UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

(Mark One)

[ X ]    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
                  EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1997

[   ]    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 0-23332

                                EFTC CORPORATION
             (Exact name of registrant as specified in its charter)

                                    COLORADO
         (State or other jurisdiction of incorporation of organization)
                                   84-0854616
                      (I.R.S. Employer Identification No.)

                                9351 Grant Street
                                Denver, Colorado
                    (Address of principal executive offices)
                                      80634
                                   (Zip code)
        Registrant's telephone number, including area code: 303-451-8200

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

           Securities registered pursuant to Section 12(g) of the Act:
                                  Common Stock
                                (Title of Class)

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

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

         As of March 25, 1998, the number of outstanding  shares of Common Stock
was  11,849,696.  As of such date,  the aggregate  market value of the shares of
Common Stock held by  non-affiliates,  based on the closing  price of the Common
Stock on the Nasdaq National Market, was approximately $84,128,309.

                       DOCUMENTS INCORPORATED BY REFERENCE
         The  Company's   Proxy   Statement  for  its  1998  Annual  Meeting  of
Shareholders is incorporated by reference in Part III of this Form 10-K.



<PAGE>



                                     PART I

ITEM 1.           BUSINESS

General

         EFTC  Corporation  (together  with its  subsidiaries,  the "Company" or
"EFTC"), is a leading independent provider of high-mix electronic  manufacturing
services  ("EMS")  and  repair  and  warranty  services  to  original  equipment
manufacturers  ("OEM's"). The Company's manufacturing services focus on a market
niche  of  high-mix  electronic  products--products  that are  characterized  by
high-speed  production.  The Company also provides hub-based repair and warranty
services that are marketed as part of the logistics service offerings of the two
largest  companies that specialize in overnight  delivery services in the United
States. These hub-based services are provided principally through such overnight
delivery companies' hub facilities located in Memphis, Tennessee and Louisville,
Kentucky (the "Overnight Delivery Hubs").

         Through a series of  acquisitions  completed  in 1997,  the Company has
expanded  its  operations  from one  manufacturing  facility  in Colorado at the
beginning of 1997 to seven  facilities  throughout the United States at December
31, 1997.  Additionally,  these  acquisitions  have  strategically  expanded the
Company's   breadth  of  high-mix  service   offerings  to  include   concurrent
engineering,  subassembly  manufacturing,  next-day  delivery of assemblies  and
warranty and post-warranty repair services.

Industry Overview

         Electronics   Manufacturing  Services.  The  electronic   manufacturing
services  industry  emerged in the United  States in the 1970s and began to grow
rapidly in the 1980s. By subcontracting  their  manufacturing  operations,  OEMs
realized productivity gains by reducing manufacturing capacity and the number of
in-house  employees needed to manufacture  products.  As a result,  capital that
such OEMs  would  have  otherwise  devoted to  manufacturing  operations  became
available for other activities,  such as product development and marketing. Over
time,  OEMs  have  determined  that  manufacturing  is  not  one of  their  core
competencies,  leading them to outsource an increasing  percentage,  and in some
cases  all,  of their  manufacturing  capacity  to EMS  providers.  The  Company
believes  that many OEMs now view EMS  providers  as an  integral  part of their
business and manufacturing  strategy rather than as a back-up source to in-house
manufacturing  capacity  during peak  periods.  The types of services  now being
outsourced have also grown.  The Company believes that OEMs are outsourcing more
design engineering, distribution and after-sale support, in addition to material
procurement, manufacturing and testing.

         Repair and Warranty  Services.  The Company believes that OEMs are also
under  pressure to control their  warranty and service  costs  without  allowing
customer service to suffer. This pressure has increased as warranty periods have
grown longer and product  life-cycles have grown shorter.  As with manufacturing
services,  many OEMs have determined  that handling repair and warranty  service
and providing  repair  services after  warranty  expiration are not within their
core competencies. Outsourcing allows the OEMs to focus their efforts on product
research, design, development and marketing. OEMs can also obtain other benefits
from the use of outside  repair  service  providers,  including  reduced  spares
inventory,  faster turns on inventory and improved customer service for products
during the warranty period as well as after  expiration of the warranty  period.
The  Company's   hub-based  service  centers  allow  OEMs  and  their  customers
accelerated  repair cycles by  eliminating  transportation  legs to and from the
shipper to the repair facilities.

         Industry  Trends.  The Company  believes that the growth of outsourcing
combined with the  increasing  number of types of electronic  products that have
emerged  over the last  decade  have  significantly  increased  the  variety  of
electronic  manufacturing  services  required by OEMs.  Management also believes
that  more OEMs from  diverse  industries  are  outsourcing  manufacturing.  The
proliferation of electronic products in such diverse fields as digital avionics,
electronic  medical  diagnostics  and  treatment,   communications,   industrial
controls and  instrumentation and computers has placed increasing demands on EMS
providers  to adapt to new  requirements  specific to different  product  types.
Similarly,  the  increasing  diversity  of the  industries  served  by their OEM
customers  is  placing  increased  demands  on EMS  providers  to  expand  their
value-added  capabilities  or  more  narrowly  focus  on  a  particular  set  of
manufacturing


<PAGE>



methods,  technologies,  quality criteria,  and logistic needs,  resulting in an
increasing need for EMS providers to specialize their services.

         The  Company  believes  that  OEMs are  offering,  and in  future  will
increasingly offer, electronic products that are customized to specifications of
OEMs  on a "box  build"  basis  and  to the  specifications  of end  users  on a
"build-to-  order"  ("BTO") basis.  In "box build"  services,  the  manufacturer
assembles  parts and  components,  some of which  may be  purchased  from  other
manufacturers, into a finished product that meets the OEM's specifications.  BTO
services are box-build  services in which the lot size may frequently consist of
a single unit and is customized to the specifications of an end user. Typically,
these products have some basic,  mass-produced  parts and special parts that are
combined in numerous  configurations  to form highly  customized  products.  The
Company  believes EMS providers  seeking to participate in this BTO market niche
will be  required to build these  products as orders are  received  from OEMs to
permit such OEMs to reduce their inventory costs and to meet end-users'  desires
for fast order  fulfillment.  The Company is pursuing a specialization  strategy
within the EMS  industry  that  focuses on  providing  a broad range of high-mix
manufacturing  and repair and warranty  services  with an emphasis on high-speed
production  and repair.  The Company  believes that OEMs that have  historically
been volume  producers,  but who are now shifting to BTO business  models,  will
also  be  attracted  to  EFTC's  integrated  assembly,   logistic,   and  repair
capabilities at the Overnight Delivery Hubs.

         Management  believes  that the  Company's  exclusive  focus on high-mix
production  techniques  will  serve  the needs of  traditional  OEMs and is also
well-suited for the BTO market. All of the Company's systems are oriented toward
small-lot processing from cable assembly,  to card assembly, to box-build level.
The Company will outsource all mass-  produced items to commodity  suppliers and
manufacture  the  complex  high-mix  items  at  one of  the  Company's  regional
facilities.  Final BTO assembly will be done within the Overnight  Delivery Hubs
in Memphis and Louisville where the Company currently offers repair and warranty
services.  This strategy positions the Company to offer OEMs a simplified,  more
cost effective logistic solution to the delivery of their products.  By locating
its repair and warranty services within the Overnight Delivery Hubs, the Company
believes it can reduce inventory  pipelines,  minimize  transportation  legs and
gain more time to respond to customer needs.

