================================================================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
----------------------
OR
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 1-8533
----------------
DRS TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-2632319
- --------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5 Sylvan Way, Parsippany, New Jersey 07054
- ------------------------------------------ --------------------------
(Address of principal executive offices) (Zip Code)
(973) 898-1500
- ----------------------------------------------------
(Registrant's telephone number, including area code)
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
- ----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ___
As of August 8, 1997, 5,589,149 shares of the registrant's Common Stock,
$.01 par value were outstanding (exclusive of 421,117 shares held in treasury).
================================================================================
<PAGE>
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
Index to Quarterly Report on Form 10-Q
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - June 30, 1997
and March 31, 1997.................................... 3
Condensed Consolidated Statements of Earnings - Three
Months Ended June 30, 1997 and 1996................... 4
Condensed Consolidated Statements of Cash Flows -
Three Months Ended June 30, 1997 and 1996............. 5
Notes to Condensed Consolidated Financial Statements.. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 7-10
PART 2. OTHER INFORMATION
Item 1. Not Applicable
Item 2. Not Applicable
Item 3. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders... 11
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K...................... 11
SIGNATURES ...................................................... 12
2
<PAGE>
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1997 March 31, 1997
------------- --------------
<S> <C> <C>
ASSETS
------
Current Assets:
Cash and cash equivalents .................................... $ 7,383,000 $ 9,455,000
Accounts receivable, net ..................................... 25,130,000 24,343,000
Inventories, net of progress payments ........................ 24,195,000 25,169,000
Prepaid expenses and other current assets .................... 1,416,000 1,389,000
----------- -----------
Total current assets ..................................... 58,124,000 60,356,000
Property, plant and equipment, less accumulated
depreciation and amortization of $29,322,000 and
$28,299,000 at June 30, 1997 and March 31, 1997,
respectively ................................................. 20,461,000 19,987,000
Intangible assets, less accumulated amortization of
$5,080,000 and $4,827,000 at June 30, 1997 and
March 31, 1997, respectively ................................. 10,711,000 10,915,000
Other assets ..................................................... 6,379,000 6,415,000
----------- -----------
$95,675,000 $97,673,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities .............................................. $24,194,000 $27,518,000
Long-term debt, excluding current installments ................... 30,650,000 30,801,000
Deferred income taxes ............................................ 3,367,000 3,367,000
Other liabilities ................................................ 3,021,000 3,000,000
----------- -----------
Total liabilities ........................................ 61,232,000 64,686,000
Stockholders' equity:
Common Stock, $.01 par value per share
Authorized 20,000,000 shares; issued 6,010,266
and 6,007,786 shares at June 30, 1997 and
March 31, 1997, respectively ................................. 60,000 60,000
Additional paid-in capital ....................................... 14,473,000 14,208,000
Retained earnings ................................................ 22,028,000 20,685,000
----------- -----------
36,561,000 34,953,000
Treasury Stock, at cost:
421,117 and 420,893 shares of Common Stock at
June 30, 1997 and March 31, 1997, respectively ............... (1,624,000) (1,622,000)
Unamortized restricted stock compensation ........................ (494,000) (344,000)
----------- -----------
Net stockholders' equity ..................................... 34,443,000 32,987,000
----------- -----------
Commitments and contingencies
$95,675,000 $97,673,000
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1997 1996
---- ----
<S> <C> <C>
Revenues ..................................................................... $38,997,000 $27,423,000
Costs and expenses ........................................................... 36,098,000 24,955,000
----------- -----------
Operating income ................................................... 2,899,000 2,468,000
Interest and related expenses ................................................ (903,000) (832,000)
Interest and other income, net ............................................... 243,000 238,000
Minority interest ............................................................ (108,000) (38,000)
----------- -----------
Earnings before income taxes ....................................... 2,131,000 1,836,000
Income taxes ................................................................. 788,000 716,000
----------- -----------
Net earnings ....................................................... $ 1,343,000 $ 1,120,000
=========== ===========
Earnings per share of common stock:
Primary ............................................................ $ 0.23 $ 0.20
Fully Diluted ...................................................... $ 0.20 $ 0.18
