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, 1998 

 [ ] 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:  DDL ELECTRONICS, INC.


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


Address of Principal Executive Offices:        2151 Anchor Court
                                               Newbury Park, CA 91320

Registrant's Telephone Number:                 (805) 376-9415



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 24,613,666 shares of Common Stock outstanding as of 
May 15, 1998.



PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                    DDL ELECTRONICS, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                       (Unaudited, except June 30, 1997)


                             	       March 31,         June 30,
                                       1998              1997
                                      ------            ------
        Assets

Current assets:
  Cash and cash equivalents       $  2,019,000     $  4,718,000
  Accounts receivable, net           8,751,000        9,198,000
  Costs and estimated earnings
   in excess of billings on 
   uncompleted contracts             4,413,000        3,161,000
  Inventories, net                   2,515,000        3,211,000
  Prepaid expenses                     441,000          132,000
                                    ----------       ----------

     Total current assets           18,139,000       20,420,000
                                    ----------       ----------
Property, equipment and
 improvements, at cost:
  Buildings and improvements         6,080,000        6,037,000
  Plant equipment                   14,947,000       14,962,000
  Office and other equipment         2,136,000        1,952,000
                                    ----------       ----------

                                    23,163,000       22,951,000
Less: Accumulated depreciation
 and amortization                  (16,946,000)     (16,161,000)
                                    ----------       ----------
Property, equipment and
 improvements, net                   6,217,000        6,790,000
                                    ----------       ----------
Other assets:
  Goodwill, net                      3,488,000        4,439,000
  Deposits and other assets            234,000          231,000
                                    ----------      -----------

                                     3,722,000        4,670,000
                                    ----------      -----------

                                  $ 28,078,000     $ 31,880,000
                                    ==========       ==========



                    DDL ELECTRONICS, INC. AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                                 (Continued)             
                       (Unaudited, except June 30, 1997)


                                     March 31,         June 30,
                                       1998              1997
                                      ------            ------
Liabilities and Stockholders' Equity

Current liabilities:
  Bank lines of credit payable    $  3,272,000     $  1,378,000
  Current portion of 
   long-term debt                    2,993,000        4,167,000
  Accounts payable                   6,837,000        9,084,000
  Accrued payroll and
   employee benefits                 1,120,000        1,145,000
  Other accrued liabilities          2,288,000        2,321,000
                                    ----------       ----------  

     Total current liabilities      16,510,000       18,095,000
                                    ----------       ----------
Long-term debt:
  7% Convertible Subordinated
   Debentures, less current 
   portion                             387,000          398,000
  8-1/2% Convertible
   Subordinated Debentures           1,580,000        1,580,000
  Notes payable, capitalized
   lease obligations and
   other long-term debt, 
   less current portion              3,284,000        5,842,000
                                    ----------       ----------

     Total long-term debt            5,251,000        7,820,000
                                    ----------       ----------

Stockholders' equity:
  Common stock                         246,000          246,000
  Additional paid-in capital         6,884,000        6,410,000
  Accumulated deficit since 
   June 27, 1997                      (204,000)            -
  Foreign currency translation
   adjustment                         (609,000)        (691,000)
                                    ----------       ----------

     Total stockholders' equity      6,317,000        5,965,000 
                                    ----------       ----------

                                  $ 28,078,000     $ 31,880,000
                                    ==========       ==========






                   See accompanying Notes to Unaudited
                    Consolidated Financial Statements

                    DDL ELECTRONICS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)


                                        Three Months Ended   
                                            March 31,       
                                      -----------------------
                                       1998             1997
                                      ------           ------

Sales                             $ 12,855,000     $ 13,580,000

Cost of goods sold                  10,829,000       11,600,000
                                    ----------       ----------
Gross profit                         2,026,000        1,980,000
                                    ----------       ----------
Operating expenses:
  Administrative and selling         1,444,000        1,290,000
  Goodwill amortization                317,000          317,000
                                    ----------       ----------
                                     1,761,000        1,607,000
                                    ----------       ----------

Operating income                       265,000          373,000
                                    ----------       ----------

