Harbor Acquisition Corporation and Elmet Technologies, Inc. Announce Elmet's 2006 Results

Business Wire, April 24, 2007

2006 gross profit increases to $18.6 million reflecting Elmet's strategic shift to higher margin products

BOSTON & LEWISTON, Maine -- Harbor Acquisition Corporation (AMEX: HAC, HAC.U, HAC.WS) and Elmet Technologies, Inc. ("Elmet"), announced the financial results for Elmet's year ended December 31, 2006.

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 continues to execute on its strategic plan," commented Mr. Jensen, CEO of Elmet. "Since 2004, we have made significant investments to manufacture, market and sell higher margin AEM products. Our strategy of focusing on refractory metals, specifically molybdenum and tungsten, which are mission-critical components in our customers' products, have been successful. Despite a reduction in revenues as we shifted our sales focus, we improved gross margins, which represented 33.8% of total sales for 2006 as compared to 30.3% in 2005. This increase reflects our shift to a higher-margin product mix, as well as our cost reduction efforts. We have made a conscious decision to invest resources in the portion of our AEM business where we see the strongest growth opportunities, such as the manufacturing of critical components for the healthcare and semiconductor markets."

2006 Results

For the twelve months ended December 31, 2006, total sales were approximately $55.1 million, a decrease of approximately 8.1% compared to $59.9 million for the full year of 2005. Sales in the manufactured products segment, which includes AEM and lighting products, were $46.3 million in 2006, a decrease of 5.0% compared to $48.7 million in 2005. This was primarily due to a decline in sales of products used in the lighting industry, as well as a customer delay in the production of healthcare products that incorporate Elmet's AEM products, which Elmet expects will begin to ship during 2007. Sales in the purchased products segment decreased to $8.8 million in 2006 from $11.2 million in 2005 as a customer ceased manufacturing its own products and sourced them overseas.

Gross profit for 2006 was $18.6 million, a 2.4% increase over $18.2 million for 2005. Gross margins for 2006 increased to 33.8% of sales from 30.3% of sales in 2005. This increase is primarily attributable to a favorable mix shift to AEM products with higher margins and improved cost controls in its manufacturing facility. Total selling, general, and administrative expense for 2006 was $6.3 million, or 11.4% of sales, compared to $4.4 million, or 7.4% of sales, for 2005. This increase in costs reflects transaction expenses related to Elmet's transaction with Harbor, the installation of a new enterprise software system and related consulting costs.

Income from operations for 2006 was $12.3 million, a 7.3% increase from $11.5 million for 2005. Net income for 2006 was $5.3 million as compared to $2.3 million in 2005. This increase was primarily a result of the improvements in gross profits, a reduced effective tax rate and decreased non-cash expense for common share warrants.

Elmet's adjusted earnings before interest, taxes, depreciation and amortization ("EBITDA"), which is a non-GAAP measure, for the twelve months ended December 31, 2006, excluding non-recurring expenses related to the proposed transaction with Harbor and expenses related to the installation of a new enterprise software system of $1.9 million, was approximately $17.1 million, or 31.0% of sales. This represented an increase of 6% over Elmet's adjusted EBITDA of $16.1 million, or 26.9% of sales, in 2005. The increase in the EBITDA margin was primarily attributable to a favorable mix shift to higher margin AEM products 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 years ended December 31, 2005 and 2006.

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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.