-----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, Mw1rnhw9FfswICUKR7hh3GeoSER8xu/z7SUpopnB0D6Jai9CQ32Ad5yW9qBuO+ig lqFTYUCBlExYGOo/iaP0rQ== 0000047035-04-000021.txt : 20041215 0000047035-04-000021.hdr.sgml : 20041215 20041215142445 ACCESSION NUMBER: 0000047035-04-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041031 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20041215 DATE AS OF CHANGE: 20041215 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-05411 FILM NUMBER: 041204375 BUSINESS ADDRESS: STREET 1: 101 NORTH POINTE BOULEVARD CITY: LANCASTER STATE: PA ZIP: 17601-4133 BUSINESS PHONE: 7177358117 MAIL ADDRESS: STREET 1: 101 NORTH POINTE BOULEVARD CITY: LANCASTER STATE: PA ZIP: 17601-4133 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 8-K 1 earnings8k120904.txt EARNINGS RELEASE Q105 DECEMBER 9, 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): December 9, 2004 ---------------- 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) 101 North Pointe Boulevard, Lancaster, Pennsylvania 17601 - --------------------------------------------------- ----- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: (717) 735-8117 -------------- ------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) o Pre-commencement communications pursuant to Rule 13e-4(C) under the Exchange Act (17 CFR 240.13e-4(C)) INFORMATION TO BE INCLUDED IN THE REPORT The information in this Form 8-K Current Report and the exhibit attached hereto is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing of the Registrant under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION On December 9, 2004, Herley Industries, Inc. issued an earnings release announcing its financial results for the first quarter of fiscal 2005 ended October 31, 2004. A copy of the earnings release is attached hereto as Exhibit 99.1. NON-GAAP FINANCIAL MEASURE The press release furnished herewith contains a financial measure ("free cash flow") not calculated in accordance with generally accepted accounting principles in the United States of America ("GAAP"). The Registrant defines "Free cash flow" as "Net cash provided by operating activities" less "Capital expenditures." The Registrant's management believes that free cash flow is useful to investors and management as a supplemental financial measurement in the evaluation of the Registrant's business and believes that free cash flow may provide additional information with respect to the Registrant's ability to meet its future debt service and capital expenditures as well as working capital requirements. A reconciliation of free cash flow for the thirteen weeks ended October 31, 2004 and November 2, 2003 is as follows (in thousands):
Thirteen weeks ended -------------------- October 31, 2004 November 2, 2003 ---------------- ---------------- Net cash provided by operating activities $ 7,658 $ 2,085 Capital expenditures (2,044) (1,187) ----- ----- Free cash flow $ 5,614 $ 898 ===== =====
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. 99.1 Earnings Release, dated December 9, 2004, announcing the Registrants's financial results for the first quarter of fiscal 2005 ended October 31, 2004. 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 hereunto duly authorized. HERLEY INDUSTRIES, INC ---------------------- Registrant BY: /S/ Thomas V. Gilboy -------------------------------------------- Thomas V. Gilboy Vice President and CFO (Principal Financial Officer) DATE: December 9, 2004 EX-99 2 exhibit991120904.txt EX. 99-1 EARNINGS RELEASE DATED DECEMBER 9, 2004 Exhibit 99.1 ------------ HERLEY REPORTS 1ST QUARTER RESULTS REVENUES INCREASED 19% to $33.6 MILLION FREE CASH FLOW WAS $5.6 MILLION EARNINGS PER DILUTED SHARE WAS $0.24 Lancaster, PA. December 9, 2004. Herley Industries, Inc. (Nasdaq:HRLY) today reported results for the first quarter ended October 31, 2004. Select financial results for the first quarter are as follows: o Net sales increased $5.3 million to $33.6 million o Cash provided by operations was $7.7 million o Capital expenditures were $2.0 million o Net income was $3.6 million, 10.6% of revenues o Book to Bill was .96:1 for the first quarter, 1.01:1 for last 12 months John Kelley, President said, "Although our results for the quarter were