UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE COMMISSION
For the fiscal year ended July 30, 2000
Commission File No. 0-5411
Herley Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 23-2413500
-------------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10 Industry Drive, Lancaster, Pennsylvania 17603
------------------------------------------ --------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (717) 397-2777
Securities registered pursuant to Section 12(b) of the Act:
Name of Exchange on
Title of Class which registered
-------------- --------------------
None None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $ .10 par value
(Title of Class)
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
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
Based on the closing sale price of $21.438 as of November 1, 2000, the
aggregate market value of the voting stock held by non-affiliates of the
registrant was $96,791,284.
The number of shares outstanding of registrant's common stock, $.10 par
value was 6,061,503 as of November 1, 2000.
Documents incorporated by reference: None
<PAGE>
PART III
ITEM TEN - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors and executive officers of the Company are as follows:
Name Age Position(s) with the Company
------------------------------------ --- ----------------------------
Lee N. Blatt 72 Chairman of the Board and
Chief Executive Officer
Myron Levy 60 President and Director
Allan L. Coon 64 Senior Vice President
Howard M. Eckstein 49 Senior Vice President
Mitchell Tuckman 50 Senior Vice President
John M. Kelley 47 Senior Vice President
Anello C. Garefino 53 Vice President-Finance, Treasurer
and Chief Financial Officer
Rozalie Schachter 54 Vice President
Benjamin Robinson 56 Vice President
David H. Lieberman 55 Secretary and Director
Adm.Thomas J. Allshouse (Ret.) 75 Director, Member of Compensation
and Audit Committees
Alvin M. Silver 69 Director, Member of Compensation
and Audit Committees
John A. Thonet 50 Director
Adm. Edward K. Walker, Jr. (Ret.) 67 Director, Member of Compensation
and Audit Committees
Mr. Lee N. Blatt is a co-founder of the Company and has been Chairman of
the Board of the Company since its organization in 1965. Mr. Blatt holds a
Bachelors Degree in Electrical Engineering from Syracuse University and a
Masters Degree in Business Administration from City College of New York. Mr.
Blatt's term as a director expires at the 2000 annual meeting of stockholders.
Mr. Myron Levy has been President of the Company since June 1993 and
served as Executive Vice President and Treasurer since May 1991, and prior
thereto as Vice President for Business Operations and Treasurer since October
1988. For more than ten years prior to joining the Company, Mr. Levy, a
certified public accountant, was employed in various executive capacities,
including Vice-President, by Griffon Corporation (formerly Instrument Systems
Corporation). Mr. Levy's term as a director expires at the 2001 annual meeting
of stockholders.
Mr. Allan L. Coon joined the Company in 1992 and was appointed Senior Vice
President in December 1998, and served as a Vice President since December 1995.
Prior to joining the Company, Mr. Coon was Senior Vice President and Chief
Financial Officer of Alpha Industries, Inc., a publicly traded company engaged
in military and commercial electronic programs.
Mr. Howard M. Eckstein was appointed Senior Vice President in July 2000,
and served as Vice President and General Manager, Herley Vega since December
1998, and was Vice President-New Product Development upon joining the Company in
April 1998. Mr. Eckstein has 25 years experience in the design and development
of aerospace telemetry equipment and systems. Mr. Eckstein served from 1992 to
1998 as Vice President - Advanced Products for L3 Communications, and as Vice
President - Engineering from 1986 to 1992. Mr.
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<PAGE>
Eckstein earned his Bachelors Degree in Electrical Engineering from the
Pennsylvania State University and holds a Masters Degree in Engineering from the
University of Pennsylvania.
Mr. Mitchell Tuckman was appointed Senior Vice President in July 2000,
and served as Vice President of Herley since the acquisition of General
Microwave Corporation ("GMC") in January 1999. At the time of the acquisition,
Mr. Tuckman was President - Chief Executive Officer of GMC since March, 1995. He
was Executive Vice President and Chief Operating Officer of GMC from August,
1994 until March, 1995. From June, 1993 until August, 1994, Mr. Tuckman was Vice
President-Microwave Engineering of GMC. Prior to that, he was Chief Microwave
Engineer of GMC.
Mr. John Kelley was appointed Senior Vice President in July 2000, and
served as Vice President/Director of Corporate Communications since March 2000.
Mr Kelley joined Herley in December 1998 as Director of Investor Relations.
