UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended: February 1, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ..........to..........
Commission File Number 0-5411
HERLEY INDUSTRIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE #23-2413500
- -------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10 Industry Drive, Lancaster, Pennsylvania 17603
- ------------------------------------------ ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (717) 397-2777
--------------
---------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
As of March 9, 1998 - 5,151,259 shares of Common Stock
<PAGE>
HERLEY INDUSTRIES, INC
AND SUBSIDIARIES
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION PAGE
Item 1 - Financial Statements:
Consolidated Balance Sheets -
February 1, 1998 and August 3, 1997 2
Consolidated Statements of Operations For the
thirteen and twenty-six weeks ended
February 1, 1998, and the thirteen and
twenty-seven weeks ended February 2, 1997 3
Consolidated Statements of Cash Flows For the
thirteen and twenty-six weeks ended
February 1, 1998, and the thirteen and
twenty-seven weeks ended February 2, 1997 4
Notes to Consolidated Financial Statements 5
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II -OTHER INFORMATION 11
Signatures 13
<PAGE>
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
February 1, August 3,
1998 1997
----------- ---------
Unaudited Audited
ASSETS
Current Assets:
Cash and cash equivalents $ 10,268,403 $ 1,194,650
Accounts receivable 6,008,475 5,176,523
Notes receivable-officers - 2,100,913
Other receivables 383,839 152,148
Inventories 13,827,163 9,790,382
Deferred taxes and other 2,367,844 2,061,066
----------- -----------
Total Current Assets 32,855,724 20,475,682
Property, Plant and Equipment, net 12,483,999 11,704,755
Intangibles, net of amortization 4,172,086 4,308,136
Available-for-sale Securities 416,962 -
Other Investments 1,382,604 1,313,502
Other Assets 2,909,533 1,455,111
=========== ===========
$ 54,220,908 $ 39,257,186
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 368,319 $ 335,000
Note payable to related party 846,000 846,000
Accounts payable and accrued expenses 6,468,897 5,541,375
Advance payments on contracts 3,021,807 3,091,001
----------- -----------
Total Current Liabilities 10,705,023 9,813,376
----------- -----------
Long-term Debt 2,998,802 2,890,000
Deferred Income Taxes 3,562,455 2,696,394
Excess of fair value of net assets of business
acquired over cost, net of amortization 243,416 486,833
----------- -----------
17,509,696 15,886,603
----------- -----------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $.10 par value; authorized
10,000,000 shares; issued and outstanding
5,241,147 at February 1, 1998 and
4,209,365 at August 3, 1997 524,115 420,936
Additional paid-in capital 19,513,828 8,856,516
Retained earnings 16,673,269 14,093,131
----------- -----------
Total Shareholders' Equity 36,711,212 23,370,583
=========== ===========
$ 54,220,908 $ 39,257,186
=========== ===========
The accompanying notes are an integral part of these financial
statements.
