<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

                        FOR ANNUAL AND TRANSITION REPORTS
                     PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
/X/      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the Fiscal Year Ended: October 2, 1999
                                       OR
/ /      TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OR THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from                 to

                          Commission File Number 1-4817

                      WHITE ELECTRONIC DESIGNS CORPORATION

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                         <C>
                            INDIANA                                                     35-0905052
(State or other jurisdiction of incorporation or organization)              (I.R.S. Employer Identification No.)

                    3601 E. UNIVERSITY DRIVE
                       PHOENIX, ARIZONA                                                    85034
           (Address of principal executive offices)                                     (Zip Code)

      Registrant's telephone number, including area code:                               602/437-1520
</TABLE>

           Securities registered pursuant to Section 12(b) of the Act:

<TABLE>
<CAPTION>
                      TITLE OF EACH CLASS                                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
                      -------------------                                 -----------------------------------------
<S>                                                                       <C>
                Common Stock, without par value                                   American Stock Exchange
                 (stated value $.10 per share)
  $3.00 Senior Voting Cumulative Convertible Preferred Stock                      American Stock Exchange
                  (par value $1.00 per share)
</TABLE>

        Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes  x   No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in PART III of this Form 10-K or any amendment to this
Form 10-K.[ ]

As of December 15, 1999, the aggregate market value of the Registrant's Common
Stock and Preferred Stock held by non-affiliates (based upon the closing price
of the shares on the American Stock Exchange on December 15, 1999) was
approximately $62,700,000.

On December 15, 1999, 15,991,303 shares of the Registrant's Common Stock and
118,606 shares of the Registrant's Preferred Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the definitive Proxy Statement prepared in connection with the 2000
Annual Meeting of Shareholders are incorporated by reference into PART III of
this Annual Report.
<PAGE>   2
                                TABLE OF CONTENTS
                                                                            Page
                                     PART I
ITEM 1     BUSINESS

           Forward Looking Statements and Associated Risks.............       1
           General.....................................................       1
           Microelectronic Segment Review..............................       1
           Display Segment Review......................................       3
           Customers...................................................       4
           Research, Engineering and Development.......................       4
           Regulatory Matters..........................................       4
           Employees...................................................       5
           Risk Factors................................................       5

ITEM 2     PROPERTIES..................................................       8

ITEM 3     LEGAL PROCEEDINGS...........................................       8

ITEM 4     SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........       8

           EXECUTIVE OFFICERS OF THE COMPANY...........................       8

                                     PART II

ITEM 5     MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
               RELATED SHAREHOLDER MATTERS.............................       9

ITEM 6     SELECTED FINANCIAL DATA ....................................       9

ITEM 7     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS.....................      10

ITEM 7A    QUANTITATIVE AND QUALITATIVE DISCLOSURES
           ABOUT MARKET RISK...........................................      13

ITEM 8     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................      13

ITEM 9     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
               ACCOUNTING AND FINANCIAL DISCLOSURE.....................      13

                                    PART III

ITEM 10    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT  ........      13

ITEM 11    EXECUTIVE COMPENSATION......................................      14

ITEM 12    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
            MANAGEMENT.................................................      14

ITEM 13    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS  ............      14

                                     PART IV

ITEM 14    EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
           ON FORM 8-K.................................................      14

SIGNATURES.............................................................      18
<PAGE>   3
                                     PART I

ITEM 1        BUSINESS

FORWARD LOOKING STATEMENTS AND ASSOCIATED RISKS

Certain matters discussed in this document contain forward-looking statements.
The words "believe," "expect," anticipate" and similar statement of expectation
identify forward-looking statements that speak only as of the date the statement
is made. These forward-looking statements are based on Management's expectations
and are subject to risks and uncertainties, some of which cannot be predicted or
quantified and are beyond the Company's control. Potential risks and
uncertainties include those set forth in the section titled "Risk Factors",
below. In light of these risks and uncertainties, there can be no assurance that
the forward-looking statements contained in this document will prove to be
accurate. Actual results may differ materially from those in the forward-looking
statements.

GENERAL

White Electronic Designs Corporation, formerly Bowmar Instrument Corporation
("the Company"), is an Indiana corporation organized in 1951. On October 26,
1998, Bowmar Instrument Corporation ("Bowmar") merged with Electronic Designs,
Inc. ("EDI"). In connection with the merger, Bowmar changed its name to White
Electronic Designs Corporation (the "Company.") While Bowmar was the legal
acquirer, the merger was accounted for as a reverse acquisition purchase whereby
EDI was deemed to have acquired Bowmar for financial reporting purposes.
Consistent with the reverse acquisition purchase accounting treatment, the
historical financial statements presented for periods prior to the merger date
are the financial statement of EDI, not the previously reported consolidated
financial statements of Bowmar. The operations of Bowmar have been included in
the financial statements from the date of the merger.

The average market value of the Bowmar Common Stock and Preferred Stock for a
reasonable period of time before and after the announcement of the merger
determined the purchase price for accounting purposes. The average market value
of Bowmar stock used to record the purchase was $1.26 per share for common stock
with 6,674,992 shares outstanding and $26.94 per share for preferred stock with
119,906 shares outstanding at the merger date. The aggregate value of the stock
and stock options outstanding used to record the purchase were $11,633,000 and
$440,000 respectively. In addition, direct expenses of the purchase of $650,000
consisting of legal, accounting and other fees were included in the purchase
price recorded.

The Company allocated costs in excess of net assets acquired of $4,075,000, to
inventory, fixed assets, and intangible assets, which are being amortized over
various periods ranging from 3 months to 15 years on a straight line basis.

The Company's principal business is the design, manufacture and sale of high
density, microelectronic memory and microprocessor products used for a wide
range of commercial, industrial and military applications. The Company also
designs and manufactures ruggedized liquid crystal display units suitable for
commercial and defense avionics.

The Company's principal executive offices are located at 3601 E. University
Drive, Phoenix, Arizona 85034, 602/437-1520 and One Research Drive, Westborough,
Massachusetts 01581, 508/366-5151.

MICROELECTRONIC SEGMENT REVIEW

Products designed, manufactured and sold by the Company through its
microelectronic business segment mainly consist of memory products for
commercial, industrial, and military markets in the U.S. and abroad.



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Commercial products use SRAM, DRAM and Flash memory components with existing
packaging technologies to create space saving solutions in industry standard
configurations (SIMMS, DIMMS, BGA), multiple bare die on laminate (MCM-L), and
boards packaged using standards established by the personal computer memory card
international association (PCMCIA cards). Commercial memory module products
range in density from 2 megabit to one gigabit, with datawidths from 8 to 144
bits, and access speeds as fast as 8 nanoseconds in various package options.
Commercial products are sold mainly to original equipment manufacturers in the
network and telecommunications industries.

Military products use SRAM, EEPROM, SDRAM and Flash memory components in ceramic
packages and laminate to produce high density multichip packages and monolithic
products for use in adverse environmental conditions. Multichip packaging is a
technique that places several semiconductor chips into a compact package. A
monolithic product does the same using only one semiconductor chip. Military
products range in density from one megabit to 288 megabits, with datawidths of 8
to 72, and speeds as fast as 15 nanoseconds in various package options. Military
products are sold primarily to government contractors in the aerospace industry.

The products designed, manufactured, and sold by the Company in its
microelectronic segment are sold to original equipment manufacturers in the
United States, Europe and Asia through the Company's sales personnel and
independent sales representatives and distributors. In a time of strong demand
for memory and microprocessor products, as at present, sources of supply of IC
(integrated circuit) die and other components may be constrained and subject to
shortages. A manufacturer's ability to compete is heavily dependent on its
ability to maintain access to steady sources of supply. To address these needs,
the Company has maintained strong relationships with leading semiconductor
fabricators in the United States and the Far East. The Company has no specific
long-term contractual arrangement with its vendors. None of the business of the
microelectronic segment is seasonal. The Company does not provide extended
payment terms to its customers. Products in the microelectronic segment are sold
under a standard one year warranty and may be returned for repair or replacement
during the warranty period.

The backlog and proforma backlog for products was approximately $20,630,000 and
$13,100,000, at the end of fiscal years 1999 and 1998, respectively.
Approximately 99% of the segment's fiscal 1998 backlog was shipped during fiscal
1999. Approximately 92% of the fiscal 1999 year-end backlog is expected to be
shipped during fiscal 2000. The backlog after fiscal 2000 is a result of
customer requirements and demand for the products, not capacity restraints.
Microelectronic segment data is disclosed in Note 18 of Notes to Consolidated
Financial Statements.

The Company's principal competitors in the commercial module market, Smart
Modular Technologies, Integrated Device Technology, Inc. ("IDT"), and Cypress
Semiconductors, Inc. are larger than the Company and have substantially greater
financial, technical, marketing, distribution and other resources. Smart
manufactures a broad range of memory modules in high volume while IDT and
Cypress, manufacture memory products in monolithic form and supply products,
which incorporate these devices. In addition, the Company competes with a number
of smaller companies and larger semiconductor companies who are now in the
market or may in the future enter the market. The Company competes in this
market on the basis of many factors, including access to advanced semiconductor
products at competitive prices, successful and timely product introduction,
design capability, lead times, quality, product specification, pricing and
customer service.

The two main military market competitors are the microelectronics division of
Aeroflex Corp., and Austin Semiconductor. Both competitors are part of business
organizations that are larger than the Company and have greater financial and
other resources. There are few competitors for the military memory market
business of the Company. Companies compete for this business on the basis of
many factors, including cost and quality systems (which allow for compliance
with U.S. and foreign military standards), longer term access to advanced
semiconductor products in die and wafer form, successful and timely product
introduction, inclusion of products on standard military drawings, design
capabilities, lead times, product specification, pricing and customer service.
The Company has recently experienced increased price competition for the memory
business. Some competitors in the industry have competed for and won


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contracts bidding at or below cost. There can be no assurance that such price
competition will not continue or that the Company can compete successfully based
on price alone.

DISPLAY SEGMENT REVIEW

The Company designs and manufactures AMLCDs (ranging in size from 4.0" to 18.1")
diagonal panels in display head, monitor and computer system formats. These
displays offer significant advantages over other commercially available
displays. Significant features include sunlight readability and ruggedized
construction for operating temperatures from -35 to +85 degrees Celsius. The
Company is growing its display product segment by offering a broad range of
products based on different sized AMLCD panels, as well as developing advanced
display driver electronics. As with any new products, there is no assurance that
the display products developed (or to be developed) will be commercially
acceptable or profitable. Display products are sold mainly to customers in the
aviation and aerospace industries.

The Company's electromechanical components and instrument packages consist of
rotating devices, including gearheads, mechanical counters, dial drives,
mechanical packages and related devices. Specific applications for these
products include controls for automatically tuning airborne radio transmitters
and receivers, controls for fuel flow in jet engines and selected automatic
flight control servomechanisms. These products are sold principally to aircraft
instrument manufacturers as information displays in aerospace and ground
equipment.

The Company also produces digital displays, which permit a more accurate readout
of information than is feasible with analog meters. These include display
devices, which respond electromagnetically to electronic input signals, thus
eliminating mechanical transmission delays. These products are sold primarily to
aircraft instrument manufacturers.

The Company designs and manufactures, to customer specification, a variety of
keyboard assemblies for commercial and military applications. The Company has
the capability of meeting demanding requirements such as backlighting to meet
night vision goggle (NVG) compatibility, adverse environments, and the
integration of displays, including LCD's, and microprocessor technology. Neither
the needs of the Company for a continuing allotment of goods from its suppliers
nor the requirements of its customers for the products of the display segment
require the carrying of finished goods inventory. In its purchase of components
(some of which must be ordered months in advance), the Company has not
encountered, and does not anticipate encountering any significant difficulty.
The Company does not provide extended payment terms to its customers. Products
are sold under a standard one year warranty and may be returned for repair or
replacement during the warranty period.

The display segment backlog and proforma backlog was approximately $10,870,000
and $7,872,000, at the end of fiscal years 1999 and 1998, respectively.
Approximately 95% of this segment's 1998 backlog was shipped during fiscal 1999.
Approximately 95% of the fiscal 1999 year-end backlog is expected to be shipped
during fiscal 2000. The backlog after 2000 is a result of customer requirements
not capacity restraints. Display segment data is disclosed in Note 18 of Notes
to Consolidated Financial Statements.

The principal basis of competition among display suppliers are display
performance (e.g., brightness, color capabilities, contrast and viewing angle),
size and weight, design flexibility, power usage, durability and ruggedness.
While the primary competition for the AMLCD is currently cathode ray tube
displays, the Company's products compete with other flat panel displays
including gas plasma and electroluminescent displays. The Company believes that
price, product reliability and the ability to meet delivery schedules are key
competitive factors. The Company competes with numerous other companies in the
display and electromechanical segment, many of which have greater financial
resources, larger technical and marketing resources and in some instances more
advanced technology products than those of the Company.


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CUSTOMERS

In fiscal 1999 one customer sales accounted for 10% of the Company's sales. The
loss of this customer could have an adverse impact on operations. Sales are
split between original equipment manufacturers in the network and
telecommunications industries, board assembly companies, and U.S. prime
contractors in the defense industry. Sales to prime contractors can be for
relatively large dollar amounts, sometimes calling for deliveries over more than
one year. The award of new contracts or the expiration of old contracts could
have a significant short-term impact on sales and operating results. Sales of
commercial memory products are usually based on high volume purchase orders with
deliveries scheduled over several months. The award of new purchase orders is
based on the Company's ability to supply the OEM or assembly company with
products that meet current technological and quality requirements. The Company
sells memory and display products to over 400 companies throughout the world.
Customers for the Company's microelectronic products include Applied Innovation,
Celestica, Inc., Data General, DY-4 Systems, Electronic Assembly Corporation,
Honeywell, Lockheed, Network Appliance, Qualcomm, Raytheon, Samsung Electronics,
and Cabletron Zeitnet. End users consist of companies such as Lucent and Cisco
Systems. The Company's Display customers include Allied Signal, Avidyne,
Computing Devices, GTE Government Systems, Honeywell, Inc., Litton, Inc.,
Rockwell International, and Telephonics. Foreign sales for fiscal 1999, 1998,
and 1997 were $10,472,000, $7,753,000 and $11,706,000 respectively.

RESEARCH, ENGINEERING AND DEVELOPMENT

Current research and product development activities are directed primarily
toward the improvement of existing standard products while some projects are
focused on the development of new products or processes. The Company devotes
minimal resources to pure research and development, but emphasizes the
application of its engineering expertise to the development and refinement of
proprietary products or technologies. Expenditures by the Company on research
and product development for fiscal years 1999, 1998 and 1997 amounted to
approximately $3,651,000, $2,559,000, and $2,135,000. Research and product
development efforts are principally conducted by the Company utilizing its
engineering staff.

REGULATORY MATTERS

Government Contracting Regulation

A significant portion of the Company's business in fiscal 1999 was derived from
subcontracts with prime contractors of the U.S. Government. As a U.S. Government
subcontractor, the Company is subject to Federal Government contracting
regulation. Under these regulations, the U.S. Government is entitled for three
years after final payment on certain negotiated contracts or contract
modifications to examine all of the Company's cost records with respect to such
contracts to determine whether the Company furnished complete, accurate and
current cost or pricing data to the Government in connection with the
negotiation of the price of the contract or modification. The U.S. Government
also has the right after final payment to seek a downward adjustment to the
price of a contract or modification if it determines that the contractor failed
to disclose complete, accurate and current data. Historically the Company has
not experienced significant downward adjustments.

In addition, the Federal Acquisition Regulations govern the allowability of
costs incurred by the Company in the performance of U.S. Government contracts to
the extent that such costs are included in its proposals or are allocated to its
U.S. Government contracts during performance of those contracts.