mixed, we did make good progress, both domestically and at our U.K. facility, on several of the engineering issues that impacted gross margins in the quarter." Kelley continued, "We are pleased with the Company's free cash flow in the quarter. Generating healthy cash flow has been an area of emphasis for us and we expect to continue to see the positive results of our actions in fiscal 2005." Net sales for the thirteen weeks ended October 31, 2004 were approximately $33.6 million, as compared to $28.3 million in the thirteen weeks ended November 2, 2003, an increase of $5.3 million (19%). Net sales at two recent acquisitions, CTI and RSS, accounted for an increase of approximately $3.5 million, or 66% of the increase for the quarter. Herley also experienced an approximate $3.1 million increase in net sales at its other US operations due to: o The start up of shipments of certain RF power amplifier products that had been in development last year, and o Shipments of certain microwave frequency modulation components principally used in electronic warfare simulation systems. These increases in sales in the first quarter were offset by a decrease in revenues recognized by EWST, Herle's UK subsidiary, due to changes in contract estimates at that operation versus contract estimates in the first quarter of fiscal 2004. The gross profit margin in the thirteen weeks ended October 31, 2004 was 32.3% compared to 37.7% in the first quarter of fiscal 2004, a decline of 5.4%. The decrease in gross profit is primarily attributable to: o Decreases of gross margins at EWST, principally due to changes in contract estimates at that operation versus contract estimates in the first quarter of fiscal 2004; o A decline of gross margins at one US operation due to lower shipments and higher labor costs attributable to the start up of a major electronic warfare upgrade program for the US Navy's EA 6B fleet aircraft, offset by o An improvement of gross margins at another US operation due to the increase in volume attributable to start up of shipments of certain RF power amplifier products, and shipments of certain microwave frequency modulation components referred to above. Selling and administrative expenses for the thirteen weeks ended October 31, 2004 were 17.4% of net sales as compared to 16.9% in the first quarter of fiscal 2004. Almost all of the net increase in expenses of $1 million was attributable to the addition of selling and administrative expenses in connection with the acquisitions of CTI and RSS. Operating income for the first quarter was $5.0 million or 15% of net sales, as compared to $5.9 million or 21% of net sales in 2004. The decrease in operating income is primarily attributable to the decline in gross margin percentage (for the reasons outlined above) and the 0.6% increase in selling and administrative costs as a percentage of sales, offset by the beneficial impact of the $5.3 million increase in revenue for the quarter. Herley will host a conference call on Friday, December 10, 2004 at 9:00 A.M. Eastern Time to discuss this news. To join the conference call dial 1 (888) 425-4188, referencing Conference ID # 2617609. A taped replay of the call will be available through December 17, 2004. To listen to the replay dial: 1 (800) 642 1687 (U.S.) or 1 (706) 645-9291 (International), and Conference ID # 2617609. In addition, the conference call will be broadcast live over the Internet through PR Newswire at http://phx.corporate-ir.net/playerlink.zhtml?c=111170&s=wm&e=979990. 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 seven manufacturing locations and approximately 830 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. 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. - -------------------------------------------------------------------------------- HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands except per share data) Thirteen weeks ended -------------------- October 31, November 2, 2004 2003 ----------- ----------- Net sales $ 33,590 $ 28,267 ------- ------- Cost and expenses: Cost of products sold 22,731 17,625 Selling and administrative expenses 5,855 4,780 ------- ------- 28,586 22,405 ------- ------- Operating Income 5,004 5,862 ------- ------- Other income (expense), net Investment income 224 176 Interest expense (79) (87) Foreign exchange (loss) -- (173) ------- ------- 145 (84) ------- ------- Income before income taxes 5,149 5,778 Provision for income taxes 1,596 1,837 ------- ------- Net income $ 3,553 $ 3,941 ======= ======= Earnings per common share - Basic $ .25 $ .28 === === Basic weighted average shares 14,252 14,013 ====== ====== Earnings per common share - Diluted $ .24 $ .27 === === Diluted weighted average shares 14,936 14,782 ====== ======
