<PAGE>
                      SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549
                                 FORM 10 - Q


(Mark One)

 [X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

     For the quarterly period ended:      MARCH 31, 2001
                                          --------------

 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

     For the transition period from            to
                                    -----------   ------------


                        Commission File Number:  1-8101


Exact Name of Registrant as
  Specified in Its Charter:     SMTEK INTERNATIONAL, INC.
                                -------------------------


            DELAWARE                               33-0213512
------------------------------                 ------------------
State or Other Jurisdiction of                 I.R.S. Employer
Incorporation or Organization:                 Identification No.



Address of Principal Executive Offices:        2151 Anchor Court
                                               Thousand Oaks, CA 91320

Registrant's Telephone Number:                 (805) 376-2595



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 [ ]



The registrant had 2,278,484 shares of Common Stock outstanding as of
May 4, 2001.


<PAGE>
PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                  SMTEK INTERNATIONAL, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
               (In thousands except share and per share amounts)



                                                March 31,        June 30,
                                                  2001             2000
                                               -----------       --------
                                               (Unaudited)
                    Assets

Current assets:
  Cash and cash equivalents                      $    205        $    532
  Accounts receivable, less allowance
    for doubtful accounts of $404 and $151         13,948          13,365
  Costs and estimated earnings in excess
    of billings on uncompleted contracts            9,754          10,257
  Inventories, net                                  8,947           6,095
  Prepaid expenses                                    375             180
                                                 --------        --------

     Total current assets                          33,229          30,429
                                                 --------        --------
Property, equipment and improvements, at cost:
  Buildings and improvements                        2,708           2,758
  Plant equipment                                  13,460          12,875
  Office and other equipment                        2,549           2,307
                                                 --------        --------

                                                   18,717          17,940
Less: Accumulated depreciation
  and amortization                                (11,143)        (11,249)
                                                 --------        --------

     Property, equipment and improvements, net      7,574           6,691
                                                 --------        --------
Other assets:
  Goodwill, net                                       465           1,126
  Deposits and other assets                           219             282
                                                 --------        --------

                                                      684           1,408
                                                 --------        --------

                                                 $ 41,487        $ 38,528
                                                 ========        ========


<PAGE>




                  SMTEK INTERNATIONAL, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS (continued)
              (In thousands except share and per share amounts)



                                                March 31,        June 30,
                                                  2001             2000
                                               -----------       --------
                                               (Unaudited)
    Liabilities and Stockholders' Equity

Current liabilities:
  Bank lines of credit payable                   $  6,763        $  7,583
  Current portion of long-term debt                 2,533           2,106
  Accounts payable                                  9,627           9,240
  Accrued payroll and employee benefits             1,310           1,150
  Interest payable                                    929             761
  Income taxes payable                              1,211           1,419
  Other accrued liabilities                         1,960           1,797
                                                 --------        --------

     Total current liabilities                     24,333          24,056
                                                 --------        --------

Long-term debt                                      6,057           4,997
                                                 --------        --------

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $1 par value; 1,000,000
    shares authorized; no shares issued
    or outstanding                                    -               -
  Common stock, $.01 par value; 3,750,000
    shares authorized; 2,278,484 and
    2,272,012 shares issued and outstanding
    at March 31, 2001 and June 30, 2000,
    respectively                                       23              23
  Additional paid-in capital                       36,999          36,972
  Accumulated deficit                             (25,770)        (27,430)
  Accumulated other comprehensive loss               (155)            (90)
                                                 --------        --------

     Total stockholders' equity                    11,097           9,475
                                                 --------        --------

                                                 $ 41,487        $ 38,528
                                                 ========        ========





    See accompanying notes to unaudited consolidated financial statements.