The Company's subcontracts provide that they may be terminated at the
convenience of the U.S. Government. Upon such termination, the contractor is
normally entitled to receive the purchase price for delivered items,
reimbursement for allowable costs incurred and allocable to the contract and an
allowance for profit on the allowable costs incurred or adjustment for loss if
completion of performance would have resulted in a loss. In addition, the
Company's subcontracts provide for termination for default if the Company fails
to perform or breaches a material obligation. In the event of a termination for
default, the customer may have the unilateral right at any time to require the
Company to return unliquidated progress payments pending final resolution of the
propriety of the termination for default. The Company may also have to pay the
excess, if any, of the cost of purchasing a substitute item from a third party.
If the


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customer has suffered other ascertainable damages as a result of a sustained
default, the customer could demand payment of such damages by the Company.

In connection with the Company's U.S. Government business, the Company also is
subject to Government investigations of its policies, procedures and internal
controls for compliance with procurement regulations and applicable laws. The
Company may be subject to downward contract price adjustments, refund
obligations or civil and criminal penalties. In certain circumstances in which a
contractor has not complied with the terms of a contract or with regulations or
statutes, the contractor might be debarred or suspended from obtaining future
contracts for a specified period of time. Any such suspension or debarment of
the Company would have a material adverse effect on the Company's business.

It is the Company's policy to cooperate with the Government in any
investigations of which it has knowledge, but the outcome of any such Government
investigations cannot be predicted with certainty. In the opinion of management
of the Company, it has complied in all material respects with applicable
government requirements.

Environmental Protection

Compliance with federal, state and local laws or regulations which govern the
discharge of materials into the environment has not had a material adverse
effect upon the capital expenditures, earnings or competitive position of the
Company.

EMPLOYEES

As of the end of the fiscal year, the Company employed 259 persons. Of such
employees, 151 were employed in the microelectronic segment, 108 in the display
segment. A total of 53 of the Company's employees in the display segment were
employed pursuant to collective bargaining agreements covering workers at the
Company's Display Division in Fort Wayne, Indiana. This agreement is effective
through October, 2001. The Company believes its labor relations are
satisfactory.

RISK FACTORS

On October 26, 1998, the Company completed the merger with Bowmar Instrument
Corporation and Electronic Designs, Inc. Throughout fiscal 1999 efforts were
made to integrate the business segments of each company. The Company
accomplished the transfer of military product manufacturing from Westborough,
Massachusetts facility to the Phoenix, Arizona facility. Other consolidations
have taken place in the administrative areas. The Company expects to continue
integration and consolidation activities in fiscal 2000. There can be no
assurance that such integration will be accomplished smoothly or successfully.
The difficulties of such integration may be increased by the necessity of
coordinating geographically separated organizations and addressing possible
differences in corporate cultures and management philosophies. The transition to
a combined company will require substantial attention from management. The
diversion of management attention and any difficulties encountered in the
transition process could have an adverse effect on the revenues and operating
results of the Company. In addition, the process of combining the two
organizations could cause the interruption of, or a disruption in, the
activities of any or all of the companies' businesses, which could have a
material adverse effect on their combined operations. There can be no assurance
that the Company will realize any of the anticipated benefits of the merger.

OPERATING RESULTS

Capital Expenditures, Research and Development and Other Costs. The need for
continued significant expenditures for capital equipment purchases, research and
development and ongoing customer service and support, among other factors, will
make it difficult for the Company to reduce its operating expenses in a
particular period if the Company's net sales for a period are not met because a
substantial component of the operating expenses are fixed costs. Accordingly,
there can be no assurance that the Company will be able to be profitable or that
it will not sustain losses in future periods. Due to the foregoing factors, it
is likely


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that in some future quarter the Company's operating results will be below the
expectations of public market analysts and investors. In such an event, the
price of the Company Common Stock may be materially adversely affected.

Microelectronic Business. In connection with the Company's microelectronics
memory business, a wide array of factors could cause the Company's results of
operations and gross margins to fluctuate in the future from period to period.
The primary factors that might affect the Company's results of operations in
this regard include the cyclicability of the semiconductor market; any loss of a
principal customer or any short term loss of a customer due to product inventory
accumulation by the customer; any inability to procure required components; any
adverse changes in the mix of products sold by the Company; and any downturn of
the semiconductor market which could cause a decline in selling unit prices,
diminished inventory value, and less demand for commercial memory products as
customers restrict inventory levels.

Reduction in Inventory Values. Reduction in value of the Company's inventories
due to unexpected price declines, as has occurred in the past in connection with
a softening of the semiconductor industry, could adversely affect the Company's
results of operations. Such declines in inventory valuation have had an adverse
effect on the Company's financial condition and results of operations in the
past and could have an adverse effect on the Company's financial condition and
results of operations in future periods.

DEPENDENCE ON DEFENSE INDUSTRIES

Current contracts of the Company with defense-related companies and revenues
generated therefrom in the aggregate account for a material portion of the
Company's overall revenues. Military capital expenditure levels have been
declining for some years now and depend on factors that are outside the control
of the Company. In addition, the U.S. defense industry has been moving toward
the purchase of commercial "off-the-shelf" (COTS) products rather than those
manufactured as compliant to specified military standards. In fiscal 1999,
military and display related sales accounted for approximately 50% of the
Company's overall sales. Changes in military spending and the shift in military
demand for microelectronics products have had an adverse effect on the sales and
profit of the Company. Continued reductions in military spending could adversely
affect the sales and profits of the Company.

DEPENDENCE ON INTERNATIONAL SALES AND PURCHASES

The Company anticipates that international sales will continue to account for a
significant portion of the Company's net sales. In addition, the majority of the
components used by the Company in connection with products for military
applications are acquired from foreign manufacturers worldwide, particularly
countries located in Asia. As a result, a significant portion of the Company's
sales and purchases are subject to the risks of international business,
including fluctuations in foreign currencies, trade disputes, changes in
regulatory requirements, tariffs and other barriers, the possibility of quotas,
duties, taxes or other changes or restrictions upon the importation or
exportation of the products being implemented by the United States, timing and
availability of export licenses and the general economies of these countries in
which the Company transact business. Foreign suppliers of semiconductor related
materials are regularly threatened with, or involved in, pending trade disputes
and sanctions which, if realized, could materially adversely effect the Company
by closing off critical sources of supply for the raw materials used to produce
its products.

DOWNTURN OF SEMICONDUCTOR INDUSTRY

The semiconductor industry has historically been characterized by wide
fluctuations in product supply and demand. The adverse effect of a continued
downturn could be significant for the Company.

Certain developments over the last several years and trends, including price
erosion in semiconductor memories and the decline of the book to bill ratio to
below parity, have created considerable uncertainty for the Company with respect
to anticipated demand for integrated circuits in the near future. These
developments have resulted in declines in the average selling prices of some of
the Company's memory products and increased availability of most memory devices
which the Company purchases for incorporation


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in its products. The increased availability of memory devices has caused an
increase in competition and allowed shorter lead times to Company customers. As
a result of the increased availability of commercial memory products, there can
be no assurance that new competitors will not enter the Company's markets, or
that existing competitors, particularly those who manufacture their own
semiconductor devices, will not cause the selling prices of some of the Company
products to decline to a level at which the Company cannot economically compete.
See "Operating Results." Any such market developments could have a material
adverse effect on the Company semiconductor packaging business.

ABSENCE OF CONTRACTUALLY ASSURED SOURCES OF SUPPLY/GENERAL LIMITATIONS ON SUPPLY

The most significant raw materials that the Company purchases in its operations
are memory devices in wafer, die and component forms and AMLCD panels. In a time
of strong demand for memory integrated circuits and other products, sources of
supply of wafers, die and other components may be constrained and subject to
shortages, and the ability of the Company to compete is heavily dependent on its
ability to maintain access to steady sources of supply. AMLCD panels may also be
in short supply, at times. The Company does not have specific long-term
contractual arrangements with its vendors, although it believes it has good
relationships with its vendors. No assurance can be given that existing access
to the current sources of supply of the Company may not be impaired in the
future. Any such impairment could have a material adverse effect on the Company.

RISKS OF TECHNOLOGY CHANGE AND DEVELOPMENT OF NEW PRODUCTS

The Company's future results of operations will be dependent upon its ability to
improve and market its existing products and to develop, manufacture and market
new products. There can be no assurance that the Company will be able to
continue to improve and market its existing products or develop and market new
products, or that technological developments will not cause the Company's
products or technology to become obsolete or noncompetitive.

The Company's display products have been developed exclusively based on AMLCD
products procured from Sharp Electronics Corporation ("Sharp"). Competitors in
the flat panel display business are investing substantial resources in the
development and manufacture of flat panel displays using a number of alternative
technologies. In the event these efforts result in the development of products
that offer significant advantages over Sharp's and the Company's products, and
the Company is unable to improve its technology or develop or acquire
alternative technology that is more competitive, the Company's business and
results of operations will be adversely affected.

VOLATILE MARKET PRICE FOR COMPANY STOCK

The market price for the Company's Common Stock is subject to fluctuations in
response to a number of factors, including variations in the Company's quarterly
operating results, perceptions about market conditions in the microelectronics
industry and the effect of general economic conditions, many of which are
unrelated to the Company's operating performance. In addition, the stock market
generally has experienced significant price and volume fluctuations. These
market fluctuations could have a material adverse effect on the market price or
liquidity of the Company's Common Stock.

ENVIRONMENTAL REGULATIONS

The Company is subject to a variety of federal, state and local governmental
regulations related to the storage, use, discharge and disposal of toxic,
volatile or otherwise hazardous chemicals used in its manufacturing process.
Increasing public attention has been focused on the environmental impact of
microelectronic manufacturing operations. While the use of toxic, volatile or
otherwise hazardous substances by the Company is small, there can be no
assurance that changes in environmental regulations will not impose the need for
additional capital equipment or other requirements. Any failure by the Company
to control the use of, or to adequately restrict the discharge of, hazardous
substances under present or future regulations could subject the Company to
substantial liability or could cause its manufacturing


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operations to be suspended. Such liability or suspension of manufacturing
operations could have a material adverse effect on the Company's business,
financial conditions and results of operations.

ITEM 2        PROPERTIES

The Company leases a facility under an operating lease in Phoenix, Arizona
consisting of approximately 53,000 square feet. The facility is used as the
Company's corporate offices and for all manufacturing of the military components
of the microelectronic segment. The Company also leases the 33,000 square foot
facility located in Westborough, Massachusetts. The Company also subleases its
former sales office in London, under a long term lease expiring in 2004. In
addition, the Company owns a facility in Ft. Wayne, Indiana consisting of a
building with approximately 75,000 square feet of space used for the manufacture
of electromechanical and mechanical equipment and components, plus approximately
ten acres of vacant land adjacent to the building. All of the Company's property
is security for the Company's line of credit and term loans with Bank One.
Management considers these properties to be well maintained and adequate for
their use.

ITEM 3        LEGAL PROCEEDINGS

On April 25, 1996, the U.S. Attorney's Office for the State of Arizona undertook
an investigation of certain aspects of White Microelectronics (a division of the
Company) contracts with prime contractors with the Government. The investigation
centered on the interpretation of certain Government contract specified testing
requirements on incoming material. The Company is cooperating fully with the
investigation. On March 13, 1998, the Company was notified by the U.S.
Attorney's Office for the State of Arizona that is has closed its criminal
investigation of White Microelectronics. The U.S. Attorney's office is now
pursuing civil damages against the Company based on their findings from the
investigation. The Company is currently discussing these claims with the U.S.
Attorney's office and believes that the outcome will not have a material adverse
effect on future operations. However, based on the information available,
management believes disposition costs can be reasonably estimated. Therefore, an
accrual adequate to cover these costs has been recorded in the financial
statements.

ITEM 4        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

EXECUTIVE OFFICERS OF THE COMPANY

The names, ages, positions and business experience of all of the executive
officers of the company are listed below. Officers are appointed annually by the
Board of Directors at the meeting of directors immediately following the Annual
Meeting of Shareholders and serve until the next annual election or until their
successors have been elected and qualified or as otherwise provided in the
Company's by-laws.

There are no family relationships between any of the directors and executive
officers of the Company nor any arrangement or understanding between any such
executive officer and any other person pursuant to which he was elected as an
executive officer.

Hamid R. Shokrgozar, 39             President, Chief Executive Officer and
President and                       Director of the Corporation. Appointed
Chief Executive Officer             President and CEO of Bowmar Instrument
                                    Corporation on January 3, 1998 and Director
                                    of the Company in February 1998. From
                                    1993-1998 served as President of White
                                    Microelectronics, the largest division of
                                    Bowmar Instrument. Served as Vice President
                                    Engineering and Technology from 1988 to
                                    1993. Mr. Shokrgozar is the new Chairman of
                                    the American Electronic Association (AEA)
                                    Arizona Council for the Fiscal Year 2000.
                                    During Fiscal 1999, he served as Vice
                                    Chairman of AEA-Az Council. Mr. Shokrgozar
                                    holds a U.S. Patent for the invention of
                                    "Stacked Silicon Die Carrier Assembly".


                                       8
<PAGE>   11
Donald F. McGuinness, 66            Elected Chairman of the Board February 11,
Chairman                            1999. Prior to the merger he was Chairman,
                                    President and CEO of Electronic Designs,
                                    Inc. Mr. McGuinness also serves on the board
                                    of directors of Cabletron Systems Inc., and
                                    Ibis /Technology Corporation.

William J. Rodes, 45                Corporate Controller, Treasurer, and
Corporate Controller, Treasurer,    Secretary since May 1999. Controller for
Secretary                           White Microelectronic Division of Bowmar
                                    Instrument Corporation from 1993-1999. From
                                    1990 to 1991 he served as Manager of Cost
                                    Accounting and Financial Analysis for
                                    California Micro Devices.

                                     PART II

ITEM 5        MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
              SHAREHOLDER MATTERS

The Company's Common Stock and $3.00 Preferred Stock are currently traded on the
American Stock Exchange under the symbols WHT and WHT_P, respectively. See Note
20 to the Consolidated Financial Statements in this Form 10-K for the high and
low sales prices for each of the Common Stock and $3.00 Preferred Stock over the
last two fiscal years.

As of December 15, 1999, there were approximately 6,545 holders of record of the
Common Stock and approximately 438 holders of record of the Company's $3.00
Preferred Stock. The Company has not paid cash dividends on its Common Stock and
does not expect to do so in the foreseeable future. The Company intends to
retain all earnings to provide funds for the operation and expansion of its
business. One of the Company's credit agreements precludes the payment of cash
dividends for both preferred and Common Stock in excess of $500,000 per year.

ITEM 6        SELECTED FINANCIAL DATA

              (In thousands of dollars, except share and per share data)

<TABLE>
<CAPTION>
                                                                                      FISCAL YEAR
----------------------------------------------------------------------------------------------------------------------------------
OPERATIONS:                                              1999               1998           1997           1996            1995
                                                                          (NOTE 1)       (NOTE 1)       (NOTE 1)      (NOTE 1 & 2)
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>               <C>              <C>            <C>            <C>
Net sales                                            $     58,038      $    32,772      $   42,104     $   57,478     $     1,639
----------------------------------------------------------------------------------------------------------------------------------
Gross margin                                         $     15,528      $     7,043      $   15,494     $   16,834     $       283
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before
   income taxes (Note 3)                             $       (859)     $    (3,304)     $    5,297     $    5,251     $    (3,817)
----------------------------------------------------------------------------------------------------------------------------------
Weighted average number of common:
  shares and equivalents-basic                         15,394,451        7,072,000       6,948,000      5,546,000       3,226,000
  shares and equivalents-fully diluted (Note 4)                --               --       7,579,000      7,603,000              --
----------------------------------------------------------------------------------------------------------------------------------
Income (loss) per common share:
     Continuing operations - basic                   $      (0.06)     $     (0.47)     $     0.74     $     0.82     $     (1.29)
     Continuing operations - fully diluted (Note 4)                                     $      .68     $     0.60
----------------------------------------------------------------------------------------------------------------------------------
Net income per share - basic                         $      (0.08)     $     (0.47)     $     0.54     $     0.51     $     (1.29)
Net income per share - fully diluted (Note 3)        $         --      $        --      $     0.50     $     0.37     $        --
----------------------------------------------------------------------------------------------------------------------------------
Financial Positions (at year end):
  Working capital                                    $     12,584      $     5,207      $   11,723     $    6,425     $      (283)
  Total assets                                       $     38,771      $    17,935      $   25,137     $   21,063     $     6,334
  Long-term debt                                     $      2,249      $        --      $    2,208     $    2,939     $       648
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>



Note 1: As a result of the merger October 26, 1998 of White Electronic Designs
Corporation (formerly Bowmar Instrument Corporation) and Electronic Designs,
Inc. (EDI), which was accounted for as a purchase by EDI of Bowmar, the
financials for the 1995, 1996, 1997, and 1998 fiscal year ended include only the
results of EDI.