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share data) October 31, August 1, 2004 2004 ----------- --------- (Unaudited) ASSETS Current Assets: Cash and cash equivalents $ 67,884 $ 66,181 Trade accounts receivable 20,809 24,664 Costs incurred and income recognized in excess of billings on uncompleted contracts 14,035 14,210 Other receivables 840 576 Inventories, net of allowance of $4,081 in fiscal 2005 and $3,937 in 2004 45,885 44,909 Deferred taxes and other 4,054 3,579 ------- ------- Total Current Assets 153,507 154,119 Property, Plant and Equipment, net 27,055 25,968 Goodwill 38,859 35,165 Intangibles, net of accumulated amortization of $847 in fiscal 2005 and $752 in 2004 4,463 4,555 Available-For-Sale Securities 147 147 Other Investments 113 117 Other Assets 846 900 ------- ------- $ 224,990 $ 220,971 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 812 $ 804 Accounts payable and accrued expenses 16,999 16,934 Billings in excess of costs incurred and income recognized on uncompleted contracts 679 1,303 Income taxes payable 3,132 2,091 Reserve for contract losses 960 954 Reserve for warranty costs 581 580 Advance payments on contracts 949 1,180 ------- ------- Total Current Liabilities 24,112 23,846 Long-term Debt 5,159 5,845 Other Long-term Liabilities 993 932 Deferred Income Taxes 4,833 4,848 ------- ------- 35,097 35,471 ------- ------- Commitments and Contingencies Shareholders' Equity: Common stock, $.10 par value; authorized 20,000,000 shares; issued and outstanding 14,285,107 in fiscal 2005 and 14,220,508 in 2004 1,429 1,422 Additional paid-in capital 108,423 107,671 Retained earnings 78,704 75,151 Accumulated other comprehensive income 1,337 1,256 ------- ------- Total Shareholders' Equity 189,893 185,500 ------- ------- $ 224,990 $ 220,971 ======= =======
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Thirteen weeks ended -------------------- October 31, November 2, 2004 2003 ---------- ----------- Cash flows from operating activities: Net income $ 3,553 $ 3,941 ------ ------ Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 1,149 966 Foreign exchange loss -- 173 Equity in income of limited partnership (6) -- Changes in operating assets and liabilities: Decrease in accounts receivable 4,126 2,274 Decrease (increase) in costs incurred and income recognized in excess of billings on uncompleted contracts 175 (5,429) (Increase) decrease in other receivables (265) 92 (Increase) in inventories (766) (1,735) (Increase) in prepaid expenses and other (473) (243) (Decrease) in accounts payable and accrued expenses (60) (327) (Decrease) increase in billings in excess of costs incurred and income recognized on uncompleted contracts (624) 1,294 Increase in income taxes payable 1,241 877 (Decrease) increase in reserve for contract losses (327) 241 (Decrease) in advance payments on contracts (231) (271) Other, net 166 232 ------ ------ Total adjustments 4,105 (1,856) ------ ------ Net cash provided by operating activities 7,658 2,085 ------ ------ Cash flows from investing activities: Acquisition of businesses, net of cash acquired (3,753) -- Partial distribution from limited partnership 10 20 Capital expenditures (2,044) (1,187) ------ ------ Net cash used in investing activities (5,787) (1,167) ------ ------ Cash flows from financing activities: Proceeds from exercise of stock options 559 718 Payments of long-term debt (727) (621) ------ ------ Net cash (used in) provided by financing activities (168) 97 ------ ------ Net increase in cash and cash equivalents 1,703 1,015 Cash and cash equivalents at beginning of period 66,181 81,523 ------ ------ Cash and cash equivalents at end of period $ 67,884 $ 82,538 ====== ======
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