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 August 3, 1997

                           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. Yes [X]   No [ ]

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation  S-K (Sec.  229.405 of this chapter) 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 $13.75 as of  December  1,  1997,  the
aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant was $36,095,716.

     The number of shares  outstanding of  registrant's  common stock,  $.10 par
value was 4,541,146 as of December 1, 1997.

     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:

<TABLE>
<CAPTION>

        Name                   Age    Position(s) with the Company

<S>                             <C>   <C>                                            
Lee N. Blatt                    69    Chairman of the Board and Chief Executive
                                      Officer
Myron Levy                      57    President and Director
Anello C. Garefino              50    Vice President-Finance, Treasurer and Chief
                                      Financial Officer 
Allan Coon                      61    Vice President
Adam J. Bottenfield             37    Vice President-Engineering
Ray Umbarger                    50    Vice President-Domestic Marketing
George Hopp                     59    Vice President-International Marketing
Glenn Rosenthal                 37    Vice President
David H. Lieberman              52    Secretary and Director
Adm.Thomas J. Allshouse  (Ret.) 72    Director, Member of Compensation and
                                      Audit Committees
Alvin M. Silver                 66    Director, Member of Compensation and Audit
                                      Committees
John A. Thonet                  47    Director
Adm. Edward K. Walker, Jr.
  (Ret.)                        64    Director, Member of Compensation and 
                                      Audit Committees

</TABLE>

     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 1997 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 1998 annual meeting
of stockholders.

     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.

     Mr.  Allan Coon  joined the  Company  in 1992 and was  appointed  as a Vice
President in 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.

<PAGE>

     Mr. Adam J.  Bottenfield was appointed Vice President - Engineering in July
1997. Mr.  Bottenfield  has been employed by the Company as Systems  Engineering
Manager of Herley-Vega Systems since the Company's  acquisition of Vega in 1993.
From  1984 to  1993,  Mr.  Bottenfield  was  Manager  of  Digital  and  Software
Engineering of Vega.

     Mr. Ray Umbarger was appointed Vice President - Domestic  Marketing in July
1997,  having been  employed by the Company  since June 1995.  For more than ten
years  prior to that,  Mr.  Umbarger  served  in the  U.S.  Navy  where he was a
Captain.  His  responsibilities  in the Navy  included  the design,  development
production,  deployment  and life cycle support of all Navy,  and in some cases,
all  Department of Defense target  systems.  Mr.  Umbarger  received a Bachelors
Degree in Aeronautical Engineering from the U.S. Naval Academy, a Masters Degree
in Aeronautical  Engineering  from Princeton  University and a Masters Degree in
Business Adminstration from Monmouth College.

     Mr. George Hopp was appointed Vice President -  International  Marketing in
July 1997.  Mr. Hopp has been  employed by the Company in a sales and  marketing
position  since 1995 and directs the  operations  of the Company's GSS division.
For more than ten years prior to joining the  Company,  Mr. Hopp was Director of
International Programs for Northrop Grumman, Military Aircraft Division.

     Mr. Glenn  Rosenthal was appointed  Vice President of the Company in August
1997.  From June 1988 until its  acquisition  by the Company in August 1997, Mr.
Rosenthal  was  employed  by  Metraplex  Corporation  holding the  positions  of
President  (from  June  1996) and  Chief  Operating  Officer  (from  1995).  Mr.
Rosenthal  holds  a  Bachelors   Degree  in  Engineering  from  Carnegie  Mellon
University.

     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 1999 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
1999 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 1998
annual meeting of stockholders.

     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 1998 annual meeting
of stockholders. 
<PAGE>

     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  Director  of  Corporate  Strategy  for  Resource
Consultants,  Inc., a member of Gilbert Associates, Inc. which is a professional
services company supporting the Department of Defense, particularly the Navy, in
a wide range of technical,  engineering and management disciplines. 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 1997 annual meeting of stockholders.