Weighted average number of shares of common stock outstanding:
Primary ............................................................ 5,809,000 5,680,000
Fully Diluted ...................................................... 8,978,000 8,877,000
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30,
----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net earnings ..................................................... $ 1,343,000 $ 1,120,000
Adjustments to reconcile net earnings to cash
flows from operating activities:
Depreciation and amortization .................................... 1,495,000 1,022,000
Other, net ....................................................... 516,000 498,000
Changes in assets and liabilities, net of effects from
business combinations:
(Increase) decrease in accounts receivable ....................... (787,000) 377,000
(Increase) decrease in inventories ............................... 566,000 (1,454,000)
(Increase) decrease in prepaid expenses and
other current assets .......................................... (27,000) 193,000
(Decrease) in current and other liabilities ...................... (3,023,000) (8,271,000)
Other, net ....................................................... (135,000) 93,000
------------ ------------
Net cash used in operating activities ............................ (52,000) (6,422,000)
------------ ------------
Cash flows from investing activities
Capital expenditures ............................................. (1,101,000) (1,093,000)
Payments pursuant to business combinations,
net of cash acquired .......................................... (290,000) (3,892,000)
Other, net ....................................................... (50,000) --
------------ ------------
Net cash used in investing activities ............................ (1,441,000) (4,985,000)
------------ ------------
Cash flows from financing activities
Net repayments of short-term debt ................................ (441,000) (1,093,000)
Payments on long-term debt ....................................... (142,000) (239,000)
Other, net ....................................................... 4,000 11,000
------------ ------------
Net cash used in financing activities ............................ (579,000) (1,321,000)
------------ ------------
Net decrease in cash and cash equivalents ............................ (2,072,000) (12,728,000)
Cash and cash equivalents, beginning of period ....................... 9,455,000 22,785,000
------------ ------------
Cash and cash equivalents, end of period ............................. $ 7,383,000 $ 10,057,000
============ ============
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE>
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1) In the opinion of Management, the accompanying unaudited condensed
consolidated financial statements of DRS Technologies, Inc. and subsidiaries
(the "Company") contain all adjustments (consisting of only normal and
recurring adjustments) necessary for the fair presentation of the Company's
consolidated financial position as of June 30, 1997, and the results of
operations and cash flows for the three-month periods ended June 30, 1997 and
1996. All significant intercompany balances and transactions have been
eliminated. Certain items in the June 30, 1996 and March 31, 1997 condensed
consolidated financial statements and accompanying notes have been
reclassified to conform to the fiscal 1998 presentation. The results of
operations for the three months ended June 30, 1997 are not necessarily
indicative of the results to be expected for the full year.
2) Inventories are summarized as follows:
June 30, 1997 March 31, 1997
------------- --------------
Work-in-process ........................... $33,043,000 $38,740,000
Raw material, unallocated stock and
finished goods .......................... 5,404,000 3,874,000
----------- -----------
38,447,000 42,614,000
Less progress payments .................... (14,252,000) (17,445,000)
----------- -----------
Total ..................................... $24,195,000 $25,169,000
=========== ===========
General and administrative costs included in work-in-process were
approximately $9.5 million and $9.4 million at June 30, 1997 and March 31,
1997, respectively. General and administrative expenses included in costs and
expenses amounted to approximately $9.4 million and $5.5 million for the
three months ended June 30, 1997 and 1996, respectively. Included in those
amounts are expenditures for internal research and development amounting to
approximately $1.0 million and $.6 million for the fiscal quarters ended June
30, 1997 and 1996, respectively.
3) The Company's industrial revenue bonds due January 1, 1998 (the "Bonds") are
supported by an irrevocable, direct-pay letter of credit. The Company has
collateralized the letter of credit with accounts receivable and has also
agreed to certain financial covenants. As a result of the issuance of the
Company's $25,000,000 aggregate principal amount of 9% Senior Subordinated
Convertible Debentures (the "9% Debentures") in fiscal 1996, the ratio of
consolidated tangible net worth to total debt (the "Debt Ratio"), as defined
under the related letter of credit agreement, was below the required minimum
ratio at March 31, 1997. As of June 30, 1997, the Debt Ratio was above the
required minimum ratio. The Company has obtained a waiver, expiring on the
maturity date of the Bonds, from the issuing bank of the required Debt Ratio
and is in compliance with all covenants under the letter of credit.