Prior to joining Herley, Mr. Kelley had fifteen years of banking experience,
most recently serving as Vice President at First Capital Bank. Mr. Kelley earned
his BS in Finance from the University of Arizona, Tucson Arizona with Graduate
Degree Studies at UCLA.
Mr. Anello C. Garefino has been employed by the Company in various
executive capacities for more than the past five years. Mr. Garefino, a
certified public accountant, was appointed Vice President-Finance, Treasurer and
Chief Financial Officer in June 1993. From 1987 to January 1990, Mr. Garefino
was Corporate Controller of Exide Corporation.
Dr. Rozalie Schachter was appointed Vice President in May 2000. Dr.
Schachter joined General Microwave in 1990 and was Vice President, Business
Development when Herley acquired General Microwave in January 1999. Prior to
joining General Microwave Dr. Schachter held positions as Technical Director and
Group Leader at American Cyanamid Co. and Stauffer Chemical Co., respectively.
Ms. Schachter received her BS from Brooklyn College in 1968, MS from Yeshiva
University in 1970 and PHD in Physics from New York University in 1979.
Mr. Ben Robinson was appointed Vice President of Herley upon the
acquisition of Robinson Laboratories, Inc. in January 2000. Mr. Robinson founded
Robinson Labs in 1980 and served as President since that time. Mr. Robinson has
over 35 years experience in the design and manufacture of microwave products and
has published technical articles in that field. Mr. Robinson holds a Bachelor of
Electrical Engineering from Rensselaer Polytechnic Institute.
Mr. David H. Lieberman has been a director of the Company since 1985 and
Secretary of the Company since 1994. Mr. Lieberman has been a practicing
attorney in the State of New York for more than the past ten years and is a
member of the firm of Blau, Kramer, Wactlar & Lieberman, P.C., general counsel
to the Company. Mr. Lieberman's term as a director expires at the 2002 annual
meeting of stockholders.
Admiral Thomas J. Allshouse (Ret.) has been a director of the Company
since September 1983. Prior to 1981, when he retired from the United States
Navy, Admiral Allshouse served for 34 years in various naval officer positions,
including acting as commanding officer of the United States Naval Ships Parts
Control Center. Admiral Allshouse holds a Bachelors Degree in Engineering from
the United States Naval Academy and a Masters Degree in Business Administration
from Harvard University. Admiral Allshouse's term as a director expires at the
2002 annual meeting of stockholders.
Mr. John A. Thonet has been a director of the Company since 1991 and
President of Thonet Associates, an environmental consulting firm specializing in
land planning and zoning matters for the past ten years. Mr. Thonet is the
son-in-law of Mr. Blatt. Mr. Thonet's term as a director expires at the 2001
annual meeting of stockholders.
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Dr. Alvin M. Silver has been a director of the Company since October 1997.
Since 1977, Dr. Silver has been Executive Vice President of the Ademco Division
of Pittway Corporation. Dr. Silver holds a Bachelors Degree in Industrial
Engineering from Columbia University, a Masters Degree in Industrial Engineering
from Stevens Institute of Technology and a Doctor of Engineering Science Degree
in Industrial Engineering/Operations Research from Columbia University. Dr.
Silver is a Professor at the Frank G. Zarb School of Business of Hofstra
University. Mr. Silver's term as a director expires at the 2001 annual meeting
of stockholders.
Admiral Edward K. Walker, Jr. (Ret.) has been a director of the Company
since October 1997. Since his retirement from the United States Navy in 1988,
Admiral Walker has been the Vice President and Director of Corporate Strategy
for Resource Consultants, Inc., a privately held corporation supporting the
Department of Defense, and other government agencies. Prior to his retirement
from the United States Navy, Admiral Walker served for 34 years in various naval
officer positions, including Commander of the Naval Supply Systems Command, and
Chief of Supply Corps. Admiral Walker holds a Bachelors Degree from the United
States Naval Academy and Masters Degree in Business Administration from The
George Washington University. Admiral Walker's term as a director expires at the
2000 annual meeting of stockholders.
ITEM ELEVEN - EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation
with respect to the Chairman/Chief Executive Officer, and the Company's four
most highly compensated executive officers other than the Chief Executive
Officer (the "named executive officers") for services rendered for the fiscal
years ended July 30, 2000, August 1, 1999 and August 2, 1998.