     Mr. Gerald Klein,  Chief Technologist for the Company since March 1994, has
been employed by the Company since 1988,  serving as Chief Operating Officer and
Executive  Vice  President from July 1988 until December 1996 and was a director
of the Company from 1991 until December 1996.

ITEM ELEVEN - EXECUTIVE COMPENSATION

    The following  table sets forth the annual and long-term  compensation  with
respect to the Chairman/Chief  Executive Officer, the Company's four most highly
compensated  executive  officers other than the Chief Executive  Officer and one
individual who served as an executive  officer for a portion of fiscal year 1997
and all of fiscal  years  1996 and 1995 (the  "named  executive  officers")  for
services  rendered for the fiscal years ended August 3, 1997,  July 28, 1996 and
July 30, 1995.


<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(4)  Compensation
----------------------------------------------------------------------------------------

<S>                <C>         <C>           <C>             <C>              <C>      
Lee N. Blatt       1997        $531,629      $302,432        599,999(5)       $4,500(6)
Chairman of        1996         483,028       203,068        133,333(7)        4,500
the Board          1995         503,842          -           133,333           4,620

Myron Levy         1997        $307,764      $181,460        400,000(5)       $9,000(6)
President          1996         288,726       121,841         66,667(7)        7,380
                   1995         295,331        27,500         66,666           6,636

Allan Coon         1997        $110,011          -            73,332(5)       $5,751(6)
Vice President     1996         110,011       $30,000         13,333(7)        4,569
                   1995          99,008        15,000             -            4,245

Anello C. Garefino 1997        $101,914          -            59,999(5)       $3,579(6)
Vice President     1996          97,885       $15,000         13,333(7)        3,424
Finance-Treasurer  1995          90,620          -            13,333           3,173

George Hopp        1997        $107,615          -            18,666(5)       $1,422(6)
Vice President     1996         104,000          -                -            1,185
                   1995          44,000          -             6,667              -

Gerald I. Klein(8) 1997        $307,764      $181,460         99,999(5)       $4,500(6) 
                   1996         288,726       121,841         66,667(7)        4,500  
                   1995         295,328          -            66,666           4,620 


<PAGE>

--------  
<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 under employment  
    contracts.  

(3) Represents for Messrs. Blatt, Levy and Klein  incentive  compensation under
    employment  agreements.  No incentive compensation was earned under the 
    employment agreements in fiscal 1995. Mr. Levy was awarded a bonus by the 
    Board of Directors  for fiscal 1995.  

(4) Adjusted to give effect to a  four-for-three  stock split on September 30, 
    1997.  This table includes  warrants issued to these  individuals  outside 
    the stock option plans.

(5) Consisting of the following  options issued in October 1996 for the right to
    purchase  Common  Stock of the  Company  at a price of  $6.9375:  Lee N. 
    Blatt - 133,333; Myron Levy - 100,000, Allan Coon - 26,666, Anello C. 
    Garefino - 13,333; options  granted in February  1997 at a price of $8.3438 
    and repriced to $6.0938 in April 1997: Lee N. Blatt 133,333,  Myron Levy - 
    100,000, Allan Coon - 20,000, Anello C.  Garefino - 20,000,  Gerald I. 
    Klein - 33,333 and George Hopp - 5,333; and options  granted in May 1997 at 
    a price of $6.4688:  Lee N. Blatt - 333,333, Myron Levy - 200,000,  Allan 
    Coon - 26,666,  Anello C. Garefino - 26,666, Gerald
    I. Klein - 66,666 and George Hopp - 13,333. 

(6) All Other Compenation  includes: (a) group term life  insurance as follows:
    $4,500 for Mr. Levy,  $2,387 for Mr. Coon, $522 for Mr. Garefino, and $1,422 
    for Mr. Hopp, and (b)  contributions to the Company's  401(k) Plan as a 
    pre-tax salary  deferral as follows:  $4,500 for each of Messrs.  Blatt, 
    Levy and Klein, $3,364 for Mr. Coon, and $3,057 for Mr. Garefino.  