Note 2: The financials for fiscal year 1995 include only the results of the
former EDI prior to the October 10, 1995 acquisition of EDI-MA.


Note 3 - See footnote 16 of the Consolidated Financial Statement provided
elsewhere herein for discussion of discontinued operations.

Note 4 - In 1999, 1998 and 1995, fully diluted net income per share is
considered to be the same as basic net income per share since the effect of the
potentially dilutive convertible preferred is antidilutive.

This table should be read in conjunction with the Consolidated Financial
Statements provided elsewhere herein.


                                       9
<PAGE>   12
ITEM 7            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

Introduction

On October 26, 1998, Bowmar Instrument Corporation ("Bowmar") merged with
Electronic Designs, Inc. ("EDI"). In connection with the merger, Bowmar changed
its name to White Electronic Designs Corporation (the "Company"). While Bowmar
was the legal acquirer, the merger was accounted for as a reverse acquisition
purchase whereby EDI was deemed to have acquired Bowmar for financial reporting
purposes. Consistent with the reverse acquisition purchase accounting treatment,
the historical financial statements presented for periods prior to the merger
date are the financial statements of EDI, not the previously reported
consolidated financial statements of Bowmar. The operations of Bowmar have been
included in the financial statements from the date of the merger.

Results of Operations 1999, 1998 & 1997

Revenues

Fiscal 1999, 1998 and 1997 revenues were $58,038,000, $32,772,000 and
$42,104,000, respectively. The increase in net sales between fiscal 1999 and
1998 is due to the inclusion in the financial presentation for fiscal 1999 of
the combined results of the former Bowmar and EDI. If the net sales of Bowmar
had been included in the fiscal 1998, combined sales would have been
$61,770,000. The primary reasons for the decrease in combined sales include
reductions in spending from year to year in the defense industry, the lower
average sales prices and the lower demand in the military memory market brought
on by the conversion to commercial-off-the-shelf ("COTS") parts.

Revenues decreased 22% to $32,772,000 in fiscal 1998 from $42,104,000 in fiscal
1997. This decrease was due substantially to declining average selling prices
for memory products reflecting declines in market prices of semiconductor memory
components.

Gross Margin

 As a percentage of sales, gross margin increased 1.3% during fiscal 1999 to
26.8% from 21.5% in fiscal 1998. If Bowmar's fiscal 1998 sales and cost of goods
sold were included, gross margin as a percentage of sales would have increased
in fiscal 1999 by 2% from fiscal 1998. This is mainly due to lower cost of sales
and improved production efficiencies due to lower material costs and headcount
decreases. Cost of goods sold was negatively impacted by merger expenses
resulting from the write up of inventories because of the allocation of the
acquisition costs and severance payments to former employees.

Due to competitive forces, the Company believes that current gross margins,
excluding the effect of lower cost or market provisions, are more indicative
than prior year gross margins of what can be expected in the future and are
relatively consistent with the gross margins experienced in the fourth quarter
of fiscal 1999.

Gross margin for fiscal 1998 was 21.5% compared to 36.7% in fiscal 1997. The
decline was due primarily to the overall decline in sales in fiscal 1998.
Additionally, inventory write offs, including a charge in fiscal 1998 of
$1,160,000 relating to inventory purchased for an anticipated South Korean
customer order which did not materialize, and the effect of higher fixed
manufacturing overhead costs as compared with the lower value of sales decreased
margins.

Selling, General and Administrative Expenses

Selling, general and administrative expenses for fiscal 1999 increased
$3,481,000 versus fiscal 1998 expenses. The inclusion of Bowmar's selling,
general and administrative expenses in fiscal 1998 would have resulted in a
decrease of $2,981,000 in fiscal 1999 compared to fiscal 1998. The decrease
results from


                                       10
<PAGE>   13
                      WHITE ELECTRONIC DESIGNS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


lower sales cost and commissions due to reorganization in the sales departments.
In addition, the Company is realizing savings in selling, general and
administrative expenses due to merger related efficiencies.

Selling, general and administrative expenses decreased to $7,202,000 or 4% in
fiscal 1998 versus $7,487,000 in fiscal 1997 due to lower commissions, sales
incentives and bonuses from lower revenues and operating margins in fiscal 1998.

Product Development

Product development expenses for fiscal 1999 increased by $1,092,000 from fiscal
1998. The inclusion of Bowmar's product development expenses in fiscal 1998
would have resulted in an increase of $464,000 in fiscal 1999 versus fiscal
1998. Product development expenses for fiscal 1998 increased $424,000 from
fiscal 1997. The yearly increases are due primarily to increases in salaries and
project costs associated with new product development.

Interest Expense

Interest expense for fiscal 1999 increased by $351,000 as compared to fiscal
1998. The increase is due to the inclusion of Bowmar's debt in the fiscal 1999
results. Interest expense in fiscal 1998 closely approximated fiscal 1997.

Merger Expense

The Company incurred additional merger expenses of approximately $850,000 during
the first two quarters of 1999. These expenses consisted mainly of severance
costs and charges for professional services to complete the merger. No
additional merger related costs are expected.

Income Taxes

The Company reported an income tax benefit from continuing operations of
$301,000 for fiscal 1999. There was no provision for income tax in fiscal 1998
and a $149,000 expense for fiscal 1997. The effective tax rate in fiscal 1999
reflected recognition of the income tax benefits of net operating loss and tax
credit carryforwards as they were utilized.

Discontinued Operations

In May 1997, EDI announced its intention to divest its Crystallume Diamond
Products Division ("Crystallume"). This divestiture was completed in October
1997 in the form of a sale of assets. As a result of EDI's decision in May 1997
to divest its Crystallume Diamond Products Division, its result were
retroactively separated from EDI's ongoing operations in the consolidated
statement of operations. In fiscal 1999, results of discontinued operations
reflect activity concerning the sale of Crystallume assets.

In connection with the October 1997 sale by EDI of Crystallume, Inc., the
Company had recorded a receivable in the amount of $625,000. As previously
disclosed, the buyer asserted an indemnity claim against the Company and refused
to pay the $625,000 balance due including the initial installment of $250,000
which was due on October 1, 1998. The Company and the buyer have resolved this
matter. In exchange for executing mutual releases the Company has reduced the
receivable to $325,000. $200,000 has been received in fiscal 1999 and $125,000
is due April 1, 2000. The results of this settlement are reflected in the fiscal
1999 Statement of Income under results from discontinued operations.

In fiscal 1998, there was no gain or loss recorded from discontinued operations
compared to a loss of $1,372,000 in fiscal 1997 relating to EDI's divestiture of
its Crystallume Diamond Products Division. Revenues related to discontinued
operations were $744,000 and $1,178,000 for fiscal 1997 and 1996, respectively.
The losses from discontinued operations for fiscal 1999 was recorded net of
current income tax provision of $16,000. The losses from discontinued operations
for fiscal 1997 and 1996 were recorded


                                       11
<PAGE>   14
net of current income tax benefits of $649,000 and $126,000, respectively. The
results of Crystallume have been retroactively separated from EDI's ongoing
operations in the consolidated statement of operations and at September 30,
1997, the assets of Crystallume, consisting primarily of fixed assets, were
separately classified on the balance sheet as a current asset.

Liquidity and Capital Resources

At October 2, 1999, working capital increased to $12,584,000 from $5,207,000 at
September 30, 1998, principally as a result of the increase in current assets
due to the merger. The Company's current ratio at fiscal year end 1999 improved
to approximately 1.8 to 1. Its total debt-to-equity ratio remained at
approximately 0.9 to 1.

In fiscal 1999 and 1998, the Company used $2,275,000 and generated $13,000
respectively of cash from operating activities. The major uses of cash in fiscal
1999 was $2,717,000 for the retirement of long term debt and $2,109,000 payments
for capital expenditures. Depreciation and Amortization expense was $2,244,000
during fiscal 1999.

Capital expenditures in fiscal 1999 primarily consisted of $400,000 for
upgrading to a new computer system and related costs, $700,000 for test
equipment and $125,000 for facility upgrades. The remaining $884,000
expenditures were for manufacturing and general office equipment.

The Company's capital expenditure plans are principally to expand manufacturing
capacity and are expected to be financed largely through existing credit lines,
and to a lesser extent, through funds provided from operating leases.

With the inclusion of Bowmar's balance sheet account balances as of the date of
the merger, other major changes in balance sheet accounts during fiscal 1999
include: an increase in accounts receivable of $4,394,000 mainly due to shipment
timing differences from previous years; an increase in inventories of $2,433,000
in connection with the higher year-end backlog; accounts payables and accrued
expenses partially offset the above working capital changes by increasing
$2,556,000 from fiscal 1998. The current portion of long-term debt has increased
$2,104,000 relating to the Company's line of credit which increased to
$4,730,000 from fiscal 1998. This was partially offset by retirement of current
portion of long term debt of $2,332,000 during fiscal 1999.

The decrease in cash for fiscal 1998 compared to fiscal 1997 was primarily the
result of the repayment of debt and the repurchase of common stock.

During fiscal 1999 the Company executed a modification to its credit facility
with Bank One, which increased its revolving line of credit to $6,000,000 and
extended the maturity date to February 28, 2000 and modified certain restrictive
covenants. As of October 2, 1999, the Company was in compliance with all
covenants.

Management also anticipates that for the near term its cash payments for Federal
income taxes will be based on rates applicable to the alternative minimum tax as
it uses its net operating loss carryforwards.

Seasonality and Inflation

The Company's business is not seasonal in nature. Management believes that the
Company's operations have not been materially affected by inflation.

Recently Enacted Accounting Pronouncements

In April 1998, SOP 98-5, Reporting on the costs of Start-Up Activities, was
issued and provides guidance on the financial reporting of start-up costs and
reorganization cost to be expensed as incurred. This SOP is


                                       12
<PAGE>   15
effective for fiscal years beginning after December 15, 1998. The Company
believes the adoption of this standard will have no material effect on the
Company's financial reporting and disclosure.

In March 1998, the Accounting Standards Executive Committee of the American
Institute of certified Public Accountants issued Statement SOP-98-1, Accounting
for the Costs of Computer Software Developed or obtained for Internal Use,
relating to the treatment of costs incurred to develop software for internal
use. This SOP is effective for the financial statements for fiscal years
beginning after December 15, 1998, and should be applied to internal use
computer software costs incurred in those fiscal years for all projects,
including those projects in progress upon initial application of this SOP. The
Company will adopt the SOP in the first quarter of Fiscal Year 2000. The Company
believes the adoption of this standard will have no material effect on the
Company's financial reporting and disclosure

Year 2000

The Company has surveyed its supporting computer systems and replaced, or
upgraded all non-compliant systems to meet year 2000 compliance. The cost of
these replacements, or upgrades, totaled approximately $400,000. The Company has
been in contact with its major suppliers and vendors. All have responded that
they are either year 2000 compliant, or will be compliant by December 31, 1999.
The Company does not expect any major disruption regarding vendor receipts, or
customer shipments. As part of the Company's year 2000 preparation process,
certain inventory items will be delivered prior to December 31, 1999 to ensure
an adequate supply on hand for the month of January 2000, in the unlikely event
that supplies are temporarily disrupted. The Company has been holding year 2000
readiness meetings on a continuing basis. Through these meetings, the Company
has developed contingency plans and work schedules to keep production working in
the unlikely event that an external system failure causes a disruption for the
Company. Based on the Company's current systems readiness, and contingency plans
to deal with external system problems, the Company does not expect any major
disruption in its business operation. Even though the Company does not expect to
be materially affected by any disruptions in its internal systems, vendor
supplies, or business operations, there can be no assurance that a global
economic slowdown caused by the year 2000 problem would not eventually have an
adverse affect on future sales or business operations.

ITEM 7A       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Item 14 of this Annual Report for required financial statements and
supplementary data.

ITEM 9        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
              ACCOUNTING AND FINANCIAL DISCLOSURE

None.
                                    PART III

ITEM 10       DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item for directors is set forth in the
Company's 2000 Proxy Statement under the heading "Election of Directors" and the
heading "Section 16(a) Beneficial Ownership Reporting Compliance" and is
incorporated herein by this reference as if set forth in full. The information
required by this Item for Executive Officers of the Company is set forth in Part
I of this Form 10-K as a separate item entitled "Executive Officers of the
Company."


                                       13
<PAGE>   16
ITEM 11       EXECUTIVE COMPENSATION

The information required by this Item is set forth in the Company's 2000 Proxy
Statement under the heading "Executive Compensation" and is incorporated herein
by this reference as if set forth in full.

ITEM 12       SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT

The information required by this Item is set forth in the Company's 2000 Proxy
Statement under the heading "Principal Shareholders" and under the heading
"Election of Directors-Nominees" and is incorporated herein by this reference as
if set forth in full.

ITEM 13       CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is set forth in the Company's 2000 Proxy
Statement under the heading "Certain Transactions" and under the heading
"Compensation Committee Interlocks and Insider Participation" and is
incorporated herein by this reference as if set forth in full.

                                     PART IV

ITEM 14       EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
              FORM 8-K

(a)(1)(2)     Financial Statements and Supplementary Data

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                      ----
<S>                                                                                   <C>
              Consolidated Financial Statements

              Report of Independent Accountants                                        19

              Consolidated Balance Sheets as of October 2, 1999
               and September 30, 1998                                                  20

              Consolidated Statements of Income for the Years Ended
              October 2, 1999, September 30, 1998 and September 30, 1997               21

              Consolidated Statements of Shareholders' Equity for the Years Ended
              October 2, 1999, September 30, 1998 and September 30, 1997               22

              Consolidated Statements of Cash Flows for the Years Ended
              October 2, 1999, September 30, 1998 and September 30, 1997               23

              Notes to Consolidated Financial Statements                               24
</TABLE>

              Financial Statement Schedules for the Years Ended October 2, 1999,
              September 30, 1998, and September 30, 1997.

         Financial statement schedules have been omitted because either they are
         not required or are not applicable, or because the information has been
         included in the consolidated financial statements or notes thereto.

(a)(3)        Exhibits

            2.1  Agreement and Plan of Merger dated May 3, 1998 by and among
                 Bowmar Instrument Corporation and Electronic Designs, Inc. and
                 Bravo Acquisition Subsidiary, Inc. (incorporated herein by
                 reference to Exhibit 2 to the current Report on Form 8-K filed
                 on


                                       14
<PAGE>   17
                 May 6, 1998.)

           2.1A  Amendment to Agreement and Plan of Merger, dated June 9, 1998
                 (incorporated herein by reference to Exhibit 2.1A to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

           2.1B  Amendment to Agreement and Plan of Merger, dated August 24,
                 1998 (incorporated herein by reference to Exhibit 2.1B to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

            3.1  Amended and Restated Articles of Incorporation of White
                 Electronic Designs Corporation (incorporated herein by
                 reference to Exhibit 3.1 on Form 10-K filed December 24, 1998).

            3.2  Amended and Restated Code of By-Laws of White Electronic
                 Designs Corporation (incorporated herein by reference to
                 Exhibit 3.2 to the Registration Statement on Form 10-K file
                 December 24. 1998).

            4.1  Rights Agreement, dated December 6, 1996, between Bowmar
                 Instrument Corporation and American Stock Transfer and Trust
                 Company, as Rights Agent (incorporated herein by reference to
                 Exhibit 5C to the Current Report on Form 8-K filed on December
                 19, 1996).