         The  Company's  objective  is to be a leading  provider  of  electronic
manufacturing  services  exclusively  focused  on  the  needs  of  high-mix  OEM
customers in its  targeted  markets.  The Company  believes  its  customers  are
increasingly focused on improved inventory  management,  reduced time to market,
BTO  production,  access to  leading-edge  manufacturing  technology and reduced
capital investment.  The Company's strategy is to offer customers select service
offerings  which utilize the Company's core  competency of small-lot  processing
and logistics  benefits  arising from the unique  positioning  of its repair and
warranty  services and, in the future,  BTO services at the  Overnight  Delivery
Hubs.  The Company  believes that this strategy is to create a broad  geographic
presence,  to provide  innovative  manufacturing  solutions,  to provide a broad
range of manufacturing  services  including,  in the future, BTO services and to
help OEMs simplify inventory and logistics management.

Services

         Manufacturing  Services Overview.  The Company's turnkey  manufacturing
services  consist of  assembling  complex  printed  circuit  boards  (using both
surface  mount  and  pin-through-hole  interconnection  technologies),   cables,
electromechanical  devices and  finished  products.  The Company  also  provides
computer-aided   testing  of  printed  circuit  boards,   subsystems  and  final
assemblies.  In certain  instances,  the Company  completes  the assembly of its
customers'  products at the Company's  facilities by integrating printed circuit
boards and  electro-mechanical  devices into other  components of the customer's
products.  The  Company  obtained,   from  the  International   Organization  of
Standards, ISO 9002 certification in 1994.

         The Company offers  customer-select  service offerings that utilize the
Company's core competency of small-lot  processing and logistic  benefits due to
the position of its repair and warranty service  operations within the Overnight
Delivery  Hubs.  The Company is  developing  plans to offer BTO  services in the
future which would be based at the Overnight  Delivery  Hubs.  In addition,  the
Company has also innovated  additional  services customized to meet the needs of
OEMs that develop and sell high-mix products.

     Broad Geographic  Presence.  Electronic  component  manufacturing  requires
close coordination of design and manufacturing  efforts.  The Company's strategy
to achieve that coordination is to provide front-end design in


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manufacturability,  engineering services,  design for test engineering services,
prototypes,  and complex high-mix production through regional facilities located
close to OEM  engineering  centers.  This  proximity  allows for faster  product
introduction  and  greater  use of  concurrent  engineering.  In  pursuit of its
manufacturing strategy, the Company has made acquisitions in Oregon, Washington,
Arizona and Florida. To pursue its integrated repair and warranty strategy,  the
Company acquired a repair and warranty services  organization located within the
Overnight Delivery Hubs in Memphis, Tennessee,  Louisville,  Kentucky and Tampa,
Florida.  The  Company  believes  that this  configuration  of sites  allows the
Company  to provide  flexible,  time-critical  services  to its  customers.  See
"--Description of Property."

         Asynchronous Process  Manufacturing.  In the third quarter of 1996, the
Company   introduced   Asynchronous   Process   Manufacturing   ("APM"),  a  new
manufacturing methodology,  at its Rocky Mountain facility. APM is an innovative
combination of high-speed  manufacturing  equipment,  sophisticated  information
systems and standardized process teams designed to manufacture mixtures of small
quantities  of  products  faster and with more  flexibility.  APM allows for the
building of small lots in very short cycle times.  The Company is  continuing to
define  APM with the goal of  reducing  manufacturing  cycle  time for  high-mix
circuit  cards to two days.  The Company  plans to  implement  APM at all of its
facilities  and for all of its  customers  as part of a  strategy  to focus  the
Company  exclusively on  manufacturing  high-mix  products.  APM  implementation
requires  a  complete  redesign  of  the  Company's  manufacturing   operations,
reorganizing  personnel  into process teams and revising  documentation.  At the
Company's  Rocky  Mountain  facility,  the  physical  moves  were  completed  in
September  1996 and by the end of October  1996 APM was fully  implemented.  The
Company has begun implementing APM at its existing Newberg, Oregon facility, but
will not complete that implementation until after its new manufacturing facility
under  construction in Newberg,  Oregon is completed.  The Company also plans to
implement APM at its other facilities, at appropriate times.

         APM improves  throughput of certain assembly processes over traditional
continuous  (synchronous)  flow  processing  ("CFM"),  which is the  predominant
method  used in  high-volume  manufacturing.  With APM,  the  Company is able to
process products rapidly using a combination of new  discontinuous  flow methods
for differing  product  quantities,  fast surface mount assembly  systems,  test
equipment  and  high-volume,  high-speed  production  lines.  In the APM  model,
materials are moved  through the  production  queue at  high-speed  and not in a
continuous  or linear order as under CFM.  Instead,  materials are moved through
the assembly procedure in the most efficient manner,  using a computer algorithm
developed  for the  Company's  operations,  with all  sequences  controlled by a
computerized information system.

         High-mix  manufacturing  using APM involves a  discontinuous  series of
products fed through assembly in a start- stop manner,  heretofore  incompatible
with  high-speed  techniques.  APM is an  alternative  to  both  CFM  and  batch
processing often used in smaller scale manufacturing. Until now, the combination
of small lots with numerous  differences in  configuration  from each lot to the
next  and  high-speed  manufacturing  has  been  viewed  as  difficult,  if  not
impossible,  by many  high-mix  manufacturers.  The  Company  believes  that CFM
techniques used by  high-volume,  high-speed  ECMs cannot  accommodate  high-mix
product  assembly  without  sacrificing  speed,  while  smaller  ECMs capable of
producing  a wide  variety  of  products,  often  find it  difficult  to  afford
high-quality,  high-speed  manufacturing assets or to keep up with OEMs' growing
product demand. Under CFM, all assembly occurs on the same line, thereby slowing
down  the   process   with   non-value-added   operations.   Under   APM,   most
non-value-added operations are performed in the most efficient manner, off-line,
thereby  keeping  the  assembly  process  moving.  A  hybrid  of CFM  and  batch
production  techniques,  APM  sets  optimal  process  parameters  and  maximizes
velocity in producing  smaller lot  quantities.  By designating  teams to set up
off-line   feeders,   standardizing   loading  methods   regardless  of  product
complexity,  and most importantly,  improving employee motivation, the Company's
application  of APM has  decreased  set-up and cycle  times,  standardized  work
centers,  allowed  processing  of smaller lot sizes and  increased the Company's
productivity.

         APM and the Company's  supporting  software represent and, are expected
to  continue  to  represent,   a  critical   part  of  the  Company's   high-mix
manufacturing strategy. The use, by third parties, of the concepts or processes,
developed by the Company,  that comprise APM is not legally restricted.  The APM
process is therefore  subject to replication  by a competitor  willing to invest
the  resources to do so and the software  similar to that used by the Company is
available from third parties having rights thereto.  To protect its know-how and
processes  related to APM, the Company  primarily  relies upon a combination  of
nondisclosure  agreements  and  other  contractual  provisions,  as  well as the
confidentiality and loyalty of its employees. However, there can be no assurance
that these steps will be adequate to prevent a competitor  from  replicating the
APM process or that a  competitor  will not  independently  develop  know-how or
processes similar or superior to the Company's APM process.  The adoption by its
competitors of a process that is similar to, or superior


<PAGE>



to, the  Company's  APM process  would likely  result in a material  increase in
competition faced by the Company for its targeted market of high-mix OEMs.

