FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission file number 000-21770
SIGNAL TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-2758268
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
222 Rosewood Drive, Danvers, MA 01923-4502
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (978) 774-2281
--------------------
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 the number of shares outstanding of each of the Registrant's classes of
Common Stock as of the latest practicable date.
Class of Common Stock Outstanding at November 13, 1998
$.01 Par Value 7,349,223 shares
<PAGE>
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Operations 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6-9
Item 2 Management's Discussion and Analysis of Financial 10-13
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 14
SIGNATURE 14
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIGNAL TECHNOLOGY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(In thousands)
September 30, December 31,
1998 1997
Assets (As restated)
-------- --------
Cash $ 1,270 $ 1,127
Accounts receivable, net 12,488 15,901
Inventories 15,745 20,205
Deferred taxes 1,527 2,327
Other assets 4,090 3,110
-------- --------
Total current assets 35,120 42,670
-------- --------
Property, plant and equipment, net 15,144 16,400
Intangible assets, net 2,610 2,924
Other assets 839 846
-------- --------
Total assets $ 53,713 $ 62,840
======== ========
Liabilities
Current maturities of long-term debt $ 480 $ 480
Accounts payable 4,011 5,354
Accrued expenses 7,828 6,620
Customer advances 843 1,177
-------- --------
Total current liabilities 13,162 13,631
-------- --------
Deferred income taxes 1,527 1,527
Long-term debt, net of current maturities 12,908 13,408
Commitments and contingencies
Stockholders' Equity
Common stock 75 74
Additional paid-in capital 12,947 12,693
Retained earnings 13,994 21,538
-------- --------
27,016 34,305
Less treasury stock (900) (31)
-------- --------
Total stockholders' equity 26,116 34,274
-------- --------
Total liabilities and stockholders' equity $ 53,713 $ 62,840
======== ========
The accompanying notes are an integral part of the condensed
consolidated financial statements.
Page 3
<PAGE>
<TABLE>
SIGNAL TECHNOLOGY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(In thousands except per share amounts)
<CAPTION>
Quarter ended Nine months ended
September 30 September 30
1998 1997 1998 1997
(As restated) (As restated)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 22,766 $ 25,312 $ 68,643 $ 77,906
Cost of sales 16,863 22,578 60,552 65,753
-------- -------- -------- --------
Gross profit 5,903 2,734 8,091 12,153
Selling, general and administrative expense 5,585 3,833 15,101 12,773
Research and development expense 32 261 160 652
-------- -------- -------- --------
Operating income (loss) 286 (1,360) (7,170) (1,272)
Interest expense 201 277 698 777
-------- -------- -------- --------
Income (loss) before income taxes 85 (1,637) (7,868) (2,049)
Benefit from income taxes -- (654) (324) (858)
-------- -------- -------- --------
Net income (loss) $ 85 $ (983) $ (7,544) $ (1,191)
======== ======== ======== ========
Net income (loss) per share
Basic $ 0.01 $ (0.14) $ (1.02) $ (0.16)
Diluted $ 0.01 $ (0.14) $ (1.02) $ (0.16)
======== ======== ======== ========
Shares used in calculating net income (loss)
per share
Basic 7,349 7,277 7,364 7,244
Diluted 7,618 7,277 7,364 7,244
======== ======== ======== ========
<FN>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
</FN>
</TABLE>
Page 4
<PAGE>
<TABLE>
SIGNAL TECHNOLOGY CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(In thousands)
<CAPTION>
Nine months ended September 30,
1998 1997
-------- --------
<S> <C> <C>
Net cash provided by operating activities $ 2,349 $ 1,303
-------- --------
Cash flows from investing activities:
Additions to property, plant and equipment (1,138) (2,685)
Proceeds from disposal of property, plant and equipment 39 3
Other assets 7 42
-------- --------
Net cash used by investing activities (1,092) (2,640)
-------- --------
Cash flows from financing activities:
Proceeds from exercise of stock options 72 268
Proceeds from Employee Stock Purchase Plan 183 --
Purchase of treasury stock (869) --
Borrowing under bank revolving credit facility 21,100 26,200
Repayments of borrowings under bank revolving credit
facility (21,200) (24,200)
Payments of long-term debt (400) (759)
-------- --------
Net cash (used) provided by financing activities (1,114) 1,509
-------- --------
Net increase in cash 143 172
Cash, beginning of period 1,127 1,870
-------- --------
Cash, end of period $ 1,270 $ 2,042
======== ========
<FN>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
</FN>
</TABLE>
Page 5
<PAGE>
SIGNAL TECHNOLOGY CORPORATION AND SUBSIDIARIES
Notes to the Condensed Consolidated Financial Statements
1. Restatement Adjustments
The Company has restated its consolidated financial statements for fiscal
years 1996 and 1997 and the first quarter of 1998. As announced in the
Company's August 17, 1998 press release, the adjustments were a result of
an investigation by Corporate management with the aid of its independent
accountants and outside counsel at its Keltec Operation. The restatements
were required to record contract and inventory adjustments in the correct
periods.