2
<PAGE>
<TABLE>
<CAPTION>
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
13 weeks ended 26 weeks ended 27 weeks ended
February 1, February 2, February 1, February 2,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
-------------- ---------------- --------------- ---------------
Net sales $ 9,051,165 $ 7,146,208 $ 19,624,470 $ 14,654,112
-------------- ---------------- --------------- ---------------
Cost and expenses:
Cost of products sold 4,997,814 4,916,166 11,486,429 10,087,340
Selling and administrative expenses 2,259,614 1,352,441 4,262,410 2,751,210
-------------- ---------------- --------------- ---------------
7,257,428 6,268,607 15,748,839 12,838,550
-------------- ---------------- --------------- ---------------
Operating income 1,793,737 877,601 3,875,631 1,815,562
-------------- ---------------- --------------- ---------------
Other income (expense):
Net gain (loss) on available-for-sale
securities and other investments 27,391 (173) 69,102 15,267
Dividend and interest income 115,868 89,930 165,527 137,885
Interest expense (64,607) (187,779) (201,122) (317,407)
-------------- ---------------- --------------- ---------------
78,652 (98,022) 33,507 (164,255)
-------------- ---------------- --------------- ---------------
Income before income taxes 1,872,389 779,579 3,909,138 1,651,307
Provision for income taxes 636,500 - 1,329,000 -
-------------- ---------------- --------------- ---------------
Net income $ 1,235,889 $ 779,579 $ 2,580,138 $ 1,651,307
============== ================ =============== ===============
Earnings per common share $.25 $.19 $.55 $.41
=== === === ===
Weighted average shares outstanding 4,891,147 4,117,632 4,714,046 3,992,761
========= ========= ========= =========
Earnings per common share-
Assuming Dilution $.22 $.16 $.48 $.35
=== === === ===
Weighted average shares outstanding-
Assuming Dilution 5,570,434 4,767,153 5,399,922 4,731,615
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
HERLEY INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
26 weeks ended 27 weeks ended
February 1, February 2,
1998 1997
<S> <C> <C>
--------------- ---------------
Cash flows from operating activities:
Net income $ 3,308,726 $ 1,651,307
--------------- ---------------
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 890,891 754,083
(Gain) on sale of available-for-sale securities - (15,440)
Equity in income of limited partnership (65,819) -
Increase (decrease) in deferred tax liabilities 182,207 (56,065)
Changes in operating assets and liabilities:
(Increase) in accounts receivable (582,525) (1,270,404)
Decrease in notes receivable-officers 2,100,913 17,017
(Increase) in other receivables (159,231) (8,065)
(Increase) in inventories (1,949,084) (772,921)
(Increase) in deferred taxes and other (170,896) (50,463)
(Decrease) in accounts payable and accrued expenses (342,771) (1,172,002)
Increase in billings in excess of costs and earnings
on contracts in process - 528,336
(Decrease) in advance payments on contracts (166,809) (520,799)
Other, net 101,187 -
--------------- ---------------
Total adjustments (161,937) (2,566,723)
--------------- ---------------
Net cash provided by (used in) operating activities 3,146,789 (915,416)
--------------- ---------------
Cash flows from investing activities:
Purchase of available-for-sale securities - (159,364)
Proceeds from sale of available-for-sale securities - 5,083,908
Proceeds from sale of fixed assets - 9,392
Capital expenditures (623,638) (389,130)
--------------- ---------------
Net cash provided by (used in) investing activities (623,638) 4,544,806
--------------- ---------------
Cash flows from financing activities:
Net proceeds from public offering of common stock 7,511,202 -
Borrowings under bank line of credit 1,200,000 2,325,000
Proceeds from exercise of stock options 99,266 184,750
Payments under lines of credit (1,200,000) (6,800,000)
Payments of long-term debt (1,059,866) -
--------------- ---------------
Net cash provided by (used in) financing activities 6,550,602 (4,290,250)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents 9,073,753 (660,860)
Cash and cash equivalents at beginning of period 1,194,650 1,104,445
--------------- ---------------
Cash and cash equivalents at end of period $ 10,268,403 $ 443,585
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
Herley Industries, Inc. and Subsidiaries
Notes to Consolidated Financial Statements - (Unaudited)
1. The consolidated financial statements include the accounts of Herley
Industries, Inc. and its subsidiaries, all of which are wholly-owned. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
In the opinion of the Company, the accompanying consolidated financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results of operations and cash
flows for the periods presented. These financial statements (except for the
balance sheet presented at August 3,1997) are unaudited and have not been
reported on by independent public accountants.
Results of operations for interim periods are not necessarily indicative of
the results of operations for a full year due to external factors which are
beyond the control of the Company.
2. Inventories at February 1, 1998 and August 3,1997 are summarized as follows:
February 1, 1998 August 3,1997
---------------- -------------
Purchased parts and raw materials $ 7,158,152 $ 4,780,336
Work in process 6,167,159 4,899,551
Finished products 501,852 110,495
$ 13,827,163 $ 9,790,382
3. In January 1997, the Company entered into a revolving credit agreement with
a bank that provides for the extension of credit in the aggregate principal
amount of $11,000,000 and may be used for general corporate purposes,
including business acquisitions. The facility requires the payment of
interest only on a monthly basis and payment of the outstanding principal
balance on January 31, 1999. Interest is set biweekly at 1% over the FOMC
Target Rate applied to outstanding balances (none at February 1, 1998) up
to 80% of the net equity value of available-for-sale securities, and at the
bank's Base Rate (8.50% at February 1, 1998) for outstanding balances in
excess of this limit. The premium rate portion of the facility would be
secured by any available-for-sale securities. The credit facility also
provides for the issuance of stand-by letters of credit with a fee of 1.0%
per annum of the amounts outstanding under the facility. At February 1,
1998, stand-by letters of credit aggregating $3,307,669 were outstanding.