4
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation (1) Long-Term Compensation
---------------------------------------- --------------------------------
Name and Securities
Principal Fiscal Underlying All Other
Position Year Salary(2) Bonus(3) Options/SARs Compensation
---------------- ------ --------- --------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Lee N. Blatt 2000 $ 637,879 $ 539,619 150,000 (4) $ 4,800 (6)
Chairman of 1999 475,908 538,126 500,000 (5) 4,800
the Board 1998 485,549 303,191 - 4,800
Myron Levy 2000 $ 471,590 $ 431,695 150,000 (4) $ 6,924 (6)
President 1999 329,166 430,501 500,000 (5) 9,525
1998 333,912 242,553 - 9,300
Allan L. Coon 2000 $ 158,758 $ 50,000 15,000 (4) $ 8,094 (6)
Senior 1999 137,157 35,000 20,000 (5) 6,502
Vice President 1998 110,011 30,000 - 6,153
Howard Eckstein 2000 $ 120,016 $ 20,000 10,000 (4) $ 4,402 (6)
Senior 1999 114,240 3,000 15,000 (5) 4,083
Vice President 1998 24,231 - - 727
Mitchell Tuckman 2000 $ 160,000 $ - 10,000 (4) $ 5,059 (6)
Senior 1999 92,308 44,985 - (5) 2,664
Vice President
--------
<FN>
(1) Does not include Other Annual Compensation because amounts of certain
perquisites and other non-cash benefits provided by the Company do not
exceed the lesser of $50,000 or 10% of the total annual base salary and
bonus disclosed in this table for the respective officer.
(2) Amounts set forth herein include cost of living adjustments for Messrs.
Blatt and Levy under employment contracts.
(3) Represents for Messrs. Blatt and Levy incentive compensation under
employment agreements.
(4) Consisting of the following options issued in May 2000 for the right to
purchase Common Stock of the Company at a price of $15.688: Lee N. Blatt -
150,000, Myron Levy - 150,000, Allan L. Coon - 15,000, Howard Eckstein -
10,000, and Mitchell Tuckman - 10,000.
(5) Consisting of the following options issued in August 1998 for the right to
purchase Common Stock of the Company at a price of $9.25: Lee N. Blatt -
250,000, and Myron Levy - 250,000; options granted in December 1998 at a
price of $11.44: Allan L. Coon - 10,000, and Howard Eckstein - 7,500; and
at a price of $13.15 (at 115% of the market price on date of issue): Allan
L. Coon - 10,000, and Howard Eckstein - 7,500; and options granted in June
1999 at a price of $12.13: Lee N. Blatt - 125,000, and Myron Levy -
125,000, and at a price of $13.94 (at 115% of the market price on date of
issue): Lee N. Blatt - 125,000, and Myron Levy - 125,000.
(6) All Other Compensation includes: (a) group term life insurance as follows:
$2,124 for Mr. Levy, $3,294 for Mr. Coon, $502 for Mr. Eckstein, and $259
for Mr. Tuckman, and (b) contributions to the Company's 401(k) Plan as a
pre-tax salary deferral as follows: $4,800 for each of Messrs. Blatt, Levy,
Coon and Tuckman, and $3,900 for Mr. Eckstein.
</FN>
</TABLE>
5
<PAGE>
Option/SAR Grants in Last Fiscal Year
<TABLE>
<CAPTION>
Individual Grants
---------------------------------------------------- Potential Realized Value at
Number of Assumed Annual Rates of
Securities % of Total Stock Price Appreciation
Underlying Options Issued Exercise Option Term (3)
Options to Employees in Price Expiration --------------------------------
Name Granted(1) Fiscal Year(2) ($/Sh) Date 0% 5% 10%
---- ---------- -------------- ------ ---- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C>
Lee N. Blatt 150,000 22 $15.69 5/18/10 $ 0.00 $ 1,479,915 $ 3,750,395
Myron Levy 150,000 22 $15.69 5/18/10 $ 0.00 $ 1,479,915 $ 3,750,395
Allan L. Coon 15,000 2 $15.69 5/18/10 $ 0.00 $147,991 $375,039
Howard Eckstein 10,000 2 $15.69 5/18/05 $ 0.00 $43,343 $95,777
Mitchell Tuckman 10,000 2 $15.69 5/18/05 $ 0.00 $43,343 $95,777
--------
<FN>
(1) Options were issued in fiscal 2000 at 100% of the closing price of the
Company's Common Stock on dates of issue and vest as follows: Lee N. Blatt,
Myron Levy and Allan L. Coon - at date of grant, Howard Eckstein and
Mitchell Tuckman - one fifth of the options vest one year from date of
grant and one fifth each year thereafter.