<TABLE>
A summary of the impact of such restatements on the accompanying
financial statements is as follows:
Condensed Consolidated Statements of Operations
<CAPTION>
Quarter ended Nine months ended
September 30, 1997 September 30, 1997
Previously As Previously As
Reported Restated Reported Restated
--------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net sales $25,639 $25,312 $78,195 $77,906
Gross profit 3,875 2,734 14,750 12,153
Operating income (loss) (219) (1,360) 1,325 (1,272)
Income (loss) before income taxes (496) (1,637) 548 (2,049)
Net income (loss) (320) (983) 318 (1,191)
Net income (loss) per share
(Basic and diluted) $(0.04) $(0.14) $0.04 $(0.16)
</TABLE>
Condensed Consolidated Balance Sheets
Year ended
December 31, 1997
Previously As
Reported Restated
--------------- ----------------
Inventories $22,707 $20,205
Total current assets 44,212 42,670
Total assets 64,382 62,840
Retained earnings 23,080 21,538
Stockholders' equity 35,816 34,274
2. The condensed consolidated financial statements of the Company as of
September 30, 1998, and for the nine months ended September 30, 1998 and
1997 are unaudited. All adjustments (consisting only of normal recurring
adjustments) have been made, which in the opinion of management, are
necessary for a fair presentation. Results of operations for the nine
months ended September 30, 1998, are not necessarily indicative of the
results that may be achieved for the full fiscal year or for any future
period. These financial statements should be read in conjunction with the
financial statements for the fiscal year ended December 31,
Page 6
<PAGE>
1997, included in the Company's annual report on Form 10-K/A. The year end
condensed balance sheet data does not include all the disclosures required
by generally accepted accounting principles.
The Company's fiscal quarter consists of a thirteen week period ending on
the Saturday closest to September 30. For ease of presentation, interim
periods are designated to have ended on September 30.
3. Earnings Per Share
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128") effective December 31,
1997. SFAS 128 requires the presentation of basic and diluted earnings per
share ("EPS"). Basic EPS is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding
for the period. Diluted EPS is computed giving effect to all dilutive
potential common shares that were outstanding during the period. Dilutive
potential common shares consist of the incremental common shares issuable
upon the exercise of stock options and warrants for all periods using the
treasury stock method. All prior period earnings per share amounts have
been restated to comply with the provisions of SFAS 128.
