Homes | Cars | Jobs | Customer Care Center
LancasterOnline Keyword
 Home
 News
 »
 Top Stories
 Local News
 US/Nation
 Pennsylvania
 Off Beat
 International
 Washington
 Sports
 »
 Local Sports
 Penn State
 Auto Racing
 Baseball
 Basketball
 Boxing
 College Sports
 Football
 Soccer
 Hockey
 Golf
 Tennis
 Business
 »
 Morning Briefing
 Local Business
 News
 Consumer News
 Market Reports
 Board of Trade
 Stock Charts
 Mortgage Rates
 Savings & Loan
 Money & Finance
 Entertainment
 »
 Local
 Television
 Movies
 Off Beat
 Recordings
 Movie Showtimes
 TV Listings
 Sudoku
 Technology
 Health
 Weather
 Archives
 »

Search for...

Within:

 en Español
 »
 Noticias
 Deportes
 Espectáculos
 Finanzas
 Salud
 Tecnología
 Rarezas
 Services
 Classifieds
 Talkback
 eEditions
 My Headlines
 Cars
 Real Estate
 Apartments
 Shopping
 Community
 Visit Lancaster
 Personals
 Features
 Celebrations
 Obituaries
 Special Sections
 Columns
 »
 Ad Crable
 Among the Living
 Editorially Speaking
 Footlights
 Jeff Hawkes
 Larry Alexander
 New Era Voices
 Political Animals
 Smart Remarks
 The Scribbler
 Interests
 »
 Today In History
 Letters to the Editor
 Lifestyle
 Living
 Outdoors
 Recipes
 Religion
 Your Life
 Advertisement
 Customer Service
 Subscribe
 Care Center
 Place an Ad
 Advertising
 Contact Us
 Site
 Site Map
 Keyword Index
 RSS Feeds
 Need a Website?

U.S. puts Herley on its suspended list
By Tim Mekeel
Lancaster New Era

Published: Jun 14, 2006 1:57 PM EST

LANCASTER COUNTY, PA - Last week, when Herley Industries was indicted for fraud, there were hints that the defense contractor’s troubles might get even deeper.

And they have.

Herley said Tuesday that the federal government has placed the company’s three largest plants under suspension, meaning they can’t get new federal contracts.

Affected are its biggest plant — a 300-employee facility here on Industry Drive — plus plants in Woburn, Mass., and Farmingdale, N.Y., as well as a Chicago marketing office.

Those locations were used in the company’s fraudulent schemes, the indictment alleged.

The late-afternoon news sent Herley’s stock into a tailspin, tumbling 34 percent to close at $10.06 a share — its lowest point since November 1998.

Herley stock had traded in the $21 range just two months ago.

The suspension is “pending the outcome of legal proceedings,” said Herley, referring to the 35-count indictment against Herley and chairman Lee N. Blatt, who resigned last week.

The impact of the action “cannot easily be determined at this time” for several reasons, said Herley in a four-paragraph statement disclosing the suspension.

First, Herley’s backlog of $142 million in contracts that already have been awarded is excluded from the suspension, according to the company.

The backlog consists of products to be delivered to customers within one to two years.

Second, the suspension allows the plants to get new federal contracts, or extensions of existing contracts, under “special exceptions.”

A special exception can be granted “if the head of the (federal) agency states in writing the compelling reason to do so,” Herley explained.

Herley noted that in “a significant portion” of its business, it is “the only qualified supplier” of high-tech electronic parts for “critical defense programs.”

Lancaster-based Herley designs and makes microwave-technology parts and systems used in military planes, missiles and ships. It also supplies the aerospace and medical industries.

This latest disclosure capped a devastating eight days for Herley.

The tumult began the previous Tuesday when a federal grand jury indicted Herley and Blatt for allegedly cheating the military out of $2.8 million, by falsely inflating prices for two radar-system parts. Blatt resigned Thursday.

Both the company and its former chairman have said they are innocent.

The news that Herley’s legal troubles had triggered financial troubles was foreshadowed last week by a federal prosecutor and a company investor.

At a press conference announcing the indictment, U.S. Attorney Patrick Meehan raised the possibility that Herley might be “precluded” from bidding on federal contracts “to some extent.”

The next day, Chicago-based investor Discovery Group, which owns 5 percent of Herley, noted the same thing in a letter to the Herley board of directors.

Article Tools
Link to This Article
Printer Friendly Format
Order a Reprint
Email This Article
Related Articles
More Local Business
Videos
 

© 2004-2006 Lancaster Newspapers
PO Box 1328, Lancaster PA 17608, (717) 291-8811
Terms of Service Privacy Policy