Non-operating income (expense):
  Interest income                       22,000           16,000
  Interest expense                    (251,000)        (279,000)
  Debt issue cost amortization           -             (124,000)
  Other income (expense), net          (45,000)         148,000
                                    ----------       ----------
                                      (274,000)        (239,000)
                                    ----------       ----------

Income (loss) before taxes              (9,000)         134,000

Provision for income taxes            (105,000)           -
                                    ----------       ----------

Net income (loss)                  $  (114,000)     $   134,000
                                    ==========       ==========


Basic and diluted earnings 
  (loss) per share                     $   -            $   .01
                                          ====             ====
Shares used in computing
 earnings per share:

    Basic                           24,610,000       23,074,000
                                    ==========       ==========

    Diluted                         24,610,000       23,595,000
                                    ==========       ==========


                   See accompanying Notes to Unaudited
                    Consolidated Financial Statements

                    DDL ELECTRONICS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (Unaudited)


                                         Nine Months Ended   
                                             March 31,       
                                      -----------------------
                                       1998             1997
                                      ------           ------

Sales                             $ 37,576,000     $ 34,660,000

Cost of goods sold                  31,615,000       30,161,000
                                    ----------       ----------
Gross profit                         5,961,000        4,499,000
                                    ----------       ----------
Operating expenses:
  Administrative and selling         4,048,000        3,653,000
  Goodwill amortization                951,000          951,000
                                    ----------       ----------
                                     4,999,000        4,604,000
                                    ----------       ----------

Operating income (loss)                962,000         (105,000)
                                    ----------       ----------

Non-operating income (expense):
  Interest income                       51,000           59,000
  Interest expense                    (724,000)        (844,000)
  Debt issue cost amortization           -             (372,000)
  Other income (expense), net          (63,000)         140,000
                                    ----------       ----------
                                      (736,000)      (1,017,000)
                                    ----------       ----------

Income (loss) before taxes             226,000       (1,122,000)

Provision for income taxes            (430,000)           -
                                    ----------       ----------

Net loss                          $   (204,000)    $ (1,122,000)
                                    ==========       ==========


Basic and diluted earnings 
  (loss) per share                     $  (.01)         $  (.05)
                                          ====             ====
Shares used in computing
  basic and diluted earnings
  per share                         24,598,000       23,047,000
                                    ==========       ==========



                   See accompanying Notes to Unaudited
                    Consolidated Financial Statements

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)

                                                  Nine Months Ended 
                                                      March 31,      
                                               -----------------------
                                                1998             1997
                                               ------           ------
Cash flows from operating activities:
  Net loss                                  $ (204,000)       $(1,122,000)
  Adjustments to reconcile net loss
   to net cash used by operating
   activities:
    Depreciation expense                     1,214,000         1,030,000
    Amortization of goodwill and debt
     issue costs                               954,000         1,326,000
    Gain on sale of assets                     (22,000)         (128,000)
    Utilization of pre-quasi-
     reorganization tax benefits               430,000             -
    Net increase in operating
     working capital                        (2,837,000)       (3,595,000)
    Increase in deposits and
     other assets                               (6,000)          100,000
    Benefit of non-capital grants                 -             (181,000)
    Other                                       89,000            65,000   
                                             ---------         ---------
Net cash used by operating activities         (382,000)       (2,505,000)
                                             ---------         ---------

Cash flows from investing activities:
  Capital expenditures                        (431,000)         (697,000)
  Proceeds from sale of assets                  16,000           202,000
							   ---------         ---------
Net cash used by investing activities         (415,000)         (495,000)
                                             ---------         ---------
Cash flows from financing activities:
  Proceeds from bank lines of credit         1,883,000         1,955,000 
  Proceeds from long-term debt               2,000,000             -   
  Payments of long-term debt                (5,995,000)         (556,000)
  Proceeds from foreign government grants      123,000           467,000
                                             ---------         ---------
Net cash provided by (used in) financing 
  activities                                (1,989,000)        1,866,000
                                             ---------         ---------

Effect of exchange rate changes on cash         87,000            44,000
                                             ---------         ---------
Decrease in cash and cash equivalents       (2,699,000)       (1,090,000)

Cash and cash equivalents at 
 beginning of period                         4,718,000         2,519,000
                                             ---------         ---------
Cash and cash equivalents at 
 end of period                              $2,019,000        $1,429,000
                                             =========         =========



                     See accompanying Notes to Unaudited
                      Consolidated Financial Statements.


