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




                                   FORM 8-K/A




                 CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934



Date of Report (Date of earliest event reported):  January 12, 1996



Exact Name of Registrant as
  Specified in Its Charter:  DDL ELECTRONICS, INC.

           DELAWARE                       1-8101                  33-0213512
State or Other Jurisdiction of          Commission             I.R.S. Employer
Incorporation or Organization           File Number           Identification No.


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


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


Former Name - Former Address and Former
Fiscal Year, if Changed Since Last Report:  7320 SW Hunziker Road Suite #300
                                            Tigard, Oregon 97223-2302
<PAGE>   2
     This report is an amendment to the Registrant's report on Form 8-K dated
January 12, 1996 that was filed with the Securities and Exchange Commission on
January 29, 1996 (the "Initial Form 8-K Report"). This amending report contains
the required audited financial statements and unaudited pro forma financial
information referenced previously in the Initial Form 8-K Report.


Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

    (a) Financial Statements:

        The audited financial statements of SMTEK, Inc. for the years ended
        March 31, 1995 and 1994, including the report thereon of Arthur Andersen
        LLP, independent public accountants, are attached hereto as pages F-1
        through F-12.

        The audited financial statements of SMTEK, Inc. for the year ended March
        31, 1993, including the report thereon of Gary Janke, CPA, independent
        accountant, are attached hereto as pages F-13 through F-22.


    (b) Pro Forma Financial Information:

        The unaudited pro forma condensed consolidated balance sheet of DDL
        Electronics, Inc. ("DDL") and SMTEK, Inc. ("SMTEK") as of December 31,
        1995, and the unaudited pro forma condensed consolidated statements of
        operations of DDL and SMTEK for the year ended June 30, 1995 and the six
        months ended December 31, 1995, are attached hereto as pages F-23
        through F-29.


SIGNATURES

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

       March 27, 1996                        /s/ Richard K. Vitelle
---------------------------------        -----------------------------------
           Date                                Richard K. Vitelle
                                               Vice President -Finance
                                               (Principal Financial Officer)



                                      1
<PAGE>   3


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors of
  SMTEK, Inc.:

We have audited the accompanying balance sheets of SMTEK, INC. (a California
corporation) as of March 31, 1995 and 1994, and the related statements of
income, shareholders' equity and cash flows for the years then ended.  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 in accordance with generally accepted auditing
standards.  Those standards 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.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SMTEK, Inc. as of March 31,
1995 and 1994, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.




                                                             ARTHUR ANDERSEN LLP


Los Angeles, California
August 15, 1995



                                     F-1


<PAGE>   4

                                  SMTEK, INC.

                    BALANCE SHEETS - MARCH 31, 1995 AND 1994

                                     ASSETS


<TABLE>
<CAPTION>
                                                                            1995                1994     
                                                                         ----------          ----------
<S>                                                                      <C>                 <C>
CURRENT ASSETS:
  Cash                                                                   $  125,000          $  368,000
  Accounts receivable, net of allowance
    for doubtful accounts of $95,000 in
    1995 and $12,000 in 1994                                              1,470,000           1,282,000
  Costs and estimated earnings in excess
    of billings on uncompleted contracts,
    net of progress payments of
    $1,934,000 in 1995 and $622,000 in 1994                               3,472,000             818,000
  Prepaid expenses                                                           43,000              68,000
  Other current assets                                                        5,000              31,000
                                                                         ----------          ----------
          Total current assets                                            5,115,000           2,567,000
                                                                         ----------          ----------

PROPERTY AND EQUIPMENT, at cost:
  Machinery and equipment                                                 2,635,000           1,505,000
  Furniture and fixtures                                                    224,000             191,000
  Leasehold improvements                                                    264,000             244,000
  Equipment under capital leases                                            579,000             579,000
                                                                         ----------          ----------
                                                                          3,702,000           2,519,000
  Less--Accumulated depreciation                                          1,705,000           1,285,000
                                                                         ----------          ----------
                                                                          1,997,000           1,234,000
                                                                         ----------          ----------

OTHER ASSETS                                                                 76,000              55,000
                                                                         ----------          ----------
                                                                         $7,188,000          $3,856,000
                                                                         ==========          ==========
</TABLE>


      The accompanying notes are an integral part of these balance sheets.





                                     F-2


<PAGE>   5

                                  SMTEK, INC.

                    BALANCE SHEETS - MARCH 31, 1995 AND 1994

                      LIABILITIES AND SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                                            1995                   1994     
                                                                         ----------             ----------
<S>                                                                      <C>                    <C>
CURRENT LIABILITIES:
  Accounts payable                                                       $2,336,000             $  585,000
  Accrued expenses                                                          430,000                268,000
  Current portion of long-term debt                                       1,045,000                426,000
  Current portion of obligations
    under capital leases                                                     89,000                150,000
                                                                         ----------             ----------
          Total current liabilities                                       3,900,000              1,429,000
                                                                         ----------             ----------

LONG-TERM LIABILITIES:
  Long-term debt, net of current portion                                    991,000                 44,000
  Obligations under capital leases,
    net of current portion                                                   17,000                106,000
                                                                         ----------             ----------
          Total long-term liabilities                                     1,008,000                150,000
                                                                         ----------             ----------

COMMITMENTS AND CONTINGENCIES (Note 3)

SHAREHOLDERS' EQUITY:
  Common stock--
    197,568 shares authorized,
      issued and outstanding                                              2,510,000              2,510,000
  Accumulated deficit                                                     (230,000)              (233,000)
                                                                         ----------             ----------
          Total shareholders' equity                                      2,280,000              2,277,000
                                                                         ----------             ----------
                                                                         $7,188,000             $3,856,000
                                                                         ==========             ==========
</TABLE>


      The accompanying notes are an integral part of these balance sheets.





                                     F-3


<PAGE>   6

                                  SMTEK, INC.

                              STATEMENTS OF INCOME

                  FOR THE YEARS ENDED MARCH 31, 1995 AND 1994




<TABLE>
<CAPTION>
                                                                           1995                   1994       
                                                                        -----------            -----------
<S>                                                                     <C>                    <C>
NET SALES                                                               $14,200,000            $11,317,000

COST OF SALES                                                            12,445,000              9,383,000
                                                                        -----------            -----------

          Gross profit                                                    1,755,000              1,934,000
                                                                        -----------            -----------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                              1,412,000              1,308,000
                                                                        -----------            -----------

          Income from operations                                            343,000                626,000
                                                                        -----------            -----------

OTHER INCOME (EXPENSE), net                                               (139,000)                  4,000
                                                                        -----------            -----------
          Income before unusual item--legal
            settlement                                                      204,000                630,000

LEGAL SETTLEMENT                                                          (200,000)                   -   
                                                                        -----------            -----------

          Income before provision
            for income taxes                                                  4,000                630,000

PROVISION FOR INCOME TAXES                                                    1,000                 61,000
                                                                        -----------            -----------

          Net income                                                    $     3,000            $   569,000
                                                                        ===========            ===========
</TABLE>




        The accompanying notes are an integral part of these statements.