(7) Represents  warrants  issued in  December  1995 for the right to
    purchase  Common  Stock of the  Company  at a price of  $4.6425.  

(8) Effective December 1996, Mr. Klein ceased to serve as an executive officer 
    of the Company.
</FN>
</TABLE>


<PAGE>

Option/SAR Grants in Last Fiscal Year

<TABLE>
<CAPTION>
                                                                                   Potential Realized Value at
                                                                                    Assumed Annual Rates of
                                                                                    Stock Price Appreciation
                                Individual Grants (1)                                    Option Term (4)
                -------------------------------------------------------            ----------------------------
                 Number of
                Securities    % of Total
                Underlying    Options Issued      Exercise
                  Options     to Employees in     Price      Expiration
Name            Granted(2)    Fiscal Year(3)      ($/Sh)     Date                  0%            5%          10%
--------------------------------------------------------------------------------------------------------------------

<S>                  <C>                 <C>         <C>        <C>               <C>         <C>           <C>     
Lee N. Blatt         133,333              9          $6.9375    10/08/06          $0.00       $255,559      $564,720
                     133,333              9          $6.0938    04/04/07          $0.00       $224,480      $496,042
                     333,333             24          $6.4688    05/01/07          $0.00     $1,356,063    $3,436,530

Myron Levy           100,000              7          $6.9375    10/08/06          $0.00       $191,670      $423,541
                     100,000              7          $6.0938    04/04/07          $0.00       $168,360      $372,032
                     200,000             14          $6.4688    05/01/07          $0.00       $813,638    $2,061,920

Allan Coon            26,666              2          $6.9375    10/08/06          $0.00        $51,111      $112,942
                      20,000              1          $6.0938    04/04/07          $0.00        $33,672       $74,406
                      26,666              2          $6.4688    05/01/07          $0.00       $108,482      $274,916

Anello C. Garefino    13,333              1          $6.9375    10/08/06          $0.00        $25,555       $56,470
                      20,000              1          $6.0938    04/04/07          $0.00        $33,672       $74,406
                      26,666              2          $6.4688    05/01/07          $0.00       $108,482      $274,916


George Hopp            5,333              -          $6.0938    04/04/07          $0.00         $8,979       $19,840
                      13,333              1          $6.4688    05/01/07          $0.00        $54,241      $137,458

Gerald I. Klein       33,333              2          $6.0938    04/04/07          $0.00        $56,120      $124,009
                      66,666              5          $6.4688    05/01/07          $0.00       $271,210      $687,301
--------

<FN>
(1) Adjusted to give effect to a four-for-three stock split on September 30, 
    1997.  This table includes warrants issued to these individuals outside the 
    stock option plans.
(2) Options  were  issued  in fiscal  1997 at 100% of the  closing price of the
    Company's Common Stock on dates of issue and vest as follows: Lee N. Blatt-
    all options vest at date of grant; Myron Levy, Allan Coon, Anello C. 
    Garefino and Gerald I. Klein - one third of the options vest at date of 
    grant,  one-third vest one year from date of grant and the balance vest two 
    years from date of grant;  George Hopp - one fifth of the  options  vest 
    one year from date of grant and one fifth each year thereafter.
(3) Total options  issued to employees and directors  in fiscal 1997 were for 
    1,465,649  shares of Common Stock.
(4) 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 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>

<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 1997
and all  unexercised  stock  options and  warrants  held by the named  executive
officers as of August 3, 1997.

