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  December 31, 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)

         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 February 5, 1998,  5,618,605  shares of the  registrant's  Common
Stock,  $.01 par value,  were  outstanding  (exclusive of 402,461 shares held in
treasury).

<PAGE>


                     DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
                     Index to Quarterly Report on Form 10-Q


<TABLE>
<CAPTION>

PART 1.               FINANCIAL INFORMATION
<S>          <C>      <C>                                                            <C>

             Item 1.  Financial Statements

                      Condensed Consolidated Balance Sheets - December 31, 1997 
                      and March 31, 1997........................................     3

                      Condensed Consolidated Statements of Earnings - Three and
                      Nine Months Ended December 31, 1997 and 1996..............     4

                      Condensed Consolidated Statements of Cash Flows - Three 
                      and Nine Months Ended December 31, 1997 and 1996..........     5

                      Notes to Condensed Consolidated Financial Statements......     6-9

             Item 2.  Management's Discussion and Analysis of Financial 
                      Condition and Results of Operations.......................     10-15

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.......     16

             Item 5.  Not Applicable

             Item 6.  Exhibits and Reports on Form 8-K..........................     16

SIGNATURES            ..........................................................     17

</TABLE>
                                    2

<PAGE>

 PART I. FINANCIAL INFORMATION

 Item 1.       Financial Statements

                     DRS TECHNOLOGIES, INC. AND SUBSIDIARIES
                      Condensed Consolidated Balance Sheets
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                    DECEMBER 31, 1997   March 31, 1997
                                                                    -----------------   --------------
<S>                                                                   <C>                <C>    
                               ASSETS
                               ------
 Current Assets:
        Cash and cash equivalents                                     $ 17,078,000       $   9,455,000
        Accounts receivable, net                                        37,134,000          24,343,000
        Inventories, net of progress payments                           32,038,000          25,169,000
        Prepaid expenses and other current assets                        1,842,000           1,389,000
                                                                      ------------       ------------- 
               TOTAL CURRENT ASSETS                                     88,092,000          60,356,000

 Property, plant and equipment,  less accumulated
        depreciation and amortization of $31,687,000 
        and $28,299,000 at December 31, 1997 and
        March 31, 1997, respectively                                    23,431,000          19,987,000

 Intangible assets, less accumulated amortization of
        $5,596,000 and $4,827,000 at December 31, 1997
        and March 31, 1997, respectively                                29,242,000          10,915,000

 Other assets                                                            9,061,000           6,415,000
                                                                      -------------       ------------ 
                                                                      $149,826,000        $ 97,673,000
                                                                      =============       ============

                LIABILITIES AND STOCKHOLDERS' EQUITY
                ------------------------------------

 Current liabilities:
        Short term debt                                               $  7,200,000        $  2,117,000
        Current installments of long-term debt                           8,313,000           2,255,000
        Other current liabilities                                       29,813,000          23,146,000
                                                                      -------------       ------------ 
               TOTAL CURRENT LIABILITIES                                45,326,000          27,518,000

 Long-term debt, excluding current installments                         60,187,000          30,801,000
 Deferred income taxes                                                   3,663,000           3,367,000
 Other liabilities                                                       3,290,000           3,000,000
                                                                      -------------       ------------                          
               TOTAL LIABILITIES                                       112,466,000          64,686,000

 STOCKHOLDERS' EQUITY:
 Common Stock, $.01 par value per share
        Authorized 20,000,000 shares; issued 6,021,066
        and 6,007,786 shares at December 31, 1997 and
        March 31, 1997, respectively                                        60,000              60,000

 Additional paid-in capital                                             14,651,000          14,208,000
 Retained earnings                                                      25,055,000          20,685,000
 Cumulative translation adjustment                                        (288,000)                 -
                                                                      -------------       ------------          
                                                                        39,478,000          34,953,000
 Treasury Stock, at cost:
        402,461 and 420,893 shares of Common Stock at
        December 31, 1997 and March 31, 1997, respectively              (1,560,000)         (1,622,000)

 Unamortized restricted stock compensation                                (558,000)           (344,000)
                                                                      -------------      -------------                          
        NET STOCKHOLDERS' EQUITY                                        37,360,000          32,987,000
                                                                      -------------      -------------

