EX-99.I 3 exhibit991121103.txt EX-99-1 EARNINGS RELEASE-FISCAL 2004 Exhibit 99.1 ------------ HERLEY REPORTS EXCELLENT 1ST QUARTER RESULTS HERLEY 1ST QUARTER OPERATING INCOME INCREASED 22.0% TO $5.9 MILLION 1ST QUARTER EARNINGS PER DILUTED SHARE INCREASED 22.7%, TO $0.27 FUNDED BACKLOG REACHED $91.7 MILLION, AN INCREASE OF $1.8 MILLION FROM FISCAL 2003 YEAR END Lancaster, PA December 11, 2003. Herley Industries, Inc. (Nasdaq:HRLY) today reported results for the first quarter ended November 2, 2003. Select financial results for the first quarter are as follows: - Revenues increased 3.6% to $28.3 million. - Vertical integration efforts generated $2.0 of inter-company sales. - Operating Income was $5.9 million, an increase of 22.0% - Net Income grew 17.6% to $3.9 million. - Book to Bill was 1.06:1 for the first quarter. John Kelley, President said, "Our first quarter results gave Herley an excellent start to the year. For the period, record results were achieved in revenues and profitability, and new orders increased funded backlog $1.8 million to $91.7 million. The combination of international sales, domestic product mix, and increased inter-company sales generated very good margins for the quarter. Operating Margin for the first quarter was 20.7% of revenue compared to 17.6% for the same period last year. Net Income as a percentage of revenue was 13.9% compared to 12.3% for the first quarter of last year." Kelley continued, "We reiterate our previous comments that Herley's strategic objective is to grow our defense electronics business organically and by making accretive acquisitions of complimentary companies, business units, and product lines. We continue to be optimistic that we will be able to successfully invest some, most, or all of our existing cash into a domestic or international acquisition." 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 five manufacturing locations and approximately 675 employees. Additional information about the company can be found on the Internet at www.herley.com HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands except per share data) 13 weeks ended 14 weeks ended November 2, November 3, 2003 2002 -------------- -------------- Net sales ...................................... $ 28,267 $ 27,290 -------- -------- Cost and expenses: Cost of products sold ................... 17,625 18,099 Selling and administrative expenses ..... 4,743 3,735 Litigation costs ........................ 37 650 -------- -------- 22,405 22,484 -------- -------- Operating Income ........................ 5,862 4,806 -------- -------- Other (expense) income, net: Investment income ....................... 176 368 Interest expense ........................ (87) (95) Foreign exchange (loss) ................. (173) -- -------- -------- (84) 273 -------- -------- Income before income taxes .............. 5,778 5,079 Provision for income taxes ..................... 1,837 1,727 -------- -------- Net income .............................. $ 3,941 $ 3,352 ======== ======== Earnings per common share - Basic .............. $ .28 $ .23 ======== ======== Basic weighted average shares ........... 14,013 14,668 ======== ======== Earnings per common share - Diluted ............ $ .27 $ .22 ======== ======== Diluted weighted average shares ......... 14,782 15,506 ======== ======== 2 HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) November 2, August 3, 2003 2003 ----------- --------- (Unaudited) (Audited) ASSETS Current Assets: Cash and cash equivalents ......................$ 82,538 $ 81,523 Accounts receivable ............................ 14,251 16,525 Costs incurred and income recognized in excess of billings on uncompleted contracts ........ 12,389 6,960 Other receivables .............................. 735 827 Inventories, net of allowance of $2,815 at November 2003 and $2,739 at August 2003 .. 39,280 37,545 Deferred taxes and other ....................... 3,450 3,207 --------- --------- Total Current Assets ...... 152,643 146,587 Property, Plant and Equipment, net ....................... 22,720 22,406 Goodwill ................................................. 25,729 25,729 Intangibles, net of accumulated amortization of $472 at November 2003 and $403 at August 2003 ....... 1,473 1,542 Available-For-Sale Securities ............................ 75 75 Other Investments ........................................ 142 162 Other Assets ............................................. 1,009 1,063 --------- --------- $ 203,791 $ 197,564 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt ..............$ 758 $ 686 Accounts payable and accrued expenses .......... 13,699 14,026 Billings in excess of costs incurred and income recognized on uncompleted contracts . 1,294 -- Income taxes payable ........................... 3,322 2,670 Reserve for contract losses .................... 977 736 Advance payments on contracts .................. 585 856 --------- --------- Total Current Liabilities ....... 20,635 18,974 Long-term Debt ........................................... 5,892 6,403 Deferred Income Taxes .................................... 4,928 4,945 --------- --------- 31,455 30,322 --------- --------- Commitments and Contingencies Shareholders' Equity: Common stock, $.10 par value; authorized 20,000,000 shares; issued and outstanding 14,052,801 at November 2003 and 13,969,151 at August 2003 1,405 1,397 Additional paid-in capital ..................... 105,486 104,551 Retained earnings .............................. 65,419 61,478 Accumulated other comprehensive income (loss) .. 26 (184) --------- --------- Total Shareholders' Equity ...... 172,336 167,242 --------- --------- $ 203,791 $ 197,564 ========= ========= For information at Herley contact: Peg Guzzetti, Investor Relations Tel: (717) 735-8117 -------------------------------------------------------------------------------- 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. 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, and general economic conditions. -------------------------------------------------------------------------------- 3