<TABLE>
<CAPTION>

                   Shares                         Number of Unexercised Options           Value of Unexercised In-the-Money
                   Acquired        Value         and Warrants at Fiscal Year-End(2)   Options and Warrants at Fiscal Year-End (3)
Name              Exercise(#)   Realized($)(1)    Exercisable     Unexercisable            Exercisable     Unexercisabale
---------------------------------------------------------------------------------------------------------------------------------

<S>              <C>          <C>                    <C>               <C>                   <C>              <C>    
Lee N. Blatt     688,886      $3,203,301             133,333           177,779              $706,532          $785,698
Myron Levy       264,441       1,255,128              66,667           255,558               353,293           969,833
Allan Coon        10,000          70,625              32,222            41,110               109,350           140,202
Anello Garefino   41,109         200,659              13,333            38,889                70,657           153,102
George Hopp        4,443          22,442               2,667            18,222                10,261            72,993
Gerald Klein     163,330         854,708              66,667            83,335               353,293           382,947
--------
<FN>
(1)  Values are  calculated by  subtracting  the exercise  price from the trading price of the Common Stock as of
     the  exercise date.
(2)  Adjusted to give effect to a four-for-three stock split on September 30, 1997.
(3)  Based upon the trading  price of the  Common Stock of $9.94  on August 3, 1997, as adjusted to
     give effect to the four-for-three stock split on September 30, 1997.

</FN>
</TABLE>

<PAGE>

Employment Agreements

     Lee N. Blatt has entered into a new employment  agreement with the Company,
dated as of November 1, 1997, which provides for a three year term,  terminating
on October 31, 2000. Pursuant to the agreement,  Mr. Blatt receives compensation
consisting of a base salary of $375,000,  with an annual cost of living increase
and an incentive bonus.  Mr. Blatt's  incentive bonus is 5% of the pretax income
of the  Company  in  excess of 10% of the  Company's  stockholders'  equity  for
specific periods,  as adjusted for stock issuances.  Mr. Blatt's incentive bonus
cannot exceed his base salary.

     Myron Levy has entered into a new  employment  agreement  with the Company,
dated as of November 1, 1997,  which provides for a five year term,  terminating
on October 31, 2002, and a five year consulting  period commencing at the end of
the employment period. Pursuant to the agreement, Mr. Levy receives compensation
consisting of a base salary of $275,000,  with an annual cost of living increase
and an incentive bonus. Mr. Levy's incentive bonus is 4% of the pretax income of
the Company in excess of 10% of the Company's  stockholders' equity for specific
periods,  as adjusted for stock  issuances.  Mr. Levy's  incentive  bonus cannot
exceed his base salary.

     Gerald Klein has entered into a new employment  agreement with the Company,
dated as of  November  1,  1997,  which  provides  for a four year  term,  and a
follow-on  consulting contract commencing at the end of his full-time employment
and  terminating  on December 31,  2010.  Pursuant to the  agreement,  Mr. Klein
receives  compensation  consisting of a base salary of $275,000,  with an annual
cost of living increase and an incentive bonus.  Mr. Klein's  incentive bonus is
3% of the  pretax  income  of the  Company  in  excess  of 10% of the  Company's
stockholders' equity for specific periods, as adjusted for stock issuances.  Mr.
Klein's incentive bonus cannot exceed his base salary.

     The employment  agreements with Messrs.  Blatt,  Levy and Klein provide for
certain payments following death or disability.  The employment  agreements also
provides,  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 twice their annual salary.

     Glenn Rosenthal  entered into an employment  agreement with the Company and
Metraplex,  dated as of August 4, 1997,  which  provides  for a three year term,
terminating  on  August 4,  2000.  Pursuant  to this  agreement,  Mr.  Rosenthal
receives  annual  compensation  consisting  of a base salary of $130,000  and an
incentive  bonus based on 3% of the pre-tax income of Metraplex.  The employment
agreement  also  provides  that if Mr.  Rosenthal is relocated out of Frederick,
Maryland,  he shall receive  $260,000 if during the first year of the employment
agreement,  $195,000 if during the second year, and $130,000 if during the third
year or beyond.

     In  addition,  Allan Coon has entered into a severance  agreement  with the
Company,  dated June 11,  1997,  which  provides  that in the event Mr.  Coon is
terminated  other than for cause prior to June 11,  1999,  he is entitled to two
years' base salary and in the event he is so terminated  after June 11, 1999 and
before June 11,  2002,  he is entitled to one year's  base  salary.  Mr.  Coon's
present base salary is $110,000.

