Harbor Acquisition Corporation and Elmet Technologies, Inc. Announce Elmet's First Quarter 2007 Results

  
    
  
  
    
      Harbor Acquisition Corporation (AMEX: HAC, HAC.U, HAC.WS) (“Harbor”) 
      and Elmet Technologies, Inc. (“Elmet”), 
      announced the financial results for Elmet’s 
      first quarter ended April 1, 2007.
    
    
      Elmet is a privately-held, fully-integrated manufacturer of custom 
      designed and engineered advanced enabling materials (“AEM”) 
      products that are manufactured primarily with molybdenum and tungsten. 
      On October 17, 2006, Harbor and Elmet announced they signed a definitive 
      agreement for Harbor to acquire Elmet. Following consummation of the 
      acquisition, Elmet’s current management team, 
      led by John S. Jensen, CEO, will continue to lead the organization and 
      the combined company will change its name to Elmet Technologies 
      Corporation.
    
    
      “Elmet showed continued strength in our sales 
      and backlog of AEM products in the first quarter of 2007,” 
      commented Mr. Jensen, CEO of Elmet. “We are 
      continuing to invest in manufacturing improvements, new products and 
      sales and marketing, directed at growing our AEM product line. This 
      investment has manifested itself in increased AEM sales to new and 
      existing customers in 2007.”
    
    
      Q1 2007 Results
    
    
      Sales for the first quarter of 2007 increased to $14.5 million from 
      $14.4 million for the first quarter of 2006, primarily as a result of 
      increased sales of AEM products, which were partially off-set by a 
      reduction in sales of contract lighting products.
    
    
      Sales of AEM products increased to $9.9 million for the first quarter of 
      2007 from $8.7 million for the first quarter of 2006, an increase of 
      approximately 15%, primarily due to continued growth in demand for 
      products used in the medical, semi-conductor, electronics and furnace 
      markets.
    
    
      Contract sales, consisting of sales of lighting products under a supply 
      agreement, decreased to $2.6 million for the first quarter of 2007 from 
      $3.7 million for the first quarter of 2006, a decrease of 30%, primarily 
      due to weaker demand for these products.
    
    
      Sales of purchase products decreased to $2.0 million for the first 
      quarter of 2007 from $2.1 million for the first quarter of 2006.
    
    
      Gross profit increased to approximately $5.0 million for the first 
      quarter of 2007 from $4.8 million for the first quarter of 2006, as a 
      result of a continued shift to higher margin AEM products. Gross margin 
      increased to 34.3% for the first quarter of 2007 from 33.1% for the 
      first quarter of 2006 as a result of improved product mix and 
      manufacturing performance.
    
    
      Elmet’s selling, general and administrative 
      expenses increased to $2.1 million for the first quarter of 2007 from 
      approximately $1.3 million for the first quarter of 2006, primarily as a 
      result of costs associated with the sale of Elmet to Harbor ($0.4 
      million), increased costs associated with the debugging and installation 
      of an enterprise software system ($0.2 million), and increased sales and 
      marketing costs ($0.1 million). Elmet believes costs associated with the 
      debugging and installation of its enterprise software system will cease 
      during the third quarter of 2007.
    
    
      Net income decreased to $1.2 million for the first quarter of 2007 from 
      $1.6 million for the first quarter of 2006, primarily as a result of 
      increase selling, general and administrative expenses.
    
    
      Backlog as of April 1, 2007 was $11.5 million. Backlog consists 
      primarily of purchase orders received for products deliverable within 90 
      days. Backlog should not be relied upon as indicative of Elmet’s 
      revenues for any future period.
    
    
      Earnings before interest, taxes, depreciation and amortization (“EBITDA”), 
      which is a non-GAAP measure, for the first quarter of 2007 excluding 
      non-recurring expenses related to the proposed transaction with Harbor, 
      as well as expenses associated with the enterprise software system, 
      increased to $4.3 million compared to $4.1 million for the first quarter 
      of 2006. The increase in adjusted EBITDA was primarily attributable to a 
      favorable mix shift to AEM products with higher margins and improved 
      cost controls in Elmet’s manufacturing 
      facility.
    
    
      The table below reconciles Elmet's adjusted EBITDA (as described in the 
      preceding paragraph) to Elmet's net income (loss) from continuing 
      operations for the quarters ended April 2, 2006 and April 1, 2007.
    
    
      
        
          
            (in thousands)
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          
            Quarter Ended
          
          
            April 2, 2006
          
        
        
        
        
          
            Quarter Ended
          
          
            April 1, 2007
          
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $
        
        
          1,583 
        
        
        
        
          $
        
        
          1,188 
        
      
      
        
          Interest expense
        
        
        
        
        
        
          644 
        
        
        
        
        
        
          753 
        
      
      
        
          
            Depreciation and
          
          
            amortization
          
        
        
        
        
        
        
          616 
        
        
        
        
        
        
          847 
        
      
      
        
          Provision for income taxes
        
        
        
        
        
        
          1,212 
        
        
        
        
        
        
          950 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          
            Transaction related expenses
          
          
            and systems implementation
          
          
            costs(1)
          
        
        
        
        
        
        
          0 
        
        
        
        
        
        
          589 
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          
             
          
        
        
        
        
           
        
      
      
        
          Adjusted EBITDA
        
        
        
        
          $
        
        
          4,055 
        
        
        
        
          $
        
        
          4,327 
        
      
    
    
    
    
      1. Includes (i) professional service fees and expenses for the 
      transactions described in Harbor proxy statement, and 
      (ii) implementation expenses paid to information technology consultants 
      and temporary employees for installing and debugging Elmet’s 
      enterprise software system.
    
