EX-99 2 hrlypressrel-ex99.txt PRESS RELEASE HERLEY REPORTS SECOND QUARTER RESULTS CONFERENCE CALL SCHEDULED FOR THURSDAY, MARCH 8, 2007 Lancaster, PA - March 6, 2007 Herley Industries, Inc. (Nasdaq: HRLY) today reported financial results for the second quarter ended January 28, 2007. Net sales for the thirteen weeks ended January 28, 2007 were approximately $38.0 million. Net income for the period was approximately $1.7 million. John M. Kelley, Herley President, commented, "Herley is regaining pre-suspension momentum and sales levels. Our book-to-bill for the quarter was 1.14 to 1. Backlog at the end of the second quarter was $136 million. Additionally, we are pleased that the scope of the U. S. defense budget includes areas where Herley has experience, technical expertise, and proven products and capabilities. We look forward to these opportunities to provide microwave hardware and solutions to the U. S. Government and its prime military contractors." Myron Levy, Chairman and CEO, said, "Herley took a "standing eight count" with the suspension. With a cleared head, we are now moving forward, and expect increasing revenues and profitability. We are pleased with these initial results in Q2, and we anticipate continued improvement in Q3 and Q4. As we progress, we will hold more frequent communications to share what we believe will be good news with our friends, customers, and shareholders." Mr. Kelley will host a conference call on March 8, 2007 at 10:00 a.m. Eastern time to discuss financial results for the second quarter ended January 28, 2007. To join the conference call dial 1 (888) 425-4188, referencing Conference ID 1338659. A taped replay of the call will be available on March 8, 2007 at 11:00 a.m. through March 15, 2007 at 11:59 p.m. Eastern time. To listen to the replay dial: 1 (800) 642-1687 (U.S.) or 1 (706) 645-9291 (International), and Conference ID 1338659. 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=38197. To listen to the live call on the Internet, go to the web site at least 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 more than 1000 employees. Additional information about the company can be found on the Internet at www.herley.com -------------------------------------------------------------------------------- Safe Harbor Statement - Except for the historical information contained herein, this presentation 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," "thinks", "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. -------------------------------------------------------------------------------- For information at Herley contact: Peg Guzzetti Tel: (717) 735-8117 Investor Relations www.herley.com HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data)
January 28, 2007 July 30, (Unaudited) 2006 ---------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 24,124 $ 22,303 Trade accounts receivable 28,438 30,600 Costs incurred and income recognized in excess of billings on uncompleted contracts and claims 13,006 13,926 Other receivables 1,657 769 Inventories, net 53,984 52,909 Deferred income taxes and other 5,705 4,932 ---------- ----------- Total Current Assets 126,914 125,439 Property, Plant and Equipment, net 30,027 30,478 Goodwill 73,862 73,612 Intangibles, net of accumulated amortization of $4,362 at January 28, 2007 and $3,468 at July 30, 2006 19,485 19,989 Other Assets 1,725 1,932 ---------- ----------- $ 252,013 $ 251,450 ========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $ 1,321 $ 630 Current portion of employment settlement agreement - (net of imputed interest of $331) 1,027 - Accounts payable and accrued expenses 16,707 21,503 Billings in excess of costs incurred and income recognized on uncompleted contracts 701 555 Income taxes payable 4,957 3,395 Accrual for contract losses 1,974 2,959 Accrual for warranty costs 1,150 986 Advance payments on contracts 4,840 3,323 ---------- ----------- Total Current Liabilities 32,677 33,351 Long-term Debt 6,577 5,948 Long-term Portion of Employment Settlement Agreement - (net of imputed interest of $665) 4,672 - Other Long-term Liabilities 1,439 1,265 Deferred Income Taxes 5,390 7,416 ---------- ----------- 50,755 47,980 ---------- ----------- Commitments and Contingencies Shareholders' Equity: Common stock, $.10 par value; authorized 20,000,000 shares; issued 14,761,366 and outstanding 13,962,799 in 2007 issued 14,660,716 and outstanding 13,862,149 in 2006 1,476 1,466 Additional paid-in capital 115,128 113,418 Retained earnings 91,948 96,286 Treasury stock, 798,567 common shares at cost (9,044) (9,044) Accumulated other comprehensive income 1,750 1,344 ---------- ----------- Total Shareholders' Equity 201,258 203,470 ---------- ----------- $ 252,013 $ 251,450 ========== ===========