The agreement contains various financial covenants, including, among other
matters, the maintenance of working capital and tangible net worth.
4. On August 4, 1997, the Company completed the acquisition of Metraplex
Corporation , a Maryland corporation for 313,193 (adjusted for 4-for-3
stock split) shares of common stock of the Company, with a fair market
value of $3,170,684, in exchange for all of the issued and outstanding
common stock of Metraplex. Metraplex is a leading manufacturer of pulse
code modulation and frequency modulation, telemetry and data acquisition
systems for severe environment applications. Metraplex products are used
worldwide for testing space launch vehicle instrumentation, aircraft flight
testing, and amphibian, industrial and automotive vehicle testing. The
transaction has been accounted for by the purchase method. Accordingly, the
consolidated balance sheet includes the assets and liabilities of Metraplex
at February 1, 1998, and the consolidated statements of operations include
the results of Metraplex operations from August 4, 1997.
On the basis of a pro forma consolidation of the results of operations as
if the acquisition had taken place
5
<PAGE>
at the beginning of fiscal 1997, unaudited consolidated net sales, net
income, and earnings per share for the thirteen and twenty-seven weeks
ended February 2, 1997 would have been approximately $8,464,000, $803,000,
and $0.16, and approximately $17,245,000, $1,698,000, and $0.34
respectively. The pro forma information includes adjustments for additional
depreciation based on the fair market value of the property, plant, and
equipment acquired, and the amortization of intangibles arising from the
transaction. The pro forma financial information is not necessarily
indicative of the results of operations as they would have been had the
transaction been effected at the beginning of fiscal 1997.
5. On September 4, 1997 the Board of Directors declared a 4-for-3 stock split
effected as a stock dividend payable September 29, 1997 to holders of
record on September 15, 1997. The effect of the split is presented within
shareholders' equity at August 3, 1997. The distribution increased the
number of shares outstanding from 3,157,024 to 4,209,365. The amount of
$105,234 was transferred from the additional paid-in capital to the common
stock account to record this distribution. All share and per share data,
including stock options and warrants, included in this annual report have
been restated to reflect the stock split.
6. On December 16, 1997 the Company completed the sale of 1,100,000 shares of
common stock to the public, of which 700,000 shares were sold by the
Company and 400,000 shares were sold by certain selling stockholders. The
Company received $7,999,400 after underwriting discounts and commissions of
$510,600 based on a price to the public of $12.00. In addition, the Company
sold 1,100,000 Common Stock Purchase Warrants for $103,400 after
underwriting discounts and commissions of $6,600 based on a price to the
public of $0.10 for each warrant. The warrants are exercisable for 25
months and entitle the holder to purchase one share of Common Stock at an
exercise price of $14.40 per share for thirteen months from date of
issuance and thereafter at $15.60 per share. The Company has also issued to
the underwriters, for their own account, warrants to purchase 110,000
shares of common stock of the Company at a price of $14.40 per share,
exercisable for a period of four years beginning December 16, 1998 and the
right to purchase warrants for $.12 per warrant for thirteen months
beginning December 16, 1998.
On January 14, 1998, the underwriters exercised their over-allotment option
to purchase 165,000 additional shares of common stock from certain selling
stockholders, and 165,000 additional Common Stock Purchase Warrants from
the Company. The Company received $15,510 for the warrants, after
underwriting discounts and commissions of $990 based on a price to the
public of $0.10 for each warrant.
