8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): July 25, 2006

METROLOGIC INSTRUMENTS, INC.

(Exact name of Registrant as specified in its charter)

New Jersey	0-24172		22-1866172
(State or other jurisdiction of incorporation or organization)	(Commission File Number)		(I.R.S. Employer Identification No.)
90 Coles Road, Blackwood, New Jersey			08012
(Address of principal executive offices)			(Zip Code)
Registrant’s telephone number, including area code:		(856) 228-8100

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operations and Financial Condition.

On July 25, 2006, the Registrant issued a press release announcing its financial results for the second quarter of fiscal year 2006. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K.

In the press release, the Registrant provided certain non-GAAP data reflecting the impact on its results of operations of the adoption of SFAS No. 123(R), Share-Based Payment (“123(R)”). 123(R) requires the expensing of share-based compensation cost.

The Registrant reported that gross margin was 40.3% for the three month period ended June 30, 2006, a decrease of 4.1% from the comparable period in 2005. If the Registrant had not been required to adopt 123(R), normalized gross margin would have been 40.7% for the three month period ended June 30, 2006, an increase of 0.4%. Operating expenses were $18.8 million for the three month period ended June 30, 2006, an increase of $4.4 million above the comparable period in 2005. If the Registrant had not been required to adopt 123(R), normalized operating expenses would have been $17.9 million, a decrease of $0.9 million or 4.9%. Net income was $4.4 million or $0.19 per fully diluted share for the three month period ended June 30, 2006, a decrease of $0.3 million or $0.01 per fully diluted share over the comparable period in 2005. If the Registrant had not been required to adopt 123(R), net income would have been approximately $5.1 million or $0.22 per fully diluted share for the three month period ended June 30, 2006, an increase of $0.7 million or $0.03 per fully diluted share on a normalized basis over the comparable period in 2005.

Comparable results for the second quarter 2005 do not reflect the effects of adopting SFAS No. 123(R), which was not yet in effect. The press release provides a reconciliation of GAAP-results to non-GAAP results. The non-GAAP data is intended to provide investors with a more complete understanding of the Registrant’s financial results but must be used in conjunction with the Registrant’s GAAP-results and not on a stand-alone basis.

The information in this Form 8-K and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 7.01  Regulation FD Disclosure

See disclosure under Item 2.02.

Item 9.01. Financial Statements and Exhibits

(d)Exhibits

Number	Description of Document
99.1	Press Release dated July 25, 2006 announcing the Registrant’s reporting of its financial results for the second quarter of fiscal year 2006.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Metrologic Instruments, Inc.(Registrant)
July 27, 2006	By:	/s/ Kevin Bratton
	Name:		Kevin Bratton
	Title:		Chief Financial Officer

3

EX-99.1

Exhibit 99.1

Corporate Headquarters

Metrologic Instruments, Inc.

90 Coles Road

Blackwood, NJ 08012-4638

Tel    856.228.8100

Fax   856.228.6673 (sales)

Fax   856.228-0653 (finance/legal)

www.metrologic.com

Metrologic Announces Financial Results for the

Second Quarter 2006

Revenue Increases 28.7% to Record $62.6 Million

Confirms Guidance for Full Year 2006

Teleconference 8:30 a.m. Wednesday, July 26, 2006

Blackwood, New Jersey – July 25, 2006 — Metrologic Instruments, Inc. (NASDAQ-NMS:MTLG) today announced financial results for the quarter ended June 30, 2006 with total revenue of $62.6 million and net income of $4.4 million or $0.19 per fully diluted share. Beginning January 1, 2006, the Company adopted SFAS No. 123(R), Share-Based Payments. Excluding the effects of SFAS No. 123(R), which for the second quarter 2006 totaled approximately $0.7 million net of income taxes or $0.03 per fully diluted share, net income was $5.1 million or $0.22 per fully diluted share.

