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 2, 1998

                           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 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  $9.9688 as of  November  2,  1998,  the
aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant was $40,890,452.

  The number of shares outstanding of registrant's  common stock, $.10 par value
was 5,295,540 as of November 2, 1998.

  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             70   Chairman of the Board and Chief Executive
                                                 Officer
Myron Levy               58   President and Director
Anello C. Garefino       51   Vice President-Finance, Treasurer and Chief
                              Financial Officer
Allan Coon               62   Vice President
Adam J. Bottenfield      38   Vice President-Engineering
Ray Umbarger             51   Vice President-Domestic Marketing
George Hopp              60   Vice President-International Marketing
Glenn Rosenthal          38   Vice President
Mark A. Krumm            52   Vice President-Business Development
Howard M. Eckstein       47   Vice President-New Product Development
David H. Lieberman       53   Secretary and Director
Adm.Thomas J.
 Allshouse  (Ret.)       73   Director, Member of Compensation and
                              Audit Committees
Alvin M. Silver          67   Director, Member of Compensation and Audit
                              Committees
John A. Thonet           48   Director
Adm. Edward K. Walker,
 Jr. (Ret.)              65   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 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 Administration 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. Mark A. Krumm was appointed  Vice  President  for Business  Development
upon  joining  the  Company in  November  1997.  For more than 10 years prior to
joining  the  Company,  Mr.  Krumm was program  manager  for various  electronic
defense  systems with Harris  Corporation.  Mr. Krumm has a Bachelors  Degree in
Aerospace  engineering  from St. Louis  University and holds a Masters Degree in
Business Administration from Southern Illinois University.

     Mr.  Howard  M.  Eckstein  was  appointed  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. 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. 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.
<PAGE>
     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.

     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 2000 annual meeting of stockholders.
<PAGE>
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 August 2, 1998,  August 3, 1997,  and July 28,  1996.
<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                 1998             $ 485,549      $ 303,191              -                     $ 4,800     (6)
Chairman of                  1997               531,629        302,432           599,999     (5)            4,500
the Board                    1996               483,028        203,068           133,333     (7)            4,500

Myron Levy                   1998             $ 333,912      $ 242,553              -                     $ 9,300     (6)
President                    1997               307,764        181,460           400,000     (5)            9,000
                             1996               288,726        121,841            66,667     (7)            7,380

Allan Coon                   1998             $ 110,011      $  30,000              -                     $ 6,153     (6)
Vice President               1997               110,011           -               73,332     (5)            5,751
                             1996               110,011      $  30,000            13,333     (7)            4,569

Anello C. Garefino           1998             $ 100,760      $  20,000              -                     $ 3,845     (6)
Vice President               1997               101,914           -               59,999     (5)            3,579
Finance-Treasurer            1996                97,885      $  15,000            13,333     (7)            3,424

George Hopp                  1998             $ 107,615      $   7,500              -                     $ 1,488     (6)
Vice President               1997               107,615           -               18,666     (5)            1,422
                             1996               104,000           -                 -                       1,185
<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  and  Levy  incentive   compensation  under
     employment agreements.
(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,  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, and
     George Hopp - 13,333.
(6)  All Other Compensation  includes: (a) group term life insurance as follows:
     $4,500 for Mr. Levy, $2,387 for Mr. Coon, $522 for Mr. Garefino, and $1,488
     for Mr.  Hopp,  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 and
     Levy, $3,766 for Mr. Coon, and $3,323 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.
</FN>
</TABLE>
<PAGE>

Option/SAR Grants in Last Fiscal Year

No options were granted to the named  executive  officers during the fiscal year
ended August 2, 1998.

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 1998
and all  unexercised  stock  options and  warrants  held by the named  executive
officers as of August 2, 1998.
<TABLE>
<CAPTION>
                                                                                                       Value of
                                                         Number of Unexercised                  Unexercised In the-Money
                   Shares                                 Options and Warrants                    Options and Warrants
                  Acquired on       Value                 at Fiscal Year-End(2)                   at Fiscal Year-End (3)
Name              Exercise(#)   Realized($)(1)       Exercisable       Unexercisable       Exercisable           Unexercisable
----              -----------   --------------       --------------------------------      -----------------------------------

<S>                  <C>        <C>                    <C>                <C>                 <C>               <C>      
Lee N. Blatt           -        $     -                311,112              -                 $ 1,491,505       $      -
Myron Levy             -              -                255,559            66,666                1,091,078           231,244
Allan Coon           15,000        111,408              49,444             8,888                  160,883            30,830
Anello C. Garefino     -              -                 43,335             8,888                  192,802            30,830
George Hopp            -              -                 10,223            10,666                   46,205            36,997
<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 $9.9375 on August 2,
     1998.
</FN>
</TABLE>
Employment Agreements

     Lee N. Blatt has entered into a new employment  agreement with the Company,
dated as of October  1, 1998,  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 $475,000,  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 October  1, 1998,  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
$325,000,  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.  Mr.
Levy's  compensation  during  the  consulting  period is at the  annual  rate of
$100,000.
<PAGE>
     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.