<TABLE>
In accordance with the disclosure requirements of SFAS 128, a
reconciliation of the numerator and denominator of both basic and diluted
EPS is provided as follows:
<CAPTION>
Quarter ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
(As restated) (As restated)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Numerator - Basic and Diluted EPS
Net income (loss) $ 85 $ (983) $(7,544) $(1,191)
======= ======= ======= =======
Denominator - Basic EPS
Common shares outstanding 7,349 7,277 7,364 7,244
------- ------- ------- -------
Basic earnings per share $ 0.01 $ (0.14) $ (1.02) $ (0.16)
======= ======= ======= =======
Denominator - Diluted EPS
Denominator - Basic EPS 7,349 7,277 7,364 7,244
Effect of Diluted Securities
Common Stock Options 269 -- -- --
------- ------- ------- -------
Denominator - Diluted EPS 7,618 7,277 7,364 7,244
------- ------- ------- -------
Diluted loss per share $ 0.01 $ (0.14) $ (1.02) $ (0.16)
======= ======= ======= =======
</TABLE>
Page 7
<PAGE>
<TABLE>
4. Details of certain balance sheet accounts are as follows:
<CAPTION>
(In thousands)
---------------------------------------
September 30, December 31,
1998 1997
(As restated)
------------- -------------
<S> <C> <C>
Inventories
Raw materials $ 3,935 $ 6,239
Work in progress 13,908 17,065
Finished goods 258 484
-------- --------
18,101 23,788
Less: unliquidated progress payments (2,356) (3,583)
-------- --------
$ 15,745 $ 20,205
======== ========
Property, Plant and Equipment
Land $ 992 $ 992
Building and improvements 9,808 9,793
Machinery and equipment 25,464 25,636
Furniture and fixtures 2,896 2,753
-------- --------
39,160 39,174
Less accumulated depreciation (24,016) (22,774)
-------- --------
Net property, plant and equipment $ 15,144 $ 16,400
======== ========
</TABLE>
5. Commitments and Contingencies
Weymouth Environmental Contamination:
In April 1996, the Company sold its facility in Weymouth, Massachusetts but
retained the environmental liability and responsibility associated with
groundwater contaminants present at the site. This facility has been
classified as a tier 1A disposal site by the Massachusetts Department of
Environmental Protection ("DEP"), as a result of past releases of petroleum
based solvents. Environmental assessment reports prepared by independent
consultants indicate that contaminants present in the Town of Weymouth well
field across the street from the facility are similar to those reportedly
released at the facility and still present in the groundwater at the
facility; however, these reports also indicate that the contaminants do not
exceed safe drinking water levels in the finished water after normal
treatment. Other contaminants which did not originate at the facility have
also been detected in the well field.
The Company is continuing to conduct investigations of the facility for
soil and groundwater contamination and to operate a pilot remediation
system in cooperation with the DEP. It is not possible at this stage of the
proceedings to predict what additional remediation and the costs thereby,
if any, will be required. The Company has been informed by its insurers
that no recovery of costs incurred in the treatment of the ground water at
the facility is possible under existing insurance arrangements.
During 1997, the Company received funds from a third party in return for a
complete release from liability for any responsibility for the
contamination. This $350 thousand settlement has been included in the
Company's accrual for remediation.
Page 8
<PAGE>
Sunnyvale Indemnification Claim:
A third party has filed a suit against the Company alleging that it has a
contractual duty to indemnify the third party for costs incurred as a
result of environmental contamination and subsequent remediation. The claim
is based upon allegations that the Company assumed certain liabilities when
it acquired one of the divisions of the third party. The indemnification
claim was recently dismissed at the trial level, but may be the subject of
an eventual appeal. The Company believes the dismissal will be upheld and
also has counterclaims it continues to assert. The Company also believes
that the ultimate disposition will not materially affect its financial
position or results of operations.
DeCoursey v. Signal Technology Corporation:
This case was filed on August 25, 1998. The Complaint alleges that the
Company and its former chairman, Dale Peterson, violated ss. 10(b) of the
Exchange Act and Rule 10b-5. The Complaint alleges that various public
statements by the Company during 1997 and 1998 were false or misleading
arising from alleged accounting irregularities that were unreported. The
case is in the initial stages, and the Court has not designated a lead
plaintiff or lead law firm as required by the Private Securities Litigation
Reform Act. Until it does so, the Company has no obligation to respond to
the Complaint. At present it is too early to evaluate the merits of the
action or to predict the likelihood of success. The Company intends to
defend the matter fully.
