , with lower gross margins, and the investment in new product development related to commercial applications. Selling and administrative expenses for the thirty-nine weeks ended April 29, 2001 increased approximately $1,490,000 as compared to fiscal 2000. Contributing to this increase were selling and administrative expenses of $1,837,000 from 8 businesses acquired. Incentive compensation decreased $413,000. Investment income increased approximately $334,000 from the prior year primarily from the investment of proceeds from the exercise of warrants in May and November 2000. Interest expense decreased $846,000 as compared to fiscal 2000 due to the repayment of bank borrowings out of the proceeds of the exercise of the warrants. Bank borrowings outstanding at April 30, 2000 were $17,000,000. There was no bank debt outstanding during the quarter ended April 29, 2001. Business Acquisitions - --------------------- In connection with the acquisition of Robinson Laboratories, Inc. in January 2000, the Company is obligated to issue 32,000 shares of Common Stock based on new orders booked through January 31, 2001. The additional shares will be valued at the closing price of the common stock on the date of issue. The contingently issuable shares have been included in the calculation of diluted weighted-average shares. The Company entered into an agreement effective as of the close of business September 30, 2000, to acquire all of the issued and outstanding common stock of Terrasat, Inc. ("Terrasat"), a California corporation. The transaction provides for the payment of $6,000,000 in cash, $3,000,000 of which was paid in December 2000 and $3,000,000 to be paid in December 2001, and the assumption of approximately $1,050,000 in liabilities. In addition, the agreement provides for additional cash payments in the future up to $2,000,000, based on gross revenues through December 31, 2001. The transaction has been accounted for under the purchase method. Accordingly, the consolidated balance sheet includes the assets and liabilities of Terrasat at April 29, 2001, and the consolidated statement of income includes the results of Terrasat operations from October 1, 2000. Excess cost over the fair value of net assets acquired of approximately $4,996,000 is being amortized over 20 years. The Company entered into an agreement, as of September 1, 2000, to acquire certain assets and the business, subject to the assumption of certain liabilities, of American Microwave Technology, Inc., ("AMT"), a California corporation, which is being operated as a division of Herley Industries, Inc. The transaction provided for the payment of $5,400,000 in cash, and the assumption of approximately $1,153,000 in liabilities. In addition, the Company entered into an exclusive license agreement for certain products providing for a royalty of 10% on the net shipments of such products through October 2004. The transaction has been accounted for under the purchase method. Accordingly, the consolidated balance sheet includes the assets and liabilities of AMT at April 29, 2001, and the consolidated statement of income includes the results of AMT's operations from September 1, 2000. Excess cost over the fair value of net assets acquired of approximately $4,109,000 is being amortized over 20 years. The allocation of the aggregate estimated purchase price in connection with these acquisitions will be revised as additional information concerning asset and liability valuations is obtained. Adjustments, which could be significant, will be made during the allocation period based on detailed reviews of the fair values of assets acquired and liabilities assumed and could result in a substantial change in the excess of cost over the fair value of net assets acquired. Liquidity and Capital Resources - ------------------------------- As of April 29, 2001 and July 30, 2000, working capital was $45,687,000 and $35,476,000, respectively, and the ratio of current assets to current liabilities was 3.49 to 1 and 3.78 to 1, respectively. As is customary in the defense industry, inventory is partially financed by progress payments. The unliquidated balance of these advanced payments was approximately $460,000 at April 29, 2001, and $1,006,000 at July 30, 2000. 9 Net cash provided by operating activities during the period was approximately $861,000 as compared to $7,162,000 in the prior fiscal year. Significant changes causing the decrease from fiscal 2000 include increases in inventories of $7,211,000 and accounts receivable of $977,000; and reductions in reserve for contract losses of $591,000, advance payments on contracts of $546,000, and income taxes payable of $404,000. Offsetting these decreases was an increase in accounts payable and accrued expenses of $1,528,000 Net cash used in investing activities consists of the acquisitions of AMT and Terrasat for net cash of approximately $8,373,000, as discussed above under "Business Acquisition", and $2,098,000 for capital expenditures. During the period ended April 29, 2001, the Company received proceeds of $223,000 from the exercise of common stock options by employees, $998,000 from the exercise of Managing Underwriters' Warrants, and $14,759,000 from the exercise of 946,349 of the warrants which were called for redemption as of November 13, 2000. The proceeds have been invested in a short term money fund. Payments of long-term debt includes the payment of approximately $622,000 of debt assumed in the acquisitions of AMT and Terrasat with interest rates ranging from 9% to 18%. The Company acquired 10,800 shares of treasury stock through open market purchases at a cost of $194,000. All treasury shares have been retired. The Company maintains a revolving credit facility with a bank for an aggregate of $30,000,000, as amended in February 2001, which expires January 31, 2003. There were no borrowings outstanding as of April 29, 2001 and July 30, 2000. At April 29, 2001, the Company had cash and cash equivalents of approximately $13,016,000. The Company believes that presently anticipated future cash requirements will be provided by internally generated funds and existing credit facilities. Item 3: Quantitative and Qualitative Disclosures About Market Risk ---------------------------------------------------------- The Company is subject to market risk associated with changes in interest rates and stock prices. The Company has not entered into any derivative financial instruments to manage the above risks and the Company has not entered into any market risk sensitive instruments for trading purposes. There have been no material changes in market risk to the Company since its fiscal year end as disclosed in the Company's Annual Report Form 10K as of July 30, 2000. 10 PART II - OTHER INFORMATION - --------------------------- ITEM 1 - LEGAL PROCEEDINGS: The Company is not involved in any material legal proceedings. ITEM 2 - CHANGES IN SECURITIES: None ITEM 3 - DEFAULTS UPON SENIOR SECURITIES: None ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS: None ITEM 5 - OTHER INFORMATION: None ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K: (a) Exhibits None (b) Reports on Form 8-K No reports on Form 8-K were filed during the third quarter of fiscal 2001. 11 FORM 10-Q SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HERLEY INDUSTRIES, INC. ----------------------- Registrant BY: /S/ Myron Levy --------------------------- Myron Levy, President BY: /S/ Anello C. Garefino --------------------------- Anello C. Garefino Principal Financial Officer DATE: June 12, 2001 12 -----END PRIVACY-ENHANCED MESSAGE-----