         Design and Testing  Services.  The Company also participates in product
design by  providing  its  customers  "concurrent  engineering"  or "design  for
manufacturability"   services.  The  Company's  applications  engineering  group
interacts  with the customer's  engineers  early in the design process to reduce
variation and complexity in new design and to increase the Company's  ability to
use  automated   production   technologies.   Application   engineers  are  also
responsible  for  assuring  that  a new  design  can  be  properly  tested  at a
reasonable cost.  Engineering input in component  selection is also essential to
assure that a minimum number of components are used, that components can be used
in  automated  assembly  and that  components  are  readily  available  and cost
efficient.  The Company  also  offers  customers  a quick-  turnaround,  turnkey
prototype service.

         The Company has the  capability to perform  in-circuit  and  functional
testing, as well as environmental stress screening. In-circuit tests verify that
components  have been  properly  inserted and that the  electrical  circuits are
complete. Functional tests determine if a board or system assembly is performing
to customer  specifications.  Environmental tests determine how a component will
respond to varying  environmental  factors  such as different  temperatures  and
power  surges.  These  tests  are  usually  conducted  on a sample  of  finished
components  although some  customers  may require  testing of all products to be
purchased  by that  customer.  Usually,  the Company  designs or  procures  test
fixtures   and  then   develops   its  own  test   software.   The  change  from
pin-through-hole  technology to surface  mount  technology is leading to further
changes in test technology.  The Company seeks to provide  customers with highly
sophisticated  testing  services  that  are at the  forefront  of  current  test
technology.   Because  the  density  and  complexity  of  electronic   circuitry
constantly  are  increasing,  the  Company  seeks  to  utilize  developing  test
technology in its automated test  equipment and  inspection  systems in order to
provide superior services to customers.

         Repair and Warranty  Services.  In September 1997, the Company acquired
the Circuit Test, Inc., Airhub Service Group, L.C. and CTI  International,  L.C.
(collectively,  the "CTI Companies"),  three affiliated companies, a hub- based,
component-level  repair  organization  focused  on  the  personal  computer  and
communications  industries.  The CTI Companies  pioneered the "end-of-runway" or
"airport-hub-based"  repair  strategy and are the only providers with operations
inside and integrated  with the  operations of the Overnight  Delivery Hubs. The
Company  believes that through the CTI  Companies'  long tenure in the industry,
high-quality technical capabilities,  logistically  advantageous site locations,
and strong relationships with transportation industry leaders, the CTI Companies
have developed and optimized "service spares pipeline," allowing lower OEM costs
and improving end-user service levels.

         The  Company  seeks to  differentiate  itself from its  competitors  by
offering the customer service offerings that utilize logistic benefits resulting
from the positioning of the CTI Companies'  operations at the Overnight Delivery
Hubs.  By taking  advantage  of the  movement  of goods  through  the  Overnight
Delivery  Hubs and the timing of the  arrival and  departure  of planes from the
Overnight Delivery Hubs, the Company believes it will be well-positioned  within
the industry to minimize:  (i) the number of transportation legs incurred in the
overall movement of goods; (ii) the total inventory pipelines required for final
build of goods in a BTO model;  and (iii) the  inventory  pipeline  required  to
support a rapid repair and warranty service.

         The Company's  repair service offering  complements the  transportation
logistics  services  marketing  efforts  of  the  two  principal  transportation
providers at the Overnight Delivery Hubs, who work with the Company in providing
access to large OEM accounts.  The Company has  exercised  tight cost control on
costs by using a flexible,  part-time  labor pool and  leveraging  the sales and
marketing  efforts of these  transportation  and  logistics  service  providers.
Additionally, beyond the requisite piece-part inventory for repairs, the Company
carries minimal OEM inventory to reduce its exposure to inventory obsolescence.

         The  Company's  repair and warranty  services  handle  various types of
equipment,  including computer monitors, PC boards, routers, laptops,  printers,
scanners,  fax machines,  pen-based products,  PDAs, and keyboards.  The Company
works with its  customers  on  "advance  exchange"  programs,  whereby end users
receive  overnight  replacement  of their broken  components,  which are in turn
repaired by the Company and replaced into the OEMs'  "service  spares  inventory
pipeline" for future  redistribution.  The Company thus assists OEM customers in
increasing inventory turns,  reducing spares inventory,  lowering overall costs,
accelerating repair cycles, and improving customer service. Customer service


<PAGE>



is improved through both quicker turnaround time for in-warranty claims, as well
as having the Company  support end-  customers with  out-of-warranty  claims and
end-of-life products.

         The Company believes that the location of its repair  facilities at the
Overnight Delivery Hubs is a significant competitive advantage for the Company's
repair and warranty service offerings and a majority of the Company's repair and
warranty  service   customers  come  from  joint  marketing  efforts  with  such
transportation  providers.  The Company does not,  however,  have any  long-term
contracts or other arrangements with these overnight delivery service providers,
each of which  could elect to cancel the  Company's  lease,  to cease  providing
scheduling  accommodations  or to cease joint marketing efforts with the Company
at any  time.  If the  Company  ceased to be  allowed  to share  facilities  and
marketing  arrangements with either or both of these overnight  delivery service
providers,  there can be no assurance that alternate  arrangements could be made
by  the  Company  to  preserve  such  advantages  and  the  Company  could  lose
significant  numbers of repair customers.  In addition,  work stoppages or other
disruptions in the transportation  network may occur from time to time which may
affect these transportation providers. Such events could have a material adverse
effect on the Company's business and results of operations.

         Build-to-Order  Services.  The Company believes OEMs are shifting their
focus to  increase  demand  for  customized  products.  In the past,  electronic
products were typically mass produced,  sold through  distributors  to retailers
who, in turn,  sell to the mass market.  Currently,  the Company  believes there
will be an  increased  need for  custom  producers  who build to a custom  order
received  directly  from an end user  through  telephone  or  internet  ordering
systems.  For  example,  several  computer  manufacturers  have  begun to market
computers  directly to, and to receive  orders  directly  from,  end-users.  The
products are then rapidly custom-built and delivered to the end-user.

         Custom  products are by  definition  high-mix in that they are built in
small lots and produced in a wide variety of configurations. Management believes
that the Company's core competency of small-lot  processing  using its APM model
will  permit  the  Company  to begin  providing  BTO  services.  The  Company is
developing a plan to begin BTO manufacturing, which includes these elements:

          -    High-mix circuit cards and subassemblies  will be manufactured at
               one of its regional sites,

          -    Commodity  high-volume cards and subassemblies will be outsourced
               to volume commodity producers,

          -    The Company's  high-mix products and outsourced  commodities will
               be  delivered  to its BTO  facilities  located  within  Overnight
               Delivery Hubs,

         -    Orders will be received at the Overnight Delivery Hubs, and

         -    Final product will be assembled at facilities  currently  used for
              repair/service  utilizing  the APM model and  delivered to the end
              user.

Management believes that this infrastructure,  combined with its APM model, will
provide OEMs a cost-advantageous model to serve their BTO needs. The Company can
give no assurance,  however,  that it will begin BTO service or that the Company
will successfully attract customers to utilize this new offering.