(2) Total options issued to employees and directors in fiscal 2000 were for
842,500 shares of Common Stock.
(3) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Commission and are not
intended to forecast future appreciation, if any, in the price of the
Common Stock. Such amounts are based on the assumption that the named
persons hold the options for the full term of the options. The actual value
of the options will vary in accordance with the market price of the Common
Stock. The column headed "0%" is included to demonstrate that the options
were issued with an exercise price greater than or equal to the trading
price of the Common Stock so that the holders of the options will not
recognize any gain without an increase in the stock price, which increase
benefits all stockholders commensurately.
</FN>
</TABLE>
6
<PAGE>
Aggregate Option/SAR Exercises in Last Fiscal Year and Fiscal Year End
Option/SAR Values
The following table sets forth stock options exercised during fiscal 2000
and all unexercised stock options and warrants held by the named executive
officers as of July 30, 2000.
<TABLE>
<CAPTION>
Value of
Number of Unexercised Unexercised In the-Money
Options and Warrants Options and Warrants
Shares at Fiscal Year-End at Fiscal Year-End (2)
Acquired on Value ---------------------------- ----------------------------
Name Exercise(#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
---------------- ----------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Lee N. Blatt - $ - 616,666 83,333 $ 4,542,008 $ 789,080
Myron Levy - - 550,000 83,333 3,603,457 789,080
Allan L. Coon 15,000 104,843 61,332 12,000 553,927 77,078
Howard Eckstein - - 9,000 23,500 55,696 113,854
Mitchell Tuckman - - 8,000 22,000 26,660 70,300
--------
<FN>
(1) Values are calculated by subtracting the exercise price from the trading
price of the Common Stock as of the exercise date.
(2) Based upon the trading price of the Common Stock of $18.719 on July 30,
2000.
</FN>
</TABLE>
Employment Agreements
Lee N. Blatt has entered into an employment agreement with the Company,
dated as of October 1, 1998, (as modified January 26, 1999 and June 17, 1999),
which provides for a four year and three month term, terminating on December 31,
2002. Pursuant to the agreement, Mr. Blatt receives compensation consisting of a
base salary of $604,933 , as adjusted June 30, 2000, with an annual cost of
living increase plus an incentive bonus. Mr. Blatt's incentive bonus is 5% of
the pretax income of the Company in excess of $2,000,000.
Myron Levy has entered into an employment agreement with the Company, dated
as of October 1, 1998, (as modified January 26, 1999 and June 17, 1999), which
provides for a four year and three month term, terminating on December 31, 2002,
and a five year consulting period commencing at the end of the active employment
period. Pursuant to the agreement, Mr. Levy receives compensation consisting of
a base salary of $446,391, as adjusted June 30, 2000, with an annual cost of
living increase plus an incentive bonus. Mr. Levy's incentive bonus is 4% of the
pretax income of the Company in excess of $2,000,000. Mr. Levy's compensation
during the consulting period is at the annual rate of $100,000.
The employment agreements with Messrs. Blatt and Levy provide for certain
payments following death or disability. The employment agreements also provide,
in the event of a change in control of the Company, as defined therein, the
right, at their election, to terminate the agreement and receive a lump sum
payment of approximately three times their annual salary.
Messrs. Coon, Eckstein and Tuckman have each entered into a severance
agreement with the Company, dated July 26, 2000, which provides that in the
event of a change in control of the Company prior to July 27, 2002, each is
entitled to two years' base salary. The base salary of each executive as of
November 1, 2000 is as follows: Mr. Coon $200,000, Mr. Eckstein $150,000, and
Mr. Tuckman $175,000.
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<PAGE>
Indemnification Agreements
Herley has entered into separate indemnification agreements with the
officers and directors of Herley. Herley has agreed to provide indemnification
with regard to certain legal proceedings so long as the indemnified officer or
director has acted in good faith and in a manner he or she reasonably believed
to be in, or not opposed to, the best interests of Herley and with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. Herley only provided indemnification for expenses, judgments,
fines and amounts paid in settlement actually incurred by the relevant officer
or director, or on his or her behalf, arising out of proceedings brought against
such officer or director by reason of his or her corporate status.