4) On May 13, 1997, DRS Ahead Technology, Inc., a second-tier subsidiary of the
Company ("Ahead"), acquired approximately 80 percent of the outstanding
equity of Magnetic Heads Company, Ltd. ("MHC") for approximately $.3 million.
Located in Razlog, Bulgaria, MHC is a manufacturer and supplier of magnetic
recording heads used primarily for commercial applications. In connection
with this acquisition, Ahead has agreed to make additional investments in MHC
totaling approximately $2.3 million over a five-year period. For purposes of
this agreement, investments include transfer of technology and related
intangible assets, transfer of inventory and other productive assets,
employee training and other similar transfers and expenditures. The
acquisition of the equity of MHC has been accounted for using the purchase
method of accounting. Accordingly, the results of operations of MHC have been
included in the Company's reported operating results as of the effective date
of the acquisition. The financial position and results of operations of MHC
were not significant to those of the Company as of the effective date of
acquisition.
6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following is management's discussion and analysis of the consolidated
financial condition and results of operations of DRS Technologies, Inc. and
subsidiaries (hereinafter, the "Company") as of June 30, 1997 and for the
three-month periods ended June 30, 1997 and 1996. This discussion should be read
in conjunction with the condensed consolidated financial statements, related
notes and other financial information included in this Quarterly Report on Form
10-Q and in the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997.
The following discussion and analysis includes certain forward-looking
statements. Forward-looking statements in this report are made pursuant to the
safe-harbor provisions of the Private Securities Litigation Reform Act of 1995.
Persons reading this report are cautioned that such forward-looking statements
involve risks and uncertainties that could cause the Company's actual results to
differ from the results suggested by these forward-looking statements. Factors
that could cause actual results to differ materially from the forward-looking
statements include, without limitation, the effect of the Company's acquisition
strategy on future operating results; the uncertainty of acceptance of new
products and successful bidding for new contracts; the effect of technological
changes or obsolescence relating to the Company's products and services; the
effects of government regulation or shifts in government policy, as they may
relate to the Company's products and services; competition; and other matters
referred to in this report.
ACQUISITIONS AND RELATED ACTIVITIES
On May 13, 1997, DRS Ahead Technology, Inc., a second-tier subsidiary of
the Company ("Ahead"), acquired approximately 80 percent of the outstanding
equity of Magnetic Heads Company, Ltd. ("MHC") for approximately $.3 million.
Located in Razlog, Bulgaria, MHC is a manufacturer and supplier of magnetic
recording heads used primarily for commercial applications. In connection with
this acquisition, Ahead has agreed to make additional investments in MHC
totaling approximately $2.3 million over a five-year period. For purposes of
this agreement, investments include transfer of technology and related
intangible assets, transfer of inventory and other productive assets, employee
training and other similar transfers and expenditures. The acquisition of the
equity of MHC has been accounted for using the purchase method of accounting.
Accordingly, the results of operations of MHC have been included in the
Company's reported operating results as of the effective date of the
acquisition. The financial position and results of operations of MHC were not
significant to those of the Company as of the effective date of acquisition.
REORGANIZATION PLAN
During the first quarter of fiscal 1998, the Company moved certain of its
military display workstation product lines from the Company's facility in
Oakland, New Jersey to its operation in Gaithersburg, Maryland. The costs
associated with this relocation were not significant to the Company's
consolidated operating results for the three-month period ended June 30, 1997.
It is currently anticipated that in the second half of this fiscal year,
the Company will relocate its multi-platform boresighting equipment product
lines, presently located and operating in Hauppauge, New York, to Oakland, New
Jersey. In connection with this relocation, the Company also plans to sell the
land and building owned in Hauppauge, New York. Due to the uncertainty
associated with specific aspects of this proposed relocation, a potential range
of costs to be incurred is not currently estimable. Although costs associated
with this proposed relocation may impact operating results for the fiscal
quarter ending September 30, 1997, the Company believes that the overall
reduction in its infrastructure resulting from this reorganization plan will
have a positive effect on the Company's operating results for the fiscal year.