 Commitments and contingencies

                                                                      $149,826,000        $ 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 December 31,           Nine Months Ended December 31, 
                                                   -------------------------------           ------------------------------ 
                                                     1997                 1996                1997                 1996 
                                                     ----                 ----                ----                 ----
<S>                                               <C>                 <C>                 <C>                   <C>    
    
 Revenues                                         $ 49,915,000        $ 38,379,000        $ 127,650,000         $ 99,242,000
                                                                                                            
 Costs and expenses                                 46,200,000          35,125,000          117,117,000           90,488,000
 Restructuring Charge                                        -                   -              634,000                    -
                                               ----------------   -----------------   ------------------    -----------------
                                               
         Operating income                            3,715,000           3,254,000            9,899,000            8,754,000

 Interest and related expenses                      (1,337,000)           (914,000)          (3,139,000)          (2,649,000)

 Interest and other income, net                        337,000             101,000            1,028,000              565,000

 Minority interest                                    (239,000)           (137,000)            (851,000)            (241,000)
                                               ----------------   -----------------   ------------------    -----------------
                                               
         Earnings before income taxes                2,476,000           2,304,000            6,937,000            6,429,000

 Income taxes                                          916,000             898,000            2,567,000            2,507,000
                                               ----------------   -----------------   ------------------    -----------------
 
         Net earnings                             $  1,560,000        $  1,406,000        $   4,370,000         $  3,922,000
                                               ================   =================   ==================    =================

 Earnings per share of common stock:
         Basic                                    $       0.28        $       0.25        $        0.78         $       0.71
         Diluted                                  $       0.22        $       0.21        $        0.64         $       0.59

 Weighted average number of shares of 
  common stock outstanding:
         Basic                                       5,614,000           5,538,000            5,598,000            5,507,000
         Diluted                                     9,102,000           8,932,000            9,026,000            8,891,000
</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>

                                                                   Nine Months Ended December 31,
                                                                   ------------------------------
                                                                      1997                1996
                                                                      ----                ----
<S>                                                               <C>                  <C>    
 CASH FLOWS FROM OPERATING ACTIVITIES

        Net earnings                                              $ 4,370,000          $ 3,922,000

 Adjustments to reconcile net earnings to cash 
 flows from operating activities:
        Depreciation and amortization                               5,022,000            3,560,000
        Other, net                                                    137,000              (24,000)

 Changes in assets and  liabilities, net of effects from 
 business combinations and divestitures:

        (Increase) decrease in accounts receivable                 (6,789,000)           1,919,000
        (Increase) in inventories                                  (5,925,000)          (3,748,000)
        (Increase) decrease in prepaid expenses and
           other current assets                                      (386,000)             283,000
        Increase (decrease) in current and other liabilities        2,668,000           (9,664,000)
        Other, net                                                   (213,000)            (353,000)
                                                                 -------------         ------------  

        NET CASH USED IN OPERATING ACTIVITIES                      (1,116,000)          (4,105,000)
                                                                 -------------         ------------  

 CASH FLOWS FROM INVESTING ACTIVITIES

        Capital expenditures                                       (4,666,000)          (2,461,000)
        Payments pursuant to business combinations,
           net of cash acquired                                   (28,468,000)          (6,226,000)
        Proceeds from sale of partnership net assets                1,890,000                    -
        Other, net                                                    228,000              122,000
                                                                 -------------         ------------    

        NET CASH USED IN INVESTING ACTIVITIES                     (31,016,000)          (8,565,000)
                                                                 -------------         ------------ 

 CASH FLOWS FROM FINANCING ACTIVITIES

        Net proceeds from short-term borrowings                     5,083,000             (899,000)
        Proceeds from acquisition-related borrowings               35,704,000                    -
        Payments on long-term debt                                   (473,000)            (651,000)
        Other, net                                                   (424,000)              51,000
                                                                 -------------         ------------ 

        NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES        39,890,000           (1,499,000)
                                                                 -------------         ------------

 EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS               (135,000)                   -
                                                                 -------------         ------------

 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               7,623,000          (14,169,000)
 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                     9,455,000           22,785,000
                                                                 -------------         ------------  

 CASH AND CASH EQUIVALENTS, END OF PERIOD                        $ 17,078,000          $ 8,616,000
                                                                 =============         ===========
</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 (hereinafter,  "DRS" or 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
     December 31, 1997,  the results of operations for the three- and nine-month
     periods ended December 31, 1997 and 1996, and cash flows for the nine-month
     periods  ended  December 31, 1997 and 1996.  All  significant  intercompany
     balances  and  transactions  have  been  eliminated.  Certain  items in the
     December  31,  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 nine months
     ended December 31, 1997 are not necessarily indicative of the results to be
     expected for the full year.

2) Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                                                  DECEMBER 31,            MARCH 31,
                                                                     1997                   1997
                                                              -------------------     -----------------
<S>                                                           <C>                     <C>
       Work-in-process                                             $55,329,000            $38,740,000
       Raw material, unallocated stock and finished goods            6,547,000              3,874,000
                                                              -------------------     -----------------
                                                                    61,876,000             42,614,000
       Less progress payments                                      (29,838,000)          ( 17,445,000)
                                                              ===================     =================
       Total                                                       $32,038,000            $25,169,000
                                                              ===================     =================
</TABLE>

     General  and  administrative   costs  included  in   work-in-process   were
     approximately $10.9 million and $9.4 million at December 31, 1997 and March
     31, 1997,  respectively.  General and  administrative  expenses included in
     costs and expenses amounted to approximately $7.4 million and $6.9 million,
     respectively, for the three-month periods ended December 31, 1997 and 1996,
     and approximately  $22.8 million and $20.0 million,  respectively,  for the
     nine-month periods then ended.

3)   The  Company's  industrial  revenue bonds due January 1, 1998 (the "Bonds")
     were supported by an irrevocable,  direct-pay letter of credit. The Company
     had  collateralized  the letter of credit with accounts  receivable and had
     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. The Company obtained a waiver
     of the required  Debt Ratio,  expiring on the  maturity  date of the Bonds,
     from the issuing bank and is in  compliance  with all  covenants  under the
     letter of credit.  The Bonds were redeemed at maturity in January 1998, and
     are no longer outstanding.

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  $0.3
     million in cash.  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>

5)   On September 12, 1997, the Company sold substantially all of the net assets
     of  DRS  Medical  Systems  to  United  States   Surgical   Corporation  for
     approximately $1.9 million in cash. DRS Medical Systems was formed February
     6, 1996,  when a wholly-owned  subsidiary of DRS entered into a partnership
     with Universal  Sonics  Corporation,  a  privately-held  company.  The sale
     resulted in a gain of  approximately  $149,000  and the reversal of accrued
     obligations of $324,000.  DRS Medical Systems accounted for approximately 2
     percent of DRS's fiscal 1997 revenues.

6)   During the second quarter of fiscal 1998, the Company completed the move of
     certain  of  its  military  display  workstation  product  lines  from  the
     Company's facility in Oakland, New Jersey to its operation in Gaithersburg,
     Maryland.  The  Company  completed  the  relocation  of its  multi-platform
     boresighting  equipment product lines,  formerly located in Hauppauge,  New
     York,  to Oakland,  New Jersey,  in the third  quarter of fiscal  1998.  In
     connection  with this  relocation,  the Company also plans to sell the land
     and  building  owned  in  Hauppauge,  New  York.  The  Company  recorded  a
     restructuring  charge of $634,000 in the  nine-month  period ended December
     31, 1997 in connection with these relocations.  This  restructuring  charge
     does not  include  costs  associated  with  the  relocation  of  employees,
     equipment  and  inventory,  nor does it  include  retraining  costs for new
     personnel  and the cost of  leasehold  improvements  for the  Oakland,  New
     Jersey  production  facility.  These costs will be charged to operations or
     capitalized, as appropriate, when incurred.

     The following  table  reconciles  the  restructuring  charge to the related
     reserve account balance as of December 31, 1997:

                                                                    Total
                                                               -----------------
         Fiscal 1998 Restructuring Charge                         $634,000
         Cash outflows for severance payments                     (519,000)
         Cash outflows for idle plant costs*                       (46,000)
                                                               -----------------
         Balance at December 31, 1997                              $69,000
                                                               =================

       * Remaining  cash  outflows for idle plant costs will occur in the fourth
quarter of fiscal 1998.