<PAGE>

                       Table of Ten-Year Option Repricings

     The following table sets forth information  concerning options of the named
executive officers that were repriced during fiscal 1997.

<TABLE>
<CAPTION>

                                                   Market Price                                       Length of Original
                           Number of Securities     of Stock at        Exercise Price                    Option Term
                            Underlying Options       Time of             at Time of          New       Remaining at Date of
                               Repriced or          Repricing or        Repricing or      Exercise       Repricing or
Name                 Date       Amended (#)         Amendment ($)       Amendment ($)    Price ($)      Amendment (Yrs)
-----------------------------------------------------------------------------------------------------------------------------

<S>                  <C>         <C>                  <C>                <C>              <C>         <C>      
Lee N. Blatt         4/8/97      133,333              $6.0938            $8.3438          $6.0938     9 years, 10 months
Myron Levy           4/8/97      100,000              $6.0938            $8.3438          $6.0938     9 years, 10 months
Gerald I. Klein      4/8/97       33,333              $6.0938            $8.3438          $6.0938     9 years, 10 months
Anello C. Garefino   4/8/97       20,000              $6.0938            $8.3438          $6.0938     9 years, 10 months
Allan Coon           4/8/97       20,000              $6.0938            $8.3438          $6.0938     9 years, 10 months

</TABLE>

      The Board of Directors  determined  to reprice the above  described  stock
options  to  strengthen  the  link  that the  Company  believes  exists  between
executive compensation and corporate objectives.



<PAGE>


ITEM TWELVE - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following table sets forth the indicated information as of November 18,
1997 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:

<TABLE>
<CAPTION>
                                  Shares of Common
                                 Stock Beneficially
Name                               Owned (1)(5)
----                             -------------------
                                 Shares       Percent
                                 ------       -------

<S>                              <C>            <C>  
Lee N. Blatt (2)(4)(5)           913,065        19.3%
Myron Levy (4)(5)(6)             396,687         8.5%
Gerald I. Klein (4)(5)           356,186         7.7%
Anello C. Garefino(4)(5)          47,440         1.0%
Allan Coon(4)                     45,555         1.0%
George Hopp (4)                    7,111          -
Adm. Thomas J. Allshouse(4)(5)    32,798          -
David H. Lieberman(4)(5)          20,799          -
John A. Thonet (3)(4)(5)          28,359          -
Alvin M. Silver                        -          -
Adm. Edward K. Walker, Jr. (Ret.)      -          -
Directors and executive
  officers  as a group
  (14 persons)                 1,518,471        30.3% 
---------
<FN>
     (1) No 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  562,259  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 153,332 shares, owned by Mr. Thonet's children, Hannah
and Rebecca  Thonet,  and 156,309  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
December 1, 1997 at prices  ranging from $2.535 to $6.9375 per share pursuant to
the Company's Stock Plans: Lee N. Blatt - 66,667, Myron Levy - 50,002, Anello C.
Garefino  - 6,667,  Allan Coon - 45,555,  George  Hopp - 2,667,  Adm.  Thomas J.
Allshouse - 6,665,  David H. Lieberman - 6,666, John A. Thonet - 6,666.

     (5) Includes shares subject to outstanding  warrants  exercisable within 60
days after December 1, 1997 at a price of $4.6425: Lee N. Blatt - 133,333, Myron
Levy - 66,667,  Gerald I. Klein - 66,667,  Anello C. Garefino - 13,333,  and the
following at a price of $5.3475:  Adm.  Thomas J.  Allshouse - 13,333,  David H.
Lieberman - 13,333, John A. Thonet - 13,333.

     (6) Does not include 12,666 shares owned by Mr. Levy's children,  Stephanie
Levy and Ronnie Roth, of which Mr. Levy disclaims beneficial ownership.