                                     F-4


<PAGE>   7

                                  SMTEK, INC.

                       STATEMENTS OF SHAREHOLDERS' EQUITY

                  FOR THE YEARS ENDED MARCH 31, 1995 AND 1994




<TABLE>
<CAPTION>
                                          Common Stock      
                                 -------------------------------
                                                                        Accumulated
                                 Shares                 Amount            Deficit              Total  
                                 -------              ----------        ----------           ----------
<S>                              <C>                  <C>               <C>
BALANCE, March 31, 1993          100,000              $  104,000          $(802,000)           $ (698,000)

  Conversion of shareholders'
    investment (Note 7)           97,568               2,406,000               -                2,406,000

  Net income                        -                       -               569,000               569,000
                                 -------              ----------          ---------            ----------
BALANCE, March 31, 1994          197,568               2,510,000           (233,000)            2,277,000

  Net income                        -                       -                 3,000                 3,000     
                                 -------              ----------          ---------            ----------
BALANCE, March 31, 1995          197,568              $2,510,000          $(230,000)           $2,280,000
                                 =======              ==========          =========            ==========
</TABLE>



        The accompanying notes are an integral part of these statements.




                                     F-5


<PAGE>   8

                                  SMTEK, INC.

                            STATEMENTS OF CASH FLOWS

                  FOR THE YEARS ENDED MARCH 31, 1995 and 1994


                                                                             
<TABLE>
<CAPTION>
                                                                           1995                  1994    
                                                                       ------------           ---------
<S>                                                                     <C>                   <C> 
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                           $      3,000           $ 569,000
  Adjustments to reconcile net income to
    net cash provided by (used in) operating
    activities:
      Depreciation and amortization                                         420,000             200,000
      Provision for doubtful accounts                                        83,000              12,000
      Changes in assets and liabilities:
      Decrease (increase) in:
        Accounts receivable                                                (271,000)            639,000
        Costs and estimated earnings in
          excess of billings on uncompleted
          contracts                                                      (2,654,000)             56,000
        Prepaid expenses                                                     25,000             (47,000)
        Other assets                                                          5,000             (45,000)
      Increase (decrease) in:
        Accounts payable                                                  1,751,000            (662,000)
        Accrued expenses                                                    162,000            (109,000)
                                                                       ------------           ---------
          Net cash provided by (used in)
            operating activities                                           (476,000)            613,000
                                                                       ------------           ---------
CASH FLOWS FROM INVESTING ACTIVITIES--
  Purchases of property and equipment                                    (1,183,000)           (531,000)
                                                                       ------------           ---------
          Net cash used in investing
            activities                                                   (1,183,000)           (531,000)
                                                                       ------------           ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Borrowings under long-term debt                                         2,120,000             430,000
  Repayment of long-term debt                                              (704,000)           (300,000)
                                                                       ------------           ---------
          Net cash provided by financing
            activities                                                    1,416,000             130,000
                                                                       ------------           ---------

NET INCREASE (DECREASE) IN CASH                                            (243,000)            212,000

CASH, beginning of year                                                     368,000             156,000
                                                                       ------------           ---------
CASH, end of year                                                      $    125,000           $ 368,000
                                                                       ============           =========
</TABLE>

        
        
        The accompanying notes are an integral part of these statements.




                                     F-6


<PAGE>   9
                                  SMTEK, INC.

                         NOTES TO FINANCIAL STATEMENTS

                                 MARCH 31,1995



1.       Line of Business and Summary of Significant Accounting Policies
         ---------------------------------------------------------------

         a.      Line of Business
                 ----------------
         
         SMTEK, Inc. (the Company), a California corporation, specializes in
         the design and manufacture of complete printed circuit boards and
         modules utilizing surface mount technology.  Its customers include
         government related and commercial customers.

         The Company derived 74 and 83 percent of net sales from contracts with
         intelligence and military agencies of government prime contractors for
         the years ended March 31, 1995 and 1994, respectively.

         b.      Depreciation and Amortization
                 -----------------------------

         Depreciation and amortization are provided over the estimated useful
         lives of the assets or lease terms, using primarily the straight- line
         method.  Estimated useful lives are as follows:

<TABLE>
                 <S>                               <C>
                 Machinery and equipment             5 to 7 years
                 Furniture and fixtures              3 to 5 years
                 Leasehold improvements              Lesser of useful life or
                                                       lease term
                 Equipment under capital leases      Lesser of useful life or
                                                       lease term
</TABLE>                                         

         Maintenance and repairs are charged to operations as incurred, while
         significant improvements are capitalized.  Upon retirement or
         disposition of property, the asset and related accumulated
         depreciation or amortization are removed from the accounts and any
         resulting gain or loss is charged to operations.

         As of April 1, 1994, the Company prospectively revised the remaining
         lives of certain machinery and equipment from five to seven years.
         This change increased income for fiscal year 1995 by approximately
         $58,000.

         c.      Revenue Recognition
                 -------------------

         Contract revenues are recorded under the percentage-of-completion
         method of accounting, primarily on the basis of costs incurred to
         total estimated costs.

         In the period in which it is determined that a loss will result from
         the performance of a contract, the entire amount of the estimated loss
         is charged to income.  Other changes in contract price and estimates
         of costs and profits at completion are recognized prospectively.  This
         method recognizes in the current period the cumulative effect of the
         changes on current and prior periods.

         Certain government agencies have audited the Company's contract costs
         through the fiscal year ended March 31, 1993.  Subsequent years remain
         open for audit.




                                     F-7


<PAGE>   10
                                     
                                     

         Progress payments on contracts in process are shown as an offset to
         costs and estimated earnings in excess of billings on uncompleted
         contracts on the balance sheet.  As completed boards are shipped,
         billings to the customer are reduced by the amount of progress
         payments related to the boards shipped.

         d.      Statement of Cash Flows
                 -----------------------

         For purposes of the statement of cash flows, the Company considers all
         highly liquid investments with an original maturity of three months or
         less to be cash equivalents.

         During fiscal 1994, the Company added equipment with a cost of
         $579,000 which was financed with a capital lease and converted its
         capital investment of $2,406,000 to common stock (see Note 7).  These
         non-cash transactions are excluded from the statement of cash flows.

         The following were cash payments for:

<TABLE>
<CAPTION>
                                               1995              1994   
                                             --------          -------
                 <S>                         <C>               <C>
                 Interest                    $117,000          $14,000
                 Income taxes                  33,000           10,000
</TABLE>                          

         e.      Reclassifications
                 -----------------

         Certain prior year balances have been reclassified to conform to the
         current year's presentation.

