EX-99 2 hrly8kdec2005-ex99.txt HERLEY REPORTS 1ST QUARTER RESULTS REVENUES INCREASED 24.9% TO $41.9 MILLION EARNINGS PER DILUTED SHARE WERE $0.26 Lancaster, PA. December 13, 2005. Herley Industries, Inc. (Nasdaq:HRLY) today reported net sales for the first quarter ended October 30, 2005 were $41.9 million, up 24.9% from the first quarter of fiscal year 2005. Net income for the quarter was $4.0 million, or $0.26 per diluted share. This compares to $3.6 million, or $0.24 per diluted share, for the first quarter of fiscal 2005, and $1.5 million, or $0.10 per diluted share, for the fourth quarter of fiscal 2005. The effective tax rate for the first quarter of fiscal 2006 was 30.0% compared to 31.0% for the first quarter of fiscal 2005, and 29.7% for the fourth quarter of fiscal 2005. Operating income for the first quarter of fiscal 2006 was $5.5 million or 13.2%. Operating income for the first quarter of 2005 was $5.0 million or 14.9% and $2.6 million, or 6.2% for the fourth quarter of fiscal 2005. Cash and cash equivalents at October 30, 2005 were $21.2 million. During the quarter, Herley generated $2.6 million in cash from operations and had $1.8 million in capital expenditures. John M. Kelley, Herley President, said, "We are very pleased with the progress made during the quarter on a number of projects, including I-CAP III, E/A-18G, and Trident D-5. Herley has hardware and software on a significant number of major weapon systems and missile and munitions for the U.S. and allied countries. The programs are very important to the U.S. government, and we expect funding will continue for many years. New production programs along with our legacy business should drive revenue growth in fiscal 2006 and the out-years." Kelley continued, "Herley is nearing completion of the integration process of our recent acquisitions. It is important to note that the acquisitions we make are not bolt-on or isolated from the activities at our other divisions. As a result, we have overlapping manufacturing capability. The integration process requires that we make each of our divisions complementary to each other, while eliminating the competitive areas. "We expect our acquisitions to contribute to the competitiveness and overall effectiveness of the company. We work hard to do it right, because when the process is completed successfully, the benefits flow, not just to Herley, but also to our customers, making us more visible and more valuable to them." Herley will host a conference call on Wednesday, December 14, 2005 at 9:00 A.M. Eastern Time to discuss this news. To join the conference call dial 1 (888) 425-4188, referencing Conference ID 3408664. A taped replay of the call will be available through December 21, 2005. To listen to the replay dial: 1 (800) 642 1687 (U.S.) or 1 (706) 645-9291 (International), and Conference ID 3408664. In addition, the conference call will be broadcast live over the Internet and can be accessed through the following URL: http://phx.corporate-ir.net/playerlink.zhtml?c=111170&s=wm&e=1178392 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 nine manufacturing locations and over 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. 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 CONSOLIDATED BALANCE SHEETS (UNAUDITED) (In thousands, except share data)
October 30, July 31, 2005 2005 -------------- ------------ ASSETS Current Assets: Cash and cash equivalents $ 21,165 $ 20,331 Trade accounts receivable 27,695 27,258 Costs incurred and income recognized in excess of billings on uncompleted contracts, including claims 17,415 16,058 Other receivables 1,300 1,414 Inventories, net of allowance of $4,687 in fiscal 2006 and $4,492 in fiscal 2005 56,181 53,668 Deferred taxes and other 3,921 3,782 ------------- ------------ Total Current Assets 127,677 122,511 Property, Plant and Equipment, net 30,023 29,461 Goodwill 70,880 70,831 Intangibles, net of accumulated amortization of $2,127 in fiscal 2006 and $1,680 in fiscal 2005 20,499 20,554 Other Assets 727 744 ------------- ------------ $ 249,806 $ 244,101 ============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 218 $ 797 Accounts payable and accrued expenses 23,988 24,477 Billings in excess of costs incurred and income recognized