7
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth items in the Condensed Consolidated
Statements of Earnings as a percent of revenues and presents the percentage
increase or decrease of those items as compared to the prior period.
- --------------------------------------------------------------------------------
Percent of Revenues
-------------------
Three Months Ended Percent
June 30, Changes
------------------- -------------
1997 1996 1997 vs. 1996
-------- -------- -------------
Revenues .......................... 100.0% 100.0% 42.2%
Costs and expenses ................ 92.6 91.0 44.7%
----- -----
Operating income ................ 7.4 9.0 17.5%
Interest and related expenses ..... (2.3) (3.0) 8.5%
Interest and other income, net .... 0.6 0.8 2.1%
Minority interest ................. (0.3) (0.1) 184.2%
----- -----
Earnings before income taxes .... 5.4 6.7 16.1%
Income taxes ...................... 2.0 2.6 10.1%
----- -----
Net earnings .................... 3.4% 4.1% 19.9%
===== =====
- --------------------------------------------------------------------------------
Revenues for the three-month period ended June 30, 1997 increased 42.2% to
$39.0 million from $27.4 million for the same three-month period in fiscal 1997.
The revenue growth in the first quarter was attributable primarily to shipments
associated with the Company's military display workstation product lines,
increased commercial product sales, which include revenues from businesses
acquired in fiscal 1997, and product shipments relating to the Company's
electro-optical system product lines.
Operating income for the three-month period ended June 30, 1997 increased
17.5% to $2.9 million from $2.5 million for the same three-month period in
fiscal 1997. Operating income as a percentage of revenue was 7.4% for the
three-month period ended June 30, 1997, as compared with 9.0% in the comparable
prior year period. The increase in operating income was due to the overall
increase in revenues and to higher income generated primarily by certain of the
Company's military display workstation and data storage system product lines.
The decrease in operating income as a percentage of revenue was primarily
attributable to an increase in military revenues from development contracts,
which typically yield lower margins than production contracts. In addition,
margins on revenues from commercial product line sales declined, due to a
seasonal downturn effecting the specialty magnetic head market.
Interest and related expenses were $.9 million and $.8 million for the
three-month periods ended June 30, 1997 and 1996, respectively. The increase was
primarily due to a net increase in financing for capital expenditures in the
second half of fiscal 1997.
Interest and other income, net was $.2 million for the three-month periods
ended June 30, 1997 and 1996, respectively. Minority interest increased to $.1
million for the three-month period ended June 30, 1997 from $38,000 in the
comparable prior year period. The increase was due to the
8
<PAGE>
growth of the DRS Laurel Technologies partnership ("Laurel"), in which the
Company has an 80% interest. Laurel manufactures many of the Company's military
display workstations.
The Company's effective tax rates for the three-month periods ended June
30, 1997 and 1996 were 37% and 39%, respectively. The Company records income tax
expense based on an estimated effective income tax rate for the full fiscal
year. The lower effective income tax rate for the fiscal quarter ended June 30,
1997 reflects the anticipated benefit of certain transactions to be completed by
the Company this fiscal year in connection with a reorganization plan (see
"Reorganization Plan"). The provision for income taxes includes all estimated
income taxes payable to federal and state governments, as applicable.
FINANCIAL CONDITION AND LIQUIDITY
CASH AND CASH FLOW: Cash and cash equivalents at June 30, 1997 and March
31, 1997 represented approximately 8% and 10%, respectively, of total assets.
During the three-month period ended June 30, 1997, cash decreased by
approximately $2.1 million. This decrease resulted from the uses of
approximately $1.1 million for capital expenditures, $.6 million for debt
repayments and $.3 million for acquisitions. In addition, approximately $.1
million was used in support of operations.