           4.1A  Amendment No. 1 to Rights Agreement, effective as of May 3,
                 1998 (incorporated herein by reference to Exhibit 4.3 to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

            4.2  Indenture, Bowmar Instrument Corporation 13 -1/2% Convertible
                 Subordinated Debentures due December 15, 1995 (incorporated
                 herein by reference to Exhibit 4.4 to the Registration
                 Statement on Form S-7, Registration No. 2-70025).

            4.3  Stock Certificate of White Electronic Designs Corporation
                 (incorporated herein by reference to Exhibit 4.3 on Form 10-K
                 filed December 24, 1998).

           10.1  Agreement to be Bound by Registration Rights Agreements, dated
                 as of May 3, 1998, by and between Bowmar Instrument Corporation
                 and Electronic Designs, Inc. (incorporated herein by reference
                 to Exhibit 10.1 to the Registration Statement on Form S-4,
                 Registration No. 333-56565).

           10.2  Agreement to be Bound by Severance Agreements and Employment
                 Agreement, dated as of May 3, 1998, by and between Bowmar
                 Instrument Corporation and Electronic Designs, Inc.
                 (incorporated herein by reference to Exhibit 10.2 to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

         **10.3  Executive Employment Agreement by and between Hamid Shokrgozar
                 and Bowmar Instrument Corporation (incorporated herein by
                 reference to Exhibit 10.4(j) to the Quarterly Report on Form
                 10-Q for the quarterly period ended April 4, 1998).

         **10.4  Executive Employment Agreement by and between Joseph G.
                 Warren, Jr. and Bowmar Instrument Corporation (incorporated
                 herein by reference to Exhibit 10.7 to the Quarterly Report on
                 Form 10-Q for the quarterly period ended January 3, 1998).

           10.5  Purchase and Sales Agreement, dated December 5, 1997,
                 concerning the sale of the Acton, Massachusetts facility
                 (incorporated herein by reference to Exhibit 10.8 to the
                 Quarterly Report on Form 10-Q for the quarterly period ended
                 January 3, 1998).

           10.6  Fourth Amendment to Credit Agreement, dated as of March 16,
                 1998, by and between Bowmar Instrument Corporation and Bank
                 One, Arizona, NA (incorporated herein by reference to Exhibit
                 10.4(h) to the Quarterly Report on Form 10-Q for the quarterly
                 period ended April 4, 1998).


                                       15
<PAGE>   18
       10.7       Promissory Note Modification Agreement, dated March 16, 1998,
                  by and between Bowmar Instrument Corporation and Bank One,
                  Arizona, NA (incorporated herein by reference to Exhibit
                  10.4(i) to the Quarterly Report on Form 10-Q for the quarterly
                  period ended April 4, 1998).

       10.8       Lease, dated February 23, 1990, by and between Bowmar/Ali,
                  Inc. as landlord and LAU Acquisition Corporation as tenant
                  (incorporated herein by reference to Exhibit 10.1(bb) to the
                  Annual Report on Form 10-K filed for the fiscal year ended
                  September 30, 1990).

     **10.9       Employment Agreement dated August 15, 1991, as amended as of
                  August 15, 1992, and as of June 1, 1995 between Gardiner S.
                  Dutton and Bowmar Instrument Corporation (incorporated herein
                  by reference to Exhibit 10.1(ff) to the Annual Report on Form
                  10-K for the fiscal year ended September 30, 1992 and Exhibit
                  5(b) to Form 8-K dated June 26, 1995).

      **10.10     Form of Incentive Stock Option Agreement covering incentive
                  stock options granted under the Corporation's now terminated
                  1986 Plan, as amended October 23, 1987 (incorporated here in
                  by reference to Exhibit 10.2(c) to the Annual Report on Form
                  10-K for the fiscal year ended September 30, 1987).

      **10.11     Form of Non-Incentive Stock Option Agreement covering
                  non-incentive stock options granted under the Corporation's
                  now terminated 1986 Plan, as amended October 23, 1987
                  (incorporated by reference to Exhibit 10.2(c) to the Annual
                  Report on Form 10-K for the fiscal year ended September 30,
                  1987).

      **10.12     Bowmar Instrument Corporation Stock Option Plan for
                  Non-Employee Directors as amended February 4, 1994
                  (incorporated herein by reference to Exhibit B to the
                  Corporation's definitive Proxy Statement, prepared in
                  connection with the 1994 Annual Meeting of Shareholders).

      **10.13     Non-Incentive Stock Option Agreement dated August 16, 1991, as
                  amended August 15, 1992, between Bowmar Instrument Corporation
                  and Gardiner S. Dutton (incorporated herein by reference to
                  Exhibit 10.1(ff) to the Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1992).

      **10.14     1994 Flexible Stock Plan (incorporated herein by reference to
                  Exhibit A to the Corporation's definitive Proxy Statement
                  prepared in connection with the 1994 Annual Meeting of
                  Shareholders).

      **10.15     Form of Agreement governing awards of restricted stock under
                  the Corporation's now terminated Restricted Plan (incorporated
                  herein by reference to the exhibit to Amendment No. 1 to the
                  Registration Statement of Form S-8 (No. 2-67645)).

      10.16       Loan documents by and between Bank One, Arizona, NA and Bowmar
                  Instrument Corporation and its wholly owned subsidiary,
                  Bowmar/ALI, Inc. (incorporated herein by reference to exhibits
                  10.4a through 10.4g to the Annual Report on Form 10-K for the
                  fiscal year ended September 30, 1995).

      10.17       Modification Agreement dated April 26, 1996, pursuant to the
                  Loan Agreement dated August 28, 1995 by and between Bank One,
                  Arizona, NA and the Registrant (incorporated herein by
                  reference to Exhibit 10.4(b) to the Annual Report on Form 10-K
                  for the fiscal year ended September 28, 1996).

      10.18       Second Modification Agreement dated August 9, 1996, pursuant
                  to the Loan Agreement dated August 28, 1995 by and between
                  Bank One, Arizona, NA and the Registrant (incorporated herein
                  by reference to Exhibit 10.4(c) to the Annual Report on Form
                  10-K for the fiscal year ended September 28, 1996).

      10.19       Third Modification Agreement dated March 28, 1997 pursuant to
                  the Loan Agreement


                                       16
<PAGE>   19
                  dated August 28, 1995 by and between Bank One, Arizona NA and
                  the Registrant (incorporated herein by reference to Exhibit
                  10.4(d) to the Form 10-Q for the quarter ended March 29,
                  1997).

      10.20       Modification of Mortgage (Massachusetts) dated March 28, 1997
                  by and between Bank One, Arizona NA and the Registrant and its
                  wholly owned subsidiary, Bowmar/ALI (incorporated herein by
                  reference to Exhibit 10.4(e) to the Form 10-Q for the quarter
                  ended March 29, 1997).

      10.21       Modification of Mortgage (Indiana) dated March 28, 1997 by and
                  between Bank One, Arizona NA and the Registrant (incorporated
                  herein by reference to Exhibit 10.4(f) to the Form 10-Q for
                  the quarter ended March 29, 1997).

      10.22       Revolving Promissory Note (RLT) dated March 28, 1997 by and
                  between Bank One, Arizona NA and the Registrant, for up to
                  $1,200,000 (incorporated herein by reference to Exhibit
                  10.4(g) to the Form 10-Q for the quarter ended March 29,
                  1997).

      10.23       Lease dated February 4, 1997 by and between Bowmar Instrument
                  Corporation as tenant and Gus Enterprises-XII, LLC as landlord
                  (incorporated by reference to Exhibit 10.5 to the Annual
                  Report on Form 10-K for the fiscal year ended September 27,
                  1997).

      10.24       Sixth Modification Agreement dated April 5, 1999 pursuant to
                  the Loan Agreement dated August 28, 1995 by and between Bank
                  One, Arizona NA and the Registrant (incorporated herein by
                  reference to Exhibit 10.1 on Form 10-Q filed August 17, 1999).

      10.25       Unconditional Guarantee of Payment by Electronic Designs Inc.
                  to Bank One, Arizona NA and the Registrant (incorporated
                  herein by reference to Exhibit 10.2 on From 10-Q filed on
                  February 16, 1999).

      10.26       Fifth Modification Agreement dated November 1, 1998 pursuant
                  to the Loan Agreement dated August 28, 1995 by and between
                  Bank One, Arizona NA and the Registrant (incorporated herein
                  by reference to Exhibit 10.1 on Form 10-Q filed on February
                  16, 1999).

       21.1       Subsidiaries of White Electronic Designs Corporation
                  (incorporated herein by reference to exhibit 21.1 to Form 10-K
                  filed December 24, 1998).

      *23.1       Consent of Independent Accountant (PricewaterhouseCoopers LLP)

      *27.1       Financial Data Schedule.

----------


(b)           Reports on Form 8-K

              None.

(c)           See (a)(3) above.

(d)           Not applicable.

 *    Filed herewith.
**    Management compensatory contract, plan or arrangement.


                                       17
<PAGE>   20
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                            WHITE ELECTRONIC DESIGNS CORPORATION




Date:    December 22, 1999                  /s/William J. Rodes
     ----------------------------           ------------------------------------
                                            William J. Rodes
                                            Controller, Secretary, Treasurer


Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Company and in
the capacities and on the date indicated:


/s/Norman T. Hall                             /s/Donald F. McGuinness
-----------------------------------           ----------------------------------
Norman T. Hall                                Donald F. McGuinness
Director                                      Chairman of the Board of Directors
Date:     December 22, 1999                   Date:     December 22, 1999
     ------------------------------                -----------------------------

/s/Thomas M. Reahard                          /s/Thomas J. Toy
-----------------------------------           ----------------------------------
Thomas M. Reahard                             Thomas J. Toy
Director                                      Director
Date:     December 22, 1999                   Date:     December 22, 1999
     ------------------------------                -----------------------------


/s/Hamid R. Shokrgozar                        /s/William J. Rodes
-----------------------------------           ----------------------------------
Hamid R. Shokrgozar                           William J. Rodes
President, Chief Executive Officer            Controller, Secretary, Treasurer
and Director
Date:     December 22, 1999                   Date:     December 22, 1999
     ------------------------------                -----------------------------

/s/Edward A. White
-----------------------------------
Edward A. White
Vice Chairman of the Board
and Director
Date:     December 22, 1999
      -----------------------------


                                       18
<PAGE>   21
                      WHITE ELECTRONIC DESIGNS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                        REPORT OF INDEPENDENT ACCOUNTANTS



TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
WHITE ELECTRONIC DESIGNS CORPORATION


In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, shareholder's equity, and of cash flows
present fairly, in all material respects, the financial position of White
Electronic Designs Corporation and Subsidiary at October 2, 1999 and September
30, 1998, and the results of their operations and their cash flows for each of
the three years in the period ended October 2, 1999, in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.




PricewaterhouseCoopers LLP


Phoenix, Arizona
November 19, 1999
(except for Note 19
for which the date is
December 21, 1999)


                                       19
<PAGE>   22
                           WHITE DESIGNS CORPORATION
                          CONSOLIDATED BALANCE SHEETS

                           (In thousands of dollars)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
                                                                   October 2,   September 30,
                                                                     1999          1998
=============================================================================================
<S>                                                                <C>          <C>
ASSETS
Current Assets
  Cash                                                              $    305      $  2,756
  Accounts receivable, less allowance for
     doubtful accounts of $304 and $320                               10,374         3,584
  Inventories                                                         14,583         6,191
  Prepaid expenses                                                       354           109
  Deferred income taxes                                                2,098         1,647
---------------------------------------------------------------------------------------------
              Total Current Assets                                    27,714        14,287
Property, Plant and Equipment, net                                     7,445         2,066
Deferred Income Taxes                                                  1,978            --
Goodwill and Intangibles                                               1,444           929
Other Assets, net                                                        190         1,100
---------------------------------------------------------------------------------------------
              Total  Assets                                         $ 38,771      $ 18,382
=============================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Current portion of long-term debt                                 $  5,165      $  2,332
  Accounts payable                                                     4,697         3,503
  Accrued salaries and benefits                                        2,240           443
  Other accrued expenses                                               3,028         2,355
---------------------------------------------------------------------------------------------
              Total Current Liabilities                               15,130         8,633
Long Term Debt                                                         2,249            --
Other Long term Liabilities                                            1,190           447
---------------------------------------------------------------------------------------------
              Total Liabilities                                     $ 18,569      $  9,080
---------------------------------------------------------------------------------------------
Commitments and Contingencies (see Note 12)
---------------------------------------------------------------------------------------------
Shareholders' Equity
   Preferred stock, $1.00 par value, authorized 500,000 shares,
     issued 119,906, and none                                            120            --
  Common stock, $0.10 stated value, authorized 60,000,000
    shares issued 15,919,524 and 7,148,295                             1,591            72
  Treasury stock, 44,442 and 51,595 shares, at stated value
     and cost                                                             (4)         (186)
  Additional paid-in capital                                          37,272        26,998
  Accumulated deficit                                                (18,777)      (17,582)
---------------------------------------------------------------------------------------------
                Total Shareholders' Equity                            20,202         9,302
---------------------------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity                          $ 38,771      $ 18,382
=============================================================================================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       20
<PAGE>   23
                    WHITE DESIGNS CORPORATION AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF INCOME
           (In thousands of dollars, except share and per share data)


<TABLE>
<CAPTION>
================================================================================================================
                                                                                  FISCAL YEAR
                                                                     1999             1998             1997
----------------------------------------------------------------------------------------------------------------
<S>                                                              <C>               <C>              <C>
Net sales                                                        $     58,038      $    32,772      $    42,104
Cost of sales                                                          42,510           25,729           26,610
----------------------------------------------------------------------------------------------------------------
Gross margin                                                           15,528            7,043           15,494
----------------------------------------------------------------------------------------------------------------
Expenses:
   Selling, general and administrative                                 10,683            7,202            7,487
   Product development                                                  3,651            2,559            2,135
   Interest expense                                                       471              120              109
   Merger expense                                                         850               --               --
   Amortization of intangible assets                                      732              466              466
----------------------------------------------------------------------------------------------------------------
   Total expenses                                                      16,387           10,347           10,197
----------------------------------------------------------------------------------------------------------------
(Loss) income before income taxes
    and discontinued operations                                          (859)          (3,304)           5,297
Provision (benefit) for income taxes                                     (301)              --              149
----------------------------------------------------------------------------------------------------------------
(Loss) income from continuing operations                                 (558)          (3,304)           5,148
----------------------------------------------------------------------------------------------------------------
Discontinued operations (Note 16)
Loss from discontinued operations of Crystallume Diamond
Products Division, net of applicable income taxes                        (277)              --             (399)
Provision for loss on disposal of Crystallume Diamond
Products Division including provision for operating losses
 during the phase out period, net of applicable income taxes               --               --             (973)
----------------------------------------------------------------------------------------------------------------
(Loss) Income from discontinued operations                               (277)              --           (1,372)
----------------------------------------------------------------------------------------------------------------
NET (LOSS) INCOME                                                $       (835)     $    (3,304)     $     3,776
================================================================================================================
Earnings (loss) per share - basic, continuing operations         $      (0.06)     $     (0.47)     $      0.74
Earnings (loss) per share - basic, discontinued operations              (0.02)              --            (0.20)
----------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS) PER COMMON SHARE - BASIC                       $      (0.08)     $     (0.47)     $      0.54
----------------------------------------------------------------------------------------------------------------
Earnings (loss) per share-diluted, continuing operations                                            $      0.68
Earnings (loss) per share-diluted, discontinued operations                                                 0.18
----------------------------------------------------------------------------------------------------------------
Net income per common share-diluted                                                                 $      0.50
----------------------------------------------------------------------------------------------------------------
Weighted average number of common shares and equivalents:
    Basic                                                          15,394,451        7,072,000        6,948,000
    Diluted                                                                                           7,579,000
================================================================================================================
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       21
<PAGE>   24
              WHITE ELECTRONIC DESIGNS CORPORATION AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                  (In thousands of dollars, except share data)