         The Company's  strategy  includes the development of a business plan to
integrate  its  existing  and  newly-acquired  businesses  in order to offer BTO
services,  oriented around a hub-based  distribution  system,  to its customers.
This plan  represents  an expansion  into a new line of business  with which the
Company has limited operating experience and will require capital  expenditures,
certain  operational  changes  and  integration  of  software.  There  can be no
assurance that the Company will successfully implement this plan or market these
services and the failure to do so could change the Company's business and growth
strategies and adversely affect the Company's long-term business prospects.

Customers and Marketing

         The  Company  seeks to serve  traditional  high-mix  OEMs and OEMs that
produce high-volume  products and need high-mix repair warranty services,  which
by their  nature  are  high-mix  services,  or plan to  implement  high-mix  BTO
strategies.  The Company has recently  reorganized its  manufacturing  marketing
efforts to focus on the following markets:


<PAGE>



(1)  aerospace  and  avionics;  (2) medical  devices;  (3)  communications;  (4)
industrial controls and instrumentation; and (5) computer-related products.

         Each  segment  has or will  have a  marketing  manager  located  at the
corporate  center in Denver and regional sales  managers  located at each of the
Company's regional sites will assist the marketing managers. This interlocked or
"webbed"  sales and  marketing  organization  positions  the  Company  to pursue
accounts on both a national and regional basis.

         In addition,  a key part of the Company's repair and warranty  services
marketing  strategy is to  continue to utilize the sales force of the  overnight
package delivery  service  providers  located in the Overnight  Delivery Hubs to
sell the  Company's  repair and  warranty  services as an  integral  part of the
logistics   service  offerings  of  these  overnight  package  delivery  service
providers.

         The   following   table   represents   the   Company's  net  sales  for
manufacturing services by industry segment:


                                              1997         1996          1995
                                              ----         ----          ----
Aerospace and Avionics                        27.3%         0.0%          0.0%
Medical                                       13.1%        29.3%         31.0%
Communications                                 8.1%         1.5%          9.1%
Industrial Controls and Instrumentation       21.6%        12.6%          9.1%
Computer-Related                              28.8%        54.4%         49.0%
Other                                          1.1%         2.2%          1.8%
                                              00.0%       100.0%        100.0%

         The Company's customer base for manufacturing services includes Exabyte
Corporation,  Ohmeda,  AlliedSignal,  Inc.  ("Allied  Signal"),  Hewlett-Packard
Company ("HP"), ADC Telecommunications, and Sony Corp of America, Inc. ("Sony").
The relationships are typically long-term with most over five years old. A small
number of customers has historically represented a substantial percentage of the
Company's net  manufacturing  sales.  As a result,  the success of the Company's
manufacturing  services  operations depends to some degree on the success of its
largest customers.

         The Company's  customer base for repair and warranty  services includes
25 of the largest PC and  electronics  OEMs,  including  International  Business
Machines  Corporation,  Dell Computer  Corporation,  Gateway 2000, Inc., HP, Bay
Networks,  Inc.,  Ascend  Communications  Inc., Cisco Systems Inc. and Sony. The
relationships  are  typically  long-term  with  most over five  years  old.  The
relationships span OEM component suppliers, OEM component customers, and system,
desktop and network vendors, as well as direct marketers and channel players. As
with  the  Company's   manufacturing  services,  a  small  number  of  customers
historically  has  represented  a  substantial  percentage  of the Company's net
repair and warranty  services sales.  As a result,  the success of the Company's
repair and warranty services operations depends to some degree on the success of
its largest customers.

         The Company  historically  has relied on a small number of customers to
generate a  significant  percentage  of its  revenue.  During  1997,  two of the
Company's  customers  each  accounted  for more  than 10% of the  Company's  net
revenues  and the  Company's  ten  largest  customers  accounted  for 76% of the
Company's net revenue.  In 1996, three of the Company's customers each accounted
for more than 10% of the  Company's  net revenues and the  Company's ten largest
manufacturing  customers  represented 89.7% of net revenue.  The Company expects
that  AlliedSignal,  which is one of the Company's ten largest  customers,  will
account in 1998 for a significantly  larger portion of the Company's net revenue
than it has historically.  The loss of AlliedSignal as a customer would, and the
loss of any other significant  customer could, have a material adverse effect on
the Company's financial condition and results of operations.



<PAGE>



         If  the  Company's   efforts  to  expand  its  customer  base  are  not
successful,  the Company will continue to depend upon a relatively  small number
of customers  for a  significant  percentage  of its net sales.  There can be no
assurance that current customers, including AlliedSignal, or future customers of
the Company will not terminate their manufacturing arrangements with the Company
or significantly  change,  reduce or delay the amount of manufacturing  services
ordered from the Company.  Ohmeda,  Inc. which has been one of the Company's ten
largest  customers,  has  announced  future  plans to  consolidate  its  outside
manufacturing  arrangements with another electronic  contract  manufacturer.  In
addition, the Company may from time to time hold significant accounts receivable
from  sales  to  certain  customers.  The  insolvency  or other  inability  of a
significant  customer  to pay  outstanding  receivables  could  have a  material
adverse effect on the Company's results of operations and financial condition.

         As is typical in the electronic  manufacturing  services industry,  the
Company frequently does not obtain long-term purchase orders or commitments from
its customers,  but instead works with them to develop  nonbinding  forecasts of
the future volume of orders.  Based on such  nonbinding  forecasts,  the Company
makes commitments  regarding the level of business that it will seek and accept,
the timing of production  schedules and the levels and  utilization of personnel
and other resources.  A variety of conditions,  both specific to each individual
customer and generally affecting each customer's  industry,  may cause customers
to  cancel,  reduce  or  delay  orders  that  were  either  previously  made  or
anticipated.  Generally,  customers may cancel,  reduce or delay purchase orders
and commitments without penalty, except, in some cases, for payment for services
rendered, materials purchased and, in limited circumstances,  charges associated
with  such   cancellation,   reduction   or  delay.   Significant   or  numerous
cancellations, reductions or delays in orders by customers would have a material
adverse  effect on the Company's  business,  financial  condition and results of
operations.

Backlog

         The Company's  backlog was  approximately  $135 million at December 31,
1997,  compared to  approximately  $28.5  million at December 31, 1996.  Backlog
generally  consists of purchase  orders believed to be firm that are expected to
be filled  within  the next six  months.  Since  orders and  commitments  may be
rescheduled or canceled and customers' desired lead times may vary, backlog does
not  necessarily  reflect  the  timing or amount of future  sales.  The  Company
generally  seeks to deliver its products within four to eight weeks of obtaining
purchase orders, which tends to minimize backlog.