     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)   On October 29, 1997 (the "Closing Date"), DRS acquired,  through certain of
     its  subsidiaries,  the  assets of the  Applied  Systems  Division  of Spar
     Aerospace Limited ("Spar"), a Canadian  corporation,  and 100% of the stock
     of Spar Aerospace (UK) Limited,  incorporated under the laws of England and
     Wales  (the   "Acquisition"),   pursuant  to  a  Purchase   Agreement  (the
     "Agreement")  dated as of  September  19, 1997,  between DRS and Spar.  The
     Company paid approximately $35.4 million in cash for the  Acquisition(which
     includes   $6.9  million  for  cash   acquired  in   connection   with  the
     transaction),  subject to certain working  capital  adjustments as provided
     for in the Agreement.

     Headquartered in Kanata, Ontario,  Canada, and now operating under the name
     DRS Flight Safety and  Communications,  Spar Applied  Systems  Division has
     been an international  provider of aviation and defense systems for over 30
     years. It designs,  manufactures  and markets  sophisticated  flight safety
     systems,  naval  communications  systems and other advanced electronics for
     government  and  commercial  customers  around the world.  It also provides
     custom  manufacturing   services  for  complex  electronic  assemblies  and
     systems.

     The Acquisition was accounted for using the purchase method of accounting.
     Accordingly,   the  

                                       7

<PAGE>

     results of operations of DRS Flight Safety and Communications were included
     in the Company's reported operating results subsequent to the Closing Date.
     DRS  has  incurred  professional  fees  and  other  costs  related  to  the
     Acquisition  of  approximately  $1.5  million.  The excess of cost over the
     estimated fair value of net assets acquired was  approximately  $20 million
     and is being amortized on a straight line basis over thirty years. Purchase
     price  allocation  has not yet been  finalized,  and actual  purchase price
     allocation  may  differ  from  that  used for  purposes  of  these  Interim
     Financial Statements.

     The following  unaudited pro forma financial  information shows the results
     of  operations  for the nine months ended  December  31, 1997 and 1996,  as
     though  the  Acquisition  had  occurred  at the  beginning  of each  period
     presented. In addition to combining the historical results of operations of
     the two companies,  the pro forma calculations include: the amortization of
     the excess of cost over the  estimated  fair value of net assets  acquired;
     the reversal of revenue in connection  with a certain  contract  which will
     not be included in reported results of operations subsequent to the Closing
     Date; interest expense on the debt associated with the Acquisition; and the
     adjustment to income taxes to reflect the effective income tax rate assumed
     for the companies on a combined basis for each pro forma period  presented.
     For  purposes  of this pro  forma  financial  information,  adjustments  to
     conform the revenue  recognition  method,  and the treatment of general and
     administrative  expenses between DRS and the acquired  companies,  prior to
     the Closing Date,  have not been made as it was not  practicable to conform
     the revenue  recognition method and management  believes that the effect of
     any  adjustment  to conform the  treatment  of general  and  administrative
     expenses would be immaterial.

<TABLE>
<CAPTION>

       ------------------------------------------------------------------------------------------
       Nine Months Ended December 31,                       1997                    1996
       ------------------------------------------------------------------------------------------
       <S>                                         <C>      <C>             <C>

       Revenues                                    $        142,024,000     $        119,574,000
       Net earnings before extraordinary items     $          3,666,000     $          4,177,000
       Earnings per share:

            Basic                                  $                .65     $                .76
            Diluted                                $                .56     $                .62
       ------------------------------------------- --- ----------------- ----- ------------------
</TABLE>

     The pro forma financial information is not necessarily indicative either of
     the results of operations that would have occurred had the acquisition been
     made at the beginning of the period, or of the future results of operations
     of the combined companies.

8)   In  connection  with the  Acquisition,  on October  29,  1997,  the Company
     entered into a $60 million  secured  credit  facility (the "Secured  Credit
     Facility")  with Mellon Bank,  N.A.,  consisting of a $20 million term loan
     (the "Term Loan") and a $40 million  revolving line of credit (the "Secured
     Line of Credit"). The Secured Credit Facility expires on March 31, 2003 and
     replaced the Company's  existing $15 million  unsecured  revolving  line of
     credit and $5 million secured  equipment line of credit/term loan facility.
     The Term Loan was used to finance a portion of the Acquisition. The Secured
     Line of Credit was used to finance the remaining  balance due in connection
     with the Acquisition and to repay outstanding borrowings on the $15 million
     unsecured  revolving  line of credit and the $5 million  secured  equipment
     line of credit/term loan facility.  The Secured Line of Credit is available
     for working  capital,  general  corporate  purposes and  acquisitions.  The
     Secured  Credit  Facility  contains  certain  covenants  and  restrictions,
     including a restriction on the payment of dividends on the capital stock of
     the Company,  a limitation on the issuance of  additional  debt and certain
     other restrictions.