Capital expenditures, excluding assets acquired as a result of business
combinations, are expected to approximate $4 million for the fiscal year ending
March 31, 1998. The majority of these expenditures will be for computer and
production-related equipment.
Working capital as of June 30, 1997 was $33.9 million, as compared to
$32.8 million at March 31, 1997. The increase was primarily due to a reduction
in accounts payable, offset in part by lower cash balances resulting from net
uses of cash for investing and financing activities, as outlined above.
On May 31, 1996, the Company entered into a revolving line of credit loan
agreement with Mellon Bank, N.A. ("Mellon Bank") for a three-year $15 million
unsecured revolving line of credit (the "Line of Credit"), available for working
capital borrowings and letters of credit. On December 6, 1997, the Company
entered into a $5 million secured equipment line of credit/term loan agreement
with Mellon Bank (the "Equipment Facility"). The Equipment Facility is available
for equipment purchases made through June 30, 1999.
As of June 30, 1997, approximately $2.9 million was outstanding against
the Line of Credit, of which $2.0 million was contingently payable under letters
of credit, as compared with $5.3 million and $2.3 million, respectively, at
March 31, 1997. The net decrease was attributable to the transfer of
approximately $1.6 million to the Equipment Facility, together with repayments
of $.5 million and the expiration of a previously outstanding letter of credit
for $.3 million. Approximately $.4 million and $.6 million of debt outstanding
on the Line of Credit was classified as long-term debt at June 30, 1997 and
March 31, 1997, respectively. Approximately $1.6 million was outstanding against
the equipment facility at June 30, 1997; there were no outstanding borrowings as
of March 31, 1997.
The Company believes that its current working capital position and
available bank financing are sufficient to support its current operational
needs, as well as its near-term business objectives.
ACCOUNTS RECEIVABLE AND INVENTORIES: Accounts receivable increased by
approximately $.8 million in the three-month period ended June 30, 1997,
primarily due to the timing of shipments of the Company's military display
workstations this quarter, offset in part by the collection of
9
<PAGE>
certain progress billings billed in the prior year. Generally, there are no
contract provisions for retainage, and all accounts receivable are expected to
be collected within one year.
Inventories decreased by approximately $1.0 million from March 31, 1997,
due primarily to the shipments of the Company's display workstation products
this fiscal quarter, offset in part by higher commercial product line
inventories and the effect of increased material procurement relating to certain
of the Company's mission data recording products.
- --------------------------------------------------------------------------------
June 30, 1997 March 31, 1997
- --------------------------------------------------------------------------------
Quick ratio ...................... 1.3 1.2
Current ratio .................... 2.4 2.2
Liabilities-to-equity ratio ...... 1.8 2.0
Long-term debt, excluding
current installments, to
capitalization ................... 47.1% 48.3%
- --------------------------------------------------------------------------------
BACKLOG: Backlog at June 30, 1997 was approximately $116.0 million as
compared to $118.4 million at March 31, 1997. The decrease in backlog was due to
the net effect of revenues, partially offset by bookings. New contract awards of
approximately $37 million were booked in the three-month period ended June 30,
1997.
LETTER OF CREDIT
The Company's industrial revenue bonds due January 1, 1998 (the "Bonds")
are supported by an irrevocable, direct-pay letter of credit. The Company has
collateralized the letter of credit with accounts receivable and has also agreed
to certain financial covenants. As a result of the issuance of the Company's
$25,000,000 aggregate principal amount of 9% Senior Subordinated Convertible
Debentures (the "9% Debentures") in fiscal 1996, the ratio of consolidated
tangible net worth to total debt (the "Debt Ratio"), as defined under the
related letter of credit agreement, was below the required minimum ratio at
March 31, 1997. As of June 30, 1997, the Debt Ratio was above the required
minimum ratio. The Company has obtained a waiver, expiring on the maturity date
of the Bonds, from the issuing bank of the required Debt Ratio and is in
compliance with all covenants under the letter of credit.