Competition

         Competition  in  the  electronic  manufacturing  services  industry  is
intense.  The  contract  manufacturing  services  provided  by the  Company  are
available from many independent sources. The Company also competes with in-house
manufacturing  operations  of  current  and  potential  customers.  The  Company
competes with numerous domestic and foreign ECMs,  including SCI Systems,  Inc.,
Solectron Corporation, Benchmark Electronics, Inc., The DII Group, Inc., Plexis,
Reptron,  and others.  The Company also faces  competition  from its current and
potential  customers,  who are  continually  evaluating  the relative  merits of
internal  manufacturing  versus  contract  manufacturing  for various  products.
Certain of the Company's  competitors have broader geographic  presence than the
Company.  Many of such competitors are more established in the industry and have
substantially  greater financial,  manufacturing or marketing resources than the
Company.   In  addition,   several  contract   manufacturers   have  established
manufacturing facilities in foreign countries. The Company believes that foreign
manufacturing  facilities  are more  important for contract  manufacturers  that
focus  on  high-volume  consumer  electronic  products,  and  do  not  afford  a
significant  competitive advantage in the Company's targeted market for complex,
mid-volume  products for which greater  flexibility in  specifications  and lead
times is required.  The Company believes that the principal  competitive factors
in its  targeted  market are  quality,  reliability,  ability  to meet  delivery
schedules, technological sophistication, geographic location and price.

Suppliers

         The Company uses numerous suppliers of electronic  components and other
materials for its operations.  The Company works with customers and suppliers to
minimize the effect of any  component  shortages.  Some  components  used by the
Company have been subject to  industry-wide  shortages,  and suppliers have been
forced to allocate  available  quantities among their  customers.  The Company's
inability to obtain any needed  components  during periods of allocations  could
cause delays in shipments to the Company's  customers and could adversely affect
results of operations.


<PAGE>



         The Company  works at  mitigating  the risks of component  shortages by
working with customers to delay delivery  schedules or by working with suppliers
to provide the needed components using just-in-time inventory programs. Although
in  the  future  the  Company  may  experience  periodic  shortages  of  certain
components,  the Company believes that an overall trend toward greater component
availability is developing in the industry.

         The Company also has a number of competitors in the repair and warranty
services  industry,  including Cerplex Group,  Inc., Aurora  Electronics,  Inc.,
Logistics  Management,  Inc.,  Sequel,  Inc., Data Exchange  Corp.,  DecisionOne
Holdings Corp., and others. In addition,  the Company competes with certain OEMs
that provide  repair and warranty  services for their own products.  Some of the
Company's  competitors  in the repair and  warranty  services  industry are more
established  in  the  industry  and  have   substantially   greater   financial,
engineering and marketing resources than the Company.  The Company believes that
its  location  within  the  Overnight  Delivery  Hubs  gives  it  a  significant
competitive advantage.  However, a competitor can, and in some cases has, gained
similar  advantages  by  locating a repair  facility in close  proximity  to the
Overnight Delivery Hubs. The Company also faces competition from its current and
potential  customers,  which are  continually  evaluating the relative merits of
providing  repair and  warranty  services  internally  versus  outsourcing.  The
Company believes that the principal  competitive  factors in its targeted repair
and warranty services market are quality, reliability,  ability to meet delivery
schedules and price.

Patents and Trademarks

         The Company  does not hold any patent or trademark  rights.  Management
does not  believe  that  patent  or  trademark  protection  is  material  to the
Company's business.

Governmental Regulation

         The  Company's  operations  are subject to certain  federal,  state and
local  regulatory  requirements  relating to  environmental,  waste  management,
health and safety matters, and there can be no assurance that material costs and
liabilities  will not be incurred in complying  with those  regulations  or that
past or future  operations  will not result in  exposure  to injury or claims of
injury by  employees  or the public.  To meet various  legal  requirements,  the
Company has modified its circuit board  cleaning  processes to eliminate the use
of  substantially  all  chlorofluorocarbons  and now uses aqueous  (water-based)
methods in its cleaning processes.

         Some risk of costs and liabilities related to these matters is inherent
in the Company's business, as with many similar businesses.  Management believes
that  the  Company's  business  is  operated  in  substantial   compliance  with
applicable environmental,  waste management,  health and safety regulations, the
violation of which could have a material  adverse effect on the Company.  In the
event of  violation,  these  regulations  provide for civil and criminal  fines,
injunctions and other sanctions and, in certain  instances,  allow third parties
to sue to enforce  compliance.  In  addition,  new,  modified or more  stringent
requirements or enforcement  policies could be adopted that may adversely affect
the Company.

         The Company  periodically  generates and  temporarily  handles  limited
amounts of materials that are considered  hazardous waste under  applicable law.
The Company contracts for the off-site disposal of these materials.

Employees

         As of December 31, 1997, the Company  employed  1,685 persons,  of whom
1,216  were  engaged  in  manufacturing,  operations  and  repair  and  warranty
services,  188 in material  handling and procurement,  18 in marketing and sales
and 91 in finance  and  administration,  and the Company  engaged the  full-time
services of 172 temporary laborers through employment  agencies in manufacturing
and  operations.  None of the  Company's  employees  is subject to a  collective
bargaining agreement.  Management believes that the Company's  relationship with
its employees is good.

Special Considerations

         Management of Growth; Geographic Expansion. The Company has experienced
rapid growth since February 1997 and intends to pursue  continued growth through
internal expansion and acquisitions.  The Company's rapid growth has placed, and
could  continue  to place,  a  significant  strain on the  Company's  management
information, operating and


<PAGE>



financial systems.  In order to maintain and improve results of operations,  the
Company's   management   will  be  required  to  manage   growth  and  expansion
effectively.  The Company's need to manage growth effectively will require it to
continue to implement  and improve its  management  information,  operating  and
financial systems and internal controls, to develop the management skills of its
managers and  supervisors and to train,  motivate and manage its employees.  The
Company's  failure to  effectively  manage  growth  could  adversely  affect the
Company's results of operations.

         In 1997, the Company has acquired,  and undertaken the construction of,
facilities in several  locations and the Company may acquire or build additional
facilities from time to time in the future.  The Company's results of operations
could  be  adversely  affected  if its  new  facilities  do not  achieve  growth
sufficient to offset increased expenditures associated with growth of operations
and  geographic  expansion.  Should the Company  increase  its  expenditures  in
anticipation of a future level of sales which does not materialize,  its results
of operations would be adversely  affected.  As the Company continues to expand,
it may become  more  difficult  to manage  geographically-dispersed  operations.
There can be no assurance that the Company will successfully manage other plants
it may acquire or build in the future.

         Acquisition Strategy. The Company has actively pursued in the past, and
expects to actively  pursue in the future,  acquisitions  in  furtherance of its
strategy of aggressively expanding its operations,  geographic markets,  service
offerings,  customer base and revenue base. Acquisitions involve numerous risks,
including  difficulties in the integration of the operations,  technologies  and
products and services of the acquired  companies  and assets,  the  diversion of
management's attention and the Company's financial resources from other business
activities,  the  potential  to enter  markets  in which the  Company  has no or
limited prior  experience  and where  competitors  in such markets have stronger
market  positions and the  potential  loss of key employees and customers of the
acquired companies. In addition,  during the integration of an acquired company,
the financial  performance  of the Company will be subject to the risks commonly
associated  with an  acquisition,  including  the  financial  impact of expenses
necessary  to  realize  benefits  from the  acquisition  and the  potential  for
disruption  of  operations.  There can be no assurance  that the Company will be
able to identify suitable acquisition opportunities,  to consummate acquisitions
successfully  or,  with  respect  to recent or  future  acquisitions,  integrate
acquired personnel and operations into the Company successfully.