     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.

     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 12, 1999,  he is entitled to two years' base salary
and in the event he is so  terminated  after June 11,  1999 and before  June 12,
2002, he is entitled to one year's base salary.  Mr. Coon's  present base salary
is $110,000.

     Anello C. Garefino has entered into a severance agreement with the Company,
dated  February  18,  1998,  which  provides  that in the event Mr.  Garefino is
terminated  other than for cause prior to February 19,  2000,  he is entitled to
two years' base salary and in the event he is so terminated  after  February 18,
2000 and before February 19, 2003, he is entitled to one year's base salary. Mr.
Garefino's present base salary is $105,000.

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

     The following table sets forth the indicated  information as of November 2,
1998 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)(4)
                                                              ------------------   
                                                              Shares       Percent
                                                              ------       -------   
<S>                                                          <C>            <C>  
Lee N. Blatt (2)(5)  .................................        608,552        10.7%
Myron Levy (5)(6)  ...................................        548,687         9.7%
Anello C. Garefino (5) ...............................         56,424         1.1%
Allen Coon ...........................................         49,444
George Hopp ..........................................         14,667
Adam J. Bottenfield ..................................         20,667
Ray Umbarger .........................................         13,620
Glenn Rosenthal ......................................          8,256
Mark A. Krumm ........................................          1,000
Adm. Thomas J. Allshouse (5) .........................         26,666
David H. Lieberman(5)  ...............................          7,933
John A. Thonet(3)(5) .................................         21,693
Alvin M. Silver ......................................          6,500
Adm. Edward K. Walker, Jr. (Ret.)  ...................          2,500
Directors and executive
  officers  as a group
  (14 persons) .......................................      1,386,609        22.3%
<FN>
----
(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 470,229  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 133,332 shares, owned by Mr. Thonet's children, Hannah and
     Rebecca  Thonet,  and 76,278 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
     November 2, 1998 at prices  ranging from $2.535 to $9.25 per share pursuant
     to the Company's Stock Plans: Lee N. Blatt - 261,113, Myron Levy - 272,226,
     Anello C.  Garefino - 30,002,  Allan Coon - 49,444,  George  Hopp - 10,223,
     Adam J.  Bottenfield  - 17,332,  Ray Umbarger - 12,667,  Glenn  Rosenthal -
     6,667, Mark A. Krumm - 1,000,  Adm. Thomas J. Allshouse - 13,333,  David H.
     Lieberman - 7,333, John A. Thonet - 13,333, Alvin M. Silver - 2,500, Edward
     K. Walker - 2,500.
(5)  Includes shares subject to outstanding  warrants exercisable within 60 days
     after November 2, 1998 at a price of $4.6406: Lee N. Blatt - 133,333, Myron
     Levy - 66,667, Anello C. Garefino - 13,333.
(6)  Does not include 5,000 shares owned by Mr. Levy's daughter, Stephanie Levy,
     of which Mr. Levy disclaims beneficial ownership.
</FN>
</TABLE>
<PAGE>
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 2, 1998,  non-qualified options to purchase 97,119 shares
of Common Stock were outstanding under this plan.

   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  August  2,  1998,
non-qualified   options  to  purchase   337,331  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.  Options for 88,333 shares
of Common  Stock were granted  during the fiscal year ended  August 2, 1998.  At
August 2,  1998,  options  to  purchase  426,394  shares of  Common  Stock  were
outstanding  under this plan.  On August 14,  1998,  the Company  issued 10 year
options to purchase  250,000  shares of Common  Stock under this plan to each of
Lee N. Blatt and Myron Levy,  which  options vest one third on each of the grant
date and on the first and second anniversary dates of the 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 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. At August 2, 1998,  warrants
to purchase 280,000 shares of Common Stock were outstanding.
<PAGE>
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  $197,000 for the 52 weeks ended
August 2, 1998, and contributed approximately $181,000 and $159,000 to this plan
for the fiscal years ended August 3, 1997 and July 28, 1996,  respectively.  For
the  year  ended  August  2,  1998,  $4,800,  $4,800,  $3,766,  and  $3,323  was
contributed  by the  Company  to this plan for  Messrs.  Blatt,  Levy,  Coon and
Garefino,  respectively,  and  $24,328  was  contributed  for all  officers  and
directors as a group.

ITEM THIRTEEN - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

   None.
<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, 1998
                                   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, 1998 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
Anello C. Garefino              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

/s/Alvin M. Silver              Director
Alvin M. Silver

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