ITEM TWELVE - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth the indicated information as of October 29,
2000 with respect to the beneficial ownership of the Company's securities by:
(i) all persons known to the Company to be beneficial owners of more than 5% of
the outstanding shares of Common Stock, (ii) each director and named executive
officer of the Company, and (iii) by all executive officers and directors as a
group:
Shares of Common
Stock Beneficially
Name Owned (1)(5)
---- ------------------------
Shares Percent
Lee N. Blatt (2)(4)(5).......................... 801,596 11.9%
Myron Levy (4)(5)............................... 857,074 12.8%
Allan L. Coon (4)............................... 70,332 1.1%
Howard M. Eckstein (4).......................... 12,000
Mitchell Tuckman (4)............................ 8,000
Adm. Thomas J. Allshouse (4).................... 39,666
David H. Lieberman (4).......................... 15,933
John A. Thonet (3)(4)........................... 48,693
Alvin M. Silver (4)............................. 31,500
Adm. Edward K. Walker, Jr. (Ret.) (4)........... 23,500
Kennedy Capital Management, Inc. (6)............ 309,129 5.1%
Fidelity Management & Research, Inc. (7)........ 449,966 7.4%
Directors and executive
officers as a group
(10 persons).................................. 1,908,294 25.1%
---------
(1) No executive officer or director owns more than one percent of the
outstanding shares of Common Stock unless otherwise indicated. Ownership
represents sole voting and investment power.
(2) Does not include an aggregate of 312,602 shares owned by family members,
including Hannah Thonet, Rebecca Thonet, Kathi Thonet, Randi Rossignol, Max
Rossignol, Henry Rossignol, Patrick Rossignol and Allyson Gerber, of which
Mr. Blatt disclaims beneficial ownership.
(3) Does not include 117,332 shares, owned by Mr. Thonet's children, Hannah and
Rebecca Thonet, and 28,278 shares owned by his wife, Kathi Thonet. Mr.
Thonet disclaims beneficial ownership of these shares.
(4) Includes shares subject to options exercisable within the 60 days after
October 29, 2000 at prices ranging from $6.0938 to $16.46 per share
pursuant to the Company's Stock Plans: Lee N. Blatt - 566,666,
8
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Myron Levy - 566,666, Allan L. Coon - 65,332, Howard Eckstein - 12,000,
Mitchell Tuckman - 7,000, Adm. Thomas J. Allshouse - 28,333, David H.
Lieberman - 15,333, John A. Thonet - 28,333, Alvin M. Silver - 22,500,
Edward K. Walker - 22,500.
(5) Includes shares subject to outstanding warrants exercisable within 60 days
after October 29, 2000 at a price of $4.6406: Lee N. Blatt - 133,333, Myron
Levy - 66,667.
(6) Address is 10829 Olive Boulevard, St. Louis, Missouri 63141.
(7) Address is 82 Devonshire Street , Boston, Massachusetts 02109.
Stock Plans
Certain officers and directors of the Company hold options or warrants to
purchase Common Stock under the Company's 1996 Stock Option Plan, 1997 Stock
Option Plan, and 1998 Stock Option Plan (collectively, the "Stock Plans"), and
under certain warrant agreements.
1996 Stock Option Plan. The 1996 Stock Option Plan covers 666,666 shares
of Common Stock. Options granted under the plan may be incentive stock options
qualified under Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options. Under the terms of the plan, the exercise price of
options granted under the plan will be the fair market value at the date of
grant. The nature and terms of the options to be granted are determined at the
time of grant by the Compensation Committee or the Board of Directors. If not
specified, 100% of the shares can be exercised one year after the date of grant.
The options expire ten years from the date of grant. At July 30, 2000,
non-qualified options to purchase 58,664 shares of Common Stock were outstanding
under this plan.
1997 Stock Option Plan. The 1997 Stock Option Plan covers 1,666,666 shares
of Common Stock. Options granted under the plan may be incentive stock options
qualified under Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options. Under the terms of the plan, the exercise price of
options granted under the plan will be the fair market value at the date of
grant. The nature and terms of the options to be granted are determined at the
time of grant by the Compensation Committee or the Board of Directors. If not
specified, 100% of the shares can be exercised one year after the date of grant.
The options expire ten years from the date of grant, subject to certain
restrictions. Options for 86,000 shares of Common Stock were granted during the
fiscal year ended July 30, 2000. At July 30, 2000, options to purchase 805,759
shares of Common Stock were outstanding under this plan.