7. At the annual meeting of stockholders held on February 18, 1998, the
stockholders of the Company approved a proposal to amend the Certificate of
Incorporation to increase the authorized shares of Common Stock from
10,000,000 to 20,000,000 shares.
8. No income tax provision was recorded in the thirteen and twenty-seven weeks
ended February 2, 1997 reflecting the utilization of prior year net
operating loss ("NOL") carryforwards and the reversal of a valuation
allowance for the NOL carryforwards established in 1995. The valuation
allowance was established based on management's uncertainty that past
performance would be indicative of future earnings. Income taxes have been
provided for the thirteen and twenty-six weeks ended February 1, 1998 at an
anticipated effective rate of 34% for fiscal 1998.
9. In March 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128).
The new rules are effective for both interim and annual financial
statements for periods ending after December 15, 1997. SFAS 128 supersedes
APB No. 15 to conform earnings per share with international standards as
well as to simplify the complexity of the computation under APB No. 15. The
previous primary earnings per share ("EPS") calculation is replaced with a
basic EPS calculation. The basic EPS differs from the primary EPS
calculation in that the basic EPS
6
<PAGE>
does not include any potentially dilutive securities. Fully dilutive EPS is
replaced with diluted EPS and should be disclosed regardless of dilutive
impact to basic EPS. Accordingly, the Company has adopted SFAS 128
effective February 1, 1998. Prior year EPS amounts have been restated to
conform to the Statement 128 presentation. The following table sets forth
the computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
Thirteen weeks ended
--------------------
February 1, 1998 February 2, 1997
---------------- ----------------
<S> <C> <C>
Numerator:
Net Income $ 1,235,889 $ 779,579
========= =========
Denominator:
Denominator for basic earnings per share:
Shares outstanding from beginning of period 4,541,147 3,934,996
Shares issued for options and warrants exercised - 320,792
Treasury shares acquired - (138,156)
Public offering of 700,000 shares of common stock 350,000 -
--------- ---------
Basic weighted-average shares 4,891,147 4,117,632
Effect of dilutive securities:
Employee stock options and warrants 679,287 649,521
--------- ---------
Adjusted weighted-average shares 5,570,434 4,767,153
========= =========
Basic earnings per share $ .25 $ .19
=== ===
Diluted earnings per share $ .22 $ .16
=== ===
Twenty-six Twenty-seven
weeks ended weeks ended
February 1, 1998 February 2, 1997
---------------- ----------------
Numerator:
Net Income $ 2,580,138 $ 1,651,307
========= =========
Denominator:
Denominator for basic earnings per share:
Shares outstanding from beginning of period 4,525,872 3,914,830
Shares issued for options and warrants exercised 13,174 174,640
Treasury shares acquired - (96,709)
Public offering of 700,000 shares of common stock 175,000 -
--------- ---------
Basic weighted-average shares 4,714,046 3,992,761
Effect of dilutive securities:
Employee stock options and warrants 685,876 738,854
--------- ---------
Adjusted weighted-average shares 5,399,922 4,731,615
========= =========
7
<PAGE>
Basic earnings per share $ .55 $ .41
=== ===
Diluted earnings per share $ .48 $ .35
=== ===
</TABLE>
10. Supplemental cash flow information is as follows:
February 1, 1998 February 2, 1997
---------------- ----------------
Cash paid during the period for:
Interest $ 196,418 $ 331,106
Income Taxes 978,830 134,527
8
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
- --------------------------------------------------------------------------------
The statements contained in this report which are not historical fact are
"forward-looking statements" that involve various important assumptions, risks,
uncertainties and other factors which could cause the Company's actual results
for 1998 and beyond to differ materially from those expressed in such
forward-looking statements. These important factors include, without limitation,
competitive factors and pricing pressures, changes in legal and regulatory
requirements, technological change or difficulties, product development risks,
commercialization and trade difficulties and general economic conditions, as
well as other risks previously disclosed in the Company's securities filings and
press releases.
Liquidity and Capital Resources
- -------------------------------
As of February 1, 1998 and August 3, 1997, working capital was approximately
$22,151,000 and $10,662,000, respectively, and the ratio of current assets to
current liabilities was 3.07 to 1 and 2.09 to 1, respectively.
