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

  
    
  
  
    
      Harbor Acquisition Corporation (AMEX: HAC, HAC.U, HAC.WS) (“Harbor”) 
      and Elmet Technologies, Inc. (“Elmet”), 
      announced the financial results for Elmet’s 
      second quarter and first six months ended July 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 six months of 2007,” 
      commented Mr. Jensen, CEO of Elmet. “We are 
      continuing to invest in new products, sales and marketing and 
      manufacturing improvements directed at growing our AEM product line. 
      These investments have resulted in a 9.5% increase in AEM sales in the 
      first six months of 2007 to both new and existing customers. While our 
      AEM revenue may vary quarter to quarter due to the timing of orders, we 
      currently expect our AEM business will experience double digit growth 
      for the full years 2007 and 2008.”
    
    
      “Our contract lighting business caused a drag 
      on revenues and earnings due to a decrease in volume resulting from 
      weaker customer demand of incandescent filaments, a contractual 
      reduction in price and an increase in raw material costs,” 
      stated Mr. Jensen. “We currently expect that 
      in the second half of 2007 we will renegotiate our most significant 
      lighting customer’s sales contract, which 
      expires on December 31, 2008.”
    
    
      New Production Line and New Product Development Efforts
    
    
      In order to meet the anticipated demand for its AEM products, Elmet 
      announced that over $3.5 million is being invested to build and install 
      a new automated production line at its Lewiston, Maine facility. This 
      new line is expected to be operational in the first quarter of 2008 and 
      to have the capacity to produce incremental revenues of $16.0 to $20.0 
      million annually.
    
    
      In addition, Elmet continues development of its molybdenum rotary and 
      flat targets and has received a prototype order to develop a consumable 
      molybdenum rotary product for the flat panel display market. Customer 
      projections indicate that the total market for this type of new 
      consumable molybdenum rotary product could be $10.0 to $12.0 million 
      over the next three years.
    
    
      Elmet also continues to develop and test a proprietary alloy filament 
      that Elmet believes could, if successfully developed, replace the 
      current standard incandescent filament. Elmet believes that the alloy 
      would last longer than currently available incandescent filaments and 
      consume less energy. Mr. Jensen stated, “While 
      this product is still in the very early stages of development and is not 
      currently included in our forecasts, it is an example of how we believe 
      that we may be able to expand our presence in existing markets by 
      utilizing our expertise in AEM technology to develop more efficient and 
      advanced products.”
    
    
      Second Quarter of 2007 Results
    
    
      Sales for the second quarter of 2007 increased to $14.6 million from 
      $14.1 million for the second quarter of 2006, primarily as a result of 
      increased sales of AEM products, which were partially offset by a 
      reduction in sales of contract lighting products.
    
    
      Sales of AEM products increased to $9.6 million for the second quarter 
      of 2007 from $9.2 million for the second quarter of 2006, primarily due 
      to continued growth in demand for products used in the medical, 
      semi-conductor, and furnace markets.
    
    
      Contract sales, consisting of sales of lighting products under a supply 
      agreement, decreased to $2.5 million for the second quarter of 2007 from 
      $2.6 million for the second quarter of 2006, primarily due to weaker 
      demand for these products and a contractual reduction in price.
    
    
      Sales of purchased products increased to $2.5 million for the second 
      quarter of 2007 from $2.3 million for the second quarter of 2006.
    
    
      Gross profit decreased to approximately $4.2 million or 28.6% of revenue 
      for the second quarter of 2007 from $4.5 million, or 31.8% of revenue 
      for the second quarter of 2006. The decline in gross profit was due to a 
      mix shift to slightly lower margin products, increased raw material 
      costs, and decreased demand and lower prices for contracted lighting 
      products.
    
    
      Elmet’s selling, general and administrative 
      expenses increased to $1.5 million for the second quarter of 2007 from 
      approximately $1.1 million for the second quarter of 2006. This increase 
      reflects increased depreciation expense associated with the new ERP 
      system and an increase in sales and marketing expense to support the 
      global growth plan.
    
    
      Net income decreased to $1.2 million for the second quarter of 2007 from 
      $1.6 million for the second quarter of 2006, primarily as a result of 
      increased cost of sales and increased selling, general and 
      administrative expenses as explained above.
    
    
      Backlog as of July 1, 2007 was $12.5 million, compared to $11.5 at the 
      end of the first quarter of 2007. 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 second quarter of 2007 excluding 
      non-recurring expenses related to the proposed transaction with Harbor, 
      as well as expenses associated with the enterprise software system, 
      decreased to $3.8 million compared to $4.2 million for the second 
      quarter of 2006. The decrease in adjusted EBITDA was primarily 
      attributable to a mix shift to slightly lower margin products, increased 
      raw material costs, increased SG&A expense and decreased demand and 
      lower prices for contracted lighting products.
    