<PAGE>
                     SMTEK INTERNATIONAL, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                         (In thousands except per share amounts)
<TABLE>
<CAPTION>
                                              Three Months Ended       Nine Months Ended
                                                  March 31,                March 31,
                                              -------------------     -------------------
                                               2001        2000        2001        2000
                                              -------     -------     -------     -------
<S>                                           <C>         <C>         <C>         <C>
Revenues                                      $25,008     $19,213     $70,080     $48,865
Cost of goods sold                             21,715      17,326      61,482      43,280
                                              -------     -------     -------     -------
Gross profit                                    3,293       1,887       8,598       5,585
                                              -------     -------     -------     -------
Operating expenses:
  Administrative and selling expenses           1,976       1,539       5,175       4,315
  Goodwill amortization                             9         326         661         978
                                              -------     -------     -------     -------
Total operating expenses                        1,985       1,865       5,836       5,293
                                              -------     -------     -------     -------
Operating income                                1,308          22       2,762         292
                                              -------     -------     -------     -------
Non-operating income (expense):
  Interest expense, net                          (319)       (226)     (1,120)       (615)
  Other expense, net                              (41)        (16)        (78)        (27)
                                              -------     -------     -------     -------
Total non-operating expense                      (360)       (242)     (1,198)       (642)
                                              -------     -------     -------     -------
Income (loss) from continuing
  operations before income taxes                  948        (220)      1,564        (350)
Income tax provision (benefit)                     22          15         (96)         45
                                              -------     -------     -------     -------
Income (loss) from continuing operations          926        (235)      1,660        (395)
Income from discontinued operations,
  net of tax                                      -           -           -           254
Loss on sale of discontinued operations,
  net of tax                                      -           -           -          (661)
                                              -------     -------     -------     -------
Net income (loss)                             $   926     $  (235)    $ 1,660     $  (802)
                                              =======     =======     =======     =======


Basic earnings (loss) per share:
  Income (loss) from continuing operations    $  0.41     $ (0.10)    $  0.73     $ (0.17)
  Income from discontinued operations             -           -           -          0.11
  Loss on sale of discontinued operations         -           -           -         (0.29)
                                              -------     -------     -------     -------
       Basic earnings (loss) per share        $  0.41     $ (0.10)    $  0.73     $ (0.35)
                                              =======     =======     =======     =======

Diluted earnings (loss) per share:
  Income (loss) from continuing operations    $  0.38     $ (0.10)    $  0.71     $ (0.17)
  Income from discontinued operations             -           -           -          0.11
  Loss on sale of discontinued operations         -           -           -         (0.29)
                                              -------     -------     -------     -------
       Diluted earnings (loss) per share      $  0.38     $ (0.10)    $  0.71     $ (0.35)
                                              =======     =======     =======     =======

Shares used in computing basic and
  diluted earnings (loss) per share:
    Basic                                       2,277       2,272       2,276       2,269
                                              =======     =======     =======     =======
    Diluted                                     2,409       2,272       2,354       2,269
                                              =======     =======     =======     =======
</TABLE>


          See accompanying notes to unaudited consolidated financial statements.

<PAGE>
                    SMTEK INTERNATIONAL, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                    (In thousands)

                                                         Nine Months Ended
                                                             March 31,
                                                       ---------------------
                                                        2001          2000
                                                       -------       -------
Cash flows from operating activities:
  Net income (loss)                                    $ 1,660       $  (802)
  Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
    Depreciation and amortization                        2,208         2,522
    Loss on sale of discontinued operations                -             661
    Increase in accounts receivable                       (811)       (1,914)
    (Increase) decrease in costs and estimated
      earnings in excess of billings on
      uncompleted contracts                                503        (3,930)
    Increase in inventories                             (2,994)       (1,994)
    Increase in accounts payable                           563         1,197
    Increase (decrease) in other accrued liabilities       308          (290)
    Other, net                                             (83)         (107)
                                                       -------       -------
Net cash provided by (used in) operating activities      1,354        (4,657)
                                                       -------       -------

Cash flows from investing activities:
  Capital expenditures                                  (1,938)         (684)
  Net proceeds from sale of discontinued operations         -          2,689
  Proceeds from sale of assets                              16           117
                                                       -------       -------
Net cash provided by (used in) investing activities     (1,922)        2,122
                                                       -------       -------

Cash flows from financing activities:
  Repayments of bank lines of credit                      (700)       (1,001)
  Proceeds from long-term debt                           2,001           -
  Repayments of long-term debt                          (1,071)       (1,178)
  Proceeds from exercise of stock options                    9           -
  Proceeds from foreign government grants                  -             250
                                                       -------       -------
Net cash provided by (used in) financing activities        239        (1,929)
                                                       -------       -------

Effect of exchange rate changes on cash                      2            61
                                                       -------       -------
Decrease in cash and cash equivalents                     (327)       (4,403)

Cash and cash equivalents at beginning of period           532         4,997
                                                       -------       -------
Cash and cash equivalents at end of period             $   205       $   594
                                                       =======       =======

Supplemental cash flow information:
  Interest paid                                        $   946       $   902
  Income taxes paid                                         58           675
Non-cash investing activities:
  Capital expenditures financed by lease
    obligations and notes payable                          589         1,130
  Other                                                     25           -



    See accompanying notes to unaudited consolidated financial statements.