     9) In February  1997,  the  Financial  Accounting  Standards  Board  issued
     Statement of Financial  Accounting  Standards No. 128, "Earnings Per Share"
     ("SFAS 128"). This statement simplified the current standards for computing
     earnings per share  ("EPS"),  as specified in Accounting  Principles  Board
     Opinion No. 15, "Earnings Per Share" ("APB 15"). Under SFAS 128, the

                                       8
<PAGE>

               presentation  of primary EPS was replaced by the  presentation of
               basic EPS and the  presentation of fully diluted EPS was replaced
               by diluted EPS. Basic EPS is calculated by dividing net income by
               the weighted average number of common shares  outstanding  during
               the periods.  The  computation of diluted EPS includes the effect
               of shares from the assumed exercise of dilutive stock options and
               the assumed  conversion of the  Company's 9% senior  subordinated
               convertible  debentures and the 8 1/2%  convertible  subordinated
               debentures.  The  Company  adopted  this  standard in the quarter
               ended  December  31,  1997 and,  accordingly,  has  restated  its
               earnings per share calculation for all prior periods.

10)  Transactions in foreign  currencies are translated into U.S. dollars at the
     approximate prevailing rate at the time of the transaction.  The operations
     of the Company's  Canadian and U.K.  subsidiaries  are translated  from the
     local  (functional)   currencies  into  U.S.  dollars  in  accordance  with
     Statement of  Financial  Accounting  Standards  No. 52,  "Foreign  Currency
     Translation". The rates of exchange at each balance sheet date are used for
     translating  the balance sheets and an average rate of exchange is used for
     translating the statement of earnings. Gains or losses resulting from these
     translation  adjustments  are  included  in the  accompanying  consolidated
     balance  sheets  as a  separate  component  of  stockholders'  equity.  The
     functional currency of the Company's Bulgarian  subsidiary is considered to
     be the U.S. dollar.

                                       9
<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,  "DRS" or the "Company") as of December 31,
1997 and for the three- and nine-month periods ended December 31, 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, DIVESTITURES 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 $0.3 million in
cash.  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.

         On September 12, 1997,  the Company sold  substantially  all of the net
assets  of DRS  Medical  Systems  to  United  States  Surgical  Corporation  for
approximately  $1.9 million in cash. DRS Medical  Systems was formed February 6,
1996,  when a  wholly-owned  subsidiary of DRS entered into a  partnership  with
Universal Sonics Corporation,  a privately-held  company. The sale resulted in a
gain of  approximately  $149,000  and the  reversal  of accrued  obligations  of
$324,000.  DRS Medical  Systems  accounted for  approximately  2 percent of DRS'
fiscal 1997 revenues.

         On October 29, 1997 (the "Closing Date"), DRS acquired, through certain
of its  subsidiaries,  the  assets  of the  Applied  Systems  Division  of  Spar
Aerospace Limited  ("Spar"),  a Canadian  corporation,  and 100% of the stock of
Spar  Aerospace (UK) Limited,  incorporated  under the laws of England and Wales
(the "Acquisition"), pursuant to a Purchase Agreement (the "Agreement") dated as
of September  19,  1997,  between DRS and Spar.  The Company paid  approximately
$35.4 million in cash for the Acquisition  (which includes $6.9 million for cash
acquired in connection with the transaction), subject to certain working capital
adjustments as provided for in the Agreement.

                                       10
<PAGE>

         Headquartered in Kanata,  Ontario,  Canada, and now operating under the
name DRS Flight Safety and  Communications,  Spar Applied  Systems  Division has
been an  international  provider  of aviation  and  defense  systems for over 30
years. It designs, manufactures and markets sophisticated flight safety systems,
naval  communications  systems and other advanced electronics for government and
commercial  customers  around the world. It also provides  custom  manufacturing
services for complex electronic assemblies and systems.