    
      First Six Months of 2007 Results
    
    
      Sales for the first half of 2007 increased to $29.1 million from $28.5 
      million for the first half 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 $19.6 million for the first half of 
      2007 from $17.9 million for the first half of 2006, an increase of 
      approximately 9.5%, primarily due to continued growth in demand for 
      products used in the medical, semi-conductor and furnace markets.
    
    
      Contract sales, consisting of sales of lighting products under a supply 
      agreement, decreased to $5.0 million for the first half of 2007 from 
      $6.3 million for the first half of 2006, a decrease of 20.6%, primarily 
      due to weaker demand for the incandescent products and a reduction in 
      the price under a supply agreement.
    
    
      Sales of purchased products increased to $4.5 million for the first half 
      of 2007 from $4.4 million for the first half of 2006.
    
    
      Gross profit decreased to approximately $9.1 million or 31.4% of revenue 
      for the first half of 2007 from $9.3 million, or 32.4% of revenue for 
      the first half of 2006. The decline in gross profit was due to a mix 
      shift to slightly lower margin products, decreased demand and lower 
      prices for contracted lighting products and increased raw material costs.
    
    
      Elmet’s selling, general and administrative 
      expenses increased to $3.6 million for the first half of 2007 from 
      approximately $2.4 million for the first half of 2006, primarily as a 
      result of costs associated with the sale of Elmet to Harbor, increased 
      sales and marketing expense, as well as increased depreciation expense 
      associated with the new ERP system.
    
    
      Net income decreased to $2.4 million for the first half of 2007 from 
      $3.2 million for the first half of 2006, primarily as a result of 
      increased cost of sales and increased selling, general and 
      administrative expenses as explained above.
    
    
      Earnings before interest, taxes, depreciation and amortization (“EBITDA”) 
      excluding non-recurring expenses related to the proposed transaction 
      with Harbor, as well as expenses associated with the enterprise software 
      system decreased to $8.1 million for the first half of 2007 compared to 
      $8.3 million for the first half of 2006. The decrease in adjusted EBITDA 
      was primarily attributable to a mix shift to slightly lower margin 
      products, decreased demand and lower prices for contracted lighting 
      products, increased raw material costs and increased SG&A expense.
    
    
      The table below reconciles Elmet's unaudited adjusted EBITDA (as 
      described in the preceding paragraph) to Elmet's net income (loss) from 
      continuing operations for the quarters ended July 2, 2006 and July 1, 
      2007.
    
    
      
        
          (in thousands)
        
      
      
        
        
        
        
        
          Three Months EndedJuly 2,
        
        
        
        
          Six Months EndedJuly 2,
        
      
      
        
        
        
        
        
          2006
        
        
        
        
          2007
        
        
        
        
          2006
        
        
        
        
          2007
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net income (loss)
        
        
        
        
          $
        
        
          1,577
        
        
        
        
          $
        
        
          1,184
        
        
        
        
          $
        
        
          3,160
        
        
        
        
          $
        
        
          2,372
        
      
      
        
          Interest expense
        
        
        
        
        
        
          697
        
        
        
        
        
        
          546
        
        
        
        
        
        
          1,341
        
        
        
        
        
        
          1,299
        
      
      
        
          Depreciation & amortization
        
        
        
        
        
        
          616
        
        
        
        
        
        
          926
        
        
        
        
        
        
          1,232
        
        
        
        
        
        
          1,773
        
      
      
        
          Provision for income taxes
        
        
        
        
           
        
        
          1,152
        
        
        
        
           
        
        
          930
        
        
        
        
        
        
          2,364
        
        
        
        
        
        
          1,880
        
      
      
        
          Transaction related expenses and systems implementation costs1
        
        
        
        
          $
        
        
          203
        
        
        
        
          $
        
        
          205
        
        
        
        
          $
        
        
          203
        
        
        
        
          $
        
        
          794
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Adjusted EBITDA
        
        
        
        
          $
        
        
          4,245
        
        
        
        
          $
        
        
          3,791
        
        
        
        
          $
        
        
          8,300
        
        
        
        
          $
        
        
          8,118
        
      
    
    
      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 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; 
      Elmet’s customers’ 
      successful development of new products, market acceptance of such 
      products and the use of Elmet’s products in 
      such customers’ new products; the risk that 
      the new production line may not become operational on a timely or 
      profitable basis; the risk that customer demand will not arise at a 
      level necessary to fully deploy the new production line; the risk that 
      Elmet may not be successful in its development of new lighting filament 
      technology or that such technology will not be cost-effective or 
      otherwise accepted by the marketplace; the risk that potential new 
      products may experience delays before they become marketable, or that 
      Elmet may not manufacture such potential products on a profitable basis, 
      if at all; the 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.