<PAGE>
                  SMTEK INTERNATIONAL, INC. AND SUBSIDIARIES
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                   Nine Months Ended March 31, 2001 and 2000


Note 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

     SMTEK International, Inc. (the "Company") is an electronics manufacturing
services ("EMS") provider to original equipment manufacturers ("OEMs")
primarily in the computer, telecommunications, instrumentation, medical,
financial services automation, industrial and aerospace industries.  The
Company provides integrated solutions to OEMs across the entire product life
cycle, from design to manufacturing to end-of-life services, for the worldwide
low-to-medium volume, high complexity segment of the EMS industry.  The
Company's operating units are located in Thousand Oaks, California; San Diego,
California; Fort Lauderdale, Florida; and Craigavon, Northern Ireland.

     On November 12, 1999, the Company sold its printed circuit board ("PCB")
operation, Irlandus Circuits Ltd. ("Irlandus").  The results of operations of
Irlandus, which represented a separate segment of the Company's business, are
shown as a discontinued operation for the nine months ended March 31, 2000 in
the accompanying unaudited consolidated statements of operations.

     All significant intercompany transactions and accounts have been
eliminated in consolidation.  In the opinion of the Company's management, the
accompanying consolidated financial statements reflect all adjustments
(consisting of normal recurring accruals) necessary to present fairly the
Company's financial position at March 31, 2001 and its results of operations
for the three and nine months ended March 31, 2001 and 2000.

     The Company uses a 52-53 week fiscal year ending on the Friday closest to
June 30, which for fiscal year 2000 fell on June 30, 2000.  The actual interim
periods ended on March 30, 2001 and March 31, 2000.  In the accompanying
consolidated financial statements, the 2000 fiscal year end is shown as June
30 and the interim period end for both years is shown as March 31 for clarity
of presentation.

     Certain notes and other information are condensed or omitted from the
interim financial statements presented in this Quarterly Report on Form
10-Q.  Therefore, these financial statements should be read in conjunction
with the Company's 2000 Annual Report on Form 10-K as filed with the
Securities and Exchange Commission on August 20, 2000.

     Certain reclassifications have been made to the interim fiscal 2000
financial statements to conform with the interim fiscal 2001 financial
statement presentation.  Such reclassifications had no effect on the Company's
results of operations or stockholders' equity.


Note 2 - DISCONTINUED OPERATIONS

     On November 12, 1999, the Company sold Irlandus, its PCB fabrication
operation in Northern Ireland.  The purchaser was a management buy-out team.
The purchase price was negotiated on an arms length basis between the Company
and the purchaser.  The gross sales proceeds in the aggregate amount of
2,800,000 pounds sterling (approximately $4,523,000) consisted of a cash
dividend of 500,000 pounds sterling paid by Irlandus just prior to closing and
cash of 2,300,000 pounds sterling paid by the purchaser at closing.  After
giving consideration to disposal costs and the cash of approximately $1.5
million which stayed with the divested operation, the net cash proceeds of
this transaction amounted to approximately $2.7 million.

     Irlandus was the sole operating unit comprising the Company's PCB
segment.  Accordingly, operating results for Irlandus have been presented in
the accompanying consolidated statements of operations as a discontinued
operation, and are summarized as follows (in thousands):

                                               Nine months ended
                                                 March 31, 2000
                                               -----------------

Net sales                                            $3,383
                                                     ======
Operating income                                     $  131
                                                     ======
Income from discontinued
  operations, net of tax                             $  254
                                                     ======

     Net assets of Irlandus consisted of the following (in thousands):

                                               November 12, 1999
                                                  (sale date)
                                               -----------------

Current assets                                     $ 4,099
Property, equipment and improvements                 3,447
Current liabilities                                 (2,081)
Long-term debt                                      (1,314)
                                                   -------
  Net assets                                       $ 4,151
                                                   =======

     The loss on sale of Irlandus, shown in the accompanying consolidated
statements of operation as "Loss on sale of discontinued operations," is
comprised as follows (in thousands):

Gross sales proceeds                               $ 4,523
Less disposal costs                                   (277)
                                                   -------
Net sales proceeds                                   4,246