                    DDL ELECTRONICS, INC. AND SUBSIDIARIES 
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 



Note 1 - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

DDL Electronics, Inc. provides electronic manufacturing services ("EMS") to 
original equipment manufacturers ("OEMs") in the computer, telecommunications, 
instrumentation, medical, industrial and aerospace industries. The Company 
also manufactures multilayer printed circuit boards ("PCBs") for use primarily 
in the computer, communications and instrumentation industries.  The Company's 
EMS operations are located in Southern California and Northern Ireland.  The 
Company's PCB facilities are located in Northern Ireland. 

The accompanying consolidated financial statements, which have not been 
audited by independent accountants (except for the balance sheet as of June 
30, 1997), include the accounts of DDL Electronics, Inc. and its subsidiaries.  
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, 1998 and its results of operations and cash flows for 
the nine months ended March 31, 1998 and 1997. 

The Company uses a 52-53 week fiscal year ending on the Friday closest to June 
30, which for fiscal year 1997 fell on June 27, 1997.  In the accompanying  
consolidated financial statements, the 1997 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.  The actual interim periods ended on April 3, 1998 and March 
28, 1997.  The nine month period of fiscal 1998 consisted of 40 weeks compared 
to 39 weeks for the same period of fiscal 1997.

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 1997 Annual Report to Stockholders as filed with the Securities and 
Exchange Commission on October 10, 1997.

Certain reclassifications have been made to the interim fiscal 1997 financial 
statements to conform with the fiscal 1998 financial statement presentation.  
Such reclassifications had no effect on the Company's results of operations or 
stockholders' equity.  



Note 2 - EARNINGS (LOSS) PER SHARE

In 1997, the Financial Accounting Standards Board issued Statement No. 128, 
"Earnings per Share" ("SFAS 128").  SFAS 128 replaced the previously reported 
primary and fully diluted earnings per share with basic and diluted earnings 
per share.  Basic earnings per share represents income available to common 
shareholders divided by the weighted average number of common shares 
outstanding for the period.  Unlike primary earnings per share, basic earnings 
per share excludes any dilutive effects of options, warrants, and convertible 
securities.  Diluted earnings per share is very similar to the previously 
reported fully diluted earnings per share.  All earnings per share amounts for 
all periods have been presented, and where necessary, restated to conform to 
SFAS 128 requirements.
A reconciliation of the numerator and denominator used in the computation of 
diluted earnings per share follows:

                                               Three Months Ended   
                                                    March 31,
                                                      1997       
                                                     ------
   NUMERATOR:
Net income                                        $   134,000   
Add back net interest related to 
  convertible subordinated debentures                  34,000  
                                                   ----------
Net income for diluted earnings computation       $   168,000   
                                                   ==========

   DENOMINATOR:
Weighted average number of common
  shares outstanding                               23,074,156    
Assumed exercise of options and warrants
  net of shares assumed reacquired under 
  treasury stock method                               211,078 
Assumed conversion of convertible
  subordinated debentures                             310,206  
                                                   ----------   
Total diluted shares                               23,595,440   
                                                   ========== 


The company reported net losses for the three and nine months ended March 31, 
1998 and for the nine months ended March 31, 1997;  hence, diluted earnings 
per share for these periods as presented in the statements of operations 
included herein is computed on the same basis as basic earnings per share.  
For the nine months ended March 31, 1998 and 1997, the following securities 
were outstanding but were not included in the computation of diluted earnings 
per as they would have an antidilutive effect on earnings per share:  
subordinated debentures convertible into 310,206 shares of common stock;  and 
options and warrants to purchase 5,421,809 and 4,988,128 shares of common 
stock, respectively, at prices ranging from $0.50 to $2.25.