<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
                                                                                 Additional                   Total Share-
                                          Preferred      Common      Treasury     Paid-in       Accumulated     holders'
                                            Stock        Stock        Stock       Capital         Deficit        Equity
--------------------------------------------------------------------------------------------------------------------------
<S>                                       <C>            <C>         <C>         <C>            <C>           <C>
BALANCE, SEPTEMBER 30, 1996                 $ --         $ 64          $ -       $ 26,943        $(17,860)       $ 9,147
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Purchase of common stock for
   treasury, at cost                                                  (194)                                         (194)
Common stock issued under
   employee stock option and stock
   purchase plans at $0.22 to $3.75
   per share                                                1           75              7                             83
Stock purchase warrant issued in
   partial payment of services                                                         25                             25
Conversion of preferred stock into
   common stock                                             7                          (7)
Net income                                                                                          3,776          3,776
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1997                 $ --         $ 72        $(119)      $ 26,968        $(14,084)       $12,837
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Purchase of common stock for
   treasury, at cost                                                  (310)                                         (310)
Common stock issued under
   employee stock option and stock
   purchase plans at $0.22 to $3.75
   per share                                                           243                           (194)            49
Stock purchase warrants issued in
   issued in partial payment of services                                               30                             30
Net loss                                                                                           (3,304)        (3,304)
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1998                 $ --         $ 72        $(186)      $ 26,998        $(17,582)       $ 9,302
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
Common stock issuance:
Exercise of options and related
   tax benefits, 76,159 shares                              8                          14                             22
Payment of preferred dividends                                                                       (360)          (360)
Acquired through merger                      120        1,511          182         10,260                         12,073
Net loss                                                                                             (835)          (835)
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
BALANCE, OCTOBER 2, 1999                    $120      $ 1,591         $ (4)      $ 37,272        $(18,777)       $20,202
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                       22
<PAGE>   25
                      WHITE ELECTRONIC DESIGNS CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands of dollars)

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------
                                                              YEAR ENDED
                                                        OCTOBER 2,   SEPTEMBER 30,
                                                          1999           1998
----------------------------------------------------------------------------------
<S>                                                     <C>          <C>
 OPERATING ACTIVITIES:
 Net income                                             $   (835)     $(3,304)
 Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation and amortization                         2,244        1,290
     Common stock and warrant issued in payment               --           30
     of interest and other expense
     Deferred income tax (benefit) expense                  (117)          --
     Net changes in balance sheet accounts:
       Accounts receivable                                (4,394)       3,809
       Inventories                                        (1,984)         712
       Prepaid expenses                                       26          326
       Other assets                                          238         (715)
       Accounts payable                                      443       (2,220)
       Accrued expenses                                    1,253           85
       Other long-term liabilities                           851           --
----------------------------------------------------------------------------------
 Net cash provided by operating activities              $ (2,275)     $    13
----------------------------------------------------------------------------------
 INVESTING ACTIVITIES:
 Acquisition of property,  plant & equipment              (2,109)        (773)
 Cash acquired in acquisition                                224
 Proceeds from sales of discontinued operations                           500
----------------------------------------------------------------------------------
 Net cash provided by (used in) investing activities    $ (1,885)     $  (273)
----------------------------------------------------------------------------------
 FINANCING ACTIVITIES:
 Borrowings under line of credit, net                      4,730           --
 Borrowings of long-term debt                                 34           --
 Issuance of long-term debt                                   --          150
 Retirement of long-term debt                             (2,717)      (1,085)
 Issuance of common stock                                     22           49
 Repurchase of common stock                                   --         (310)
 Payment of preferred stock dividend                        (360)          --
----------------------------------------------------------------------------------
 Net cash provided by (used in) financing activities    $  1,709      $(1,196)
----------------------------------------------------------------------------------
 Net change in cash                                       (2,451)      (1,456)
 Cash at beginning of year                                 2,756        4,212
----------------------------------------------------------------------------------
 Cash at end of year                                    $    305      $ 2,756
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
 SUPPLEMENTAL CASH FLOWS INFORMATION:
 Net cash paid for interest                             $    404      $   261
 Net cash recovered from income tax refunds             $    129      $   331
----------------------------------------------------------------------------------
 NON-CASH INVESTING AND FINANCING ACTIVITIES
 Details of acquisition
    Fair value of assets acquired                       $ 18,074      $    --
    Fair value of liabilities assumed                     (5,351)          --
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
 Net assets acquired                                    $ 12,723      $    --
 Acquisition costs                                          (650)
----------------------------------------------------------------------------------
 Stock issued in connection with the merger             $ 12,073      $    --
----------------------------------------------------------------------------------
----------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these financial statements.


                                       23
<PAGE>   26
                      WHITE ELECTRONIC DESIGNS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       NATURE OF OPERATIONS

White Electronic Designs Corporation, formerly Bowmar Instrument Corporation and
its subsidiary (collectively "the Company"), designs and manufactures high
density, microelectronic memory products, advanced matrix liquid crystal
displays, interface products, and electromechanical components and packages. The
Company's customers include both domestic and international government
contractors and original equipment manufacturers. The majority of the sales and
operating income are generated by the microelectronic business segment.

2.       MERGER WITH ELECTRONIC DESIGNS, INC.

On October 26, 1998, Bowmar Instrument Corporation ("Bowmar") merged with
Electronic Designs, Inc. ("EDI"). In connection with the merger, Bowmar changed
its name to White Electronic Designs Corporation (the "Company"). While Bowmar
was the legal acquirer, the merger was accounted for as a reverse acquisition
purchase whereby EDI was deemed to have acquired Bowmar for financial reporting
purposes. Consistent with the reverse acquisition purchase accounting treatment,
the historical financial statements presented for periods prior to the merger
date are the financial statements of EDI, not the previously reported
consolidated financial statements of Bowmar. The operations of Bowmar have been
included in the financial statements from the date of the merger. Pursuant to
the Merger each outstanding share of common stock of EDI was converted into
1.275 shares of common stock of Bowmar.

The following unaudited pro forma information shows the results of operations of
EDI and Bowmar for the fiscal years ended 1998 and 1997 assuming the companies
had combined as of October 1, 1996.

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                              1998                           1997
(dollars in thousands except per share data)
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                              <C>
Revenue                                                                   $  61,770                        $ 69,924
Net income (loss), continuing operations                                  $  (4,205)                       $  4,549
Basic income (loss) per share, continuing operations                      $   (0.29)                       $   0.27
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

This pro forma information does not purport to be indicative of the results that
actually would have been obtained if the companies had been combined during the
periods presented and is not intended to be a projection of future results.

3.       SIGNIFICANT ACCOUNTING POLICIES

         a.  Principles of Consolidation
         The consolidated financial statements include the accounts of the
         Company. All significant inter-company accounts and transactions are
         eliminated. Certain amounts in prior fiscal years consolidated
         financial statements have been reclassified to conform to current
         presentation.

         b.  Fiscal Year-End
         The Company's fiscal year-end is the Saturday nearest September 30.

         c.  Fair Value of Financial Instruments
         The Company values financial instruments as required by SFAS No. 107,
         Disclosures about Fair Value of Financial Instruments ("SFAS No. 107").
         The carrying amounts of cash and cash equivalents and bank notes
         payable approximate fair value due to the short maturity of those
         instruments. The fair value of marketable securities and long-term
         investments is determined based on quoted market prices. The fair value
         of long-term obligations is estimated by discounting the future cash
         flows required under the terms of each respective debt agreement by
         current market rates for the same of similar issues of debt with
         similar remaining maturities.

                                       24
<PAGE>   27
         d.  Inventories
         Inventories are valued at the lower of cost or market with costs
         determined using the average and standard costs methods with standard
         costs approximating actual.

         e.  Property, Plant and Equipment
         Property, plant and equipment, including property under capital lease
         agreements, are stated at cost. Depreciation is determined on a
         straight-line basis over the estimated useful lives ranging from 5 to
         20 years for buildings and improvements and 3 to 7 years for machinery
         and equipment. Leasehold improvements are amortized over the lives of
         the leases or estimated useful lives of the assets, whichever is less.
         When assets are sold or otherwise retired, the cost and accumulated
         depreciation are removed from the books and the resulting gain or loss
         is included in operating results.

         f.  Intangible Assets
         Intangible assets represent the goodwill generated from the October 26,
         1998 merger with White Electronic Designs Corporation and the October
         10, 1995 acquisition of Electronic Designs, Inc. . These assets are
         being amortized over periods ranging from four to five years. The
         intangible asset balances and related accumulated amortization as of
         fiscal year end 1999 and 1998 are as follows:

<TABLE>
<CAPTION>
         -----------------------------------------------------------------------------------------------------------
                                                                                    Fiscal 1999          Fiscal 1998
         -----------------------------------------------------------------------------------------------------------
<S>                                                                                 <C>                  <C>
         Intangible Assets Gross October  26, 1998 Merger                            $ 1,247,000         $        --
         Intangible Assets Gross October 10, 1995 Acquisition                          2,330,000           2,330,000
         Accumulated Amortization October 26, 1998 Merger                               (266,000)                 --
         Accumulated Amortization October 10, 1995 Acquisition                        (1,867,000)         (1,401,000)
         ------------------------------------------------------------------------------------------------------------
         Intangible Assets, Net                                                      $ 1,444,000         $   929,000
         ------------------------------------------------------------------------------------------------------------
</TABLE>

         g.  Government Contracts
         Sales under government contracts, which are usually based on firm fixed
         price contracts, are recorded when the units are shipped and accepted
         by the government.

         h.  Sales Recognition and Accounts Receivable
         The majority of the Company's sales are recognized when the products
         are shipped to the customer. Some product shipments to distributors may
         be returned based on conditions set forth in their distributor
         agreement. Therefore, product sales on these shipments to distributors
         are not recognized until the distributor ships the products to the end
         user customer. The Company also maintains reserves for warranty return
         expense based on normal return rates. In addition, the Company has
         reserves for potential credit losses, and distributor price protection
         adjustments. Based on historical experience, the Company believes it
         has adequate reserves to account for potential losses or adjustments.
         Write-offs for uncollectible accounts totaled $36,000 in fiscal 1999
         and $26,000 in fiscal 1998.

         i.  Income Taxes
         The Company accounts for income taxes in accordance with Statement of
         Financial Accounting Standards No. 109, "Accounting for Income Taxes"
         ("SFAS 109"). SFAS 109 is an asset and liability approach that requires
         the recognition of deferred tax assets and liabilities for the expected
         future tax consequences of temporary differences between the financial
         statement carrying amounts and the tax bases of assets and liabilities.
         Deferred tax assets are recognized, net of any valuation allowance, for
         deductible temporary differences and net operating loss and tax credit
         carryforwards.

         j.  Newly Issued Accounting Standards
         The Company has adopted Statement of Financial Accounting Standards No.
         131, Disclosures about Segments of an Enterprise and related
         information (SFAS 131). Business segment and related information can be
         found in Note 18 of Notes to Consolidated Financial Statements.

         The Company has adopted Statement of Financial Accounting Standards No
         132, Disclosures about Pension and other Post-Retirement Benefits (SFAS
         132). Pension benefits plan information can be found in Note 9 of Notes
         to Consolidated Financial Statements.

                                       25
<PAGE>   28
         In April 1998, SOP 98-5, Reporting on the costs of Start-Up Activities,
         was issued and provides guidance on the financial reporting of start-up
         costs and reorganization cost to be expensed as incurred. This SOP is
         effective for fiscal years beginning after December 15, 1998. The
         Company believes the adoption of this standard will have no material
         effect on the Company's financial reporting and disclosure.

         In March 1998, the Accounting Standards Executive Committee of the
         American Institute of certified Public Accountants issued Statement
         SOP-98-1, Accounting for the Costs of Computer Software Developed or
         obtained for Internal Use, relating to the treatment of costs incurred
         to develop software for internal use. This SOP is effective for the
         financial statements for fiscal years beginning after December 15,
         1998, and should be applied to internal use computer software costs
         incurred in those fiscal years for all projects, including those
         projects in progress upon initial application of this SOP. The Company
         will adopt the SOP in the first quarter of Fiscal Year 2000. The
         Company is evaluating the effect this SOP will have on the Company's
         financial reporting and disclosure. The Company believes the adoption
         of this standard will have no material effect on the Company's
         financial reporting and disclosure.

         k.  Accounting Estimates
         The preparation of financial statements in conformity with generally
         accepted accounting principles requires management to make estimates
         and assumptions that affect the reported amounts of assets and
         liabilities and disclosure of contingent assets and liabilities at the
         date of the financial statements and the reported amounts of revenues
         and expenses during the reported period. Actual results could differ
         from those estimates.

         l.  Research and Development
         Expenditures for research and development are expensed as incurred.


4.   INVENTORIES

Inventories consist of the following:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
                                                   October 2, 1999                           September 30, 1998
---------------------------------------------------------------------------------------------------------------
<S>                                                <C>                                       <C>
Raw materials                                         $ 7,373,000                                   $ 4,193,000
Work-in-process                                         4,659,000                                       265,000
Finished goods                                          2,551,000                                     1,733,000
---------------------------------------------------------------------------------------------------------------
Total Inventories                                     $14,583,000                                   $ 6,191,000
---------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------
</TABLE>

The inventories are net of reserve for excess and obsolete inventories of
$1,691,000 and $1,264,169 for fiscal 1999 and 1998 respectively.

5.       OTHER ASSETS

Other assets for fiscal 1999 consist of $57,000 in bank loan origination costs,
$42,000 in security deposits and $91,000 in other general deposits. Other assets
for fiscal 1998 consisted of $412,000 relating to capitalized merger costs, a
note receivable for $625,000 relating to the sale of Crystallume, and $63,000 in
other general deposits.

                                       26
<PAGE>   29
6.       PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consists of the following:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                                 October 2 1999                      September 30, 1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                                 <C>
Land                                                               $   246,000                          $        --
Buildings and improvements                                             600,000                                   --
Machinery and equipment                                              5,704,000                            3,153,000
Tooling                                                                987,000                              912,000
Furniture and fixtures                                               1,618,000                               12,000
Leasehold improvements                                               1,694,000                              191,000
--------------------------------------------------------------------------------------------------------------------------------
Total, at cost                                                      10,849,000                            4,268,000
Less accumulated depreciation and amortization                      (3,404,000)                          (2,202,000)
--------------------------------------------------------------------------------------------------------------------------------
Net Property, Plant and Equipment                                  $ 7,445,000                          $ 2,066,000
--------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

At fiscal year-end 1999 and 1998, property, plant and equipment held under
capital leases amounted to $375,000 and $375,000 respectively. Related
accumulated amortization on this property and equipment amounted to $304,000 and
$211,000. Accumulated amortization for such equipment approximated $94,000 and
$94,000 for fiscal years 1999 and 1998, respectively.

7.       LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                            October 2, 1999                     September 30, 1998
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                         <C>                                 <C>
Term loan, Bank One                                           $ 2,601,000                           $        --
Term loan                                                              --                             1,823,000
Term loan, Equipment                                                   --                               337,000
Bank One revolving line of credit                               4,730,000
Obligations under capital leases                                   83,000                               172,000
-------------------------------------------------------------------------------------------------------------------------------
   Sub-Total                                                    7,414,000                             2,332,000
Less current portion                                            5,165,000                           $(2,332,000)
-------------------------------------------------------------------------------------------------------------------------------
Total long term debt                                          $ 2,249,000                           $        --
-------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The financing agreement with Bank One provides for a $6.0 million revolving line
of credit which expires February 28, 2000 and bears interest at .5% over the
Bank's prime rate (on October 2, 1999 the loan rate was 8.75%; and a term loan
with principal amount of $2,601,000 which bears interest at the rate of 2.5%
over the LIBOR. The term loan's rate on October 2, 1999 was 7.9% with principal
payments of $29,363 per month with the balance due on November 30, 2003. The
Bank One financing is collateralized by all of the assets of the Company. The
term loans which were outstanding as of September 30, 1998 were paid using
borrowing arrangements through Bank One.