on uncompleted contracts 756 538 Income taxes payable 5,225 3,760 Reserve for contract losses 420 630 Advance payments on contracts 4,111 3,966 -------------- ------------ Total Current Liabilities 34,718 34,168 Long-term Debt 4,840 5,000 Other Long-term Liabilities 1,143 1,042 Deferred Income Taxes 6,261 6,254 ------------- ------------ 46,962 46,464 -------------- ------------ Commitments and Contingencies Shareholders' Equity: Common stock, $.10 par value; authorized 20,000,000 shares; issued and outstanding 14,468,875 in fiscal 2006 and 14,389,625 in fiscal 2005 1,447 1,439 Additional paid-in capital 110,302 109,118 Retained earnings 89,907 85,932 Accumulated other comprehensive income 1,188 1,148 -------------- ------------ Total Shareholders' Equity 202,844 197,637 -------------- ------------ $ 249,806 $ 244,101 ============== ============
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands except per share data)
Thirteen weeks ended October 30, October 31, 2005 2004 ------------ ------------ Net sales $ 41,938 $ 33,590 ------------ ------------ Cost and expenses: Cost of products sold 27,813 22,784 Selling and administrative expenses 8,587 5,802 ------------ ------------ 36,400 28,586 ------------ ------------ Income from operations 5,538 5,004 ------------ ------------ Other income (expense), net Investment income 110 224 Interest expense (83) (79) Foreign exchange gain 113 - ------------ ------------ 140 145 ------------ ------------ Income before income taxes 5,678 5,149 Provision for income taxes 1,703 1,596 ------------ ------------ Net income $ 3,975 $ 3,553 ============ ============ Earnings per common share - Basic $ .28 $ .25 ============ ============ Basic weighted average shares 14,446 14,252 ============ ============ Earnings per common share - Diluted $ .26 $ .24 ============ ============ Diluted weighted average shares 15,240 14,936 ============ ============
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UAUDITED) (In thousands)
Thirteen weeks ended October 30, October 31, 2005 2004 -------------- -------------- Cash flows from operating activities: Net income $ 3,975 $ 3,553 -------------- -------------- Adjustments to reconcile net income to net cash provided by operations: Depreciation and amortization 1,730 1,149 Stock-based compensation expense 78 - Increase in deferred tax assets (30) - Foreign exchange gain (31) - Changes in operating assets and liabilities: (Increase) decrease in trade accounts receivable (437) 4,126 (Increase) decrease in costs incurred and income recognized in excess of billings on uncompleted contracts, and claims (1,357) 175 Decrease (increase) in other receivables 114 (265) Increase in inventories (2,513) (766) Increase in deferred taxes and other (139) (473) Decrease in accounts payable and accrued expenses (489) (60) Increase (decrease) in billings in excess of costs incurred and income recognized on uncompleted contracts 218 (624) Increase in income taxes payable 1,465 1,041 Decrease in accrual for contract losses (210) (327) Increase (decrease) in advance payments on contracts 145 (231) Other, net 123 160 -------------- -------------- Total adjustments (1,333) 3,905 -------------- -------------- Net cash provided by operating activities 2,642 7,458 -------------- -------------- Cash flows from investing activities: Acquisition of businesses, net of cash acquired - (3,753) Acquisition of technology license (375) - Partial distribution from limited partnership - 10 Capital expenditures (1,820) (2,044) -------------- -------------- Net cash used in investing activities (2,195) (5,787) -------------- -------------- Cash flows from financing activities: Borrowings under bank line of credit 4,000 - Proceeds from exercise of stock options 898 559 Payments of long-term debt (727) (727) Payments under bank line of credit (4,000) - Income tax benefit from exercise of stock options 216 200 -------------- -------------- Net cash provided by financing activities 387 32 -------------- -------------- Net increase in cash and cash equivalents 834 1,703 Cash and cash equivalents at beginning of period 20,331 66,181 -------------- -------------- Cash and cash equivalents at end of period $ 21,165 $ 67,884 ============== ==============