2.       Income Taxes
         ------------

Effective April 1, 1993, the Company changed its method of accounting for
income taxes to comply with the provisions of Statement of Financial Accounting
Standards (SFAS) No. 109.  This change had a minimal effect on the Company's
financial statements.

Under SFAS No. 109, deferred income tax assets or liabilities are computed
based on the temporary difference between the financial statement and income
tax bases of assets and liabilities using the statutory marginal income tax
rate in effect for the year in which the differences are expected to reverse.
Deferred income tax expenses or credits are based on the changes in the
deferred income tax assets or liabilities from period to period.

The net deferred income tax asset at March 31, 1995 and 1994 consists primarily
of accruals and differences in depreciation for financial and tax reporting
purposes and is fully reserved.






                                     F-8




<PAGE>   11


The components of the provision for income taxes for the years ended March 31,
1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                          Current            Deferred              Total 
                          -------            --------             -------
    <S>                    <C>               <C>                  <C>
    1995:
    Federal               $  -               $  -                 $  -
    State                   1,000               -                   1,000
                          -------            -------              -------
                          $ 1,000            $  -                 $ 1,000
                          -------            -------              -------

    1994:
    Federal               $  -               $  -                 $  -
    State                  61,000               -                  61,000
                          -------            -------              -------
                          $61,000            $  -                 $61,000
                          =======            =======              =======
</TABLE>

The Company's tax provision for the period ended March 31, 1994 benefited from
the utilization of federal and state net operating loss carryforwards totaling
$735,000 and $80,000, respectively.  The Company has no federal or state net
operating loss carryforwards.

3.       Commitments and Contingencies
         -----------------------------

The Company leases certain property and equipment under capital and operating
lease agreements.  The leases expire at various dates through 1999.  The charge
to income for rental expense on operating leases was approximately $172,000 and
$162,000 for fiscal 1995 and 1994, respectively.

The minimum aggregate rental commitments under both capital and operating
leases with noncancellable terms of more than one year at March 31, 1995 are as
follows:

<TABLE>
<CAPTION>

      Year Ending                           Capital       Operating   
       March 31,                             Leases        Leases          Total  
      -----------                          ---------     ----------      ---------
         <S>                               <C>          <C>             <C>
         1996                               $ 97,000       $187,000       $284,000
         1997                                 18,000        100,000        118,000
         1998                                    -            5,000          5,000
                                            --------       --------       --------
                                             115,000       $292,000       $407,000
                                                           ========       ========
         Less--Amount representing                                    
           interest                           (9,000)                  
                                            --------   
         Present value of minimum                     
           capital lease payments            106,000   
                                                      
         Less--Current portion               (89,000)        
                                            --------   
                                            $ 17,000   
                                            ========   
</TABLE>




                                     F-9


<PAGE>   12


As discussed, in 1.a. above, a significant portion of the Company's revenue is
derived from contracts with government prime contractors.  Most of these
contracts are subject to review and audit by the DCAA and various government
agencies.  During fiscal year 1995, the Company settled a false claim action
with the United States Government for $200,000.  This settlement, which was
paid subsequent to year-end, is accrued in the 1995 financial statements.

The Company is party to certain legal proceedings incidental to its business.
Certain claims, suits or complaints arising out of the normal course of
business have been filed or are pending against the Company.  Based on the
facts known to the Company, management believes although it is not possible to
predict the outcome of any litigation, management, after consultation with
counsel, does not expect that such litigation will have a material adverse
effect on its financial position or results of operations.

4.       Retirement Plan
         ---------------

Effective April 1, 1991, the Company adopted a 401(k) plan (the Plan) which
covers substantially all employees meeting certain eligibility requirements.
Employees may defer up to 15% of their compensation.  Employer contributions to
the Plan are made at the discretion of the Company and vest after five years of
service.  The 401(k) contribution expense charged to operations was $30,000
during fiscal 1994.  No contribution was made for fiscal year 1995.

5.       Related Party Transactions
         --------------------------

During fiscal 1995 and 1994, the Company borrowed $800,000 and $426,000,
respectively, from a company controlled by a shareholder and a shareholder for
the purchase of equipment (see Note 6).

6.       Long-Term Debt and Line of Credit
         ---------------------------------

In March 1995, the Company entered into a credit arrangement with a financial
institution for a working capital line of credit up to $1,000,000, subject to
certain collateral limitations, extending through September 1995 at an interest
rate of prime plus .75 percent (9.75 percent at March 31, 1995).  The
arrangement is collateralized by the Company's raw material and accounts
receivable and contains certain financial and non-financial covenants.  As of
March 31, 1995, the Company had not drawn on the line of credit.




                                     F-10


<PAGE>   13

At March 31, 1995 and 1994, long-term debt consists of the following:

                                                   
<TABLE>
<CAPTION>
                                                                            1995            1994      
                                                                         ----------       ---------
         <S>                                                             <C>            <C>
         Unsecured, non-interest bearing note
           payable to a related party, payable
           in three annual installments of
           $20,000 with the last payment due
           on August 5, 1998.  This note had been
           discounted by $34,000.                                        $   48,000        $ 44,000

         Note payable to a shareholder, payable
           on or before April 10, 1994, bearing
           interest at prime plus four percent.                                -            426,000

         Note payable to a finance company, bearing
           interest at 10.9 percent, with 60
           installments of $3,316 through April 2000,
           secured by certain equipment.                                    153,000            -

         Note payable to a finance company, bearing
           interest at 9.5 percent, with 60
           installments of $9,156 through July 1999,
           secured by certain equipment.                                    390,000            -

         Note payable to a finance company, bearing
           interest at 7.95 percent, with 60
           installments of $8,629 through April 1999,
           secured by certain equipment.                                    360,000            -

         Note payable to a finance company, bearing
           interest at 9.5 percent, with 48
           installments of $5,133 through December
           1998, secured by certain equipment.                              194,000            -

         Note payable to a finance company, bearing
           interest at 9.5 percent, with 48
           installments of $2,422 through December
           1998, secured by certain equipment.                               91,000            -

         Unsecured note payable to a company
           controlled by a shareholder, bearing
           interest at prime plus 4 percent,
           payable on demand.                                               800,000            -

                                                                         ----------        --------
                                                                          2,036,000         470,000
                   Less--current portion                                  1,045,000         426,000
                                                                         ----------        --------
                                                                         $  991,000        $ 44,000
                                                                         ==========        ========
</TABLE>



                                     F-11



<PAGE>   14

Future principal maturities of long-term debt as of March 31, 1995 are as
follows:

<TABLE>
<CAPTION>

               Year ending 
                March 31,
                  <S>                               <C>
                  1996                               $1,045,000
                  1997                                  285,000
                  1998                                  310,000
                  1999                                  314,000
                  2000                                   82,000
                                                     ----------
                                                     $2,036,000
                                                     ==========
</TABLE>

7.       Equity
         ------

In January 1995, the Company finalized the treatment of equity funds previously
put into the Company by the Diversified Equity Group.  The finalization and
formalization of the equity transaction resulted in the issuance of 97,568
additional shares of common stock.  This transaction has been reflected in the
accompanying financial statements as of March 31, 1994.