</FN>
</TABLE>

<PAGE>


ITEM THIRTEEN - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In November 1995 and March 1996,  the Company loaned  $1,400,000,  $300,000
and $300,000, to Messrs. Blatt, Levy and Klein,  respectively,  as authorized by
the  Board of  Directors,  pursuant  to the terms of  non-negotiable  promissory
notes.  The loans are secured by 315,774,  50,000,  and 80,000  shares of Common
Stock, respectively.  The notes were initially due November 1996, March 1997 and
March 1997, respectively. The notes were extended by the Company and are now due
April 30, 1998, January 31, 1998 and January 31, 1998, respectively. Interest is
payable at  maturity  at the  average  rate of  interest  paid by the Company on
borrowed  funds during the fiscal year.  The pledge  agreement also provides for
the  Company  to have  the  right of  first  refusal  to  purchase  the  pledged
securities,  based  on a  formula  as  defined,  in the  event  of the  death or
disability of the officer. 

     On March 6, 1996,  the Board of Directors,  by action of the  disinterested
directors,  approved  the  purchase  of an  industrial  parcel  of land from the
Chairman of the Company for $940,000. A deposit of $94,000 was paid on execution
of the  contract,  and the balance of $846,000  will be paid at settlement on or
before March 31, 1998. The Company  intends to use this land for possible future
expansion.

Stock Plans

     Certain  officers and  directors of the Company hold options or warrants to
purchase Common Stock under the Company's 1992 Non-Qualified  Stock Option Plan,
1996 Stock Option Plan, 1997 Stock Option Plan (collectively, the "Stock Plans")
and warrant agreements.

1992 Non-Qualified  Stock Option Plan. 

     The 1992 Non-Qualified  Stock Option Plan covers 1,333,333 shares of Common
Stock. Under the terms of the plan, the purchase price of the shares, subject to
each option granted,  is 100% of the fair market value at the date of grant. The
date of  exercise  is  determined  at the  time  of  grant  by the  Compensation
Committee or the Board of Directors. If not specified,  50% of the shares can be
exercised  each year  beginning  one year after the date of grant.  The  options
expire  ten  years  from the date of  grant.  In  December  1995,  this plan was
terminated  except  for  outstanding  options  thereunder.  At August  3,  1997,
non-qualified   options  to  purchase   151,127  shares  of  Common  Stock  were
outstanding under this plan.

1996 Stock Option Plan. 

     The 1996 Stock Option Plan covers 666,667  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  (the  "Internal  Revenue
Code") 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.  Options for 663,997
shares of Common Stock were granted during the fiscal year ended August 3, 1997.
At August 3, 1997,  non-qualified  options to purchase  394,662 shares of Common
Stock were outstanding under this plan.

<PAGE>

1997 Stock Option Plan. 

     The 1997 Stock Option Plan covers 1,666,667 shares of Common Stock. Options
granted under the plan may be incentive  stock options  qualified  under Section
422 of the Internal Revenue Code 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. Options for 800,665 shares of Common Stock were granted during the fiscal
year ended August 3, 1997. At August 3, 1997, options to purchase 369,553 shares
of Common Stock were outstanding under this plan.

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 533,333 of these
shares were  canceled.  The warrants  expire April 30, 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.

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  accrued  approximately  $178,000  for the fiscal year
ended August 3, 1997 and contributed approximately $159,000 and $151,000 to this
plan for the years ended July 28, 1996 and July 30, 1995, respectively.  For the
year ended August 3, 1997, $4,500, $4,500, $3,364, and $3,057 was contributed by
the  Company  to  this  plan  for  Messrs.   Blatt,  Levy,  Coon  and  Garefino,
respectively,  and $20,452 was  contributed  for all officers and directors as a
group.


<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 2nd day of
December, 1997. 

                                           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 December 2, 1997 by the following  persons in
the capacities indicated:

               Signature                        Title/Capacity
               ---------                        --------------

/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 
-----------------------------
Anello C. Garefino                        (Chief Financial Officer and 
                                          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

-----------------------------             Director
Alvin M. Silver

/s/ Edward K. Walker, Jr.                 Director
-----------------------------
Edward K. Walker, Jr.