Less net assets of Irlandus                         (4,151)
                                                   -------
Gain on sale before elimination of foreign
  currency translation account balance                  95

Elimination of Irlandus' foreign
  currency translation account balance                (756)
                                                   -------
Loss on sale of discontinued operations            $  (661)
                                                   =======

     Prior to the sale, Irlandus had an accumulated foreign currency
translation loss of $756,000, which was carried as a reduction of consolidated
stockholders' equity.  In accordance with Statement of Financial Accounting
Standards ("SFAS") No. 52, "Foreign Currency Translation," this amount has
been included in the determination of the loss on sale of discontinued
operations and in accordance with SFAS No. 130, "Reporting Comprehensive
Income," an equal and offsetting amount is reported as other comprehensive
income (see Note 8).


Note 3 - EARNINGS PER SHARE

     Basic earnings per share is computed by dividing net income available to
common stockholders by the weighted average number of common shares
outstanding during the period.  Diluted earnings per share reflects the
potential dilution that could occur if securities or other contracts to issue
Common Stock were exercised or converted into Common Stock or resulted in the
issuance of Common Stock that then shared in the earnings of the Company.

     Common stock equivalents used in the determination of diluted earnings
per share include the effect, when such effect is not antidilutive, of the
Company's outstanding employee stock options, the 7% Convertible Subordinated
Debentures (which are convertible into 8,075 shares of Common Stock at $40.00
per share of Common Stock), and the 8-1/2% Convertible Subordinated Debentures
(which are convertible into 7,435 shares of Common Stock at $212.60 per share
of Common Stock).  The following is a summary of the calculation of basic and
diluted earnings per share (dollars in thousands, except per share data):

                                      Three months ended    Nine months ended
                                        March 31, 2001        March 31, 2001
                                      ------------------    -----------------

Net income                                $     926             $   1,660
                                          =========             =========

Weighted average shares:
  Basic weighted average number of
    common shares outstanding             2,277,110             2,276,015
  Dilutive effect of outstanding
    common stock equivalents                131,974                78,024
                                          ---------             ---------
      Diluted weighed average number
        of common shares outstanding      2,409,084             2,354,039
                                          =========             =========

Earnings per share:
  Basic                                   $    0.41             $    0.73
                                          =========             =========
  Diluted                                 $    0.38             $    0.71
                                          =========             =========

     Options to purchase approximately 416,000 shares of Common Stock at
prices ranging from $6.50 to $21.25 were outstanding at March 31, 2001 but
were not included in the computation of diluted earnings per share for the
three and nine months then ended because the exercise price of these options
was greater than the average market price of the Common Stock.  The Company's
convertible subordinated debentures were antidilutive for all periods
presented.

     Because the Company had a loss from continuing operations for the three
and nine months ended March 31, 2000, there were no common stock equivalents
which had a dilutive effect on earnings per share for such periods.  If the
Company had reported income from continuing operations rather than a loss,
outstanding stock options to purchase approximately 13,000 shares of Common
Stock at exercise prices ranging from $3.38 to $3.88 would have been included
in the computation of diluted earnings per share, and stock options and
warrants to purchase approximately 394,000 shares at exercise prices ranging
from $5.38 to $70.00 per share would have been excluded from the computation
of diluted earnings per share because such exercise prices were greater than
the average market price of Common Stock.


Note 4 - COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS ON UNCOMPLETED
          CONTRACTS

     Costs and estimated earnings in excess of billings on uncompleted
contracts consists of revenue recognized under electronics assembly contracts,
which amounts were not billable at the balance sheet date.  Substantially all
of the unbilled amount is expected to be billed and collected within 180 days
of the balance sheet date.  The components of costs and estimated earnings in
excess of billings on uncompleted contracts are as follows (in thousands):

                                                March 31,       June 30,
                                                   2001           2000
                                               ------------     --------
  Costs incurred to date on
    uncompleted contracts                        $ 72,881       $ 56,381
  Estimated earnings based on
    percentage of completion                        9,204          6,889
                                                 --------       --------
                                                   82,085         63,270
  Less:  Billings to date                         (72,331)       (53,013)
                                                 --------       --------
    Total costs and estimated
      earnings in excess of billings
      on uncompleted contracts                   $  9,754       $ 10,257
                                                 ========       ========


Note 5 - INVENTORIES

     Inventories consist of the following (in thousands):