                                     F-12


<PAGE>   15





Gary W. Janke
--------------------------------------------------------------------------------
<TABLE>
<S>                                                       <C>
CERTIFIED PUBLIC ACCOUNTANT                               15650 DEVONSHIRE STREET - SUITE 200
                                                          GRANADA HILLS, CALIFORNIA 91344-7241
                                                          (818) 893-9674        (310) 276-8470
                                                                            FAX (818) 893-1246
</TABLE>



To the Board of Directors of
SMTEK, Inc.

I have audited the accompanying balance sheet of SMTEK, Inc. (A California
Corporation) as of March 31, 1993, and the related statements of income,
shareholders' equity and cash flows for the year then ended.  These financial
statements are the responsibility of the Company's management.  My
responsibility is to express an opinion on these financial statements based on
my audit.

I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.  An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.  I believe that my audit provides a reasonable basis
for my opinion.

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of SMTEK, Inc. as of March 31,
1993, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.




                                                            /s/ Gary W. Janke



Granada Hills, California
March 21, 1996



                                     F-13


<PAGE>   16
                                 SMTEK, INC.

                                BALANCE SHEET

                                March 31, 1993


                                    ASSETS


<TABLE>
     <S>                                                                           <C>              
     CURRENT ASSETS:                                                                                
        Cash  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  156,000       
        Accounts receivable, net of allowance for                                                   
            doubtful accounts of $ 0  . . . . . . . . . . . . . . . . . . . . .     1,933,000       
        Inventories   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     1,560,000       
        Costs and estimated earnings in excess of                                                   
          billings on uncompleted contracts   . . . . . . . . . . . . . . . . .       863,000       
        Prepaid expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . .        21,000       
                                                                                   ----------       
              Total Current Assets  . . . . . . . . . . . . . . . . . . . . . .    $4,533,000       
                                                                                   ----------       
     PROPERTY AND EQUIPMENT, at cost:                                                               
        Machinery and equipment   . . . . . . . . . . . . . . . . . . . . . . .    $  993,000       
        Furniture and fixtures  . . . . . . . . . . . . . . . . . . . . . . . .       159,000       
        Leasehold improvements  . . . . . . . . . . . . . . . . . . . . . . . .       243,000       
        Property under capital leases   . . . . . . . . . . . . . . . . . . . .       492,000       
                                                                                   ----------       
                                                                                   $1,887,000       
        Less-Accumulated depreciation   . . . . . . . . . . . . . . . . . . . .       975,000       
                                                                                   ----------       
              Net Property and Equipment  . . . . . . . . . . . . . . . . . . .    $  912,000       
                                                                                   ----------       
     OTHER ASSETS:                                                                                  
        Security deposits   . . . . . . . . . . . . . . . . . . . . . . . . . .    $   35,000       
        Software license fees, net of amortization of $59,000   . . . . . . . .         6,000       
                                                                                   ----------       
              Total Other Assets  . . . . . . . . . . . . . . . . . . . . . . .    $   41,000       
                                                                                   ----------       
              TOTAL ASSETS  . . . . . . . . . . . . . . . . . . . . . . . . . .    $5,486,000       
                                                                                   ==========       
</TABLE>



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




                                     F-14


<PAGE>   17
                                  SMTEK, INC.

                                 BALANCE SHEET

                                 March 31, 1993

                      LIABILITIES AND SHAREHOLDERS' EQUITY


<TABLE>
     <S>                                                                             <C>            
     CURRENT LIABILITIES:                                                                           
        Accounts payable  . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $1,247,000     
        Short-term loan payable   . . . . . . . . . . . . . . . . . . . . . . . .       300,000     
        Accrued expenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . .       345,000     
        Progress payments on contracts in process   . . . . . . . . . . . . . . .     1,549,000     
        Current portion of obligations under capital leases   . . . . . . . . . .       104,000     
                                                                                     ----------     
              Total Current Liabilities . . . . . . . . . . . . . . . . . . . . .    $3,545,000     
                                                                                     ----------     
     LONG-TERM LIABILITIES:                                                                         
        Long-term debt, net of current portion  . . . . . . . . . . . . . . . . .    $   40,000     
        Obligations under capital leases, net of current                                            
          portion   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       193,000     
        Loans payable - stockholders  . . . . . . . . . . . . . . . . . . . . . .     2,406,000     
                                                                                     ----------     
              Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . .    $6,184,000     
                                                                                     ----------     
     SHAREHOLDERS' EQUITY:                                                                          
        Common stock: no par value                                                                  
          100,000 shares authorized, issued and outstanding   . . . . . . . . . .    $  104,000     
        Accumulated deficit   . . . . . . . . . . . . . . . . . . . . . . . . . .      (802,000)    
                                                                                     ----------     
              Total Shareholders' Equity  . . . . . . . . . . . . . . . . . . . .    $ (698,000)    
                                                                                     ----------     
              TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY  . . . . . . . . . . . .    $5,486,000     
                                                                                     ==========     
</TABLE>





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





                                      F-15
<PAGE>   18

                                  SMTEK, INC.

                              STATEMENT OF INCOME

                       FOR THE YEAR ENDED MARCH 31, 1993


<TABLE>
        <S>                                                                      <C>              
        Net Sales   . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $9,285,000      
        Cost of Sales   . . . . . . . . . . . . . . . . . . . . . . . . . . .      8,144,000      
                                                                                  ----------      
              Gross Profit  . . . . . . . . . . . . . . . . . . . . . . . . .     $1,141,000      
        Selling, General and Administrative   . . . . . . . . . . . . . . . .      1,037,000      
                                                                                  ----------      
              Income from Operations  . . . . . . . . . . . . . . . . . . . .     $  104,000      
        Other Income (Expense)  . . . . . . . . . . . . . . . . . . . . . . .        (43,000)     
                                                                                  ----------      
              Income Before Provision for Income Taxes  . . . . . . . . . . .     $   61,000      
        Provision for Income Taxes  . . . . . . . . . . . . . . . . . . . . .          7,000      
                                                                                  ----------      
              NET INCOME  . . . . . . . . . . . . . . . . . . . . . . . . . .     $   54,000      
                                                                                  ==========      
</TABLE>





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





                                      F-16
<PAGE>   19
                                 SMTEK, INC.