ACCOUNTING STANDARDS
In February, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). This
statement simplifies the current standards for computing earnings per share
("EPS"), as specified in Accounting Principals Board Opinion No. 15, "Earnings
Per Share" ("APB 15"). Under SFAS 128, the presentation of primary EPS will be
replaced by the presentation of basic EPS. For companies with complex capital
structures, the presentation of fully diluted EPS will be replaced by diluted
EPS. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB 15.
The Company will adopt this standard in the current fiscal year, beginning with
the fiscal quarter ending December 31, 1997. Had the Company adopted this
standard in the first quarter of fiscal 1998, basic EPS would have been $0.24
and $0.20 and diluted EPS would have been $0.20 and $0.18 for the three-month
periods ended June 30, 1997 and 1996, respectively.
10
<PAGE>
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Schedule of Computations of Per Share Earnings
27. Financial Data Schedule
(b) Reports on Form 8-K
None.
11
<PAGE>
DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
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.
DRS TECHNOLOGIES, INC.
----------------------
Registrant
Date: August 14, 1997 /s/ NANCY R. PITEK
-------------------------------------
Nancy R. Pitek
Vice President, Finance and Treasurer
12
DRS TECHNOLOGIES, INC.
EXHIBIT 11
SCHEDULE OF COMPUTATIONS OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended June 30,
--------------------------
1997 1996
----------- -----------
PRIMARY
<S> <C> <C>
Net earnings for primary earnings per share ................................. $ 1,343,000 $ 1,120,000
=========== ===========
Weighted average number of shares outstanding ............................... 5,588,000 5,473,000
Add-common equivalent shares (determined using the "treasury stock" method)
representing shares issuable upon exercise of employee stock options ........ 221,000 207,000
----------- -----------
Weighted average number of shares used in calculation of
primary earnings per share .................................................. 5,809,000 5,680,000
=========== ===========
Primary earnings per share .................................................. $ 0.23 $ 0.20
=========== ===========
FULLY DILUTED
Net earnings ................................................................ $ 1,343,000 $ 1,120,000
Add-interest on 8-1/2% Convertible Subordinated
Debentures, net of applicable income taxes .................................. 67,000 65,000
Add-interest on 9% Senior Subordinated Convertible
Debentures, net of applicable income taxes .................................. 358,000 347,000
Add-amortization of deferred issuance costs relating to 9% Senior
Subordinated Convertible Debentures, net of
applicable income taxes ..................................................... 39,000 36,000
----------- -----------
Net earnings for fully diluted earnings per share ........................... $ 1,807,000 $ 1,568,000
=========== ===========
Weighted average number of shares used in calculation of
primary earnings per share .................................................. 5,809,000 5,680,000
Add (deduct) incremental shares representing:
Shares issuable upon exercise of stock options included in
primary earnings per share calculation ...................................... (221,000) (207,000)
Shares issuable upon exercise of stock options based on
period-end market prices .................................................... 232,000 246,000
Shares issuable upon conversion of 8-1/2% Convertible
Subordinated Debentures ..................................................... 333,000 333,000
Shares issuable upon conversion of 9% Senior Subordinated
Convertible Debentures ...................................................... 2,825,000 2,825,000
----------- -----------
Weighted average number of shares used in calculation of
fully diluted earnings per share ............................................ 8,978,000 8,877,000
=========== ===========
Fully diluted earnings per share ............................................ $ 0.20 $ 0.18
=========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM DRS TECHNOLOGIES, INC.
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 1997 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,383,000
<SECURITIES> 0
<RECEIVABLES> 25,130,000
<ALLOWANCES> 0
<INVENTORY> 24,195,000
<CURRENT-ASSETS> 58,124,000
<PP&E> 49,783,000
<DEPRECIATION> 29,322,000
<TOTAL-ASSETS> 95,675,000
<CURRENT-LIABILITIES> 24,194,000
<BONDS> 30,650,000
0
0
<COMMON> 60,000
<OTHER-SE> 34,383,000
<TOTAL-LIABILITY-AND-EQUITY> 95,675,000
<SALES> 38,997,000
<TOTAL-REVENUES> 38,997,000
<CGS> 36,098,000
<TOTAL-COSTS> 36,098,000
<OTHER-EXPENSES> 0
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</TABLE>