L3 Communications Corporation v. Signal Technology Corporation, et al:
This case was filed on September 3, 1998. The Complaint alleges that
certain former employees of L-3 Communications now working for the Company
unlawfully misappropriated confidential and trade secret information on
behalf of the Company and unlawfully induced other L-3 Communications
employees to join the Company. L-3 Communications has brought claims for
civil conspiracy, tortious interference with prospective and contractual
relations, under both the Georgia Deceptive Trade Practices Act and the
Uniform Trade Secrets Act. The Company denies the allegations. At present
it is too early to evaluate the merits of the action or to predict the
likelihood of success. The Company intends to defend the matter fully.
T-3 Contract:
The Company is currently committed to a long term contract at its Keltec
division (the T-3 contract) for amplifiers for Raytheon. The current
contract value is $764 thousand. If Raytheon exercises all of its options
within this contract, the total value could be in excess of $19 million.
Based on an assessment by management in the third quarter of 1998, if all
options are exercised at current estimated costs and prices, the company's
loss could total up to $4 million. The Company is currently negotiating
with Raytheon for changes that would reduce costs or increase prices and,
therefore, any potential losses are not currently estimable.
The Company is not accepting options against this contract until mutually
agreeable terms are reached with Raytheon.
Page 9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Results of Operations for the Three Months Ended September 30, 1998 and 1997
Net sales in the third quarter of 1998 decreased $2.5 million, or 10.1% as
compared to the third quarter of 1997. Backlog decreased from $85.8 million at
June 30, 1998 to $76.5 million at September 30, 1998 on new orders of $13.5
million. This compares to a decrease in backlog from $88.4 million at June 30,
1997 to $82.1 million at September 30, 1997 on new orders of $19.0 million in
the third quarter of 1997.
The decrease in net sales for the third quarter of 1998 compared to the same
period in 1997 was due to the Company's Arizona Operation reporting
approximately $3 million less sales in the third quarter of 1998 versus the
third quarter of 1997 which includes approximately $2 million less sales for
space related products. This was offset by modest increases at both the
Company's Systems Operation and Keltec Operation.
Gross profit during the third quarter of 1998 increased $3.2 million as compared
to the third quarter of 1997. In the third quarter of 1997, the Company
experienced gross margin losses at its Keltec Operation as it wrote-off
inventory on contract overruns on many of it programs. The Company's Arizona
Operation also experienced low margins in the third quarter of 1997 as a result
of certain development programs. In the third quarter of 1998, both operations
reported improved margins.
Selling, general and administrative expenses increased $1.8 million or 45.7% as
compared to the third quarter of 1997 and as a percentage of net sales increased
from 15.1% in 1997 to 24.5% in 1998. General and administrative expenses were
higher in the third quarter of 1998 primarily as a result of the additional
legal and accounting costs associated with the restatement of the financial
statements, relocation expenses for new executive employees, as well as
severence pay to former executive employees.
Research and development activities decreased from $261 thousand in the third
quarter of 1997 to $32 thousand in the third quarter of 1998. The Company is not
currently engaged in any material Company-funded R & D projects, but continues
to participate in and to pursue customer-funded development projects and
opportunities.
Interest expense was lower by $76 thousand in the third quarter of 1998 versus
the same period last year as a result of lower average levels of borrowings.
The Company recorded no tax provision for the third quarter of 1998 as it
utilized the future tax benefit resulting from the net operating loss
carry forward in the second quarter of 1998.
Results of Operations for the Nine Months Ended September 30, 1998 and 1997
Net sales in the first nine months of 1998 decreased $9.3 million, or 11.9% as
compared to the first nine months of 1997. Backlog decreased from $88.7 million
at December 31, 1997 to $76.5 million at September 30, 1998 on new orders of
$56.4 million. This compares to a decrease in backlog from $89.1 million at
December 31, 1996 to $82.1 million at September 30, 1997 on new orders of $70.9
million in the first nine months of 1997.
Lower than expected new orders in the first nine months of 1998 has adversely
impacted shipment levels at all the Company's operations with the exception of
its Keltec Operation. Keltec's shipments continue to be adversely affected by
both engineering and production problems, although third quarter 1998 sales were
slightly higher than the same period last year. Keltec maintains a high backlog
and accounted for approximately 30% of
Page 10
<PAGE>
the Company's new business. New orders throughout the Company have been
moderately affected by the economic conditions in Asia with lost or postponed
orders from primarily the Company's Korean customers. Government sanctions
placed on certain shipments to India and Pakistan have also delayed or cancelled
shipments on existing orders as well as postponed new orders.