                        STATEMENT OF RETAINED EARNINGS

                      FOR THE YEAR ENDED MARCH 31, 1993


<TABLE>
     <S>                                                                     <C>           
     Accumulated Deficit, beginning of year  . . . . . . . . . . . . . . .    $(856,000)   
     Net Income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       54,000    
                                                                              ---------    
           ACCUMULATED DEFICIT, END OF YEAR  . . . . . . . . . . . . . . .    $(802,000)   
                                                                              =========    
</TABLE>



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





                                     F-17


<PAGE>   20
                                  SMTEK, INC.

                            STATEMENT OF CASH FLOWS

                       FOR THE YEAR ENDED MARCH 31, 1993


<TABLE>
    <S>                                                                           <C>         
    CASH FLOWS FROM OPERATING ACTIVITIES:                                                     
       Net income  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    $  54,000   
       Adjustments to reconcile net income to                                                 
           cash used by operating activities:                                                 
             Depreciation and amortization . . . . . . . . . . . . . . . . . .      310,000   
             Changes in assets and liabilities:                                               
                Decrease (increase) in:                                                       
                   Accounts receivable   . . . . . . . . . . . . . . . . . . .     (726,000)  
                   Inventories   . . . . . . . . . . . . . . . . . . . . . . .     (648,000)  
                   Costs and estimated earnings in excess                                     
                     of billings . . . . . . . . . . . . . . . . . . . . . . .     (225,000)  
                   Prepaid expenses  . . . . . . . . . . . . . . . . . . . . .       13,000   
                   Other assets  . . . . . . . . . . . . . . . . . . . . . . .       25,000   
                Increase (decrease) in:                                                       
                   Accounts payable  . . . . . . . . . . . . . . . . . . . . .      436,000   
                   Accrued expenses  . . . . . . . . . . . . . . . . . . . . .     (216,000)  
                   Progress payments on contracts in process   . . . . . . . .      520,000   
                                                                                  ---------   
                     Net Cash Used by Operating Activities . . . . . . . . . .    $(457,000)  
                                                                                  ---------   
    CASH FLOWS FROM INVESTING ACTIVITIES:                                                     
       Purchases of property and equipment   . . . . . . . . . . . . . . . . .    $ (89,000)  
                                                                                  ---------   
                     Net Cash Used by Investing Activities . . . . . . . . . .    $ (89,000)  
                                                                                  ---------   
    CASH FLOWS FROM FINANCING ACTIVITIES:                                                     
       Proceeds from short-term debt   . . . . . . . . . . . . . . . . . . . .    $ 300,000   
       Increase in note payable  . . . . . . . . . . . . . . . . . . . . . . .        4,000   
       Repayment of long-term debt   . . . . . . . . . . . . . . . . . . . . .      (88,000)  
                                                                                  ---------   
                     Net Cash Provided by Financing Activities . . . . . . . .    $ 216,000   
                                                                                  ---------   
                     NET (DECREASE) IN CASH  . . . . . . . . . . . . . . . . .    $(330,000)  
                                                                                              
    Cash, beginning of year  . . . . . . . . . . . . . . . . . . . . . . . . .      486,000   
                                                                                  ---------   
                     CASH, END OF YEAR . . . . . . . . . . . . . . . . . . . .    $ 156,000   
                                                                                  =========   
</TABLE>





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







                                      F-18

<PAGE>   21
                                  SMTEK, INC.

                         NOTES TO FINANCIAL STATEMENTS

                                 March 31, 1993

1.       Line of Business and Summary of Significant Accounting Policies

         a. Line of Business

         SMTEK, Inc. is engaged in the design and manufacture of complete
         printed circuit boards and modules utilizing surface mount technology.
         Its customers include government related and commercial customers.

         The Company derived 84 percent of revenues from contracts with
         intelligence and military agencies of government prime contractors for
         the year ended March 31, 1993.

         b. Inventories

         Inventories, consisting of materials not yet applied to contracts, are
         stated at the lower of cost (first-in, first-out) or market.

         c. Depreciation and Amortization

         Depreciation and amortization are provided over the estimated useful
         lives of the assets or lease terms, using primarily the straight-line
         method.  Estimated useful lives are as follows:

<TABLE>
             <S>                                   <C>
             Machinery and equipment               5 to 10 years
             Furniture and fixtures                3 to 5 years
             Leasehold improvements                Lesser of asset life or lease term
             Property under capital leases         Lesser of asset life or lease term
</TABLE>

         Maintenance and repairs are charged to operations as incurred, while
         significant improvements are capitalized.  Upon retirement or
         disposition of property, the asset and related accumulated
         depreciation or amortization are removed from the accounts and any
         resultant gain or loss is charged to operations.

         d. Revenue Recognition

         Contract revenues are recorded under the percentage-of-completion
         method of accounting.  Work in process is valued using managements
         estimates of the progress on various contracts which have not been
         completed or fully invoiced as of the balance sheet date.

         In the period in which it is determined that a loss will result from
         the performance of a contract, the entire amount of the estimated loss
         is charged to income.  Other changes in contract price and estimates
         of costs and profits at completion are recognized prospectively.  This
         method recognizes in the current period the cumulative effect of the
         changes on current and prior periods.








                                      F-19

<PAGE>   22

         Progress payments on contracts in process are shown as a liability on
         the balance sheet.  As various portions of the contract are completed
         and accepted by the customer, the progress payments are reduced by the
         revenue recognized from the completed portion of the contract.

         e. Statement of Cash Flows

         For purposes of the statement of cash flows, the Company considers all
         highly liquid investments with an original maturity of three months or
         less to be cash equivalents.

         Cash paid for interest and income taxes during fiscal 1993 was $64,000
         and $2000 respectively.

         f. Reclassifications

         Certain reclassifications have been made to the 1993 financial
         statements to conform with current financial statement presentation.

2.       Income Taxes

         The provision for income taxes is based on elements of income, costs
         and expenses as reported in the statement of income.  The Company has
         a federal net operating loss carryforward of $747,000 and a state loss
         carryforward of $87,000 to offset against future taxable income.

         The components of the provision for income taxes for the year ended
         March 31, 1993 is as follows:

<TABLE>
<CAPTION>
                                  Current      Deferred       Total                
                                  -------      --------       -----                
        <S>                       <C>           <C>           <C>                  
          Federal                 $    0        $    0        $    O               
          State                    5,000         2,000         7,000               
                                  ------        ------        ------               
                                  $5,000        $2,000        $7,000               
                                  ======        ======        ======               
</TABLE>

3.       Commitments and Contingencies

         a. Lease Commitments

         The Company leases certain property and equipment under capital and
         operating lease agreements.  The leases expire at various dates
         through 1996.  The charge to income for rental expense on operating
         leases was approximately $269,000 for fiscal 1993.



