Herley Chairman Addresses Shareholders at Its Annual Meeting of Stockholders

LANCASTER, Pa., Jan. 11, 2011 /PRNewswire/ -- Herley Industries, Inc. (Nasdaq: HRLY) held its Annual Meeting with Shareholders today in Lancaster, PA.   John A. Thonet, Chairman of the Board, addressed shareholders at the meeting, and Herley CEO and President, Richard F. Poirier, delivered an overview of the company.  Mr. Thonet's comments follow:

"In March of last year, I had the pleasure of addressing our shareholders for the first time as Herley's Chairman. I spoke of a new beginning for Herley Industries that was, in fact, already beginning to take place. I posted a large image of Janus, the Roman god of beginnings, to symbolize that new beginning. As you may recall, that image depicted Janus as a god having two heads or faces, one looking backward to the past, the other looking forward to the future.

Our first step on our new journey was to eliminate uncertainty regarding Herley's ability to consistently provide solid performance, quarter after quarter. After five (5) successive quarters of solid performance, with our highest recorded revenues in our 45-year history, increased gross profit percentages, and improved earnings, Herley has made significant progress in this regard.

And the value of our stock has responded accordingly, increasing from $12.18 on August 2, 2009 as FY 2010 began to $17.02 at the close of business this past Friday, an increase of about 40 percent over this roughly 17 month time period. Indeed, over the last 52 weeks, Herley's stock value increased by roughly 28 percent, significantly outperforming both the market and its peer group.

In Fiscal 2011, the goal of improved performance continues as the Company, under CEO Rich Poirier's able leadership, explores and implements additional opportunities for improved operational efficiencies and organizational structure that we believe will lead to continuing improved performance, improved gross profit margins, reduced costs, and improved earnings.

Our first quarter results for FY 2011, reported just one month ago, provided the Company with the highest gross profit margins since 2004 -- just a preliminary indication of the impact of management's initial efforts to affect internal performance efficiencies. As note in our earnings release, the quarterly earnings reported in that quarter, adjusted in recognition of a significant legal settlement accrued in that quarter, would have exceeded $0.30 per diluted share.  This is a significant improvement over past quarterly earnings performance and on target for the type of earnings improvement we are trying to accomplish for our shareholders this year.

I congratulate Herley's management team and all of Herley's employees for five successive quarters of excellent and continuously improving performance. Stay tuned as Mr. Poirier, his management team and the Board continue to focus on improving the bottom line in FY 2011.

'Step 2' in the plan I proposed last year for Herley's new beginning involved the elimination of any uncertainty that might have existed as to the Company's long term financial health as it related to Herley's involvement in complex legal entanglements, notably the consolidated securities class action and related derivative litigation matters.

As I reported recently at Herley's first ever in-house investor conference, held this past October in Boston, Herley not only resolved those legal matters, but did so without the need to borrow money to satisfy related settlements, thus demonstrating Herley's continuing strong balance sheet going forward.

In addition, I am particularly pleased to report that, as I stand here today, for the first time in five years, Herley has no ongoing litigation. We look forward in FY 2011 to the financial benefits that we hope and expect will be associated with a reduction in our litigation costs.

The third step in our plan last year for Herley's new beginning involved 'Identifying Opportunities for Growth.'

To this end, Mr. Poirier and his management team were asked to formulate and implement plans to foster organic growth particularly by (i) gaining more content on existing platforms; (ii) by identifying and pursuing new opportunities on other programs and platforms; and by (iii) capitalizing on the needs of foreign militaries. Immediately following these comments, Mr. Poirier will bring you up to date on these ongoing efforts.  

We also told shareholders last year that we would seek to resume Herley's historical path to growth through participation in the defense industry's M&A market, acknowledging that as Herley began its efforts to identify strategic acquisition targets, other companies might also be looking at us.  This has become increasingly true as Herley began to return to consistently solid performance and profitability.

We began this process with the retention of investment bankers to assist in determining the worth of our Company in the market and to further assist in enhancing shareholder value. To Herley, this action was represented by Janus looking backwards.

This process, set in motion in early 2010, is nearing a conclusion. In 2011, the year of Janus will end and Herley will narrow its focus to a single direction.  We have used this year to complete a thorough evaluation of the Company and our business, and we will be guided in our decisions by our responsibility to the shareholders.

We also set in motion plans for growing the Company in the defense industry as we see it in the future through strategic acquisitions. We've appointed a strong triad of managers to work with the Board in identifying and pursuing such opportunities. To Herley, this was Janus looking forward.

During this past year we have also identified those technologies which we believe we should pursue to allow the Company to grow in the industry and succeed in the changing defense environment that we forecast. As you will see in Mr. Poirier's presentation to follow, Herley is a microwave company with known leadership in many technologies, including radar, ECM (electronic countermeasures), Command and Control and complex microwave assemblies.  One area where we believe that there is room for growth is in microwave communications.

To complete Herley's portfolio of technologies that we believe will position the company to better compete in the unmanned vehicle scenarios of modern warfare, we intend to expand our penetration of the microwave communications sector of the industry.

To this end, I have charged Herley Board Member, Carlos Campbell, working with our Board and senior members of our engineering management team, to identify acquisition targets for Herley, particularly in the area of microwave communications. He has done so. We have met with companies who have the technology and skills in the communications area, especially in the Unmanned Vehicle area, that will permit Herley to expand its business in the changing defense environment.

At our annual meeting of the shareholders last year, we laid out ambitious goals and plans for accomplishing those goals. As you can see, one by one those goals have been successfully accomplished. Very quickly now, Herley will choose one direction and move forward with dispatch to serve the needs of our customers, enhance shareholder value, and motivate our employees to successfully implement our strategies. With each passing month, Herley's successes increase as does the clarity of its vision and direction.

And now, it is my pleasure to turn the program over to Herley's Chief Executive Officer and President, Mr. Richard Poirier."

Interested parties may access a replay of the meeting and slide presentation via the web at:  http://www.videonewswire.com/event.asp?id=75371.  The replay will be available through January 10, 2012.  The presentation will also be available on Herley's web site at www.herley.com.

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 1,000 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 release may contain forward-looking statements. Such statements are inherently subject to risks and uncertainties. Forward-looking statements involve various important assumptions, risks, uncertainties and other factors which could cause our actual results to differ materially from those expressed in such forward-looking statements. Forward-looking statements in this discussion can be identified by words such as "anticipate," "believe," "could," "estimate," "expect," "plan," "intend," "may," "should" or the negative of these terms or similar expressions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance or achievement. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors including but not limited to, competitive factors and pricing pressures, changes in legal and regulatory requirements, cancellation or deferral of customer orders, technological change or difficulties, difficulties in the timely development of new products, difficulties in manufacturing, commercialization and trade difficulties and current economic conditions, including the potential for significant changes in US defense spending under the current Administration which could affect future funding of programs and allocations within the budget to various programs as well as the factors set forth in this report and in our public filings with the Securities and Exchange Commission.  We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Herley Industries, Inc.