Note 3 - ACCOUNTS RECEIVABLE

The components of accounts receivable are as follows:


                                       March 31,      June 30,
                                         1998           1997
                                         ----           ----
    Trade receivables                 $8,925,000     $8,810,000
    Other receivables                     21,000        546,000
    Less allowance for doubtful
     accounts                           (195,000)      (158,000)
                                       ---------      ---------
                                      $8,751,000     $9,198,000
                                       =========      =========


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

The components of costs and estimated earnings in excess of billings on 
uncompleted contracts are as follows:

                                       March 31,      June 30,
                                         1998           1997
                                         ----           ----
  Costs incurred on uncompleted
   contracts                         $30,801,000    $20,455,000
  Estimated earnings                   3,003,000      2,714,000 
                                      ----------     ----------
                                      33,804,000     23,169,000
  Less:  Billings to date            (29,391,000)   (20,008,000)
                                      ----------     ----------
                                     $ 4,413,000    $ 3,161,000  
                                      ==========     ========== 

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.  Essentially all of the 
unbilled receivables are expected to be billed within 90 days of the balance 
sheet date.


Note 5 - INVENTORIES

Inventories consist of the following:

                                       March 31,      June 30,
                                         1998           1997
                                         ----           ----
  Raw materials                       $2,239,000     $2,889,000
  Work in process                        475,000        654,000
  Finished goods                         310,000        160,000
  Less reserves                         (509,000)      (492,000)
                                       ---------      ---------
                                      $2,515,000     $3,211,000
                                       =========      =========



Note 6- OTHER ACCRUED LIABILITIES

Other accrued liabilities consist of the following:

                                       March 31,      June 30,
                                         1998           1997
                                         ----           ----
  Environmental liabilities           $  651,000     $  684,000
  Accrued taxes payable                  790,000        794,000
  Other                                  847,000        843,000
                                       ---------      ---------
                                      $2,288,000     $2,321,000
                                       =========      =========


Note 7- FINANCING ARRANGEMENTS AND ACQUISITION COMMITMENT

The Company has an accounts receivable-based working capital bank line of 
credit for SMTEK, its U.S. EMS operation, which provides for borrowings of up 
to $2,500,000 at an interest rate of prime (8.50% at March 31, 1998) plus 
1.25%. At March 31, 1998, borrowings outstanding under this credit facility 
amounted to $1,763,000.  The Company also has a credit facility agreement with 
Ulster Bank Markets for its Northern Ireland operations.  This agreement 
includes a working capital line of credit of 3,000,000 pounds sterling 
(approximately $5,000,000), and provides for interest on borrowings at the 
bank's base rate (7.59% at March 31, 1998) plus 1.50%.  At March 31, 1998, 
borrowings outstanding under this credit facility amounted to $1,509,000.   

On June 30, 1997 (which is subsequent to the year ended June 27, 1997), the 
Company repaid its 10% Senior Notes due July 1, 1997 in the amount of 
$5,300,000 plus accrued interest of $43,000.  Of the funds used to repay the 
10% Senior Notes, $2,000,000 was borrowed from a private investor (the 
"Investor") on June 30, 1997 under an 8% note payable due February 1, 1999 
which is secured by the common stock of SMTEK. 

Following is pro forma information for certain consolidated balance sheet line 
items presented as if the issuance of the $2,000,000 note payable and 
repayment of the 10% Senior Notes had occurred on June 27, 1997:


                                                 June 27, 1997      
                                          ---------------------------
                                          As Reported      Pro forma
                                          -----------     -----------
Assets:
  Cash and cash equivalents               $4,718,000      $1,375,000  

Liabilities:
  Current portion of long-term debt       $4,167,000      $  867,000
  Other accrued liabilities               $2,321,000      $2,278,000


Concurrent with issuing the $2,000,000 note payable on June 30, 1997, the 
Company agreed to acquire all of the issued and outstanding shares of Jolt 
Technology, Inc.  ("Jolt"), a privately-held electronic manufacturing services 
company controlled by the Investor, for nine million shares of the Company's 
common stock.  The acquisition of Jolt is subject to obtaining the approval of 
the Company's stockholders.  Upon consummation of the Jolt acquisition, the 
maturity date of the $2,000,000 note payable will be extended from February 1, 
1999 to October 31, 1999.