                                      

                                     F-20


<PAGE>   23

       The minimum aggregate rental commitment under both capital and
       operating leases with noncancellable terms of more than one year at
       March 31, 1993 is as follows:

<TABLE>
<CAPTION>
                                         Capital      Operating                                        
        Fiscal Year                      Leases        Leases           Total                                
        -----------                      -------      ---------       ----------                                
       <S>                              <C>           <C>            <C>                                     
           1994 . . . . . . . . . . .   $147,000      $273,000        $  420,000                             
           1995 . . . . . . . . . . .    147,000       199,000           346,000                             
           1996 . . . . . . . . . . .     73,000       181,000           254,000                             
           1997 . . . . . . . . . . .                   95,000            95,000                             
                                        --------      --------        ----------                             
                                        $367,000      $748,000        $1,115,000                             
                                                      ========        ==========                             
       Less-Amount representing                                                                              
         interest . . . . . . . . . .     70,000                                                             
                                        --------                                                             
       Present value of minimum                                                         
         capital lease payments . . .   $297,000                                                             
                                                                                                             
       Less-Current portion . . . . .    104,000                                                             
                                        --------                                                             
                                        $193,000                                                             
                                        ========                                                             
</TABLE>

       b. Contingency

       A significant portion of the Company's revenue is derived from
       contracts with government prime contractors.  Most of these contracts
       are subject to review and audit by various government agencies.  The
       Company believes that it has made adequate provisions for any matters
       that could arise as a result of these reviews or audits. (Note 7)

4.     Retirement Plan

       Effective April 1, 1991, the Company adopted a 401 (k) plan (the Plan)
       which covers substantially all employees meeting certain eligibility
       requirements.  Employees may defer up to 15% of their compensation.
       Employer contributions to the Plan are made at the discretion of the
       Company and vest after five years of service.  The 401 (k) contribution
       expense charged to operations was $12,000 during fiscal 1993.

5.     Long-Term Debt

       At March 31, 1993, long-term debt consists of the following:

<TABLE>
             <S>                                                                    <C>                
             Notes payable to shareholders - subsequently converted                                    
             to common stock ( Note 7) . . . . . . . . . . . . . . . . . . . . . .  $2,406,000         
                                                                                                       
             Unsecured note payable, payable in three annual                                           
             installments of $20,000 with the last payment due on                                      
             August 5, 1998 . . . . . .  . . . . . . . . . . . . . . . . . . . . .      40,000         
                                                                                    ----------         
                 Total Long-Term Debt  . . . . . . . . . . . . . . . . . . . . . .  $2,446,000         
                                                                                    ==========         
</TABLE>




                                     F-21


<PAGE>   24

         Future principal maturities of long-term debt as of March 31. 1993 are
         as follows:

<TABLE>
<CAPTION>
                    Year ending March 31          
                    --------------------          
                             <S>                         <C>
                             1997                       $ 15,000
                             1998                         13,000
                             1999                         12,000
                                                        --------
                                                        $ 40,000
                                                        ========
</TABLE>                                          
                                                  
7.         Subsequent Events

         In January 1995, the Company finalized the treatment of funds
         previously put into the Company by the Diversified Equity Group.  The
         finalization and formalization of the equity transaction resulted in
         the issuance of 97,568 additional shares of common stock.  The entire
         long-term liability of $2,406,000, reflected on the balance sheet at
         March 31, 1993, was converted to equity.

         Subsequent to year-end, the Company's performance under two contracts
         was audited by the federal government.  The government made certain
         claims against the Company which the Company settled for $200,000.
         This settlement has not been reflected in these financial statements.

         In January 1996, SMTEK, Inc. was acquired by DDL Electronics, Inc. and
         became a wholly owned subsidiary.





                                      F-22
<PAGE>   25
             DESCRIPTION OF UNAUDITED PRO FORMA CONDENSED FINANCIAL
                    STATEMENTS REFLECTING THE ACQUISITION OF
                      SMTEK, INC. BY DDL ELECTRONICS, INC.

     The following unaudited pro forma condensed consolidated financial
statements have been prepared giving effect to the acquisition of SMTEK, Inc.
("SMTEK") as if the transaction had taken place at December 31, 1995 for the pro
forma condensed consolidated balance sheet and, in the case of the income
statement data, as of July 1, 1994.

     On January 12, 1996, DDL Electronics, Inc. ( "DDL") acquired 100% of the 
outstanding stock of SMTEK. The purchase price of $8,000,000 million was paid 
in cash of $7,199,000 and 1,000,000 shares of common stock. The cash portion 
of the purchase price was financed through the issuance of short-term 10% 
bridge loans in the aggregate amount of $7,000,000 (the "Bridge Loans"). The 
Bridge Loans were repaid in February 1996 through the issuance of 10% Senior 
Secured Notes due July 1, 1997 in the aggregate amount of $5,300,000 (the 
"Notes") and 10% Cumulative Convertible Debentures due February 27, 1997 in the 
aggregate amount of $3,500,000 (the "Debentures"). In connection with the sale 
of the Notes and Debentures, DDL paid $352,000 as a fee to the placement agent 
for these financings, and issued 572,683 shares of common stock to the 
placement agent as additional compensation. The accompanying pro forma 
financial statements give effect to the Notes and Debentures as if they had 
been issued at the time the SMTEK acquisition was consummated.

     The acquisition has been accounted for using the purchase method. In
accordance with Accounting Principles Board Opinion No. 16, the purchase price
will be allocated to the assets and liabilities acquired at their estimated fair
values at acquisition date. Based on current information, DDL's management does
not expect the final allocation of the purchase price to be materially different
from that used in the following pro forma balance sheet and pro forma statements
of operation.

     The unaudited pro forma financial information is not necessarily indicative
of the results of operations or the financial position which would have been
attained had the acquisition been consummated at any of the foregoing assumed
dates, or which may be attained in the future. The pro forma financial
information should be read in conjunction with the historical financial
statements of DDL and SMTEK.