1998 Stock Option Plan. The 1998 Stock Option Plan covers 1,500,000 shares
of Common Stock. Options granted under the plan may be incentive stock options
qualified under Section 422 of the Internal Revenue Code of 1986, as amended, or
non-qualified stock options. Under the terms of the plan, the exercise price of
options granted under the plan will be the fair market value at the date of
grant. The nature and terms of the options to be granted are determined at the
time of grant by the Compensation Committee or the Board of Directors. If not
specified, 100% of the shares can be exercised one year after the date of grant.
The options expire up to ten years from the date of grant, subject to certain
restrictions. Options for 646,500 shares of Common Stock were granted during the
fiscal year ended July 30, 2000. At July 30, 2000, options to purchase 1,145,000
shares of Common Stock were outstanding under this plan.
On May 18, 2000, the Company issued 10 year options to purchase 150,000
shares of Common Stock at a price of $15.688 per share, the fair market value at
the date of grant, under these plans to each of Lee N. Blatt and Myron Levy,
which options vest at grant date.
Warrant Agreements. In April 1993, common stock warrants were issued to
certain officers and directors for the right to acquire 573,333 shares of Common
Stock at an exercise price of $5.3475 per share, which was the closing price of
the Common Stock on the date of issue. In December 1995, warrants with respect
to
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<PAGE>
533,333 of these shares were canceled, and the remaining 40,000 warrants were
exercised in March 1998. In December 1995, warrants were issued to certain
officers for the right to acquire 293,333 shares of Common Stock at an exercise
price of $4.6425 per share at date of issue. These warrants expire December 13,
2005. At July 30, 2000, warrants to purchase 213,333 shares of Common Stock at
$4.6425 per share were outstanding.
Employee Savings Plan
The Company maintains an Employee Savings Plan that qualifies as a thrift
plan under Section 401(k) of the Internal Revenue Code. This plan allows
employees to contribute between 2% and 15% of their salaries to the plan. The
Company, at its discretion, can contribute 100% of the first 2% of the
employees' salary so contributed and 25% of the next 4% of salary. Additional
Company contributions can be made, depending on profits. The aggregate benefit
payable to an employee depends upon the employee's rate of contribution, the
earnings of the fund, and the length of time such employee continues as a
participant. The Company recognized expenses of approximately $415,000, $266,000
and $197,000 for the 52 weeks ended July 30, 2000, August 1, 1999 and August 2,
1998, respectively. For the year ended July 30, 2000, $4,800, $4,800, $4,800,
$3,900, and $4,800 was contributed by the Company to this plan for Messrs.
Blatt, Levy, Coon, Eckstein and Tuckman, respectively, and $32,520 was
contributed for all officers and directors as a group.
ITEM THIRTEEN - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 23, 1999, the Company closed on the sale of GMC's property in
Amityville, New York and relocated the plant to a leased facility in
Farmingdale, New York. The Company entered into a 10 year lease agreement with a
partnership owned by the children of certain officers of the Company. The lease
provides for initial minimum annual rent of $312,390, subject to escalation of
approximately 4% annually throughout the 10 year term.
Additionally, in March 2000, the Company entered into another 10 year
lease agreement with the same partnership for additional space. The initial
minimum annual rent of $92,000 is subject to escalation of approximately 4%
annually throughout the 10 year term.
The Company believes that these rents are at the fair market value. The
outside directors of the Company unanimously approved this transaction.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on the 16 day of
November, 2000
Herley Industries, Inc.
By: /s/ Lee N. Blatt
-------------------------
Lee N. Blatt
Chairman of the Board
(Chief Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below on November 16, 2000 by the following persons
in the capacities indicated:
Signature Title
------------------------------ ---------------------
/s/ Lee N. Blatt Chairman of the Board
------------------------------
Lee N. Blatt (Chief Executive Officer)
/s/ Myron Levy President and Director
------------------------------
Myron Levy
/s/ Anello C. Garefino Vice President - Finance, Treasurer
------------------------------ (Chief Financial Officer and
Anello C. Garefino Principal Accounting Officer)
/s/ Thomas J. Allshouse Director
------------------------------
Thomas J. Allshouse
/s/ David H. Lieberman Secretary and Director
------------------------------
David H. Lieberman
/s/ John Thonet Director
------------------------------
John Thonet
/s/Alvin M. Silver Director
------------------------------
Alvin M. Silver
/s/ Edward K. Walker, Jr. Director
------------------------------
Edward K. Walker, Jr.
11