                                                 March 31,      June 30,
                                                   2001           2000
                                               ------------     --------
  Raw materials                                   $5,450         $3,894
  Work in process                                  3,388          2,129
  Finished goods                                     109             72
                                                  ------         ------
                                                  $8,947         $6,095
     Total inventories                            ======         ======


Note 6 - FINANCING ARRANGEMENTS

     The Company has a credit facility for its domestic operating units which
consists of a $10 million working capital line secured by accounts receivable,
inventory and equipment.  Borrowings under the credit agreement bear interest
at either the bank's prime rate or a LIBOR-based rate of LIBOR plus 2.50%.  At
March 31, 2001, borrowings outstanding under this credit facility amounted to
$5,012,000, and the effective weighted average interest rate was 7.98%.  The
Company's available borrowing capacity as of March 31, 2001 was approximately
$5.0 million.  This credit facility expires on July 6, 2001.  The Company
expects to either renew its domestic line of credit with its current lender in
the normal course of business or to obtain a replacement credit facility from
another source.

     The Company also has a credit facility agreement with Ulster Bank Markets
for its Northern Ireland operating company.  This agreement consists of an
accounts receivable revolver, with maximum borrowings equal to the lesser of
70% of eligible receivables or 2,250,000 pounds sterling (approximately
$3,240,000 at March 31, 2001), and bears interest at the bank's base rate
(5.75% at March 31, 2001) plus 2.00%.  At March 31, 2001, borrowings
outstanding under this credit facility amounted to approximately $1,751,000
and the amount available to borrow based on the advance rate against
receivables was approximately $241,000.  The credit facility agreement with
Ulster Bank Markets expires on November 30, 2001.

     During the nine months ended March 31, 2001 and 2000, the Company entered
into capital leases and notes payable to finance equipment purchases of
$2,590,000 and $1,130,000, respectively.


Note 7 - INCOME TAXES

     In March 2001, the Company reached a tentative settlement with the
Appeals Division of the Internal Revenue Service ("IRS") concerning a federal
income tax assessment related to tax refunds received in 1995 which were
subsequently disallowed by the IRS, as described in more detail in the
Company's latest Annual Report on Form 10-K.  The tax assessment and related
interest expense were recorded by the Company in its financial statements for
the year ended June 30, 1999.  Additional interest expense has been accrued
since that date.  As a result of negotiations with the IRS, the Company
recognized income tax benefits of $64,000 and $218,000, respectively, in the
three and nine month periods ended March 31, 2001.  After giving effect to
these adjustments, at March 31, 2001 the Company's recorded federal tax
liability associated with this assessment is approximately $1,115,000 and
accrued interest thereon is approximately $844,000.  Upon finalization of the
settlement, the Company intends to seek an installment plan with the IRS.


Note 8 - Other Comprehensive Income (Loss)

     Other comprehensive income (loss) is as follows (in thousands):
<TABLE>
<CAPTION>
                                              Three Months Ended       Nine Months Ended
                                                  March 31,                March 31,
                                              -------------------     -------------------
                                               2001        2000        2001        2000
                                              -------     -------     -------     -------
<S>                                    <C>        <C>       <C>        <C>
Net income (loss)                             $   926     $  (235)    $ 1,660     $  (802)
Other comprehensive income (loss):
  Foreign currency translation adjustments        (61)        (32)        (65)        109
  Reclassification of foreign currency
    translation adjustments included in
    loss on sale of discontinued operations       -           -           -           756
                                              -------     -------     -------     -------
Total other comprehensive income (loss)           (61)        (32)        (65)        865
                                              -------     -------     -------     -------
Comprehensive income (loss)                   $   865     $  (267)    $ 1,595     $    63
                                              =======     =======     =======     =======


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

     Certain statements made below are forward-looking in nature and reflect
the Company's current expectations and plans.  Such statements involve various
risks and uncertainties that could cause actual results to differ materially
from those currently expected by the Company.  Meaningful factors that might
cause such differences include, but are not limited to, significant historical
losses, limited capital resources and a continuing need for financing,
dependence on key personnel, concentration of revenues among major customers,
industry conditions, competition, environmental matters, dependence on
suppliers and other factors, as described in more detail in the Company's most
recently filed Form 10-K and the section titled "Risk Factors" in the
Company's Registration Statement on Form S-3 (No. 333-62621) on file with the
Securities and Exchange Commission.