                                      F-23


<PAGE>   26
                            DDL ELECTRONICS, INC.
                PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                              DECEMBER 31, 1995
                                 (Unaudited)
                                (In thousands)


<TABLE>
<CAPTION>
                                                   Historical
                                              --------------------
                                                  DDL                  Pro Forma     Pro Forma
                                              Electronics    SMTEK    Adjustments      Total
                                              -----------   ------    -----------    ---------
<S>                                           <C>            <C>      <C>            <C>
                    ASSETS
Current assets:
  Cash and cash equivalents                    $  2,828     $   55   $  (621)(A)     $  2,262
  Accounts receivable, net                        3,837      2,236                      6,073
  Costs and estimated earnings in excess
     of billings on uncompleted contracts,
     net of progress billings                                2,357                      2,357
  Inventories                                     2,687                                 2,687
  Prepaid expenses                                1,274         67                      1,341
                                               --------     ------   -------         --------

      Total current assets                       10,626      4,715      (621)          14,720

Property and equipment, net                       3,228      2,096         0 (B)        5,324

Goodwill                                                               6,391 (C)        6,391

Debt issuance costs                                                    1,068 (D)        1,068

Deposits and other assets                           396         62       375 (E)          833
                                               --------     ------   -------         --------

                                               $ 14,250     $6,873   $ 7,213         $ 28,336
                                               ========     ======   =======         ========


LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Bank line of credit payable                               $1,000                   $  1,000
  Current portion of long-term debt            $    280        441                        721
  Short-term borrowings                           1,000              $ 2,500 (F)        3,500
  Accounts payable                                4,735      2,283                      7,018
  Other current liabilities                       3,598        170                      3,768
                                               --------     ------   -------         --------

      Total current liabilities                   9,613      3,894     2,500           16,007
                                               --------     ------   -------         --------
Long-term debt                                    6,882        875     5,300 (G)       13,057
                                               --------     ------   -------         --------

Stockholders' equity:
  Common stock and additional
    paid-in capital                              21,646                1,517 (H)       23,163
  Retained earnings                             (22,862)                              (22,862)
  Foreign currency translation adjustment        (1,029)                               (1,029)
  Net assets of acquired company                             2,104    (2,104)(I)            0
                                               --------     ------   -------         --------

      Total stockholders' equity (deficit)       (2,245)     2,104      (587)            (728)
                                               --------     ------   -------         --------

                                               $ 14,250     $6,873   $ 7,213         $ 28,336
                                               ========     ======   =======         ========
</TABLE>



                                     F-24


<PAGE>   27
                             DDL ELECTRONICS, INC.
            NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
                                 (In thousands)

<TABLE>
<S>                                                                        <C>          
(A)  Proceeds of new debt, less cash paid for direct costs of                           
     acquisition and debt issuance costs, as follows:                                   
                                                                                         
         Proceeds of 10% Senior Secured Notes. . . . . . . . . . . .     $ 5,300       
         Proceeds of 10% Cumulative Convertible Debentures . . . . .       3,500       
         Cash paid to SMTEK shareholders . . . . . . . . . . . . . .      (7,199)      
         Repayment of short-term bridge loan . . . . . . . . . . . .      (1,000)      
         Cash paid for finders fee  . . . . . . .. . . . . . . . . .        (150)      
         Cash paid for debt placement agent fee  . . . . . . . . . .        (352)      
         Cash deposited to interest impound account. . . . . . . . .        (375)      
         Cash paid for other direct costs of SMTEK acquisition . . .        (345)      
                                                                         -------       
                                                                         $  (621)      
                                                                         =======       
                                                                                         
(B)  The fair market value of SMTEK's property and equipment is                           
     considered to approximate its net book value in SMTEK's                              
     historical financial statements, hence no adjustment in basis                        
     of property and equipment is shown.                                                  
                                                                                         
(C)  To record excess of cost over value assigned to net assets                           
     acquired (goodwill) . . . . . . . . . . . . . . . . . . . . . .     $ 6,391       
                                                                         =======       
                                                                                         
(D)  To record debt issuance costs paid in cash and stock. . . . . .     $ 1,068       
                                                                         =======       
                                                                                         
(E)  To record deposit to interest impound with escrow agent . . . .     $   375       
                                                                         =======       
                                                                                         
(F)  To record 10% Cumulative Convertible Debentures issued to                            
     finance SMTEK acquisition, net of bridge loan repayment . . . .     $ 2,500       
                                                                         =======       
                                                                                         
(G)  To record 10% Senior Secured Notes issued to finance                                 
     SMTEK acquisition . . . . . . . . . . . . . . . . . . . . . . .     $ 5,300       
                                                                         =======       
                                                                                         
(H)  To record issuance of DDL Electronics' common stock for:                             

     Purchase consideration for SMTEK acquisition - 1,000,000 shares     $   801       
     Fee to placement agent for financing - 572,683 shares . . . . .         716       
                                                                         -------       
                                                                         $ 1,517       
                                                                         =======       
                                                                                         
(I)  To eliminate historical equity of SMTEK . . . . . . . . . . . .     $(2,104)      
                                                                         =======       
                                                                                         
(J)  The following is a computation of the purchase price:                                

        Cash paid at closing . . . . . . . . . . . . . . . . . . . .     $ 7,199       
        Issuance of 1,000,000 unregistered shares of DDL common 
          stock, valued at $0.801 per share  . . . . . . . . . . . .         801       
        Direct costs of acquisition including finders fee, 
          legal and accounting . . . . . . . . . . . . . . . . . . .         495       
                                                                         -------       
                                                                         $ 8,495       
                                                                         =======       
                                                                                         
     The purchase price is allocated as follows:                                          
        Book value of net assets acquired  . . . . . . . . . . . . .     $ 2,104       
        Excess of cost over value assigned (goodwill)  . . . . . . .       6,391       
                                                                         -------       
                                                                         $ 8,495       
                                                                         =======       
</TABLE>

                                      F-25
<PAGE>   28
                             DDL ELECTRONICS, INC.
                  PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                           YEAR ENDED JUNE 30, 1995
                                  (Unaudited)
                    (In thousands except per share amounts)

<TABLE>
<CAPTION>
                                                            Historical
                                           ----------------------------------------------
                                                          Adjustments     DDL
                                               DDL         to Exclude   without
                                           as Originally    Divested    Divested              Pro Forma   Pro Forma
                                             Reported      Operations  Operations   SMTEK    Adjustments    Total
                                           -------------  -----------  ----------  -------   -----------  ---------
                                                               (A)                    (B)
<S>                                        <C>            <C>          <C>          <C>       <C>          <C>
Sales                                        $29,576       $ (8,765)    $20,811    $14,200                 $35,011
                                             -------       --------     -------    -------                 -------
Costs and expenses:
  Cost of goods sold                          26,516         (8,592)     17,924     12,445                  30,369
  Administrative and selling                   6,497         (1,435)      5,062      1,412                   6,474
  Restructuring charges                        1,533         (1,533)          0                                  0
  Amortization of goodwill                                                                    $ 1,278 (C)    1,278
  Amortization of debt issuance costs                                                             907 (D)      907
                                             -------       --------     -------    -------    -------      -------
                                              34,546        (11,560)     22,986     13,857      2,185       39,028
                                             -------       --------     -------    -------    -------      -------