Financial Results and Second Quarter Highlights

•Revenue for the second quarter of 2006 increased by 28.7% to a record $62.6 million as compared to $48.6 million in the second quarter of 2005. This is the highest quarterly revenue in the Company’s history.

•For the quarter, gross margin was 40.3% versus 44.4% for the second quarter 2005. On a sequential basis, gross margin improved 0.7% as compared to the first quarter’s gross margin of 39.6%. Gross margin for the second quarter 2006 was primarily impacted by continued sales to Tier 1 retailers, product mix, business segment mix, and royalty costs. Excluding the effects of SFAS No. 123(R), gross margin for the second quarter of 2006 would have been 40.7%, an increase of 0.4%.

•Operating expense as a percentage of revenue was 30.0% for the second quarter 2006 compared to 29.5% in the second quarter 2005. This increase is primarily caused by higher selling, general and administrative expenses related to increased legal spending for ongoing litigation. It is anticipated that an elevated level of legal expense will continue for the remainder of 2006. Excluding the effects of SFAS No. 123(R), operating expense would have been $17.9 million versus $18.8 million, a decrease of $0.9 million or 4.9%.

•Net income for the second quarter 2006 was $4.4 million, or $0.19 per fully diluted share, as compared to $4.7 million or $0.20 per fully diluted share in the second quarter 2005. Excluding the effects of SFAS No. 123(R), net income for the second quarter of 2006 would have been approximately $5.1 million or $0.22 per fully diluted share, an increase of $0.7 million or $0.03 per fully diluted share.

•The Data Capture and Collection business segment grew 30.5% to approximately $51.1 million as compared to the second quarter of 2005, reflecting continued strength in the Channel and in reverse vending applications. The Optical Systems business was also quite strong, with growth of 47.2% as compared to the second quarter of 2005.

•On a geographic basis, sales in the EMEA (Europe, Middle East, Africa) region increased by 53.3% to approximately $29.7 million, fueled by new and follow-on orders received from Tier 1 retailers and for reverse vending applications. The Asia/Pacific region grew at 19.3% to approximately $7.2 million. The Americas region experienced continued growth in sales, up 10.6% to approximately $25.6 million, reflecting solid strength in the Optical Systems business.

First Half 2006 Results

Revenue for the first six months of 2006 was approximately $122.8 million, an increase of 28.6% as compared to revenue of $95.5 million in the first half of 2005. Net income for the first half of 2006 increased 2.5% to approximately $8.8 million, or $0.38 per fully diluted share, as compared to $8.6 million or $0.37 per fully diluted share in the first half of 2005. Excluding the effects of SFAS No. 123(R), which was not in effect during the comparable period in 2005, net income for the first half of 2006 would have been approximately $10.5 million or $0.45 per fully diluted share.

Please refer to the reconciliation of GAAP results to non-GAAP results included with the financial statements in this release. The non-GAAP data is intended to provide investors with a more complete understanding of our financial results but must be used in conjunction with our GAAP results and not on a stand-alone basis.

2006 Full Year Outlook Confirmed

Metrologic also confirmed its prior guidance for the full year 2006. Revenue is expected within a range of $245.0 million to $255.0 million. The Company expects gross margin to be in the range of 40.0% to 42.0% for the year, with the expectation that wide variances may occur quarter to quarter due to product mix, business segment contribution and other factors. Net income for 2006 will be impacted by discretionary spending associated with our previously announced strategic initiatives and is expected to be $19.0 million to $21.0 million, or $0.82 to $0.91 per fully diluted share, including the estimated annual compensation expense for options issued and outstanding as of June 30, 2006 in accordance with SFAS No. 123(R). Excluding the effects of SFAS No. 123(R), net income is expected to be $22.0 million to $24.0 million, or $0.95 to $1.03 per fully diluted share. SFAS No. 123(R) became effective for Metrologic as of January 1, 2006. Other factors to consider include an assumed rate for the Euro of $1.20 to $1.25 to the US Dollar and an effective annual tax rate of 36%. These statements do not consider the effect of any acquisitions, dispositions, the future results of litigation or other significant Company events that may take place during the year.