Note 8- INFORMATION RELATING TO STATEMENT OF CASH FLOWS

"Net cash used by operating activities" includes cash payments for interest as 
follows:
                                          Nine months ended
                                              March 31,
                                       ---------------------
                                        1998           1997
                                       ------         ------
Interest paid                        $ 610,000      $ 834,000 
                                       =======        =======   


"Net increase in operating working capital" is comprised of the following:

                                          Nine months ended
                                              March 31,
                                       ---------------------
                                        1998           1997
                                       ------         ------
(Increase) decrease in 
  accounts receivable              $   324,000    $ (3,736,000)
Increase in costs and estimated
 earnings in excess of billings
 on uncompleted contracts           (1,251,000)     (1,418,000)
Decrease in inventories                689,000         779,000
(Increase) decrease in 
  prepaid expenses                    (309,000)        109,000
Increase (decrease) in 
  accounts payable                  (2,232,000)      1,225,000
Decrease in accrued payroll 
 and employee benefits                 (24,000)        (30,000)
Decrease in other liabilities          (34,000)       (524,000)
                                     ---------       ---------
Net increase in operating
 working capital                   $(2,837,000)    $(3,595,000)
                                     =========       =========


Following is the supplemental schedule of non-cash investing and financing 
activities:
                                         Nine months ended
                                            March 31,
                                       ---------------------
                                        1998           1997
                                       ------         ------
Capital expenditures financed by
 lease obligations                  $  237,000      $  710,000 

Conversion of debt to equity        $   44,000      $  153,000


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, 
historical dependence on government business on the part of the Company's U.S. 
operating unit and a recent shift into commercial business, industry 
conditions, competition, environmental matters, dependence on suppliers and 
other factors as discussed in the Company's Securities and Exchange Commission 
filings, including other factors described as "Risk Factors" in the Company's 
Registration Statement on Form S-3 (No. 333-31349).

DESCRIPTION OF THE BUSINESS

The Company provides electronic manufacturing services ("EMS") to original 
equipment manufacturers ("OEMs") in the computer, telecommunications, 
instrumentation, medical, industrial and aerospace industries. The Company 
also manufactures multilayer printed circuit boards ("PCBs") for use primarily 
in the computer, communications, and instrumentation industries.  The 
Company's EMS operations are located in Southern California and Northern 
Ireland.  Its PCB facilities are located in Northern Ireland.


QUASI-REORGANIZATION

The Company, with the authorization of its Board of Directors, implemented a 
quasi-reorganization effective June 27, 1997.  The quasi-reorganization, which 
did not require the approval of the Company's stockholders, resulted in an 
elimination of the accumulated deficit of $23,678,000 by a transfer from 
additional paid-in capital of an equivalent amount.  This deficit was 
attributable primarily to operations which were divested or discontinued in 
prior years.  Following a review and evaluation by management, no adjustment 
was made to the carrying values of the Company's assets and liabilities 
because such amounts were deemed to be not in excess of estimated fair values.  


RESULTS OF OPERATIONS

The Company uses a 52-53 week fiscal year ending on the Friday closest to June 
30.  In the accompanying consolidated financial statements, the interim period 
end for both years is shown as March 31 for clarity of presentation.  The 
actual periods ended on April 3, 1998 and March 28, 1997.  The nine month 
period of fiscal 1998 consisted of 40 weeks compared to 39 weeks for the 
comparable period of fiscal 1997.

Consolidated sales for the three months ended March 31, 1998 were $12,855,000, 
compared to $13,580,000 for the same period in the previous fiscal year.  This 
decrease is attributable to the Company's PCB operations, for which sales 
decreased by 25% from the third quarter of last year.  PCB sales in the 1997 
quarter included a relatively large quick-turn contract that was not recurring 
business.  Sales of the EMS operations for the three months ended March 31, 
1998 remained level from the prior year quarter.