The financing agreement contains certain financial covenants and precludes the
payment of cash dividends for both Preferred and Common Stock in excess of
$500,000 per year.

The availability of cash under the revolving line of credit is based on eligible
accounts receivable and inventories. There is a charge of 1/4 of 1% per month on
the unused portion of the line of credit.

The aggregate maturities of the above debt excluding the revolving line of
credit, are approximately $435,000 in 2000, $352,000 in 2001, $352,000 in 2002
and $1,545,000 in 2003.

The weighted average interest rate on long term debt for fiscal 1999, 1998, and
1997 was approximately 8.05%, 9.25%, and 9.00% respectively.


                                       27
<PAGE>   30
8.       INCOME TAXES

The provision (benefits) for income taxes on continuing operations consists of
the following:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                          Fiscal Year
                                                  1999                       1998                           1997
-------------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                        <C>                             <C>
Current                                        $ 129,000                $     --                        $ 1,349,000
Deferred                                       (430,000)                      --                         (1,200,000)
-------------------------------------------------------------------------------------------------------------------------------
Income tax provision (benefit)               $ (301,000)                $     --                        $   149,000
===============================================================================================================================
</TABLE>

A reconciliation of the provision for income taxes on continuing operations
between the U.S. statutory and effective rates follows:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                    Fiscal Year
                                                                1999                    1998                    1997
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>                      <C>                  <C>
Provision (benefits) at statutory rate                     $ (292,000)              $   --               $ 1,133,000
State taxes, net of federal benefit                           (30,000)                  --                   216,000
Other                                                          (8,000)                  --                        --
Permanent difference                                           29,000                   --                (1,200,000)
-------------------------------------------------------------------------------------------------------------------------------
Effective Tax                                              $ (301,000)              $   --               $   149,000
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The income tax effect of loss carryforwards, tax credit carryforwards and
temporary differences between financial and tax reporting give rise to the
deferred income assets and liabilities. Deferred income taxes consisted of the
following:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                                     October 2, 1999      September 30, 1998
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                   <C>
Current:
  Accounts receivable                                                                $      --             $    40,000
  Allowance for doubtful accounts                                                        119,000                  --
  Inventories                                                                          1,374,000               471,000
  Plant, Property and Equipment                                                           58,000                  --
  Deferred Revenue                                                                       332,000                  --
  Accrued expenses and other liabilities                                                 816,000               803,000
  Tax credit carryforwards                                                                  --               1,264,000
  Net operating loss carryforwards                                                       283,000             6,262,000
  Deferred tax asset valuation allowance                                                (884,000)           (7,193,000)
-------------------------------------------------------------------------------------------------------------------------------
Subtotal                                                                             $ 2,098,000           $ 1,647,000
-------------------------------------------------------------------------------------------------------------------------------
  Long Term:
    Property, Plant and Equipment                                                       (990,000)              (79,000)
    Intangible Assets                                                                   (568,000)             (368,000)
    Net operating loss carryforwards                                                   4,324,000                  --
    Tax credits                                                                          147,000                  --
    Other                                                                               (102,000)                 --
    Deferred tax asset valuation allowance                                              (833,000)                 --
-------------------------------------------------------------------------------------------------------------------------------
  Subtotal                                                                             1,978,000              (447,000)
-------------------------------------------------------------------------------------------------------------------------------
  Total                                                                              $ 4,076,000           $ 1,200,000
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Based on the Company's taxable income in recent years and projecting future
taxable income over the period in which the deferred income tax assets are
deductible, the Company believes that it is more likely than not that it will
realize the benefit of the deferred tax assets.

As of October 2, 1999, the Company had federal net operating loss carryforward
for tax purposes of approximately $12,950,000, which expire at various dates
through 2018. In addition, the Company has state tax net operating loss
carryforwards of $3,800,000, which expire at various dates through 2003.

Ownership changes, as defined in Internal Revenue Code (IRC Section 382), have
limited the amount of net operating loss tax credit carryforwards that can be
utilized by the Company annually to offset future taxable income.

                                       28
<PAGE>   31
The net change in the Company's valuation allowance of $5,422,000 results from
purchase accounting adjustments and a waiver of a portion of net operating
losses that will not be utilized due to IRC Section 382.

9.       BENEFIT PLANS

The Company has a defined benefit pension plan for union employees at its Fort
Wayne, Indiana facility pursuant to a collective bargaining agreement. Benefits
are based primarily on a benefits multiplier and years of service. The Company
funds the amount equal to the minimum funding required plus additional amounts
which may be approved by the Company from time to time. The following statements
lists pension benefit information as of October 2, 1999. Electronic Designs Inc.
did not have a pension benefit plan in fiscal 1997 and 1998.

CONSOLIDATED BENEFIT PLAN

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
                                                                         October 2,
                                                                            1999
-----------------------------------------------------------------------------------
<S>                                                                   <C>
Reconciliation of Projected Benefit Obligation
   Benefit obligation beginning of year                                        -
   Benefit obligation assumed through merger                          $ 2,258,116
   Service Cost                                                            49,217
   Interest cost                                                          146,900
   Participant contributions                                                 --
   Plan amendments                                                        133,176
   Curtailments                                                              --
   Settlements                                                               --
   Benefits paid                                                         (126,083)
   Actuarial (gain) loss                                                 (313,733)
   Acquisitions (divestitures)                                               --
-----------------------------------------------------------------------------------
Benefit obligation-end of year                                        $ 2,147,593
-----------------------------------------------------------------------------------
Reconciliation of Fair Value of Plan Assets
   Plan assets at fair market value-beginning of year                 $ 2,353,962
   Actual return on plan assets                                           217,067
   Acquisitions (divestures)                                                 --
   Employer contributions                                                  15,289
   Participant contributions                                                 --
   Benefits paid                                                         (126,083)
   Settlements                                                               --
   Expenses                                                               (53,070)
-----------------------------------------------------------------------------------
Plan assets at fair market value-end of year                          $ 2,407,165
-----------------------------------------------------------------------------------
Funded Status                                                         $   259,572
   Unrecognized transition (assets) obligation                               --
   Unrecognized prior service cost                                        185,922
   Unrecognized actuarial (gain) loss                                    (341,032)
-----------------------------------------------------------------------------------
Net amount recognized                                                 $   104,462
-----------------------------------------------------------------------------------
Weighted-Average Assumptions
   Discount rate                                                             7.50%
   Expected return on plan assets                                            7.00%
Amounts recognized in the statement of financial position
   Prepaid benefit cost                                               $   104,462
   Accrued benefit liability                                                 --
   Intangible assets                                                         --
   Accumulated other comprehensive income                                    --
-----------------------------------------------------------------------------------
Net amount recognized                                                 $   104,462
-----------------------------------------------------------------------------------
Components of Net Periodic Benefit Cost
   Service cost                                                       $    86,492
   Interest cost                                                          146,900
   Expected return on market-related plan assets                         (160,546)
   Amortization of transition (assets) obligation                            --
   Amortization of prior cost                                              24,885
   Recognized actuarial (gain) loss                                          --
-----------------------------------------------------------------------------------
   Net periodic benefit cost                                          $    97,731
-----------------------------------------------------------------------------------
   Curtailment (gain) loss                                                   --
   Settlement (gain) loss                                                    --
-----------------------------------------------------------------------------------
Net periodic benefit cost after curtailments and settlements          $    97,731
===================================================================================
</TABLE>
<PAGE>   32
In addition, the Company has an Incentive Savings 401(k) Plan covering non-union
employees of the Company who have completed six months of service. During fiscal
1999, EDI matched employee contributions equal to 50% of the first 6% of a
participant's wage base and Bowmar matched employee contributions equal to 50%
of the first 3% of a participant's wage base. During each of the fiscal years
1999, 1998 and 1997, the Company made contributions to the plan of approximately
$133,475, $119,000 and $117,000 respectively. The two companies' 401(k) plans
were combined in October, 1999 and the Company now matches employee
contributions equal to 50% of the first 6% of a participant's wage base.

10.   STOCK OPTIONS WARRANTS AND STOCK PURCHASE PLANS

The Company has adopted the disclosure only provision of Statement of Financial
Accounting Standards No. 123, Accounting for Stock Based Compensation (SFAS
123). As allowed by SFAS 123, the Company has elected to continue to follow
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees" (APB 25) in accounting for its stock option plans. Accordingly, since
all options are issued with exercise prices greater than or equal to the market
price on the grant date, no compensation cost has been recognized for the stock
option plans.

In connection with the merger with Electronic Design, Inc., Bowmar assumed all
outstanding EDI options and EDI warrants exercisable for shares of EDI common
stock and each such EDI option and EDI warrant was by virtue of the merger and
without any action on the part of the holder thereof, exercisable for shares of
Bowmar stock having the same terms and condition as the EDI options and EDI
warrants (including such terms and conditions as may be incorporated by
reference into the agreements evidencing EDI options and EDI warrants pursuant
to the plans or arrangements pursuant to which such EDI options and EDI warrants
were granted ) except that the number of shares issuable upon exercise has been
multiplied by the Exchange Ratio of 1.275 and rounded to the nearest whole
number of shares of Bowmar Stock and the exercise price per share of EDI Stock
under such option or warrants equals the exercise price per share of EDI Stock
under such EDI options or EDI warrant divided by the Exchange ratio of 1.275 and
rounded to the nearest cent.

Common Stock Warrants

During the year ended September 30, 1997, EDI, as part of a service agreement
with an outside firm, issued warrants to purchase 45,000 shares of common stock
at an exercise price of $3.875 per share, which vest upon achievement of
specified goals. These warrants expire in December, 1999. The Company assigned a
value of $90,000 to these warrants, which is being amortized to the income
statement over the service period.

In connection with obtaining the bank borrowings, the Company issued warrants in
October 1995 to purchase up to 276,686 shares of common stock at an exercise
price of $3.50 per share. The warrants expired in October 1998.
The Company assigned a value of $28,000 to these warrants.

At October 2, 1999, warrants to purchase 56,281 shares of common stock issued
prior to October 1, 1995, with an exercise price of $2.22, (using the exchange
ratio of 1.275) and expiration date of August, 2001 were outstanding.

Stock Options Plans

In February 1987, EDI adopted the 1987 Stock Option Plan (the "Plan"). The Plan,
as amended, allows for the issuance of up to 2,259,748 shares of the Company's
common stock. Options granted under the Plan must be granted at the fair market
value of such shares on the date of grant and must have an expiration date no
more that ten years from the date of grant. Generally, options vest over a five
year period and expire five years from the date of grant. Additionally, in
October 1995, in connection with the acquisition of EDI-MA, fully vested options
to purchase 314,826 shares of the Company's common stock at $0.22 per share that
were valued at $598,000 were issued to employee in exchange for fully vested
options of EDI-MA. At the date of the merger with White Electronic Designs
Corporation, Bowmar assumed all then outstanding unexercised EDI options and

                                       30
<PAGE>   33
converted the number of shares issuable upon exercise and the exercise price per
share using the 1.275 exchange ratio. At fiscal year end 1999, 1,620,297 and
195,987 shares from the 1987 Stock Option and EDI-MA acquisition plan is under
option. As both plans were terminated upon merging with the Company, there are
no shares available for future grants.

Under Bowmar's shareholder approved 1994 Flexible Stock Plan, Common Stock is
available for the grant of options, appreciation rights, restricted stock
awards, performance shares and other stock-based awards. The vesting and terms
of the options granted under this plan are determined when awarded by the Board
of Directors. At October 2,1999 there were 562,390 shares available for future
grants to directors, officers and employees at prices not less than the fair
value at the date of grant by the Board of Directors. At fiscal year-end 1999,
609,700 shares from the Company's 1994 plan are under option.

During fiscal 1995, the Board of Directors terminated Bowmar's shareholder
approved 1986 Stock Option Plan. At fiscal year-end 1999, 13,250 shares from
Bowmar's 1986 Plan remain under option.

The Company's approved Non-Qualified Stock Option Plan for Directors provides
for the issuance of options to purchase shares of Common Stock to directors at
an exercise price equal to the fair market value on the date of grant. At fiscal
year end October 2, 1999, there were 190,822 shares available for future grants
to the directors. The options are exercisable as early as six months after date
of grant and expire in ten years. A total of 181,000 options under this
Non-Qualified Plan have been issued to non-employee directors and 151,000
options remain unexercised at October 2, 1999.

During fiscal 1999, the Company's Board of Directors approved an independent
grant to Mr. McGuinness for a nonqualified stock option to purchase up to
102,000 shares of common stock at an exercise price of $1.125 per share, vesting
ratably over three years. At October 2, 1999, 102,000 shares from this
independent option right are still under option.

A summary of the Company's stock option activity and related information is as
follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                                     Fiscal Year
                                                          1999                          1998                       1997
----------------------------------------------------------------------------------------------------------------------------------
                                                               Weighted                      Weighted                   Weighted
                                                  Shares        Average       Shares         Average        Shares       Average
                                                  Under        Exercise       Under          Exercise       Under        Exercise
                                                  Option         Price        Option           Price        Option         Price
----------------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>            <C>            <C>           <C>           <C>           <C>
Beginning balance outstanding                    2,715,586    $      2.31     1,740,978    $      3.49     1,573,235   $      3.39
Granted                                          1,271,178           1.19       135,250           3.18       333,000          3.56
Canceled                                        (1,218,371)          2.37      (268,068)          3.39      (111,335)         3.50
Exercised                                          (76,159)          0.28        (2,566)          3.37       (53,922)         1.10
----------------------------------------------------------------------------------------------------------------------------------
Ending balance outstanding                       2,692,234           1.80     1,605,594           3.48     1,740,978   $      3.49
Merger conversion at 1.275                                                    2,047,132           2.73
Beginning balance outstanding, Bowmar                                           668,454           2.04
----------------------------------------------------------------------------------------------------------------------------------
Adjusted ending balance outstanding              2,692,234    $      1.80     2,715,586    $      2.39     1,740,978   $      3.49
----------------------------------------------------------------------------------------------------------------------------------
Shares available for future grant                  562,390                      757,000                      624,000
Weighted average fair value of option grants
                                               $      0.68                   $     2.13                  $      2.35
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The beginning balance of shares under option for fiscal 1999 was calculated by
converting EDI's balance of option shares outstanding by the $1.125 exchange
ratio and adding Bowmar's balance of option shares outstanding at fiscal year
end 1998. The following table summarizes additional information about the
Company's stock options outstanding as of October 2, 1999:


                                       31
<PAGE>   34
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                    Options Outstanding                          Options Exercisable
--------------------------------------------------------------------------------------------------------------------------------
                                                       Weighted           Weighted                               Weighted-
                                      Shares           Average             Average                               Average
                                       Under           Exercise           Remaining          Exercisable         Exercise
                                      Option            Price           Contractual Life        Shares             Price
--------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>             <C>                <C>                  <C>                 <C>
Range of exercise price:
    $0.170 - $1.000                    195,987           $0.17             2.7 years             195,987           $0.17
    $1.125 - $2.000                  1,390,042           $1.13             5.3 years             570,179           $1.38
    $2.606 - $2.940                  1,060,530           $2.71             3.8 years           1,056,386           $2.71
    $3.125 - $3.563                     45,675           $3.40             2.8 years              44,973           $3.40
--------------------------------------------------------------------------------------------------------------------------------
                                     2,692,234           $1.79             4.5 years           1,867,525           $2.04
================================================================================================================================
</TABLE>

On December 6, 1996, the Bowmar Board of Directors approved the repricing of
213,500 options that were granted to officers and employees in 1995 under the
Company's 1994 Flexible Stock Plan. The revised exercise price is $2.00 per
share (approximately 25% over the market price on the date of the repricing)
instead of the original exercise prices which ranged from $3.125 to $3.375 per
share.