Conference Call Information

The Company will host a conference call for investors on Wednesday, July 26 at 8:30 AM ET. The dial-in numbers for the teleconference are: (800) 946-0705 (Domestic/Canada) or (719) 457-2637 (International). Those interested in participating in the conference call should dial in at least 10 minutes prior to commencement of the call. The audio for the conference call will also be available as an audio web cast that can be accessed through the Metrologic web site at www.metrologic.com by clicking on the banner and following the instructions. Also available through our web site will be a graphical presentation that will be referred to throughout the conference call. The graphical presentation will be available for download and printing approximately 30 minutes before the start of the conference call.

About Metrologic

Metrologic Instruments, Inc. (“Metrologic” or the “Company”) is a global supplier of choice for data capture and collection hardware, optical solutions, and image processing software. Metrologic has been delivering innovative, quality products that are cost effective, reliable and supported by a superior level of personal service for nearly 40 years. Metrologic products are sold worldwide through Metrologic’s sales, service and distribution offices located in The Americas, EMEA and Asia/Pacific. Metrologic provides its customers not only with a great deal, but a great deal more. For more information please call 1-800-667-8400 or visit www.metrologic.com.

Forward Looking Statements

Forward-looking statements contained in this release are highly dependent upon a variety of important factors which could cause actual results to differ materially from those reflected in such forward looking statements. Specifically, the factors that could cause actual results to differ from expectations include: the timing, introduction and market acceptance of Metrologic’s new products; foreign currency fluctuations with the US dollar; pricing pressures; competitive factors; sales cycles of Metrologic’s products; Metrologic’s ability to control manufacturing and operating costs as well as product and revenue mix which affect future profitability; the effect of current and pending legislation on the Company’s effective annual tax rate; technological changes in the data capture industry, including the adoption of imaging-based and RFID technologies; availability of patent protection for Metrologic’s vision-based technologies, and other products; the results of litigation; general economic conditions; and the potential impact of terrorism, international hostilities and natural disasters. When used in this release and documents referenced, the words “believes”, “expects”, “may”, “should”, “seeks”, or “anticipates”, and similar expressions as they relate to Metrologic or its management are intended to identify such forward-looking statements. We undertake no obligation to correct or update any forward-looking statements, whether as a result of new information, future events or otherwise. For additional factors, please see Metrologic’s reports filed with the Securities and Exchange Commission.

For more information contact:

Ann Anthony – Director, Investor Relations

856.228.8100    X5507

Email:  a.anthony@metrologic.com

Metrologic Instruments, Inc.

Condensed Consolidated Statements of Operations

(amounts in thousands, except per share data)

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	(Unaudited)
	2006		2005			2006		2005
Sales	$	62,551	$	48,604		$	122,786	$	95,455
Cost of sales	37,337		27,044			73,746		53,777
Gross profit	25,214		21,560			49,040		41,678
Selling, general and administrative expenses	16,032		12,139			30,819		23,534
Research and development expenses	2,763		2,218			5,249		4,170
Operating income	6,419		7,203			12,972		13,974
Net interest income	377		112			246		134
Other income/(expense)	95		(45		)	485		(742		)
Income before income tax expense	6,891		7,270			13,703		13,366
Income tax expense	2,481		2,617			4,933		4,812
Net income	$	4,410	$	4,653		$	8,770	$	8,554
Earnings per share:
Basic	$	0.19	$	0.21		$	0.39	$	0.39
Diluted	$	0.19	$	0.20		$	0.38	$	0.37
Weighted average number of common shares outstanding:
Basic	22,669		22,136			22,550		22,022
Diluted	23,237		23,076			23,221		23,100

Metrologic Instruments, Inc.