         Implementation of New Information System. The Company is implementing a
new  management  information  system (the "MIS System"),  based on  commercially
available software  products,  that is designed to track and control all aspects
of its manufacturing services. Among other things, the implementation of the MIS
System  includes the  conversion of the  Company's  Automated  Execution  System
("AES"),  which is a customized  software  package designed to meet the needs of
the Company's APM process,  into software  compatible  with the MIS System.  The
Company  completed the  implementation  of the MIS System at the Company's Rocky
Mountain  facility in December 1997 and Arizona  facility in February  1998. The
Company  currently  expects to  implement  the MIS System in its Ft.  Lauderdale
facility  in the  second  quarter  of 1998  and it other  facilities  as soon as
practicable  thereafter.  If the MIS System  fails to operate as  designed,  the
Company's  operations  could  be  disrupted  by lost  orders  resulting  in lost
customers or by  inventory  shortfalls  and  overages  and the Company  could be
compelled to write-off the development costs of such software.  Such disruptions
or events could adversely affect results of operations and the implementation of
the Company's strategy.




<PAGE>



                                     PART II

ITEM 5.           MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         The  Company's  Common  Stock is quoted on the Nasdaq  National  Market
under the  symbol  "EFTC".  On March 24,  1998,  there  were  approximately  242
shareholders of record of the Company's Common Stock.

         The  following  table sets  forth the high and low sale  prices for the
Company's  Common  Stock,  as reported on the Nasdaq  National  Market,  for the
quarters presented.


                     1997 Sales Prices                  1996 Sale Prices
                     -----------------                  ----------------
                   High              Low              High             Low
                   ----              ---              ----             ---
First Quarter      $6 3/4            $4 3/4           $5 1/8           $3 3/4
Second Quarter      8 1/2             4 5/8            4 7/8            3 5/8
Third Quarter      14 5/16            8 3/4            4 1/4            3 1/2
Fourth Quarter     18 1/4            12 1/16           4 7/8            2 3/4

Dividends

         The Company has never paid  dividends  on its Common Stock and does not
anticipate that it will do so in the foreseeable  future. The future payments of
dividends,  if any,  on Common  Stock is within the  discretion  of the Board of
Directors  and will  depend on the  Company's  earnings,  capital  requirements,
financial  condition and other relevant  factors.  The Company's loan agreements
prohibit payment of dividends without the lender's consent.

Recent Sales of Unregistered Securities.

         On February 24, 1997, the Company  acquired Current  Electronics,  Inc.
and Current Electronics (Washington),  Inc. (the "CE Companies"), which operated
two manufacturing facilities in Newberg, Oregon and Moses Lake, Washington,  for
total  consideration  of  approximately  $10.9 million,  consisting of 1,980,000
shares of Company  Common Stock and  approximately  $5.5 million in cash,  which
included  approximately  $600,000 of transaction  costs. The Company  determined
that the issuance of such shares was exempt from registration under Section 4(2)
of the  Securities  Act  of  1933,  as  amended  (the  "Securities  Act"),  as a
transaction  by  the  issuer  not  involving  a  public  offering   because  the
transaction involved the acquisition of a business from the owners thereof based
on private negotiations.

         During  September  1997,  the Company  issued to Richard L. Monfort,  a
director  of  the  Company  $15  million  in  aggregate   principal   amount  of
Subordinated  Notes,  with a maturity  date of  December  31,  2002 and  bearing
interest at LIBOR plus 2.0%, in order to fund the  acquisition of certain assets
from  AlliedSignal.  During  October  1997,  the Company  issued a warrant  (the
"Warrant")  to purchase  500,000  shares of Common Stock at a price of $8.00 per
share as additional  consideration  for the loan represented by the Subordinated
Notes.  The Warrant was exercised on October 9, 1997,  resulting in net proceeds
to the Company of $4 million.  The Company  determined that the issuances of the
Subordinated Notes, the Warrant and the Common Stock issued upon exercise of the
Warrants were exempt from registration  under Section 4(2) of the Securities Act
because it involved a director of the Company.

     On September 30, 1997, the Company  acquired the CTI Companies for cash and
other  consideration  that  included  the  issuance of  1,858,975  shares of the
Company's Common Stock. The Company  determined that the issuance of such shares
was exempt from  registration  under  Section  4(2) of the  Securities  Act as a
transaction  by  the  issuer  not  involving  a  public  offering   because  the
transaction involved the acquisition of a business from the owners thereof based
on private negotiations.

Volatility


<PAGE>



         The Company's Common Stock has experienced significant price volatility
historically,  and such volatility may continue to occur in the future.  Factors
such as announcements of large customer orders, order cancellations, new product
introductions  by the Company,  events  affecting the Company's  competitors and
changes in general conditions in the electronics industry, as well as variations
in the Company's  actual or  anticipated  results of  operations,  may cause the
market  price  of  the  Company's  Common  Stock  to  fluctuate   significantly.
Furthermore,   the  stock  market  has  experienced  extreme  price  and  volume
fluctuations  in recent  years,  often for reasons  unrelated  to the  operating
performance  of the  specific  companies.  These broad market  fluctuations  may
materially  adversely affect the price of the Company's Common Stock.  There can
be no  assurance  that the market price of the  Company's  Common Stock will not
experience significant  fluctuations in the future,  including fluctuations that
are unrelated to the Company's performance.


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

General

         The Company is a leading  independent  provider of high-mix  electronic
manufacturing  services  to  OEMs  in  the  aerospace  and  avionics,   medical,
communications,   industrial   instruments  and  controls  and  computer-related
products industries.  The Company's manufacturing services consist of assembling
complex printed circuit boards, cables,  electro-mechanical devices and finished
products.  Circuit Test, Inc., Airhub Service Group, L.C. and CTI International,
L.C. (collectively, the "CTI Companies") provide repair and warranty services to
OEMs in the communications and computer industries.

         The Company's  quarterly  results of operations are affected by several
factors,  primarily  the level  and  timing of  customer  orders  and the mix of
turnkey  and  consignment  orders.  The level and  timing of orders  placed by a
customer vary due to the customer's  attempts to balance its inventory,  changes
in the  customer's  manufacturing  strategy  and  variation  in  demand  for its
products due to, among other things, product life cycles, competitive conditions
and general economic  conditions.  In the past, changes in orders from customers
have had a significant effect on the Company's  quarterly results of operations.
Other  factors  affecting  the Company's  quarterly  results of  operations  may
include, among other things, the Company's success in integrating the businesses
of the CTI  Companies  and Current  Electronics,  Inc.  and Current  Electronics
(Washington),  Inc. (the "CE Companies") and the assets and operations  acquired
from AlliedSignal  (the  "AlliedSignal  Asset Purchase"),  costs relating to the
expansion of operations including development of the Company's plan to develop a
build-to-order business, price competition, the Company's level of experience in
manufacturing  a  particular  product,  the  degree  of  automation  used in the
assembly  process,  the  efficiencies   achieved  by  the  Company  in  managing
inventories  and other assets,  the timing of  expenditures  in  anticipation of
increased sales and fluctuations in the cost of components or labor.