Operating  income (loss)                      (4,970)         2,795      (2,175)       343     (2,185)      (4,017)
                                             -------       --------     -------    -------    -------      -------

Non-operating income (expense):
  Interest expense                              (883)           175        (708)      (139)      (880)(E)   (1,727)
  Gain on sale of assets                       3,317         (3,317)          0                                  0
  Other income (expense)                         170                        170       (200)                    (30)
                                             -------       --------     -------    -------    -------      -------

                                               2,604         (3,142)       (538)      (339)      (880)      (1,757)
                                             -------       --------     -------    -------    -------      -------

Income (loss) before income taxes             (2,366)          (347)     (2,713)         4     (3,065)      (5,774)

Provision for income taxes                         0                          0         (1)                     (1)
                                             -------       --------     -------    -------    -------      -------

Income (loss) before extraordinary item      $(2,366)      $   (347)    $(2,713)   $     3    $(3,065)     $(5,775)
                                             =======       ========     =======    =======    =======      =======

Per share information:
  Income (loss) before extraordinary item    $ (0.15)                   $ (0.17)                           $ (0.33)
                                             =======                    =======                            =======

Shares used in computing income (loss)
  per share                                   15,971                     15,971                 1,573       17,544
                                             =======                    =======               =======      =======
</TABLE>



                                     F-26


<PAGE>   29
                            DDL ELECTRONICS, INC.
             NOTES TO PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                           YEAR ENDED JUNE 30, 1995
                                (In thousands)

(A) During the year ended June 30, 1995, DDL sold the assets of its
    Aeroscientific Corp. ("Aero") and A.J. Electronics ("A.J.") subsidiaries.
    DDL realized a gain of $3,317 on the sale of Aero's assets, and recognized
    restructuring charges of $1,533 in connection with the liquidation and
    disposal of A.J. Because of the materiality of these transactions and of
    Aero's and A.J.'s operations during the period prior to the disposal of
    these assets, all in relation to DDL's consolidated operations, inclusion of
    such amounts in the pro forma statement of operations would not be
    representative of the combined DDL/SMTEK entity as it now exists.
    Accordingly, the accompanying pro forma consolidated condensed statement of
    operations has been adjusted to exclude Aero's and A.J.'s operating results,
    the gain on sale of Aero's assets and the A.J. restructuring charges.

(B) The revenues and expenses shown for SMTEK are the historical amounts for
    SMTEK's fiscal year ended March 31, 1995.

<TABLE>
<S>                                                                        <C>          
(C) To amortize goodwill on a straight-line basis over five years . . . .  $1,278       
                                                                           ======       
                                                                                        
(D) To amortize debt issuance costs over the respective terms of the                    
    10% Senior Secured Notes (16 months) and the 10% Cumulative                         
    Convertible Debentures (12 months)  . . . . . . . . . . . . . . . . .  $  907       
                                                                           ======       
                                                                                        
(E) To record interest expense on the new indebtness incurred to                        
    finance the acquisiton of SMTEK . . . . . . . . . . . . . . . . . . .  $ (880)       
                                                                           ======        
</TABLE>



                                     F-27


<PAGE>   30
                            DDL ELECTRONICS, INC.
                 PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                      SIX MONTHS ENDED DECEMBER 31, 1995
                                 (Unaudited)
                   (In thousands except per share amounts)

<TABLE>
<CAPTION>
                                            Historical
                                        ------------------
                                            DDL               Pro Forma   Pro Forma
                                        Electronics  SMTEK   Adjustments    Total
                                        -----------  -----   -----------  ---------
                                                      (A)
<S>                                     <C>          <C>     <C>          <C>
Sales                                    $12,221     $7,782                $20,003
                                         -------     ------                -------
Costs and expenses:
  Cost of goods sold                      10,838      6,813                 17,651
  Administrative and selling               1,895        726                  2,621
  Amortization of goodwill                                    $   639 (B)      639
  Amortization of debt issuance costs                             161 (C)      161
                                         -------     ------   -------      -------

                                          12,733      7,539       800       21,072
                                         -------     ------   -------      -------

Operating  income (loss)                    (512)       243      (800)      (1,069)
                                         -------     ------   -------      -------

Non-operating income (expense):
  Interest expense                          (229)       (60)     (440)(D)     (729)
  Other income (expense)                     367         13                    380
                                         -------     ------   -------      -------

                                             138        (47)     (440)        (349)
                                         -------     ------   -------      -------

Income (loss) before income taxes           (374)       196    (1,240)      (1,418)

Income tax benefit                         1,110 (E)                         1,110
                                         -------     ------   -------      -------

Net income (loss)                        $   736     $  196   $(1,240)     $  (308)
                                         =======     ======   =======      =======


Net income (loss) per share              $  0.04                           $ (0.02)
                                         =======                           =======

Shares used in computing income (loss)
  per share                               16,985                1,573       18,558
                                         =======              =======      =======
</TABLE>



                                     F-28


<PAGE>   31
                            DDL ELECTRONICS, INC.
             NOTES TO PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                      SIX MONTHS ENDED DECEMBER 31, 1995
                                (In thousands)

(A) The revenues and expenses shown for SMTEK are the historical amounts for the
    six months ended December 31, 1995. Because the accompanying pro forma
    statement of operations for the year ended June 30, 1995 includes SMTEK's
    historical operating results for its fiscal year ended March 31, 1995,
    SMTEK's operating results for the three months ended June 30, 1995 are not
    included in either of the accompanying pro forma statements of operations.
    SMTEK's summary financial information for this three month stub period ended
    June 30, 1995 is as follows:

<TABLE>
<S>                                                                   <C>              
              Sales  . . . . . . . . . . . . . . . . . . . . . . .   $3,359            
              Costs and expenses . . . . . . . . . . . . . . . . .    3,708            
                                                                     ------            
                                                                                       
              Operating  loss  . . . . . . . . . . . . . . . . . .     (349)
              Non-operating expense. . . . . . . . . . . . . . . .      (23)            
                                                                     ------            
                                                                                       
              Net loss . . . . . . . . . . . . . . . . . . . . . .   $ (372)
                                                                     ======            
                                                                                       
                                                                                       
(B) To amortize goodwill on a straight-line basis over five years.   $  639            
                                                                     ======            
                                                                                       
                                                                                       
(C) To amortize debt issuance costs. . . . . . . . . . . . . . . .   $  161            
                                                                     ======            
                                                                                       
                                                                                       
(D) To record interest expense on the new indebtness incurred to                       
    finance the acquisiton of SMTEK. . . . . . . . . . . . . . . .   $ (440)
                                                                     ======            
</TABLE>

(E) DDL recognized an income tax benefit of $1,110 in September 1995 as the
    result of federal tax refunds received under Section 172(f) of the Internal
    Revenue Code.



                                     F-29