RESULTS OF OPERATIONS

     Consolidated revenues for the three and nine months ended March 31, 2001
were $25,008,000 and $70,080,000, respectively, compared to $19,213,000 and
$48,865,000, respectively, for the three and nine months ended March 31, 2000.
The increases of $5,795,000, or 30%, for the three months ended March 31, 2001
and $21,215,000, or 43%, for the nine months ended March 31, 2001, compared to
the same periods of the prior year, were primarily due to an increase in
business with key customers.  Given the current downward economic trends, the
Company may be unable to sustain its current level of revenue growth exhibited
in the latest three and nine month periods.  Although the Company continues to
book business, the outlook beyond its current backlog is uncertain.  Existing
business for some of the Company's customers is beginning to soften, but for
the most part this softness is expected to be temporary, as these customers
have pushed out their orders to later scheduled delivery dates.

     Consolidated gross profit for the three months ended March 31, 2001 was
$3,293,000 (13.2% of sales) compared to $1,887,000 (9.8% of sales) for the
three months ended March 31, 2000.  Consolidated gross profit for the nine
months ended March 31, 2001 was $8,598,000 (12.3% of sales) compared to
$5,585,000 (11.4% of sales) for the nine months ended March 31, 2000.  The
gross margin improvement is attributable primarily to the significant revenue
growth in the latest three and nine month periods compared to the prior year,
which caused fixed costs to be spread over a larger volume of production.  In
addition, certain production changes made by the Company, and a recent decline
in materials pricing, have reduced costs.  These changes have had a positive
impact on the Company's gross profit margin.

     Administrative and selling expenses increased to $1,976,000 and
$5,175,000 for the three and nine months ended March 31, 2001, respectively,
from $1,539,000 and $4,315,000 for the three and nine months ended March 31,
2000, respectively.  The increases of $437,000, or 28%, for the three months
ended March 31, 2001, and $860,000, or 20%, for the nine months ended March
31, 2001 are due primarily to expansion of the Company's managerial and
administrative staff and an increase in the allowance for doubtful accounts.

     Goodwill amortization decreased to $9,000 and $661,000 for the three and
nine months ended March 31, 2001, respectively, from $326,000 and $978,000 for
the three and nine months ended March 31, 2000, respectively. These reductions
occurred because the Company had fully amortized, as of December 31, 2000, the
goodwill of $6.3 million which arose from the Company's acquisition of its
Thousand Oaks operating unit in January 1996.

     Total interest expense was $319,000 for the three months ended March 31,
2001 compared to $226,000 for the three months ended March 31, 2000.  For the
nine months ended March 31, 2001, interest expense was $1,120,000 compared to
$615,000 for the nine months ended March 31, 2000.  There are two reasons for
the increased interest expense in the latest three and nine month periods.
First, the Company had higher line of credit borrowings due mainly to the
Company's growth, and an increased need for working capital, principally in
higher inventory levels due to the industry-wide shortages of certain
electronic components.  Second, the average interest rates have been 0.5% to
1.0% higher during fiscal 2001.

     The Company had an income tax provision of $22,000 in the three months
ended March 31, 2001 and had an income tax benefit of $96,000 in the nine
month period ended March 31, 2001.  These amounts include income tax benefits
of $64,000 and $218,000 in the three and nine month periods ended March 31,
2001, respectively, resulting from the reduction of the recorded liability for
a federal tax assessment related to prior years, as discussed in Note 7 to the
accompanying unaudited financial statements.  Without these items, the Company
would have reported income tax expense of $86,000 and $122,000 in the three
and nine month periods ended March 31, 2001, respectively, compared to income
tax expense of $15,000 and $45,000 in the three and nine month periods ended
March 31,2000, respectively.  These income tax expense amounts, after taking
into account the nondeductibility of the Company's goodwill amortization, are
less than the statutory income tax rates due to the utilization of federal net
operating loss carryforwards.

     Income from continuing operations was $926,000 for the three months ended
March 31, 2001, or $0.41 per basic share, compared to a loss from continuing
operations of $235,000, or $0.10 per basic share, for the three months ended
March 31, 2000.  Income from continuing operations was $1,660,000 for the nine
months ended March 31, 2001, or $0.73 per basic share, compared to a loss from
continuing operations of $395,000, or $0.17 per basic share.  The improvement
is due to increased gross profit which was partially offset by increases in
administrative and selling expenses and interest expense.