Gross profit during the first nine months of 1998 decreased $4.1 million as
compared to the first nine months of 1997. Gross profit was adversely effected
primarily by contract adjustments and inventory write-downs in the first two
quarters primarily at the Company's Keltec Operation and to a lesser extent at
its California Operation. The impact of contract adjustments and inventory
write-downs on gross profit was $8.2 million.
Selling, general and administrative expenses increased $2.3 million or 18.2% as
compared to the first nine months of 1997 and as a percentage of net sales
increased from 16.4% in 1997 to 22.0% in 1998. The increase in general and
administrative expenses was primarily in the third quarter of 1998 compared to
1997 and is primarily legal and accounting costs associated with the restatement
of the financial statements, relocation expenses for new executive employees, as
well as severence pay to former executive employees.
Research and development activities decreased from $652 thousand in the first
nine months of 1997 to $160 thousand in the first nine months of 1998. The
Company is not currently engaged in any material Company-funded R & D projects,
but continues to participate in and to pursue customer-funded development
projects and opportunities.
As a result of lower average levels of borrowings, interest expense was $698
thousand for the first nine months of 1998 compared to $777 thousand for the
comparable period last year.
In the second quarter of 1998, the Company recorded a tax benefit of $459
thousand reflecting the loss carry backs to the extent available. No future tax
benefit was recorded at the time because of the uncertainty of realizability.
The Company utilized a portion of this tax benefit in the third quarter and thus
recorded no tax provision on its income.
Liquidity and Capital Resources
At September 30, 1998, the Company had working capital of $22.0 million as
compared to $29.0 million at December 31, 1997. The decrease in working capital
resulted primarily from the write-off of inventory at the Company's Keltec
Operation and California Operation in the second quarter of 1998. The Company's
net cash/debt position (loan balances less cash on hand) decreased from $12.8
million at December 31, 1997 to $12.1 million at September 30, 1998. Net cash
provided by operating activities during the first nine months of 1998 totaled
$2.3 million. The primary non-operating uses of cash were additions to property,
plant and equipment totaling $1.1 million and the repurchase of Company stock
totaling $869 thousand under the Company's stock repurchase program. The Company
suspended its stock repurchase program in July 1998.
As a result of the restatement of the financial statements discussed in Note 1
of Notes to the Condensed Consolidated Financial Statements, the Company was in
default of several of its loan covenants. The Company and its bank amended the
loan agreement as of October 22, 1998. In the new agreement the bank waived all
defaults. Among other changes, the amendment increases the interest charged on
the revolving credit facility and the real estate term loans from the bank's
base rate to base rate plus 1/2 % . The amount available for current borrowings
is calculated on the Company's eligible receivables as defined in the agreement
but not to exceed $15 million. This provision is not anticipated to have a
material impact on the Company's cash requirements in the foreseeable future.
Page 11
<PAGE>
As a result of the restatements described in Note 1, the Company will amend its
1996 and 1997 tax returns and expects to be entitled to tax refunds totaling
approximately $2.4 million.
With the exception of the T-3 contract as discussed under Note 5, Commitments
and Contingencies, the Company has no other material potential contract losses
or commitments for any acquisitions, product requirements or for capital
expenditures at September 30, 1998.
The Company believes it has adequate cash, working capital and available
financing facilities to meet its operating and capital requirements for the
foreseeable future and to continue its acquisition program.
Impact of Year 2000
Management is aware of the potential software and hardware anomalies associated
with the upcoming century change commonly known as the Year 2000 problem. The
Company is presently in the second phase of a five stage plan to bring about
complete compliance in all of its products, internal systems, and suppliers and
thus ensure that there is no disruption of the Company's business at the turn of
the century. The Company is evaluating all of its product lines and has so far
found no product with an embedded date function which would cause any Y2K
exposure.