         The  Acquisition  was  accounted  for  using  the  purchase  method  of
accounting.  Accordingly,  the results of  operations  of DRS Flight  Safety and
Communications   are  included  in  the  Company's  reported  operating  results
subsequent to the Closing  Date.  DRS has incurred  professional  fees and other
costs related to the Acquisition of  approximately  $1.5 million.  The excess of
cost over the estimated fair value of net assets acquired was  approximately $20
million  and is being  amortized  on a straight  line basis over  thirty  years.
Purchase price allocation has not yet been finalized,  and actual purchase price
allocation  may differ from that used for  purposes of these  Interim  Financial
Statements.

REORGANIZATION PLAN

         During the second  quarter of fiscal 1998,  the Company  completed  the
move of certain  of its  military  display  workstation  product  lines from the
Company's  facility in Oakland,  New Jersey to its  operation  in  Gaithersburg,
Maryland.   The  Company   completed  the   relocation  of  its   multi-platform
boresighting  equipment product lines, formerly located in Hauppauge,  New York,
to Oakland,  New Jersey in the third quarter of fiscal 1998. In connection  with
this  relocation,  the Company also plans to sell the land and building owned in
Hauppauge,  New York. The Company recorded a restructuring charge of $634,000 in
the  nine-month  period  ended  December  31,  1997  in  connection  with  these
relocations.  This  restructuring  charge does not include costs associated with
the  relocation  of  employees,  equipment  and  inventory,  nor does it include
retraining  costs for new personnel and the cost of leasehold  improvements  for
the  Oakland,  New Jersey  production  facility.  These costs will be charged to
operations or capitalized, as appropriate, when incurred.

The following table reconciles the  restructuring  charge to the related reserve
account balance as of December 31, 1997:

                                                                  Total
                                                            -----------------
         Fiscal 1998 Restructuring Charge                        $634,000
         Cash outflows for severance payments                    (519,000)
         Cash outflows for idle plant costs*                      (46,000)
                                                            -----------------
         Balance at September 30, 1997                           $ 69,000
                                                            =================

        *  Remaining cash outflows for idle plant costs are expected to occur in
           the fourth quarter of fiscal 1998.

         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.

                                       11

<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.

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                   Percent of Revenues                          Percent of Revenues 
                                   -------------------      ---------------     -------------------      ---------------
                                   Three Months Ended           Percent          Nine Months Ended           Percent
                                      December 31,              Changes             December 31,             Changes
                                   -------------------      ---------------     -------------------      ---------------
                                    1997         1996        1997 vs. 1996       1997         1996        1997 vs. 1996
                                    ----         ----        -------------       ----         ----        -------------
<S>                                 <C>          <C>              <C>            <C>          <C>              <C>       
Revenues                            100.0 %      100.0 %          30.1 %         100.0 %      100.0 %          28.6 %

Costs and expenses                   92.6         91.5            31.5            91.7         91.2            29.4
Restructuring Charge                  0.0          0.0              -              0.5          0.0              -
                                   -------      -------                         -------      -------

   Operating income                   7.4          8.5            14.2             7.8          8.8            18.1

Interest and related expenses        (2.7)        (2.4)           46.3            (2.5)        (2.7)           18.5

Interest and other income, net        0.7          0.3           233.7             0.8          0.6            31.9

Minority interest                    (0.6)        (0.4)           74.5            (0.7)        (0.2)          253.1
                                   -------      -------                         -------      -------

   Earnings before income taxes       4.9          6.0             7.5             5.4          6.5             7.9

Income taxes                          1.8          2.3             2.0             2.0          2.5             2.4
                                   -------      -------                         -------      -------

    Net earnings                      3.1 %        3.7 %          11.0 %           3.4 %        4.0 %          11.4 %
                                   =======      =======                         =======      =======           

</TABLE>
--------------------------------------------------------------------------------

         Revenues for the  three-month  period ended December 31, 1997 increased
30.1% to $49.9  million from $38.4  million for the same  three-month  period in
fiscal 1997.  Revenues were $127.7  million and $99.2 million for the nine-month
periods  ended  December  31, 1997 and 1996,  respectively.  The revenue  growth
during the third quarter was attributable primarily to shipments associated with
the  Company's  data  recording  product  lines and to revenues  from the recent
acquisition  of  Flight  Safety  and  Communications.  Higher  revenues  for the
nine-month  period were due  primarily  to shipments  relating to the  company's
military display workstation, data recording and electro-optical systems product
lines, as well as to increases in commercial product sales. Revenues from Flight
Safety and Communications also contributed to the increase for the nine months.