Consolidated sales increased from $34,660,000 for the nine months ended March 
31, 1997 to $37,576,000 for the latest nine months.  Sales for the Company's 
EMS operations for the latest nine months increased by $3,628,000 over the 
comparable prior year period, and is attributable primarily to higher levels 
of business with existing customers.  Sales for the nine months ended March 
31, 1998 for the PCB operations declined by 9% from the comparable period in 
the prior year as a result of a fluctuation in business from a major customer 
as well as the aforementioned quick-turn contract in the prior year period 
that was not recurring business.

Consolidated gross profit for the nine months ended March 31, 1998 was 
$5,961,000 (15.9% of sales), compared to $4,499,000 (13.0% of sales) for the 
same period of the prior year. Gross profit of the EMS operations was 
$4,244,000 for the nine months ended March 31, 1998, compared to $2,911,000 
for the prior year.  A change in the mix of business with lower direct 
material costs as a percentage of sales contributed to the increase in EMS 
gross profit, along with higher sales volume and increased productivity.  For 
the nine months ended March 31, 1998, gross profit from PCB operations 
increased approximately 8% over gross profit for the comparable period of the 
prior year despite the level volume of sales.  This improvement is 
attributable primarily to an increase in higher margin quick-turn orders, 
material price reductions and processing cost savings. 

Administrative and selling expenses for the three months ended March 31, 1998 
were $1,444,000 compared to $1,290,000 for the same period in the previous 
year.  The increase is attributable to the addition of a key management 
position at Irlandus Circuits, Ltd. in the fourth quarter of fiscal 1997, a 
difference in the timing of a discretionary employer contribution to SMTEK's 
401(k) plan, and an increase in corporate overhead expenses for the 1998 third 
quarter compared to the 1997 third quarter.  

Administrative and selling expenses for the nine months ended March 31, 1998 
and 1997 were $4,048,000 and $3,653,000, respectively.  The increase is 
attributable to the key management position addition noted above and other 
increases in administrative staff.  The additional week of operations included 
in the period ended March 31, 1998 as a result of the Company's 52-53 week 
fiscal year also contributed to the increased administrative and selling 
expenses in the latest nine-month period. 

In the three and nine months ended March 31, 1998, consolidated operating 
income was $265,000 and $962,000, respectively, compared to consolidated 
operating income (loss) of $373,000 and ($105,000), respectively, for the same 
periods in the previous fiscal year. 

Interest expense decreased from $844,000 in the nine months ended March 31, 
1997 to $724,000 in the nine months ended March 31, 1998 because the Company 
repaid its 10% Senior Notes in the amount of $5,300,000 on June 30, 1997.  Of 
the funds used to repay the 10% Senior Notes, $2,000,000 was borrowed on June 
30, 1997 under an 8% promissory note due February 1, 1999. 

Debt issue cost amortization expense of $372,000 for the nine months ended 
March 31, 1997 related to the 10% Senior Notes.  There is no such amortization 
expense in the latest quarter because these debt issue costs were fully 
amortized as of June 30, 1997.

The provision for income taxes of $430,000 for the nine months ended March 31, 
1998 arises as a result of the quasi-reorganization which was effected on June 
30, 1997.  Pursuant to quasi-reorganization accounting, as the portion of net 
operating loss carryforwards and deferred tax benefits originating prior to 
the effective date of the quasi-reorganization are utilized, the corresponding 
tax effect ($430,000 for the nine months ended March 31, 1998) is credited to 
paid-in capital instead of being treated as a reduction of the provision for 
income taxes.  Additionally, because the Company's goodwill amortization 
expense is not deductible for income taxes, the provision for income taxes in 
the three and nine months ended March 31, 1998 is greater than the amount 
which would result from applying statutory tax rates to pretax income.

The net loss for the nine months ended March 31, 1998 was $204,000 or $.01 per 
share, compared to $1,122,000 or $.05 per share for the nine months ended 
March 31, 1997. 

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board issued Statement No. 130, "Reporting 
Comprehensive Income" ("SFAS 130") in June 1997.  SFAS 130 establishes 
standards for reporting and display of comprehensive income and its components 
in financial statements.  SFAS 130 is effective for fiscal years beginning 
after December 15, 1997.  The Company will adopt SFAS 130 in the first quarter 
of its fiscal year ending June 30, 1999.  Management believes that the 
adoption of SFAS 130 will not have a material impact on the Company's 
financial position or results of operations.