Condensed Consolidated Balance Sheets

(all amounts in thousands)

	June 30,		December 31,
	2006		2005*
	(Unaudited)
Cash and cash equivalents	$	40,138	$	49,463
Marketable securities	25,599		24,475
Accounts receivable, net	49,583		48,462
Inventories, net	35,682		29,364
Other current assets	5,344		6,400
Total current assets	156,346		158,164
Property, plant and equipment, net	20,873		20,402
Goodwill and other intangibles, net	43,253		43,103
Other assets	1,634		4,513
Total assets	$	222,106	$	226,182
Accounts payable and accrued expenses	$	26,096	$	46,709
Current portion of debt	16,572		18,433
Deferred contract revenue	981		739
Total current liabilities	43,569		65,881
Debt	4		3
Other liabilities	2,502		8
Total shareholders’ equity	175,951		160,290
Total liabilities and shareholders’ equity	$	222,106	$	226,182

*Certain prior period amounts have been reclassified to conform to the current period presentation

Supplemental Sales Data

	Three Months Ended								Six Months Ended
	June 30,								June 30,
					%		%						%		%
	2006		2005		Total		Growth		2006		2005		Total		Growth
By Geography
The Americas	$	25,596	$	23,149	40.9	%	10.6	%	$	53,541	$	45,766	43.6	%	17.0	%
EMEA	29,713		19,387		47.5	%	53.3	%	56,825		38,253		46.3	%	48.6	%
Asia/Pacific	7,242		6,068		11.6	%	19.3	%	12,420		11,436		10.1	%	8.6	%
	$	62,551	$	48,604	100.0	%	28.7	%	$	122,786	$	95,455	100.0	%	28.6	%
By Business Segment
Data Capture and Collection	$	51,059	$	39,128	81.6	%	30.5	%	$	101,329	$	75,656	82.5	%	33.9	%
Industrial Automation/Optical Systems
Industrial Automation	2,639		3,461		4.2	%	-23.8	%	5,122		8,015		4.2	%	-36.1	%
Optical Systems	8,853		6,015		14.2	%	47.2	%	16,335		11,784		13.3	%	38.6	%
	$	62,551	$	48,604	100.0	%	28.7	%	$	122,786	$	95,455	100.0	%	28.6	%

Metrologic Instruments, Inc.

Condensed Consolidated Statements of Operations
Non-GAAP Financial Measures

(amounts in thousands, except per share data)

	Three Months Ended				Six Months Ended
	June 30, 2006				June 30, 2006
	Actual Before SFAS 123(R)	Effect of SFAS 123(R)		Actual as Reported	Actual Before SFAS 123(R)	Effect of SFAS 123(R)		Actual as Reported
	(Unaudited)
Sales	62,551	0		62,551	122,786	0		122,786
Cost of sales	37,120	217		37,337	73,208	538		73,746
Gross profit	25,431	(217	)	25,214	49,578	(538	)	49,040
Selling, general and administrative expenses	15,370	662		16,032	29,226	1,593		30,819
Research and development expenses	2,545	218		2,763	4,739	510		5,249
Operating income	7,516	(1,097	)	6,419	15,613	(2,641	)	12,972
Net interest income	377	0		377	246	0		246
Other income	95	0		95	485	0		485
Income before income tax expense	7,988	(1,097	)	6,891	16,344	(2,641	)	13,703
Income tax expense/(benefit)	2,876	(395	)	2,481	5,884	(951	)	4,933
Net income	5,112	(702	)	4,410	10,460	(1,690	)	8,770
Earnings per share:
Basic	0.23	(0.04	)	0.19	0.46	(0.07	)	0.39
Diluted	0.22	(0.03	)	0.19	0.45	(0.07	)	0.38
Weighted average number of common shares outstanding:
Basic	22,669			22,669	22,550			22,550
Diluted	23,237			23,237	23,221			23,221