         In the third  quarter  of 1996,  the  Company  introduced  Asynchronous
Process Manufacturing,  a new manufacturing  methodology,  at its Rocky Mountain
facility.  APM  is  an  innovative   combination  of  high-speed   manufacturing
equipment,  sophisticated  information  systems and  standardized  process teams
designed to manufacture  mixtures of small  quantities of products more flexibly
and faster.  APM allows for the building of small lots in very short cycle times
and increases  throughput by decreasing setup time,  standardizing  work centers
and processing smaller lot sizes. The Company has done this by designating teams
to set up off-line  feeders and  standardizing  loading  methods  regardless  of
product  complexity.  APM has allowed the  Company to increase  productivity  by
producing  product  with  fewer  people,  which  ultimately  reduces  costs  and
increases gross profit. The Company completed implementation of APM at its Rocky
Mountain  facility in October  and has begun  implementing  APM at its  existing
Newberg,  Oregon facility, but will not complete that implementation until after
its  new  manufacturing  facility  under  construction  in  Newberg,  Oregon  is
completed.  The Company also plans to implement APM at its other facilities,  at
appropriate times.




<PAGE>



Recent Developments

         During 1997,  the Company  completed  the CE Merger,  the  AlliedSignal
Asset  Purchase and the CTI Merger,  all of which have  affected  the  Company's
results of operations and financial condition in 1997.

         CE Merger. On February 24, 1997, the Company acquired (the "CE Merger")
the CE Companies for approximately  $10.9 million consisting of 1,980,000 shares
of  Common  Stock  and  approximately  $5.5  million  in  cash,  which  included
approximately  $0.6 million of transaction  costs. The Company recorded goodwill
of  approximately  $8.0 million,  which is being  amortized  over 30 years.  The
combined  revenues for the CE Companies for the fiscal year ended  September 30,
1996 was approximately $32.5 million.  In connection with this transaction,  the
Company renegotiated its line of credit and obtained a 90-day bridge loan in the
amount of $4.9 million (which was subsequently  repaid), the proceeds from which
were used to pay the cash  consideration  related to the CE Merger, as discussed
above. See "--Liquidity and Capital Resources."

         AlliedSignal Asset Purchase.  In August and September 1997, the Company
completed the initial  elements of two  transactions  with  AlliedSignal,  Inc.,
pursuant to which the Company acquired certain  inventory and equipment  located
in Ft.  Lauderdale,  Florida,  subleased the portion of AlliedSignal's  facility
where such  inventory  and equipment  was located and employed  certain  persons
formerly  employed by  AlliedSignal  at that  location.  The Company  also hired
certain persons formerly employed by AlliedSignal in Tucson,  Arizona and agreed
with AlliedSignal to provide the personnel and management  services necessary to
operate a related  facility on behalf of AlliedSignal on a temporary  basis. The
Company  purchased  from a third party and  renovated a  production  facility in
Tucson,  Arizona. The Company moved  AlliedSignal's  inventory and equipment and
related  employees to its own facility and began  production  in early  February
1998. The aggregate  purchase  price of the assets  acquired by the Company from
AlliedSignal  approximated $15 million,  of which  approximately $13 million was
paid by December 31, 1997. The Florida and Arizona facilities are currently used
to produce electronic  assemblies for AlliedSignal.  The Company is also seeking
to use the Florida and Arizona  facilities  to provide  services  for  customers
other than  AlliedSignal.  The Company agreed to pay AlliedSignal one percent of
gross revenue for all electronic  assemblies and parts made for a customer other
than  AlliedSignal  at the Arizona or Florida  facilities  through  December 31,
2001.

         CTI Merger.  On September  30,  1997,  the Company  acquired  (the "CTI
Merger") the CTI  Companies  for  approximately  $29.7  million in cash and debt
assumption,  1,858,975  shares of the  Company's  Common  Stock and a $6 million
contingent  payment paid upon closing of a public  offering in November of 1997.
The Company  recorded  goodwill of approximately  $38.9 million,  which is being
amortized  over 30 years.  In  connection  with this  acquisition,  the  Company
entered  into  the  Bank  One  Loan  (as  defined   below)  and  issued  certain
subordinated  notes  in an  aggregate  principal  amount  of  $15  million  (the
"Subordinated Notes"). See "--Liquidity and Capital Resources."

         In many respects, the CTI Companies and the Company are financially and
operationally complementary businesses. This tends to give management at the CTI
Companies more alternatives when making decisions that affect profit margins and
overall operations.  The CTI Companies have historically turned receivables at a
slower rate and inventories at  approximately  the same rate as the Company.  In
1996, the CTI Companies turned  receivables at an approximate rate of 57 days or
6 times a year and turned  inventories  every 79 days or approximately 5 times a
year. In 1996, the Company turned  receivables at an approximate rate of 25 days
or  approximately  14  times a year  and  turned  inventories  every  62 days or
approximately  6 times a year.  The Company,  after the CTI Merger,  expects its
receivables  and inventory to turn over at a slower rate due to the inclusion of
the CTI Companies.

         The  Company is  involved  in the front end of many  OEMs'  new-product
introductions  and is subject to production  fluctuations  relating to the OEMs'
product  demands.  Thus,  the Company's  production  of a particular  product is
related to overall product life cycle and length of demand for such product. The
CTI  Companies'  repair and  warranty  service is  dependent  on the size of the
installed base and extent of use of such product.

         The CTI Companies have generated gross profit percentages  ranging from
26% to 33% from 1994 to 1996.  This is  significantly  higher than the Company's
historic gross profit  percentages,  which have ranged from  approximately 5% to
10% from 1994 to 1996.  This is due to the high  value-added  content of the CTI
Companies'  operations.  The impact of combining operations of the CTI Companies
with the Company has been to increase the Company's overall


<PAGE>



gross,  operational and net profit percentages due to the CTI Companies' overall
higher  profitability levels as a percentage of sales. This is based on historic
results, and there is no guarantee that these trends will continue.

Results of Operations

         The following  table sets forth certain  operating data as a percentage
of net sales:


                                                   Year ended December 31,
                                                   -----------------------
                                               1997          1996        1995
                                               ----          ----        ----
Net sales...................................   100.0%        100.0%      100.0%
Gross profit................................    14.6           5.1         7.9
Selling, general and administrative
   expenses.................................     8.4           7.4         6.3
Goodwill....................................     0.5             -           -
Impairment of fixed assets..................       -           1.3           -
                                              -------       -------     -------

Operating income (loss).....................     5.7          (3.6)        1.6
Interest expense............................    (2)           (0.9)       (0.8)
Other, net..................................     1.1           0.2         0.2
                                              -------       -------     -------

Income (loss) before income taxes...........     4.8          (4.3)        1.0
Income tax expense (benefit)................     1.9          (1.5)        0.3
                                              -------       --------    -------

Net income (loss)...........................     2.9          (2.8)        0.7
                                             =======       ========    =======

1997 Compared to 1996

         Net Sales. The Company's net sales increased by 99.1% to $113.2 million
during the year ended  December 31, 1997,  from $56.9 million for the year ended
December 31, 1996.  The increase in set sales is due  primarily to the inclusion
of the  operations  from the CE  Companies,  acquired on February 24, 1997,  the
inclusion  of the  operations  of  the  Company's  Ft.  Lauderdale  and  Arizona
facilities,  acquired from AlliedSignal in August 1997, the inclusion of the CTI
Companies,  acquired on September 30, 1997,  and increased  orders from existing
customers.