          Operating income for the three-month period ended December 31, 1997
increased 14.2% to $3.7 million from $3.3 million for the same three-month
period in fiscal 1997. Operating income was $9.9 million and $8.8 million for
the nine-month periods ended December 31, 1997 and 1996, respectively. Operating
income as a percentage of revenues was 7.4% and 7.8% for the three- and
nine-month periods ended December 31, 1997, respectively, as compared with 8.5%
and 8.8% in the comparable prior-year periods. The increase in operating income
was due to the overall increase in revenues. The decrease in operating income as
a percentage of revenue for the fiscal 1998 third quarter and nine-month period
was primarily attributable to revenue mix. Additionally, the Company began to
experience margin pressure during the


                                       12
<PAGE>

third quarter from its commercial magnetic head business, resulting from
business consolidation in the disk drive industry and a reduction in orders
toward the end of the quarter as customers reacted to over supply in the market.
The situation has continued to effect the Company's magnetic head business
during the fourth quarter. While a reduction in commercial revenues is expected
to have an impact on margins during the fourth quarter, the Company cannot
quantify, at this time, the extent or duration of such impact.

         Interest and related expenses were  approximately  $1.3 million and $.9
million  for  the  three-month   periods  ended  December  31,  1997  and  1996,
respectively, and $3.1 million and $2.6 million for the nine-month periods ended
December  31, 1997 and 1996,  respectively.  The  increase in both the three and
nine months ended December 31, 1997 was  attributable  primarily to the increase
in debt associated with the acquisition of Flight Safety and Communications.

         Interest  and other  income,  net was $0.3  million  and $0.1  million,
respectively,  for the three-month periods ended December 31, 1997 and 1996, and
$1.0 million and $0.6 million,  respectively,  for the  nine-month  periods then
ended.  The increase for the three-month  period was primarily due to additional
interest income earned on invested cash. The increase for the nine-month  period
was  primarily  due to the gain on the  sale of the net  assets  of DRS  Medical
Systems.

         Minority   interest   increased  to  $0.2  million  and  $0.9  million,
respectively for the three- and nine-month  periods ended December 31, 1997 from
$.1 million and $0.2 million in the comparable  prior-year periods. The increase
was due to the 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 both the three- and  nine-month
periods  ended  December 31, 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  periods  ended  December 31, 1997  reflects the  anticipated  benefit of
certain  transactions  to be  completed  by the  Company  this  fiscal  year  in
connection  with  the  reorganization  plan  (see  "Reorganization  Plan").  The
provision  for income taxes  includes  all  estimated  income  taxes  payable to
federal, state and foreign governments, as applicable.

FINANCIAL CONDITION AND LIQUIDITY

         CASH AND CASH FLOW: Cash and cash  equivalents at December 31, 1997 and
March 31, 1997 represented  approximately  11% and 10%,  respectively,  of total
assets.  During the nine-month period ended December 31, 1997, cash increased by
approximately  $7.6 million.  This increase resulted primarily from the addition
of cash  acquired  in  conjunction  with the  acquisition  of Flight  Safety and
Communications.  Uses of cash for the period of  approximately  $4.7 million and
$29.1 million for capital  expenditures and  acquisitions and related  expenses,
respectively,  were offset by $1.9 million  provided from the divestiture of DRS
Medical  Systems  and  $35.4  million  in  acquisition-related   borrowings.  In
addition,  approximately $1.1 million was used in support of operations and $6.1
million was borrowed against the Company's line of credit for short-term working
capital  requirements  and to  satisfy  the  outstanding  principal  balance  of
approximately  $1.6 million on the variable  rate  industrial  revenue bonds due
January 1, 1998.  The Company  expects to repay the short-term  borrowings  with
positive cash flow from operations in the fourth quarter of fiscal 1998 and with
the  proceeds  from  the  expected  sale of the  Company's  Hauppauge,  New York
facility.

         Capital expenditures, excluding assets acquired as a result of business
combinations,  are  expected  to  approximate  $5.5  million for the fiscal year
ending March 31, 1998. The majority of these  expenditures  will be for computer
and production-related equipment, as well as leasehold improvements.