On December 3, 1998, the Board of Directors approved the repricing of options to
employees (excluding the Chief Executive Officer and the Chief Financial
officer) of the Company. The revised exercise price is $1.125 per share (the
market closing price on the date of repricing) instead of the original exercise
prices that ranged from $1.688 to $3.490 per share. In the above table these
options are shown as being canceled and new options granted.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
stock option plans under the fair value based method of that Statement. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                         1999                       1998                            1997
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>                        <C>                              <C>
Expected options term (years)                            4.4                        5.0                              5.0
Risk free interest rate                                  5.5%                       6.0%                             6.3%
Volatility                                              67%                        78%                              78%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the vesting period of the options. The pro forma
information for 1999 and 1998 and 1997 follows:
(In thousands except for per share information):

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                            1999                      1998                        1997
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                       <C>                      <C>                          <C>
Net (loss), continuing operations                         $ (558)                  $ (3,304)                    $ 5,148
Operation compensation expense                              (363)                      (772)                       (616)
--------------------------------------------------------------------------------------------------------------------------------
Pro forma net (loss), continuing operations               $ (921)                  $ (4,076)                    $ 4,532
--------------------------------------------------------------------------------------------------------------------------------
Pro forma net (loss), income per share  continuing
      operations, basic                                   $(0.08)                  $  (0.58)                    $  0.65
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Because additional option grants are expected to be made in future years and
options vest over several years, the pro forma impact on fiscal years 1999, 1998
and 1997 is not necessarily representative of the pro forma impact on reported
results for future years.

Stock Purchase Plans

In November 1995, the EDI Board of Directors adopted the 1996 Employee Stock
Purchase Plan. This plan provided for the purchase by employees of up to 250,000
shares of common stock at 85% of the fair market value on the first or last day
of the offering period (as defined in the plan), whichever is lower. This plan
was terminated in October, 1998 resulting from the merger of EDI and the
Company. There were no shares issued under this plan in fiscal 1999. During the
years ended September 30, 1998, 1997 and 1996, 17,744 shares at $1.66, 7,315
shares at $2.00 and 7,241 shares at $3.21, respectively, using the exchange
ratio of 1.275, were issued under the plan.

                                       32
<PAGE>   35
11.      FINANCIAL INSTRUMENTS

The financial position of the Company at October 2, 1999, includes certain
financial instruments which may have a fair value that is different from the
value currently reflected on the financial statements. The following methods and
assumptions were used to estimate the fair value of each class of financial
instruments for which it is practical to estimate that value.

Cash and Cash Equivalents: Cash is invested in overnight securities, therefore
the fair value is equal to the carrying amount. The carrying amount of long term
debt is a reasonable estimate of fair value as stated rates of interest
approximate current market rates.

12.      COMMITMENTS AND CONTINGENCIES

The Company leases certain property and equipment under noncancelable lease
agreements some of which include renewal options of up to five years. Total rent
expense for 1999, 1998, and 1997 was $1,337,000, $609,000 and $591,000
respectively. Future minimum annual fixed rentals required under noncancelable
operating leases having an original term of more than one year are $1,310,000 in
2000, $1,237,000 in 2001, $608,000 in 2002, $458,000 in 2003, and $1,832,000
thereafter.

The Company is currently required to pay tariffs on certain imported parts. The
Company believes that the tariffs are not justified and is appealing the
assessment.

On April 25, 1996 the U.S. Attorney's Office for the State of Arizona undertook
an investigation of certain aspects of White Microelectronics contracts with
prime contractors with the Federal government. The investigation focused on the
interpretation of certain government contract specified testing requirements on
incoming material. The Company is cooperating fully with the investigation. On
March 13, 1998, the Company was notified by the U.S. Attorney's Office for the
State of Arizona that it has closed its criminal investigation of White
Microelectronics. The U.S. Attorney's office is now pursuing civil damages
against the Company based on their findings from the investigation. The Company
is currently discussing these claims with the U.S. Attorney's office and
believes that the outcome will not have a material adverse effect on future
operations. However, based on information available, management believes
disposition costs can be reasonably estimated. Therefore, an accrual adequate to
cover these cost has been recorded in the financial statements.

13.      PREFERRED STOCK

Preferred shareholders vote equally with common shareholders. Each share of
preferred stock has one vote, is convertible into 13.33 shares of the Company's
Common Stock (stated value $0.10 per share), and pays annual dividends totaling
$3.00 per share, payable quarterly on March 31, June 30, September 30 and
December 31 of each year. The dividend on the preferred shares is cumulative. As
of October 2 1999, the Company has approximately 1,600,000 shares of Common
Stock reserved for the conversion of preferred stock. The preferred stock is
redeemable at the option of the Company at $25.00 per share on and after January
1, 1998, and is not subject to mandatory redemption.

14.      CONCENTRATIONS OF CREDIT RISK

The Company sells its products primarily to large original equipment
manufacturers, or electronic assembly houses in the United States. In fiscal
1999, one customer accounted for 10% of the Company's sales. The Company
performs ongoing credit evaluations of its customers' financial condition and,
generally, requires no collateral from its customers. At certain times
throughout the year the Company may maintain certain bank accounts in excess of
the FDIC insured limits.


                                       33
<PAGE>   36
15.      SHAREHOLDERS RIGHTS PLAN

On December 6, 1996, the Board of Directors adopted a shareholder rights plan to
protect shareholders against unsolicited attempts to acquire control of the
Company which do not offer what the Company believes to be an adequate price for
all shareholders. To implement the plan, the Board declared a dividend of one
common share purchase right (a "Right" or "Rights") for each outstanding share
of the Company's Common Stock and entered into a rights agreement with American
Stock Trust and Transfer, as Rights Agents (the "Rights Agreement"). If and when
the Rights become exercisable, each Right will entitle the registered holder to
purchase from the Company one share of Common Stock of the Company at a purchase
price of $20.00 (subject to adjustment pursuant to certain anti-dilution
provisions) (the "Purchase Price"). The terms of the rights are set forth in the
Rights Agreements.

Separate certificates representing the Rights will be distributed only upon an
event triggering a distribution. Pursuant to the Rights Agreement, if a person
or group (an "Acquiring Person") acquires 15% or more of the Company's
outstanding voting stock or announces a tender or exchange offer that would
result in the ownership by the Acquiring Person of 15% or more of the
outstanding voting stock, the Rights certificates will be distributed and each
holder of the rights (other than the Acquiring Person) may either exercise the
Rights to acquire Common Stock of the Company at the then Purchase Price or
convert the Rights into that number of shares of Common Stock equal to the
Purchase Price times the number of Rights held by the holder divided by 50% of
the then current market price of the Common Stock.

In the event that the Company is acquired in a merger or other transaction where
it is not the surviving corporation or where all or part of its Common Stock is
exchanged for securities, cash or property of another person, or in the event
that 50% or more of the Company's assets are sold, proper provision will be made
so that each holder of the right (other than the Acquiring Person) will have the
right to receive, upon exercise thereof, that number of shares of common stock
of the acquiring corporation which at the time of such transaction will have a
market value of two times the exercise price of the Right. Similarly, in the
event that a person acquires 15% or more of the outstanding Common Stock of the
Company, proper provision will be made so that each holder of a Right (other
than the Acquiring Person) will thereafter have the right to receive upon
exercise that number of shares of Common Stock of the Company having a market
value of two times the exercise price of the Right.

The Rights Agreement also contains an exchange option. At any time after a
person becomes an Acquiring Person, and prior to the acquisition by such
Acquiring Person of 50% or more of the outstanding Common Stock of the Company,
the Board of Directors may exchange the Rights (other than Rights owned by the
Acquiring Person, which Rights shall become void), in whole or in part, at an
exchange ratio of one share of Common Stock per Right.

Finally, the Rights are subject to redemption. At any time prior to the tenth
calendar day following the date of a public announcement that a person or group
has become an Acquiring Person, the Board of Directors of the Company may redeem
the Rights in whole, but not part, at a price of $.01 per Right.

The terms of the Rights may be amended by the Board of Directors without the
consent of the holders of the Rights, except that from and after such time as
any person becomes an Acquiring Person, no such amendment may adversely affect
the interests of the holders of the Rights. Until a Right is exercised, the
holder thereof, as such, will have no rights as a shareholder of the Company,
including, without limitation, the right to vote or to receive dividends. The
Rights cannot be bought, sold or otherwise traded separately from the Common
Stock. Certificates for Common Stock issued after the date of the Rights
Agreement carry a notation that indicates the Rights are attached. The Rights
will expire on December 5, 2006 unless extended or unless the Rights are earlier
redeemed by the Company. The Rights Agreement was amended in connection with the
EDI merger to exempt from operation of the Rights Agreement the execution of the
Agreement and Plan of Merger with EDI and the transactions contemplated thereby.


                                       34
<PAGE>   37
16.      DISCONTINUED OPERATIONS


On May 13, 1997, the Company announced the decision to divest Crystallume. As a
consequence, the Company recorded a provision for loss on disposal of
Crystallume of $973,000, which included a provision for operating losses during
the phase out period (May 13, 1997 to the estimated date of disposal). Revenues
related to discontinued operations were $744,000 for fiscal 1997. The losses
from discontinued operations for fiscal 1997 were recorded net of current income
tax benefits of $649,000. The results of Crystallume have been retroactively
separated from the Company's ongoing operations in the consolidated statement of
operations and, at September 30, 1997, the assets of Crystallume, consisting
primarily of fixed assets, have been separately classified on the balance sheet
as a current asset.


On October 27, 1997, the Company sold the assets, effective as of October 1,
1997, of Crystallume pursuant to an Asset Purchase Agreement (the "Agreement").
The assets sold include all intellectual property, manufacturing equipment,
inventories and certain specific contracts related to Crystallume's diamond
films and coating business. The buyer assumed none of the liabilities, except
that it assumed the obligation to perform under the acquired contracts with
Crystallume's customers, facility lessor and equipment lessors. The purchase
price consisted of: $500,000 in cash at closing; $625,000 payable over three
years, plus simple interest at 9.5%; and an agreement for future payments based
on product and license revenues earned by the buyer using Crystallume
intellectual property over the next five and seven years, respectively.

On October 1, 1998, the date that the first installment in the amount of
$250,000 was due, the Company received a letter from the buyer asserting certain
indemnity claims under the Agreement in the amount of the total purchase price
and claimed its right to set-off its indemnifiable damages against amounts due
to the Company. The Company and the buyer have resolved this matter. In exchange
for executing mutual releases, the Company has reduced the receivable to
$325,000. In fiscal 1999, $200,000 was been received and $125,000 is due April
1, 2000. This settlement resulted in a loss of $342,000 net taxes in fiscal
1999.

17.      EARNINGS PER SHARE

The Company has adopted the provisions of the Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128") effective January 3, 1998.
SFAS 128 requires the presentation of basic and diluted earnings per share.
Basic EPS is computed by dividing income available to common stockholders by the
weighted average number of common shares that were outstanding during the
period. Dilutive potential common shares consist of the incremental common
shares issuable upon exercise of stock options. All prior period earnings per
share amounts have been restated to comply with the SFAS 128.

In accordance with the disclosure requirements of SFAS 128, a reconciliation of
the numerator and denominator of basic and diluted EPS is provided as follows
(in thousands, except per share amounts):

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------------------
                                                                      FISCAL 1999
----------------------------------------------------------------------------------------------------------------------------------
                                                                        Income              Shares               Per share
                                                                     (Numerator)         (Denominator)             Amount
----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>               <C>                    <C>
Loss from continuing operations, net of tax                          $  (558,000)
Less: preferred stock dividends                                           360,000
----------------------------------------------------------------------------------------------------------------------------------
BASIC EPS
Loss applicable to continuing operations, net of tax                 $  (918,000)          15,394,451            $ (0.06)
Loss applicable to discontinued operations, net of tax                  (277,000)          15,394,451            $ (0.02)
----------------------------------------------------------------------------------------------------------------------------------
Loss available to common stockholders                                 (1,195,000)                                $ (0.08)
EFFECTS OF DILUTIVE SECURITIES
Common stock options                                                                          487,402
----------------------------------------------------------------------------------------------------------------------------------
DILUTIVE EPS
Loss available to common stockholders                                $(1,195,000)          15,881,853            $ (0.08)
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       35
<PAGE>   38
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                      FISCAL 1998
-------------------------------------------------------------------------------------------------------------------------------
                                                                         Income            Shares               Per Share
                                                                       (Numerator)      (Denominator)            Amount
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                    <C>              <C>                     <C>
Earnings from continuing operations, net of Tax                        (3,304,000)
Less: preferred stock dividends                                                -
-------------------------------------------------------------------------------------------------------------------------------
BASIC EPS
Earnings applicable to continuing operations, net of tax               (3,304,000)         7,072,000             $(0.47)
Loss applicable to discontinued operations, net of tax                         --          7,072,000             $ 0.00
-------------------------------------------------------------------------------------------------------------------------------
Earnings available to common stock holders                             (3,304,000)                               $(0.47)
EFFECTS OF DILUTIVE SECURITIES
Common stock equivalents                                                                          --
-------------------------------------------------------------------------------------------------------------------------------
DILUTIVE EPS
Earnings available to common stock holders                             (3,304,000)         7,072,000             $(0.47)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                                                   FISCAL 1997
-------------------------------------------------------------------------------------------------------------------------------
                                                                         Income            Shares               Per Share
                                                                       (Numerator)      (Denominator)            Amount
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>               <C>                     <C>
Earnings from continuing operations, net of tax                        $5,148,000
Less: preferred stock dividends                                                --
-------------------------------------------------------------------------------------------------------------------------------
BASIC EPS
Earnings applicable to continuing operations, net of tax                5,148,000           6,948,000           $(0.74)
Loss applicable to discontinued operations, net of tax                (1,372,000)           6,948,000           $(0.20)
----------------------------------------------------------------- -------------------- -------------------- -------------------
Earnings available to common stock holders                              3,776,000                               $(0.54)
EFFECTS OF DILUTIVE SECURITIES
Common stock options                                                                           302,000
Common stock warrants                                                                          174,000
Convertible preferred stock                                                                    155,000
-------------------------------------------------------------------------------------------------------------------------------
DILUTIVE EPS
Earnings available to common stock holders                              3,776,000            7,579,000           $0.50
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The convertible preferred stock is not included in the calculation of dilutive
earnings per share for fiscal 1999, because its inclusion would be
anti-dilutive. The effect of common stock equivalents is not included in fiscal
1998 diluted loss per share calculation as their inclusion would be
anti-dilutive.

18.      OPERATIONS BY BUSINESS SEGMENTS

The Company operates in two business segments. The microelectronic segment
packages semiconductor products mainly for memory storage. Its products are sold
to original equipment manufacturers in the telecommunications, computer
networking, aerospace defense, and military equipment industries. The display
segment designs and manufactures AMLCD's and other interface products. Display
products are sold mainly to customers in the aviation and aerospace industries.
The segments have common customers, mainly in the aerospace defense industry.
However, the products from each segment are usually purchased by different
purchasing groups within the parent company. There are no intersegment sales.
Transfers of inventory between segments are made at cost, and are treated simply
as transfers between locations.

The assets identified by segment are those assets used in the companies
operations and do not include general corporate assets such as cash, goodwill,
or deferred tax assets. Capital expenditures report asset purchases and do not
include equipment added through the use of operating leases.

A significant portion of the Company's business activity in each segment is from
contractor's who have contracts with the United States Department of Defense.


                                       36
<PAGE>   39
A significant portion of the Company's sales are to foreign customers. Export
sales as a percent of total sales in fiscal 1999, 1998, and 1997 were 18%, 24%,
and 28% respectively.