A comprehensive review of the Company's computer systems, software and internal
embedded systems is presently underway and the Company is not aware at this time
of any significant year 2000 issues that will not be resolved prior to the year
2000. The Company is ahead of schedule in its corporate-wide plan to achieve
compliance by the third quarter of 1999. As part of its overall plan, the
Company is surveying its suppliers to determine their Y2K readiness. The
Company's suppliers are an integral part of the Company's success. To the extent
the Company believes certain suppliers will not be Y2K compliant, the Company
will seek alternate suppliers. The projected costs of $475 thousand associated
with the Company's overall plan are not expected to have a material effect on
the Company's results of operations or financial position. Costs include Company
employee labor, outside consultants and, to a lesser extent, new computer
hardware and software required for Y2K compliance. To date, the Company has
expended approximately $80 thousand.
At this time, the Company has not developed a "worst case" scenario or an
overall year 2000 contingency plan and does not intend to do so unless, as a
result of its ongoing year 2000 review, management believes such plans are
warranted. The only contingency planning that is currently set to be implemented
will come as a result of a comprehensive survey of the Company's suppliers in
order to learn which will be impacted by the Y2K problem.
Safe Harbor for Forward-Looking Statements
Forward-looking statements in this document involve known and unknown factors
and risks that may cause future period results to be materially different from
future performance suggested in this document.
The Company has experienced and expects to continue to experience significant
fluctuations in its results of operations. Factors that affect the Company's
results of operations include the volume and timing of orders received, changes
in the mix of products sold, competitive pricing pressures and the Company's
ability to meet or renegotiate customer demands. As a result of the foregoing or
other factors, there can be no assurance that the Company will not experience
material fluctuations in its future operating results on a quarterly or annual
basis, which would materially and adversely affect the Company's business,
financial condition and results of operations.
Page 12
<PAGE>
Recent Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 (SFAS 130) "Reporting Comprehensive
Income." SFAS 130 establishes standards for reporting and display of financial
statements. The Company has adopted SFAS 130 for fiscal 1998. For all periods
presented, net Income (loss) amounts are the same as Comprehensive Income
(loss).
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (SFAS 131) "Disclosures about Segments of
an Enterprise and Related Information." SFAS 131 requires publicly held
companies to report financial and other information about key revenue producing
segments of the entity for which such information is available and is utilized
by the chief operation decision maker. Specific information to be reported for
individual segments includes profit or loss, certain revenue and expense items
and total assets. A reconciliation of segment information to amounts reported in
the financial statements would be provided. The Company is evaluating the
disclosure requirements of SFAS 131.
Page 13
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
27. Financial Data Schedule.
(b) Reports on Form 8-K.
1) Filed August 17, 1998. Company's press release dated August 17,
1998. Charge to earnings and pending restatement.
2) Filed September 25, 1998. Company's press release dated September
25, 1998. Timing of SEC filings and operational changes.
SIGNATURES
Pursuant to the requirement 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.
SIGNAL TECHNOLOGY CORPORATION
------------------------------------------
Robert Nelsen
Chief Financial Officer
DATE: November 13, 1998
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,270
<SECURITIES> 0
<RECEIVABLES> 12,488
<ALLOWANCES> 0
<INVENTORY> 15,745
<CURRENT-ASSETS> 35,120
<PP&E> 39,160
<DEPRECIATION> 24,016
<TOTAL-ASSETS> 53,713
<CURRENT-LIABILITIES> 13,162
<BONDS> 12,908
0
0
<COMMON> 75
<OTHER-SE> 26,041
<TOTAL-LIABILITY-AND-EQUITY> 53,713
<SALES> 68,643
<TOTAL-REVENUES> 68,643
<CGS> 60,552
<TOTAL-COSTS> 75,813
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 698
<INCOME-PRETAX> (7,868)
<INCOME-TAX> (324)
<INCOME-CONTINUING> (7,544)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,544)
<EPS-PRIMARY> (1.02)
<EPS-DILUTED> (1.02)
</TABLE>