As is customary in the defense industry, inventory is partially financed by
progress payments. The unliquidated balance of these advanced payments was
approximately $3,022,000 at February 1, 1998, and $3,091,000 at August 3, 1997.
Net cash provided by operations during the period was approximately $3,147,000.
This includes the repayment of notes receivable from certain officers in the
amount of $2,101,000.
Net cash used in investing activities consists of $624,000 for capital
expenditures.
Financing activities provided net cash of $6,551,000 primarily from the sale of
common stock and common stock purchase warrants to the public on December 16,
1997 for the net amount of $7,511,000. This was offset by reductions of long
- -term debt of $1,060,000.
The Company maintains a revolving credit facility with a bank for an aggregate
of $11,000,000 which expires January 31, 1999. There were no borrowings
outstanding as of February 1, 1998 or August 3, 1997.
At February 1, 1998, the Company had cash and cash equivalents of approximately
$10,268,000.
We have conducted a review of our information systems to identify the systems
which may be affected by the "Year 2000" issue and have developed an
implementation plan to resolve the issue. The Company has been informed that its
accounting software and computer hardware is year 2000 compliant at all but one
of its facilities. We have incurred internal staff costs as well as external
consulting and other expenses in order to convert that facility as discussed
under "Results of Operations" below. Any additional cost of this project is not
expected to have a material impact on our financial condition, results of
operations or cash flows. The Company believes its engineering software is
unaffected by year 2000. However, there can be no guarantees that all the
Company's systems that may be affected have been identified.
The Company believes that presently anticipated future cash requirements will be
provided by internally generated funds, as well as the net proceeds of the
public offering, and existing credit facilities.
9
<PAGE>
Results of Operations
- ---------------------
Thirteen weeks ended February 1, 1998 and February 2, 1997
- ----------------------------------------------------------
Net sales for the thirteen weeks ended February 1, 1998 were
$9,051,000 compared to $7,146,000 in the second quarter of fiscal year 1997. The
sales increase of $1,905,000 (26.7%) is attributed to additional volume of
$1,056,000 from the acquisition of Metraplex and increased shipments of flight
instrumentation products in the foreign markets.
The gross profit margin of 44.8% for the thirteen weeks ended
February 1, 1998 exceeded that of the second quarter of fiscal 1997 of 31.2%
primarily due to the increase in higher margin foreign sales, and increased
absorption of fixed overhead costs.
Selling and administrative expenses for the thirteen weeks ended
February 1, 1998 were $2,260,000, an increase of $907,000 over the second
quarter of the prior year. Of this amount, $313,000 is attributable to the
operations of Metraplex. The balance of the increase includes $93,000 for
computer systems upgrades at the Herley-MDI facility, $261,000 in personnel
related costs, $48,000 in performance incentives, and $132,000 in higher
representative fees related to increased foreign shipments.
Other income (net of expenses) for the thirteen weeks ended
February 1, 1998 increased $177,000 from the prior year due to increased
investment income of $54,000, and lower interest expense of $123,000.
A provision for income taxes has been provided at the anticipated
effective rate of 34% for fiscal 1998. No income tax provision was recorded in
the second quarter fiscal 1997 due to the decrease in the valuation allowance
for net operating loss carryforwards expected to be realized. A valuation
allowance was provided previously to reduce deferred tax assets to their net
realizable value for amounts which management believed may expire unutilized.
The uncertainty that past performance would be indicative of future earnings due
to the unpredictable nature of the industry in which the Company operates was a
determining factor in assessing the need for a valuation allowance.
Twenty-six weeks ended February 1, 1998 and twenty-seven weeks ended February 2,
1997
- --------------------------------------------------------------------------------
Net sales for the twenty-six weeks ended February 1, 1998 were
$19,624,000 compared to $14,654,000 for the period ended February 2, 1997, an
increase of $4,970,000, or 33.9%. Of this increase, $2,221,000 is attributable
to the Metraplex acquisition. The remaining increase is due to increased foreign
shipments.