RECENT ACCOUNTING PRONOUNCEMENTS


     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements."  The objective of SAB No. 101 is to provide further guidance on
revenue recognition issues in the absence of authoritative literature
addressing a specific arrangement or a specific industry.  The Company is
required to follow the guidance in SAB No. 101 no later than the fourth
quarter of its fiscal year 2001.  The Company believes that adherence to the
provisions of SAB No. 101 will not have a material impact on the Company's
financial position or results of operations.


LIQUIDITY AND CAPITAL RESOURCES

     The Company's primary sources of liquidity are its cash and cash
equivalents, which amounted to $205,000 at March 31, 2001, and its unused bank
lines of credit.  During the nine months ended March 31, 2001, cash and cash
equivalents decreased by $327,000.  This decrease resulted from cash used for
capital expenditures of $1,938,000, offset by an increase in cash from
operations of $1,354,000 and net proceeds from bank lines of credit and other
debt of $239,000.

     Cash provided by operating activities of $1,354,000 in the nine months
ended March 31, 2001 was attributable primarily to income before depreciation
and amortization of $3,868,000, partially offset by an increase in working
capital of $2,514,000.  Substantially all of the costs and estimated earnings
in excess of billings on uncompleted contracts at March 31, 2001 is expected
to be billed prior to September 30, 2001.

     As further discussed in Note 6 to the accompanying unaudited consolidated
financial statements, the Company has bank lines of credit to finance the
working capital requirements of its domestic and foreign operations.  At March
31, 2001, the Company had approximately $5.2 million available to borrow under
its bank lines of credit.  The Company's domestic line of credit expires on
July 6, 2001.  The Company expects to either renew its domestic line of credit
with its current lender in the normal course of business or to obtain a
replacement credit facility from another source.

     Capital expenditures during the nine months ended March 31, 2001,
including amounts financed by capital leases, were $2,527,000.  The Company
anticipates that additional capital expenditures of as much as $307,000 may be
required during the remainder of fiscal 2001, primarily to expand production
capacity at its Thousand Oaks and San Diego plants.  The substantial majority
of these capital expenditures is expected to be financed by capital leases
and/or installment loans.

     As more fully described in Note 7 to the accompanying unaudited
consolidated financial statements, at March 31, 2001 the Company has a federal
tax assessment liability of approximately $1,115,000 and a related accrued
interest liability of approximately $844,000, which amounts reflect the
results of a tentative settlement reached with the IRS Appeals Division in
March 2001.  Upon finalization of the settlement, the Company intends to seek
an installment payment plan with the IRS.

     Management believes that the Company's cash resources and borrowing
capacity on its working capital lines of credit are sufficient to fund its
operations for at least the next 12 months.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's financial instruments include cash and cash equivalents,
accounts receivable and short-term and long-term debt.  At March 31, 2001, the
carrying amount of long-term debt (including the current portion thereof) was
$8,590,000 and the related fair value was $8,116,000.  The carrying values of
the Company's other financial instruments approximated their fair values.  The
fair value of the Company's financial instruments is estimated based on quoted
market prices for the same or similar issues.  It is estimated that a change
in interest rates of one percent would result in an annual impact on interest
expense of approximately $80,000.

     It is the policy of the Company not to enter into derivative financial
instruments for speculative purposes.  The Company, from time to time, may
enter into foreign currency forward exchange contracts in an effort to protect
itself from adverse currency rate fluctuations on foreign currency commitments
entered into in the ordinary course of business.  These commitments are
generally for terms of less than one year.  The foreign currency forward
exchange contracts are executed with banks believed to be creditworthy and are
denominated in currencies of major industrial countries.  Any gain or loss
incurred on foreign currency forward exchange contracts is offset by the
effects of currency movements on the respective underlying hedged
transactions.  The Company did not have any open foreign currency forward
exchange contracts at March 31, 2001.

     A portion of the Company's operations consists of investments in a
foreign operating unit.  As a result, the Company's financial results have
been and may continue to be affected by changes in foreign currency exchange
rates.



PART II.  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

a.  Exhibits:

    27      Financial Data Schedule (electronic filing only)

b.  Reports on Form 8-K:

         The Company did not file any reports on Form 8-K during the quarter
    ended March 31, 2001.





                                   SIGNATURE

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



          May 14, 2001                      /s/ Gregory L. Horton
---------------------------------        -----------------------------------
            Date                                Gregory L. Horton
                                                Chief Executive Officer,
                                                President and Chairman of
                                                Board
                                                (as Duly Authorized and
                                                Principal Financial Officer)
11



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