                    Foreign Sales by Major Geographic Segment
                            (in thousands of dollars)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
                                       Fiscal 1999                     Fiscal 1998                      Fiscal 1997
-------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                             <C>                              <C>
           Europe                          7,866                          5,595                             7,705
            Asia                           2,606                          2,158                             4,001
-------------------------------------------------------------------------------------------------------------------------------
           Total                          10,472                          7,753                            11,706
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

OPERATIONS BY BUSINESS SEGMENTS


(In thousands of dollars)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
                                                                 FISCAL YEAR
                                                  1999              1998               1997
-------------------------------------------------------------------------------------------------
<S>                                            <C>                <C>                <C>
NET SALES
Microelectronics                               $ 45,463           $ 28,149           $ 35,259
Display                                          12,575              4,623              6,845
-------------------------------------------------------------------------------------------------
Total Net Sales                                $ 58,038           $ 32,772           $ 42,104
-------------------------------------------------------------------------------------------------
INCOME BEFORE TAX
Microelectronics                               $    (38)          $ (1,713)          $  5,569
Display                                              29             (1,591)              (272)
Merger costs                                       (850)
-------------------------------------------------------------------------------------------------
Total income before tax                        $   (859)          $ (3,304)          $  5,297
-------------------------------------------------------------------------------------------------
IDENTIFIABLE ASSETS
Microelectronics                               $ 24,239           $  9,814           $ 13,333
Display                                           8,517              2,084              3,080
General corporate                                 6,015              6,037              8,724
-------------------------------------------------------------------------------------------------
Total Assets                                   $ 38,771           $ 17,935           $ 25,137
-------------------------------------------------------------------------------------------------
CAPITAL EXPENDITURES
Microelectronics                               $  1,731           $    535           $    887
Display                                             378                238                143
-------------------------------------------------------------------------------------------------
Total capital expenditures                     $  2,109           $    773           $  1,030
-------------------------------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION EXPENSE
Microelectronics                               $  1,834           $  1,131           $  1,576
Display                                             410                159                 49
-------------------------------------------------------------------------------------------------
Total                                          $  2,244           $  1,290           $  1,625
-------------------------------------------------------------------------------------------------
</TABLE>

                                       37
<PAGE>   40
19. SUBSEQUENT EVENTS

On November 10, 1999, and December 21, 1999, the White Electronic Designs Board
of Directors approved measures to redeem the Senior Voting Cumulative Preferred
Stock

20. INTERIM FINANCIAL RESULTS (UNAUDITED)
    (In thousands of dollars, except per share data)

<TABLE>
<CAPTION>
                                                                               FISCAL 1999
-------------------------------------------------------------------------------------------------------------------------
                                                       Jan 2        Apr 3        Jul 3        Oct 2         Year
-------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>           <C>         <C>           <C>
Net sales                                            $ 12,301     $ 12,960      $15,172     $ 17,604      $ 58,038
-------------------------------------------------------------------------------------------------------------------------
Gross margin                                         $  2,176     $  2,982      $ 4,592     $  5,777      $ 15,528
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
   before income taxes                               $(1,860)     $(1,127)      $   827     $  1,304      $  (859)
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing
   operations                                        $(1,116)     $  (676)      $   493     $    743      $  (558)
-------------------------------------------------------------------------------------------------------------------------
Discontinued operations
Crystallume Diamond Products
      Division (loss) income on disposal
      net of applicable income taxes (Note 19)       $    --      $  (342)      $    --     $     65      $  (277)
-------------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                                    $(1,116)     $(1,018)      $   493     $    808      $  (835)
-------------------------------------------------------------------------------------------------------------------------
Net income per share - basic (a)                     $ (0.09)     $ (0.07)      $  0.03     $   0.05      $ (0.08)
-------------------------------------------------------------------------------------------------------------------------
Common stock market price: (b)
    High                                               1  5/12      1  2/3       1 2/3        2 5/24
-------------------------------------------------------------------------------------------------------------------------
    Low                                                1  1/8       1  1/4       1 1/5        1  2/3
-------------------------------------------------------------------------------------------------------------------------
Preferred market price: (b)
    High                                              22 4/7       29           26 1/5       31 4/5
-------------------------------------------------------------------------------------------------------------------------
    Low                                               20 2/7       25 2/7       25 1/4       29 1/4
=========================================================================================================================
</TABLE>


<TABLE>
<CAPTION>
                                                                           FISCAL 1998 (NOTE 1)
----------------------------------------------------------------------------------------------------------------------
                                                      Dec 28       Mar 29        Jun 28       Sep 30         Year
----------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>           <C>         <C>            <C>
Net sales                                            $ 9,410      $ 7,900       $ 8,054      $ 7,408       $ 32,772
----------------------------------------------------------------------------------------------------------------------
Gross margin                                         $ 2,803      $ 1,550       $ 1,700      $   990       $  7,043
----------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
   before income taxes                               $   254      $(1,174)      $  (620)     $(1,764)      $ (3,304)
----------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing
   operations                                        $   154      $(1,074)      $  (620)     $(1,764)      $ (3,304)
----------------------------------------------------------------------------------------------------------------------
Discontinued operations
Crystallume Diamond Products
      Division (loss) income on disposal
      net of applicable income taxes (Note 19)       $    --      $    --       $    --     $     --         $    --
----------------------------------------------------------------------------------------------------------------------
NET INCOME (LOSS)                                    $   154      $(1,074)      $  (620)    $ (1,764)      $ (3,304)
----------------------------------------------------------------------------------------------------------------------
Net income per share - basic (a)                     $  0.02      $ (0.15)      $ (0.09)    $  (0.25)      $  (0.47)
----------------------------------------------------------------------------------------------------------------------
Common stock market price: (b)
    High                                              2 15/16      2 15/16        2  5/8       1 15/16
----------------------------------------------------------------------------------------------------------------------
    Low                                               1  3/4       2  3/4         1 15/16          7/8
----------------------------------------------------------------------------------------------------------------------
Preferred market price: (b)
    High                                             40  1/2      39  1/8        35  1/2      31
----------------------------------------------------------------------------------------------------------------------
    Low                                              30  1/4      34  1/4        29           22  1/2
======================================================================================================================
</TABLE>

(a)      Earnings per share-assuming dilution is the same as earnings per share
         and thus is not shown separately.

(b)      Both common and preferred shares are traded on the American Stock
         Exchange.


                                       38
<PAGE>   41
                                 EXHIBIT INDEX


            2.1  Agreement and Plan of Merger dated May 3, 1998 by and among
                 Bowmar Instrument Corporation and Electronic Designs, Inc. and
                 Bravo Acquisition Subsidiary, Inc. (incorporated herein by
                 reference to Exhibit 2 to the current Report on Form 8-K filed
                 on May 6, 1998.)

           2.1A  Amendment to Agreement and Plan of Merger, dated June 9, 1998
                 (incorporated herein by reference to Exhibit 2.1A to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

           2.1B  Amendment to Agreement and Plan of Merger, dated August 24,
                 1998 (incorporated herein by reference to Exhibit 2.1B to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

            3.1  Amended and Restated Articles of Incorporation of White
                 Electronic Designs Corporation (incorporated herein by
                 reference to Exhibit 3.1 on Form 10-K filed December 24, 1998).

            3.2  Amended and Restated Code of By-Laws of White Electronic
                 Designs Corporation (incorporated herein by reference to
                 Exhibit 3.2 to the Registration Statement on Form 10-K file
                 December 24, 1998).

            4.1  Rights Agreement, dated December 6, 1996, between Bowmar
                 Instrument Corporation and American Stock Transfer and Trust
                 Company, as Rights Agent (incorporated herein by reference to
                 Exhibit 5C to the Current Report on Form 8-K filed on December
                 19, 1996).

          4.1A   Amendment No. 1 to Rights Agreement, effective as of May 3,
                 1998 (incorporated herein by reference to Exhibit 4.3 to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

            4.2  Indenture, Bowmar Instrument Corporation 13-1/2% Convertible
                 Subordinated Debentures due December 15, 1995 (incorporated
                 herein by reference to Exhibit 4.4 to the Registration
                 Statement on Form S-7, Registration No. 2-70025).

            4.3  Stock Certificate of White Electronic Designs Corporation
                 (incorporated herein by reference to Exhibit 4.3 on Form 10-K
                 filed December 24, 1998).

           10.1  Agreement to be Bound by Registration Rights Agreements, dated
                 as of May 3, 1998, by and between Bowmar Instrument Corporation
                 and Electronic Designs, Inc. (incorporated herein by reference
                 to Exhibit 10.1 to the Registration Statement on Form S-4,
                 Registration No. 333-56565).

           10.2  Agreement to be Bound by Severance Agreements and Employment
                 Agreement, dated as of May 3, 1998, by and between Bowmar
                 Instrument Corporation and Electronic Designs, Inc.
                 (incorporated herein by reference to Exhibit 10.2 to the
                 Registration Statement on Form S-4, Registration No.
                 333-56565).

         **10.3  Executive Employment Agreement by and between Hamid Shokrgozar
                 and Bowmar Instrument Corporation (incorporated herein by
                 reference to Exhibit 10.4(j) to the Quarterly Report on Form
                 10-Q for the quarterly period ended April 4, 1998).

         **10.4  Executive Employment Agreement by and between Joseph G.
                 Warren, Jr. and Bowmar Instrument Corporation (incorporated
                 herein by reference to Exhibit 10.7 to the Quarterly Report on
                 Form 10-Q for the quarterly period ended January 3, 1998).

           10.5  Purchase and Sales Agreement, dated December 5, 1997,
                 concerning the sale of the Acton, Massachusetts facility
                 (incorporated herein by reference to Exhibit 10.8 to the
                 Quarterly Report on Form 10-Q for the quarterly period ended
                 January 3, 1998).

           10.6  Fourth Amendment to Credit Agreement, dated as of March 16,
                 1998, by and between Bowmar Instrument Corporation and Bank
                 One, Arizona, NA (incorporated herein by reference to Exhibit
                 10.4(h) to the Quarterly Report on Form 10-Q for the quarterly
                 period ended April 4, 1998).
<PAGE>   42
           10.7  Promissory Note Modification Agreement, dated March 16, 1998,
                 by and between Bowmar Instrument Corporation and Bank One,
                 Arizona, NA (incorporated herein by reference to Exhibit
                 10.4(i) to the Quarterly Report on Form 10-Q for the quarterly
                 period ended April 4, 1998).

           10.8  Lease, dated February 23, 1990, by and between Bowmar/Ali, Inc.
                 as landlord and LAU Acquisition Corporation as tenant
                 (incorporated herein by reference to Exhibit 10.1(bb) to the
                 Annual Report on Form 10-K filed for the fiscal year ended
                 September 30, 1990).

         **10.9  Employment Agreement dated August 15, 1991, as amended as of
                 August 15, 1992, and as of June 1, 1995 between Gardiner S.
                 Dutton and Bowmar Instrument Corporation (incorporated herein
                 by reference to Exhibit 10.1(ff) to the Annual Report on Form
                 10-K for the fiscal year ended September 30, 1992 and Exhibit
                 5(b) to Form 8-K dated June 26, 1995).

        **10.10  Form of Incentive Stock Option Agreement covering incentive
                 stock options granted under the Corporation's now terminated
                 1986 Plan, as amended October 23, 1987 (incorporated here in by
                 reference to Exhibit 10.2(c) to the Annual Report on Form 10-K
                 for the fiscal year ended September 30, 1987).

        **10.11  Form of Non-Incentive Stock Option Agreement covering
                 non-incentive stock options granted under the Corporation's now
                 terminated 1986 Plan, as amended October 23, 1987 (incorporated
                 by reference to Exhibit 10.2(c) to the Annual Report on Form
                 10-K for the fiscal year ended September 30, 1987).

        **10.12  Bowmar Instrument Corporation Stock Option Plan for
                 Non-Employee Directors as amended February 4, 1994
                 (incorporated herein by reference to Exhibit B to the
                 Corporation's definitive Proxy Statement, prepared in
                 connection with the 1994 Annual Meeting of Shareholders).

        **10.13  Non-Incentive Stock Option Agreement dated August 16, 1991, as
                 amended August 15, 1992, between Bowmar Instrument Corporation
                 and Gardiner S. Dutton (incorporated herein by reference to
                 Exhibit 10.1(ff) to the Annual Report on Form 10-K for the
                 fiscal year ended September 30, 1992).

        **10.14  1994 Flexible Stock Plan (incorporated herein by reference to
                 Exhibit A to the Corporation's definitive Proxy Statement
                 prepared in connection with the 1994 Annual Meeting of
                 Shareholders).

        **10.15  Form of Agreement governing awards of restricted stock under
                 the Corporation's now terminated Restricted Plan (incorporated
                 herein by reference to the exhibit to Amendment No. 1 to the
                 Registration Statement of Form S-8 (No. 2-67645)).

          10.16  Loan documents by and between Bank One, Arizona, NA and Bowmar
                 Instrument Corporation and its wholly owned subsidiary,
                 Bowmar/ALI, Inc. (incorporated herein by reference to exhibits
                 10.4a through 10.4g to the Annual Report on Form 10-K for the
                 fiscal year ended September 30, 1995).

          10.17  Modification Agreement dated April 26, 1996, pursuant to the
                 Loan Agreement dated August 28, 1995 by and between Bank One,
                 Arizona, NA and the Registrant (incorporated herein by
                 reference to Exhibit 10.4(b) to the Annual Report on Form 10-K
                 for the fiscal year ended September 28, 1996).

          10.18  Second Modification Agreement dated August 9, 1996, pursuant to
                 the Loan Agreement dated August 28, 1995 by and between Bank
                 One, Arizona, NA and the Registrant (incorporated herein by
                 reference to Exhibit 10.4(c) to the Annual Report on Form 10-K
                 for the fiscal year ended September 28, 1996).

          10.19  Third Modification Agreement dated March 28, 1997 pursuant to
                 the Loan Agreement
<PAGE>   43
                 dated August 28, 1995 by and between Bank One, Arizona NA and
                 the Registrant (incorporated herein by reference to Exhibit
                 10.4(d) to the Form 10-Q for the quarter ended March 29, 1997).


          10.20  Modification of Mortgage (Massachusetts) dated March 28, 1997
                 by and between Bank One, Arizona NA and the Registrant and its
                 wholly owned subsidiary, Bowmar/ALI (incorporated herein by
                 reference to Exhibit 10.4(e) to the Form 10-Q for the quarter
                 ended March 29, 1997).

          10.21  Modification of Mortgage (Indiana) dated March 28, 1997 by and
                 between Bank One, Arizona NA and the Registrant (incorporated
                 herein by reference to Exhibit 10.4(f) to the Form 10-Q for the
                 quarter ended March 29, 1997).

          10.22  Revolving Promissory Note (RLT) dated March 28, 1997 by and
                 between Bank One, Arizona NA and the Registrant, for up to
                 $1,200,000 (incorporated herein by reference to Exhibit 10.4(g)
                 to the Form 10-Q for the quarter ended March 29, 1997).

          10.23  Lease dated February 4, 1997 by and between Bowmar Instrument
                 Corporation as tenant and Gus Enterprises-XII, LLC as landlord
                 (incorporated by reference to Exhibit 10.5 to the Annual Report
                 on Form 10-K for the fiscal year ended September 27, 1997).

          10.24  Sixth Modification Agreement dated April 5, 1999 pursuant to
                 the Loan Agreement dated August 28, 1995 by and between Bank
                 One, Arizona NA and the Registrant (incorporated herein by
                 reference to Exhibit 10.1 on Form 10-Q filed August 17, 1999).

          10.25  Unconditional Guarantee of Payment by Electronic Designs Inc.
                 to Bank One, Arizona NA and the Registrant (incorporated herein
                 by reference to Exhibit 10.2 on From 10-Q filed on February 16,
                 1999).

          10.26  Fifth Modification Agreement dated November 1, 1998 pursuant to
                 the Loan Agreement dated August 28, 1995 by and between Bank
                 One, Arizona NA and the Registrant (incorporated herein by
                 reference to Exhibit 10.1 on Form 10-Q filed on February 16,
                 1999).

           21.1  Subsidiaries of White Electronic Designs Corporation
                 (incorporated herein by reference to exhibit 21.1 to Form 10-K
                 filed December 24, 1998).

          *23.1  Consent of Independent Accountant (PricewaterhouseCoopers LLP)

          *27.1  Financial Data Schedule.

----------

(b)           Reports on Form 8-K

              None.

(c)           See (a)(3) above.

(d)           Not applicable.


 *       Filed herewith.

**       Management compensatory contract, plan or arrangement.