The gross profit margin for the first six months of fiscal 1998 was
41.5%, which exceeded the gross profit margin of 31.2% in fiscal 1997 by 10.3%.
This is attributable to the mix of foreign shipments which accounted for 32% of
sales in fiscal 1998 as compared to 10% in 1997, as well as product mix and
increased absorption of fixed overhead.
Selling and administrative expenses for the twenty-six weeks ended
February 1, 1998 were $4,262,000, an increase of $1,521,000 over the prior year
of which $597,000 is attributable to the Metraplex acquisition. Other increases
include $277,000 in license fees for MAGIC2, $214,000 in performance incentives,
$131,000 for computer systems upgrades at the Herley-MDI facility, $253,000 in
personnel related costs, and representative fees of $89,000.
Other income (net of expenses) for the twenty-six weeks ended
February 1, 1998 increased $198,000 over the prior year due to increased
investment income of $82,000, and lower interest expense of $116,000.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS:
The Company is not involved in any material legal proceedings.
ITEM 2 - CHANGES IN SECURITIES:
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES:
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
(a) The Registrant held its Annual Meeting of Stockholders on
February 18, 1998.
(b) Seven directors were elected at the Annual Meeting of
Stockholders as follows:
Class I - To serve until the Annual Meeting of Stockholders in 2000 or
until their successors are chosen and qualified:
Name Votes For Votes Withheld
---- --------- --------------
Lee N. Blatt 4,402,183 5,490
Adm. Edward K. Walker, Jr. 4,402,183 5,490
Class II - To serve until the Annual Meeting of Stockholders in 1998
or until their successors are chosen and qualified:
Name Votes For Votes Withheld
---- --------- --------------
Dr. Alvin M. Silver 4,420,316 5,357
John A. Thonet 4,420,316 5,357
Myron Levy 4,420,316 5,357
Class III - To serve until the Annual Meeting of Stockholders in 1999
or until their successors are chosen and qualified:
Name Votes For Votes Withheld
---- --------- --------------
Adm. Thomas J. Allshouse 4,420,316 5,357
David Lieberman 4,420,316 5,357
(c) A proposal to amend the Certificate of Incorporation to
increase the authorized shares of Common Stock from 10,000,000
to 20,000,000 shares was approved at the Annual Meeting of
Stockholders. Votes cast at this meeting were 4,200,983 for,
198,672 shares against, and 8,018 shares abstaining.
11
<PAGE>
ITEM 5 - OTHER INFORMATION:
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits : None
(b) During the quarter for which this report is filed, the
Registrant filed the following reports under Form 8-K:
None
12
<PAGE>
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERLEY INDUSTRIES, INC.
Registrant
BY: /S/ Myron Levy
-------------------------
Myron Levy, President
BY: /S/ Anello C. Garefino
----------------------------
Anello C. Garefino
Principal Financial Officer
DATE: March 11, 1998
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE 26 WEEKS ENDED FEBRUARY 1, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-02-1998
<PERIOD-START> AUG-04-1997
<PERIOD-END> FEB-01-1998
<CASH> 642,807
<SECURITIES> 9,625,596
<RECEIVABLES> 6,008,475
<ALLOWANCES> 0
<INVENTORY> 13,827,163
<CURRENT-ASSETS> 32,855,724
<PP&E> 26,407,374
<DEPRECIATION> 13,923,375
<TOTAL-ASSETS> 54,220,908
<CURRENT-LIABILITIES> 10,705,023
<BONDS> 0
0
0
<COMMON> 524,115
<OTHER-SE> 36,187,097
<TOTAL-LIABILITY-AND-EQUITY> 54,220,908
<SALES> 19,624,470
<TOTAL-REVENUES> 19,624,470
<CGS> 11,486,429
<TOTAL-COSTS> 15,748,839
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 201,122
<INCOME-PRETAX> 3,909,138
<INCOME-TAX> 1,329,000
<INCOME-CONTINUING> 2,580,138
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,580,138
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.48
<FN>
(1)Primary and diluted EPS reflect
a 4-for-3 stock split payable September 29, 1997. Prior Financial Data
Schedules have not been restated for this stock split.
</FN>
</TABLE>