                                       13
<PAGE>

         Working capital as of December 31, 1997 was $38.0 million,  as compared
to $32.8  million at March 31,  1997.  The  increase  was  primarily  due to the
Acquisition.

         In connection  with the  Acquisition,  on October 29, 1997, the Company
entered  into  a $60  million  secured  credit  facility  (the  "Secured  Credit
Facility")  with Mellon Bank,  N.A.,  consisting of a $20 million term loan (the
"Term Loan") and a $40 million  revolving  line of credit (the  "Secured Line of
Credit"). The Secured Credit Facility expires on March 31, 2003 and replaced the
Company's  $15  million  unsecured   revolving  line  of  credit  facility  (the
"Unsecured  Facility")  and a $5 million  secured  equipment line of credit/term
loan agreement (the "Equipment  Facility").  The Term Loan was used to finance a
portion of the  Acquisition.  The Secured Line of Credit was used to finance the
remaining   balance  due  in  connection  with  the  Acquisition  and  to  repay
outstanding borrowings on the Unsecured Facility and the Equipment Facility. The
Secured  Line of Credit is  available  for working  capital,  general  corporate
purposes  and  acquisitions.   The  Secured  Credit  Facility  contains  certain
covenants and restrictions,  including a restriction on the payment of dividends
on the capital stock of the Company,  a limitation on the issuance of additional
debt and certain  other  restrictions.  As of December 31,  1997,  approximately
$31.2 million was outstanding against the Secured Credit Facility, of which $6.4
million was  contingently  payable  under  letters of credit,  as compared  with
amounts  outstanding  under the  Unsecured  Facility  at March 31,  1997 of $5.3
million and $2.3 million, respectively.

         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  $12.8 million in the  nine-month  period ended December 31, 1997,
primarily  due to the  Acquisition  and to balances  due from  program  revenues
recorded in December  1997.  Generally,  there are no  contract  provisions  for
retainage, and accounts receivable are expected to be collected within one year.

         Inventories  increased  by  approximately  $6.9  million from March 31,
1997, due primarily to the  Acquisition  and to increased  material  procurement
associated with production activity.

--------------------------------------------------------------------------------
                                      DECEMBER 31, 1997           March 31, 1997
--------------------------------------------------------------------------------

Quick ratio                                   1.2                       1.2
Current ratio                                 1.9                       2.2
Liabilities-to-equity ratio                   3.0                       2.0
Long-term debt, excluding current
installments, to capitalization              61.7%                     48.3%

--------------------------------------------------------------------------------

         BACKLOG: Backlog at December 31, 1997 was approximately $170.3 million,
as compared with $118.4  million at March 31, 1997.  The increase in backlog was
due to the addition of approximately $23 million from the Acquisition and to the
increase in  bookings,  partially  offset by revenues.  New  contract  awards of
approximately  $39.7 million and $159.7  million were received in the three- and
nine-month  periods ended December 31, 1997,  respectively.  Year to date awards
include  amounts  totaling  approximately  $69  million for the  manufacture  of
AN/UYQ-70 Advanced Display System tactical workstations for the U.S. Navy.


                                       14
<PAGE>

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
also has 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.  The  Company has  obtained a waiver,  expiring on the
maturity date of the Bonds, of the required Debt Ratio from the issuing bank and
is in compliance with all covenants  under the letter of credit.  The Bonds were
redeemed at maturity in January 1998, and are no longer outstanding.

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  simplified the current  standards for computing  earnings
per share ("EPS"),  as specified in Accounting  Principles Board Opinion No. 15,
"Earnings Per Share" ("APB 15"). Under SFAS 128, the presentation of primary EPS
was replaced by the presentation of basic EPS and the presentation of fully
diluted EPS was replaced  by diluted  EPS.  The  Company has adopted  this
standard in the quarter ending December 31, 1997 and, accordingly,  has restated
its earnings per share calculation for all prior periods.

                                       15
<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

                             The following  report on Form 8-K was filed
                               during the  quarter  ended  December  31,
                               1997:

                   1.   Form 8-K, Current Report, dated November 13, 1997, 
                        File No. 1-8533, containing Item 2 and Item 7(c).



                                       16
<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: February 13, 1998             /s/ Nancy R. Pitek
                                    --------------------------------------------
                                     Nancy R. Pitek
                                     Vice President, Finance and Treasurer


                                       17