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Herley Industries Inc. Reports Operating Results (10-K)

October 19, 2009 | About:

Herley Industries Inc. (HRLY) filed Annual Report for the period ended 2009-08-02.

Herley Industries Inc. is engaged in the design development and manufacture of flight instrumentation components and systems and microwave products sold primarily to the U.S. government foreign governments and aerospace companies. Flight instrumentation products include command and control systems transponders flight termination receivers telemetry transmitters and receivers pulse code modulator encoders and scoring systems. Herley Industries Inc. has a market cap of $169.3 million; its shares were traded at around $13.04 with a P/E ratio of 31.13 and P/S ratio of 1.11.

Highlight of Business Operations:

- DIVERSE PRODUCT AND CUSTOMER BASE. We have a diverse product and customer

base. The U.S. Government accounted for approximately 12% of our fiscal 2009

revenues. Lockheed Martin Corporation and Northrop Grumman Corporation accounted

for approximately 13% and 16%, respectively in fiscal 2009. No other customer

accounted for 10% or more of consolidated net sales during this period. We are a

first-tier supplier to all of the prime defense contractors, as well as a direct

supplier to all of the service branches of the U.S. military, including products

found on over 120 individual platforms. Foreign customers accounted for

approximately 33% of our revenues in fiscal 2009.

During the fiscal years ended August 2, 2009, August 3, 2008 and July 29, 2007,

approximately 12%, 14% and 12% of our net sales respectively, were attributable

to contracts directly with offices and agencies of the U.S. Government. Lockheed

Martin Corporation and Northrop Grumman Corporation accounted for approximately

13% and 16%, respectively of net sales in fiscal 2009 and each accounted for

approximately 12% and 11% in fiscal years 2008 and 2007, respectively. No other

customer accounted for 10% or more of consolidated net sales during fiscal years

2009, 2008 or 2007.

During fiscal 2009, sales to foreign customers accounted for approximately 33%

of our net sales. Sales to foreign customers from our domestic locations

accounted for 9% of net sales with the remaining sales generated from the United

Kingdom (2%) and Israel (22%). The governments of Israel, Egypt, Japan, South

Korea, Taiwan and the United Kingdom are all significant customers. All of our

domestic contracts with foreign customers are payable in U.S. dollars. Contracts

with customers originating in Israel and England are either in U.S. dollars or

the local functional currency. International sales are subject to numerous

risks, including political and economic instability in foreign markets, currency

and economic difficulties in the Pacific Rim, restrictive trade policies of

foreign governments, inconsistent product regulation by foreign agencies or

governments, imposition of product tariffs and burdens and costs of complying

with a wide variety of international and U.S. export laws and regulatory

requirements. Our international sales are also subject to our obtaining export

licenses for certain products and systems.

Our funded backlog of orders was approximately $182 million on August 2, 2009

which are covered by signed contracts or purchase orders. There was no unfunded

backlog at August 2, 2009. Of our total backlog at August 2, 2009, $118 million

(65%) is attributable to domestic orders and $64 million (35%) is attributable

to foreign orders.

Read the The complete ReportHRLY is in the portfolios of Michael Price of MFP Investors LLC, Third Avenue Management.

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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