    
      About Elmet Technologies, Inc.
    
    
      Originally founded in 1929, Elmet was founded in late 2003 and became an 
      independent company in early 2004 when its current CEO Jack Jensen led 
      the management buyout of Elmet from its former parent, Philips 
      Electronics North America Corporation. Under Jensen and his management 
      team, Elmet has enjoyed growth by providing innovative refractory metal 
      solutions to OEMs serving such industries as data storage, 
      semiconductor, medical, electronics and lighting. Elmet now employs 
      approximately 240 personnel, including highly-skilled sales, design, 
      engineering, and production professionals at its Lewiston, Maine 
      headquarters. Elmet’s products are typically 
      custom-engineered components used in products such as medical imaging 
      devices, silicon wafer chip manufacturing equipment, and specialty 
      commercial and residential lighting applications.
    
    
      About Harbor Acquisition Corporation
    
    
      Based in Boston, Harbor is a publicly traded, special purpose 
      acquisition corporation (“SPAC”) 
      formed to acquire a company in the industrial or consumer products 
      sectors. The contemplated transaction is subject to shareholder 
      approval, along with certain regulatory approvals including the filing 
      of a proxy statement with the Securities and Exchange Commission. Upon 
      completion of the transaction, Harbor intends to change its corporate 
      name to Elmet Technologies Corporation.
    
    
      Forward Looking Statements
    
    
      This press release includes forward-looking statements within the 
      meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities 
      Act”), and Section 21E of the Securities 
      Exchange Act of 1934, as amended (the “Exchange 
      Act”). These forward-looking statements are 
      based on current expectations and projections about future events and no 
      party assumes an obligation to update any such forward-looking 
      statements. These forward-looking statements are subject to known and 
      unknown risks, uncertainties and assumptions about Harbor and Elmet that 
      may cause actual results to be materially different from any future 
      results expressed or implied by such forward-looking statements. In some 
      cases, you can identify forward-looking statements by terminology such 
      as “may,” “should,” 
      “could,” “would,” 
      “expect,” “plan,” 
      “anticipate,” “believe,” 
      “estimate,” “continue,” 
      or the negative of such terms or other similar expressions. Factors that 
      might cause our future results to differ from those statements include, 
      but are not limited to, the failure of Harbor’s 
      stockholders to approve the acquisition and the transactions 
      contemplated thereby; the number and percentage of Harbor’s 
      stockholders voting against the acquisition and electing to exercise 
      their redemption rights; changing interpretations of generally accepted 
      accounting principles; costs associated with continued compliance with 
      government regulations; legislation or regulatory environments, 
      requirements or changes adversely affecting the businesses in which 
      Elmet is engaged; the continued ability of Elmet to successfully execute 
      its business plan involving the proper management of its human resources 
      and assets; demand for the products and services that Elmet provides; 
      continued availability of, and changes in pricing for, raw materials 
      used by Elmet; general economic conditions; geopolitical events and 
      regulatory changes; as well as other relevant risks detailed in Harbor’s 
      filings with the Securities and Exchange Commission.
    
    
      Additional Information
    
    
      This communication is being made in respect of the proposed transaction 
      involving Elmet, its stockholders and Harbor. In connection with the 
      proposed transaction, Harbor will file with the Securities and Exchange 
      Commission a definitive proxy statement on Schedule 14A for the 
      stockholders of Harbor describing the proposed transaction. Harbor will 
      be filing other documents with the SEC as well. BEFORE MAKING ANY VOTING 
      OR INVESTMENT DECISIONS, INVESTORS ARE ADVISED TO READ, WHEN AVAILABLE, 
      HARBOR’S DEFINITIVE PROXY STATEMENT IN 
      CONNECTION WITH THE SOLICITATION OF PROXIES FOR THE SPECIAL MEETING 
      BECAUSE THIS PROXY STATEMENT WILL CONTAIN IMPORTANT INFORMATION.
    
    
      The definitive proxy statement will be mailed to stockholders as of a 
      record date to be established for voting on the proposed transaction. 
      Stockholders will also be able to obtain a copy of the definitive proxy 
      statement and other documents related to the transaction that are filed 
      with the SEC, without charge, once available, at the SEC’s 
      Internet site (http://www.sec.gov) or 
      by directing a request to Harbor Acquisition Corporation at One Boston 
      Place, Suite 3630, Boston , Massachusetts 02108. As a result of the 
      review by the SEC of the proxy statement, Harbor may be required to make 
      changes to its description of the acquired business or other financial 
      or statistical information contained in the preliminary proxy statement 
      previously filed by Harbor with the SEC.
    
    
      Harbor and its directors and officers and other members of management 
      and employees may be deemed to be participants in the solicitation of 
      proxies in respect of the proposed transaction with Elmet and its 
      stockholders. Information regarding Harbor’s 
      directors and executive officers is set forth in Harbor’s 
      final prospectus dated April 27, 2006, and the definitive proxy 
      statement relating to the proposed transaction with Elmet and its 
      stockholders when it becomes available.
    
    
      Harbor’s final prospectus also contains a 
      description of the security holdings of the Harbor officers and 
      directors and of Ferris Baker Watts, the managing underwriter of 
      Harbor’s initial public offering consummated 
      on May 1, 2006, and their respective interests in the successful 
      consummation of this business combination.