The Financial Accounting Standards Board issued Statement No. 131, 
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS 
131") in June 1997.  SFAS 131 establishes standards for the way public 
business enterprises are to report information about operating segments in 
annual financial statements and requires enterprises to report selected 
information about operating segments in interim financial reports issued to 
shareholders.  It also establishes standards for related disclosures about 
products and services, geographic areas, and major customers.  It replaces the 
"industry segment" concept of Statement of Financial Accounting Standards No. 
14, "Financial Reporting for Segments of a Business Enterprise", with a 
"management approach"  basis for identifying reportable segments.  SFAS 131 is 
effective for financial statements for fiscal years beginning after December 
15, 1997.  The Company will adopt SFAS 131 in its fiscal year ending June 30, 
1999.  Management believes that the adoption of SFAS 131 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 $2,019,000 at March 31, 1998, and its bank lines of credit.  
During the nine months ended March 31, 1998, cash and cash equivalents 
decreased by $2,699,000.  This decrease consisted of cash used by operating 
activities of $382,000, capital expenditures of $431,000, and net reductions 
of long-term debt of $3,995,000, partially offset by cash proceeds from the 
sale of assets of $16,000, bank lines of credit of $1,883,000, government 
grants of $123,000 and the effect of exchange rate changes on cash of $87,000.  

Components of operating working capital increased by $2,837,000 during the 
first nine months of fiscal 1998, comprised of a $1,251,000 increase in costs 
and earnings in excess of billings on uncompleted contracts, a $309,000 
increase in prepaid expenses, and a $2,290,000 decrease in accounts payable 
and other accrued liabilities, partially offset by a $324,000 decrease in 
accounts receivable and a $689,000 decrease in inventories. 

The Company has an accounts receivable-based working capital bank line of 
credit for SMTEK which provides for borrowings of up to $2,500,000 at an 
interest rate of prime (8.50% at March 31, 1998) plus 1.25%. At March 31, 
1998, borrowings outstanding under this credit facility amounted to 
$1,763,000.  The Company also has a credit facility agreement with Ulster Bank 
Markets for its Northern Ireland operations.  This agreement includes a 
working capital line of credit of 3,000,000 pounds sterling (approximately 
$5,000,000), and provides for interest on borrowings at the bank's base rate 
(7.59% at March 31, 1998) plus 1.50%.  At March 31, 1998, borrowings 
outstanding under this credit facility amounted to $1,509,000.   

The Company's EMS and PCB fabrication businesses require continuing investment 
in plant and equipment to remain competitive.  In recent years, however, the 
Company's financial position has severely restricted its ability to make 
capital improvements in its facilities. Capital expenditures during fiscal 
1997, 1996 and 1995 were approximately $2,210,000, $1,599,000 and $643,000, 
respectively.  The Company anticipates it will need to increase its capital 
spending in the coming years in order to stay competitive as technology 
evolves.  Capital expenditures for the nine months ended March 31, 1998 were 
$668,000.  Management estimates that capital expenditures of as much as $2 
million may be required in fiscal 1998.  Of that amount, the substantial 
majority is expected to be financed by a combination of capital leases, 
secured loans and foreign government grants.

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


"YEAR 2000" ISSUES

Many existing computer programs use only two digits to identify a year in the 
date field.  These programs were designed and developed without considering 
the impact of the upcoming change in the century.  If not corrected, many 
computer applications could fail or create erroneous results by or at the year 
2000.  "Year 2000" issues affect virtually all companies and organizations, 
including the Company.  The Company is studying its information systems with a 
view to upgrading and improving such systems.  The Company's management 
expects to identify and resolve its specific "Year 2000" issues as part of 
this study, and believes that the resolution of these issues will not have a 
material effect on its financial position or results of operations.



PART II.  OTHER INFORMATION
Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

a.  Exhibits:
    
     27    Financial Data Schedule (electronic filing only)




                                 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 26, 1998                          /s/ Richard K. Vitelle   
---------------------------------        -----------------------------------
            Date                                Richard K. Vitelle 
                                                Vice President -Finance 
                                                (Principal Financial Officer)