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands except per share data) (Unaudited)
Thirteen weeks ended Twenty-six weeks ended ------------------------- ------------------------- January 28, January 29, January 28, January 29, 2007 2006 2007 2006 ----------- ---------- ---------- ----------- Net sales $ 37,997 $ 45,839 $ 78,113 $ 87,777 ----------- ---------- ---------- ----------- Cost and expenses: Cost of products sold 28,010 32,351 57,841 60,164 Selling and administrative expenses 7,398 8,238 16,420 16,825 Employment contract settlement costs - - 8,914 - ----------- ---------- ---------- ----------- 35,408 40,589 83,175 76,989 ----------- ---------- ---------- ----------- Income (loss) from operations 2,589 5,250 (5,062) 10,788 ----------- ---------- ---------- ----------- Other income (expense), net: Investment income 263 199 479 309 Interest expense (222) (91) (365) (174) Foreign exchange gain (loss) 266 (10) 283 103 ----------- ---------- ---------- ----------- 307 98 397 238 ----------- ---------- ---------- ----------- Income (loss) before income taxes 2,896 5,348 (4,665) 11,026 Provision (benefit) for income taxes 1,223 1,384 (327) 3,087 ----------- ---------- ---------- ----------- Net income (loss) $ 1,673 $ 3,964 $ (4,338) $ 7,939 =========== ========== ========== =========== Earnings (loss) per common share - Basic $ .12 $ .27 $ (.31) $ .55 =========== ========== ========== =========== Basic weighted average shares 13,902 14,474 13,882 14,460 =========== ========== ========== =========== Earnings (loss) per common share - Diluted $ .12 $ .26 $ (.31) $ .52 =========== ========== ========== =========== Diluted weighted average shares 14,405 15,091 13,882 15,173 =========== ========== ========== ===========
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Twenty-six weeks ended ---------------------- January 28, January 29, 2007 2006 --------------- --------------- Cash flows from operating activities: Net (loss) income $ (4,338) $ 7,939 --------------- --------------- Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 3,507 3,466 Stock-based compensation expense 225 213 Excess tax benefit from exercise of stock options (212) (244) Employment contract settlement costs (includes $196 of stock option modification costs) 5,914 - Imputed interest related to employment settlement liability 111 - Deferred taxes (2,307) (81) Gain on sale of equipment (107) - Foreign exchange gain (68) (36) Inventory valuation reserve charges 424 488 Reduction in accrual for contract losses (664) - Warranty reserve charges 634 167 Changes in operating assets and liabilities: Trade accounts receivable 2,162 (1,291) Costs incurred and income recognized in excess of billings on uncompleted contracts and claims 920 (2,865) Other receivables (888) (228) Inventories (1,499) (3,491) Other current assets (315) (71) Accounts payable and accrued expenses (5,266) (3,121) Billings in excess of costs incurred and income recognized on uncompleted contracts 146 457 Income taxes payable 1,774 1,174 Accrual for contract losses (321) 85 Advance payments on contracts 1,517 1,738 Other, net 209 259 --------------- --------------- Total adjustments 5,896 (3,381) --------------- --------------- Net cash provided by operating activities 1,558 4,558 --------------- --------------- Cash flows from investing activities: Acquisition of technology license (179) (825) Proceeds from sale of equipment 202 - Capital expenditures (2,235) (2,785) --------------- --------------- Net cash used in investing activities (2,212) (3,610) --------------- --------------- Cash flows from financing activities: Borrowings under bank line of credit 8,500 8,000 Borrowings - other 1,746 - Proceeds from exercise of stock options 1,087 999 Excess tax benefit from exercises of stock options 212 244 Payments under employment contract settlement (130) - Payments of long-term debt (440) (753) Payments under bank line of credit (8,500) (8,000) --------------- --------------- Net cash provided by financing activities 2,475 490 --------------- --------------- Net increase in cash and cash equivalents 1,821 1,438 Cash and cash equivalents at beginning of period 22,303 20,331 --------------- --------------- Cash and cash equivalents at end of period $ 24,124 $ 21,769 =============== ===============