Herley Reports 1st Quarter Results

LANCASTER, Pa., Dec. 16 /PRNewswire-FirstCall/ -- Herley Industries, Inc. today reported financial results for the First Quarter of Fiscal Year 2009.

A Conference Call has been scheduled for 9:00 a.m. Eastern Time on Wednesday, December 17, 2008. Interested parties may join the conference by dialing: [phone] referencing Conference ID # 77420347.

Replay of the conference call is scheduled to begin on December 17, 2008, two hours after completion of the call, and end on December 24 at 11:59 p.m. Eastern Time. To listen to the replay dial: 1 [phone] (U.S.) or 1 [phone] (International), and Conference ID # 77420347.

This conference call will be broadcast live over the Internet and can be accessed by interested parties through URL: http://www.videonewswire.com/event.asp?id=54095.

To listen to the live call, please go to the Web site at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software. For those who are not available to listen to the live broadcast, a replay will be available shortly after the call on the site.

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 approximately 1000 employees. Additional information about the company can be found on the Internet at http://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. When used in this report, words such as "anticipated," "believes," "could," "estimates," "expects," "may," "plans," "potential" and "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, 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: [phone] Investor Relations http://www.herley.com/ HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) November 2, 2008 August 3, (Unaudited) 2008 ASSETS Current Assets: Cash and cash equivalents $11,949 $14,347 Trade accounts receivable, net 24,559 27,003 Income Taxes Receivable 2,056 2,056 Costs incurred and income recognized in excess of billings on uncompleted contracts and claims 14,703 19,490 Other receivables 1,302 1,286 Inventories, net 62,695 61,559 Deferred income taxes 11,991 11,263 Assets held for sale 19,633 - Other current assets 1,823 1,276 Total Current Assets 150,711 138,280 Property, Plant and Equipment, net 34,429 30,552 Goodwill 85,980 73,900 Intangibles, net of accumulated amortization of $5,171 at November 2, 2008 and $7,505 at August 3, 2008 13,586 16,145 Other Assets 1,068 541 Total Assets $285,774 $259,418 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Current portion of long-term debt $2,332 $1,394 Current portion of employment settlement agreement - (net of imputed interest of $122 at November 2, 2008 and $138 at August 3, 2008) 1,136 1,119 Current portion of litigation settlement - (net of imputed interest of $29 at November 2, 2008 and $46 at August 3, 2008) 971 954 Accounts payable and accrued expenses 24,240 27,546 Billings in excess of costs incurred and income recognized on uncompleted contracts 199 613 Income taxes payable 94 43 Accrual for contract losses 2,805 2,994 Accrual for warranty costs 1,016 1,142 Advance payments on contracts 7,772 8,120 Liabilities of business held for sale 4,633 - Total Current Liabilities 45,198 43,925 Long-term Debt 34,727 7,092 Long-term Portion of Employment Settlement Agreement - (net of imputed interest of $339 at November 2, 2008 and $387 at August 3, 2008) 2,792 3,074 Long-term Portion of litigation settlement - (net of imputed interest of $93 at November 2, 2008 and $108 at August 3, 2008) 907 892 Other Long-term Liabilities 1,993 1,652 Deferred Income Taxes 8,941 8,839 Accrued Income Taxes Payable 509 509 Total Liabilities 95,067 65,983 Commitments and Contingencies Shareholders' Equity: Common stock, $.10 par value; authorized 20,000,000 shares; issued and outstanding 13,526,402 at November 2, 2008, and 13,521,902 at August 3, 2008 1,352 1,352 Additional paid-in capital 101,608 101,403 Retained earnings 87,719 89,058 Accumulated other comprehensive income 28 1,622 Total Shareholders' Equity 190,707 193,435 Total Liabilities and Shareholders' Equity $285,774 $259,418 HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (In thousands except per share data) Thirteen weeks ended November 2, October 28, 2008 2007 Net sales $35,344 $32,538 Cost and expenses: Cost of products sold 28,741 23,226 Selling and administrative expenses 7,323 7,075 Gain on sale of assets (618) - Litigation costs 558 513 Litigation settlement - 6,042 36,004 36,856 Operating loss (660) (4,318) Other (expense) income: Investment income 18 417 Interest expense (223) (25) Foreign exchange transactions (losses) gains (360) 146 (565) 538 Loss from continuing operations before income taxes (1,225) (3,780) Income taxes benefit (342) (1,551) Loss from continuing operations $(883) $(2,229) Discontinued operations (Note 3): Loss from operations of discontinued subsidiary (734) (539) Income taxes benefit (278) (177) Loss from discontinued operations $(456) $(362) Net loss $(1,339) $(2,591) Loss per common share - Basic and Diluted Loss from continuing operations $(.07) $(.16) Loss from discontinued operations (.03) (.03) Net loss - basic and diluted $(.10) $(.19) Basic and diluted weighted average shares 13,525 13,965 HERLEY INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) Thirteen weeks ended November 2, October 28, 2008 2007 Cash flows from operating activities: Net Loss $(1,339) $(2,591) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 2,148 1,846 Gain on sale of fixed assets (618) - Loss from goodwill impairment of discontinued subsidiary 1,000 - Stock-based compensation costs 148 247 Excess tax benefit from exercises of stock options (19) (13) Litigation settlement costs - 5,942 Imputed interest related to employment settlement liability 96 80 Foreign exchange transactions losses (gains) 360 (146) Inventory valuation reserve charges 400 481 Reduction in accrual for contract losses - (826) Warranty reserve charges 343 348 Deferred tax benefit (620) (1,742) Changes in operating assets and liabilities: Cash of discontinued subsidiary (712) - Trade accounts receivable 896 2,379 Costs incurred and income recognized in excess of billings on uncompleted contracts and claims 4,786 (3,047) Other receivables 399 463 Inventories, net (375) (2,173) Other current assets (579) (791) Accounts payable and accrued expenses (4,093) 1,687 Billings in excess of costs incurred and income recognized on uncompleted contracts 252 542 Income taxes payable 70 (208) Accrual for contract losses (55) 151 Employment settlement agreement (330) (302) Advance payments on contracts (117) (45) Other, net (920) (188) Total adjustments 2,460 4,685 Net cash provided by operating activities 1,121 2,094 Cash flows from investing activities: Acquisition of business, net of cash acquired of $417 (30,010) - Capital expenditures (2,044) (966) Net cash used in investing activities (32,054) (966) Cash flows from financing activities: Borrowings under bank line of credit 20,000 4,900 Borrowings - other 10,000 - Proceeds from exercise of stock options 38 34 Excess tax benefit from exercises of stock options 19 13 Payments of long-term debt (441) (425) Payments under bank line of credit (1,000) (4,900) Purchase of treasury stock - (1,288) Net cash provided by (used in) financing activities 28,616 (1,666) Effect of exchange rate changes on cash (81) - Net decrease in cash and cash equivalents (2,398) (538) Cash and cash equivalents at beginning of period 14,347 35,181 Cash and cash equivalents at end of period $11,949 $34,643