         Gross Profit.  Gross profit increased by 471.5% to $16.6 million during
the year  ended  December  31,  1997,  from $2.9  million  during the year ended
December  31,1996.  The gross profit margin for the year ended December 31, 1997
was 14.6% compared to 5.1% for the year ended December 31, 1996. The increase in
gross profit  percentage  is related to (i) the  operations of the CE Companies,
which have  historically had a higher gross profit margin,  (ii) the adoption of
APM in the later part of 1996 in the Rocky Mountain  facility which has resulted
in  greater  operating  efficiencies,  and  (iii)  the  operations  of  the  CTI
Companies,  which  have  also  have  historically  had  a  higher  gross  profit
percentage.  In addition, as revenues have increased,  fixed overhead costs such
as labor costs and depreciation have been absorbed in cost of goods resulting in
higher margins.  Finally, the Company incurred a restructuring charge in cost of
goods  sold of $0.5  million  in the third  quarter  of fiscal  1996,  primarily
related to severance  costs and the write-off of inventory  associated  with the
restructuring of the Company's  customer base, which  accentuated the difference
in gross profit margins between 1997 and 1996.

         Selling,  General and  Administrative  Expenses.  Selling,  general and
administrative ("SGA") expenses increased by 127.3% to $9.5 million for the year
ended December 31, 1997, compared with $4.2 million for the same period of 1996.
As a percentage of net sales,  SGA expense  increased to 8.4% for the year ended
December 31, 1997, from 7.4% in the same period of 1996. The Company  incurred a
restructuring  charge of $0.9  million in the third  quarter of 1996,  primarily
from  severance pay for  terminated  employees at the Rocky  Mountain  facility.
Without the restructuring  charge,  SGA expense for 1996 would have been 5.8% of
sales.  The increase in SGA expenses is primarily due to the inclusion of the CE
Companies,  the  CTI  Companies,  the  Company's  Fort  Lauderdale  and  Arizona
facilities' SGA expenses and increased investment in information  technology and
marketing.



<PAGE>



     Impairment of Fixed Assets.  During the third quarter of 1996,  the Company
incurred  a write down  associated  with  impaired  assets in the amount of $0.7
million. See "--1996 Compared to 1995--Impairment of Fixed Assets."

         Operating  Income.  Operating  income increased to $6.5 million for the
year ended December 31, 1997, from a loss of $2.0 million for the same period in
1996.  Operating  income as a percentage  of net sales  increased to 5.7% in the
year ending December 31, 1997 from negative 3.6% in the same period of 1996. The
increase in operating  income is attributable to the CE Merger,  the CTI Merger,
increased efficiencies associated with APM, and the acquisition and operation of
the Fort Lauderdale and Tucson  facilities.  Without the $2.1 million write down
in the third quarter of 1996, the 1996  operating  profit margin would have been
approximately breakeven.

         Interest Expense.  Interest expense was $2.3 million for the year ended
December 31, 1997 as compared to $0.5  million for the same period in 1996.  The
increase  in  interest  is  primarily  the  result  of the  incurrence  of  debt
associated with the CE Merger,  the  AlliedSignal  Asset Purchase in Arizona and
Florida,  the CTI Merger,  and  increased  operating  debt used to finance  both
inventories and receivables for the Company in fiscal 1997.

         Income Tax Expense.  The  effective  income tax rate for the year ended
December  31,  1997  was  38.9%  compared  to 36.5%  for the same  period a year
earlier.  This percentage can fluctuate because  relatively small dollar amounts
tend to move the rate  significantly  as estimates  change.  The Company expects
that the rate will be higher in the upcoming  quarters.  This higher anticipated
effective tax rate is due to the impact of the nondeductible  goodwill component
of the CTI Merger and CE Merger.

1996 Compared to 1995

         Net Sales.  Net sales in 1996  increased  15.6% to $56.9  million  from
$49.2  million in 1995.  The increase in net sales is due primarily to increased
material sales associated with the box-build  project for one customer.  The top
ten  customers in 1996  accounted for 77.6% of total sales volume as compared to
80.4% in 1995.

         Gross Profit.  Gross profit in 1996  decreased  25.5% from 1995 to $2.9
million. Gross profit as a percentage of net sales for 1996 was 5.1% compared to
7.9% in  1995.  One  reason  for the  decline  in gross  profit  is  related  to
restructuring  charges of $0.5 million that were  included in cost of goods sold
in the third quarter of 1996. Without the restructuring, gross profit would have
been  $3.4  million  or 5.9% of net  sales.  These  restructuring  charges  were
severance  costs  related to a decrease in  workforce,  write down of  inventory
related to changes in the Company's  customer  mix, and expenses  related to the
reorganization  of  the  manufacturing   floor  and  manufacturing   process  in
connection with the implementation of APM.

         Selling,  General  and  Administrative  Expenses.  SGA expense for 1996
increased  by  35.6%  over  1995  to  $4.2  million.  The  increase  is  due  to
restructuring  charges for severance costs related to reduction in workforce and
other expenses related to  organizational  changes in the amount of $0.9 million
in the third  quarter of 1996.  Excluding  the  restructuring  charges,  the SGA
expense  would have been $3.3  million  which is an increase of $179,980 or 5.8%
over 1995.  This increase was due primarily to increased  sales  commissions and
related  expenses  associated  with the sales growth from 1995 to 1996 levels as
noted above. As a percentage of net sales, SGA expense increased to 7.4% in 1996
from 6.3% in 1995.  Without the restructuring  changes,  SGA expenses would have
been 5.8% of net sales for 1996.

         Impairment  of Fixed  Assets.  During the third  quarter  of 1996,  the
Company  incurred a write down  associated with impaired assets in the amount of
$0.7 million.  Statement of Financial Accounting Standards No.12 "Accounting for
the  impairment of long-lived  assets and for  long-lived  assets to be disposed
of," requires that long-lived assets and certain identifiable  intangibles to be
held and used by an entity be reviewed for impairment whenever events or changes
in  circumstances  indicate  that the  carrying  amount  of an asset  may not be
recoverable.  Long-lived  assets  and  certain  identifiable  intangibles  to be
disposed of should be  reported  at the lower of  carrying  amount of fair value
less cost to sell.  The Company  went through a corporate  restructuring  in the
third quarter of 1996, which included a workforce  reduction and  implementation
of APM, resulting in certain assets no longer being used in operations.  Certain
software that will no longer be used, as well as excess equipment that was sold,
were written down to fair value in accordance with Statement No.121.



<PAGE>



         Operating  Income.  Operating income in 1996 decreased 352.3% to a loss
of $2.0  million  from  income of $0.8  million in 1995.  Operating  income as a
percent  of sales  decreased  to  negative  3.6% in 1996 from 1.6% in 1995.  The
decrease in operating  income was primarily  attributable  to the  restructuring
charges  and  impairment  of fixed  assets  noted  above in the  amount  of $2.1
million.  Excluding  the  restructuring  charges,  the  Company  would  have had
operating  income of $0.1 million or 0.2% of net sales for 1996.  The  decrease,
excluding  the  restructuring  charges,  was  related to product mix changes and
related  overhead  expenses to put new  programs  in place as well as  increased
variable  selling  costs  associated  with higher sales volumes in the first two
quarters of 1996.

         Interest expense. Interest expense in 1996 increased 31.7% from 1995 to
$0.5  million.  Borrowing  necessitated  by increases in inventory  and accounts
receivable levels is the primary reason for the increase in interest expense.

         Income Tax Expense.  The Company's  effective  income tax rate for 1996
was 35.4%  compared  to 26.3% for 1995.  Tax  expense  for 1995 was lower due to
certain  research  expenditures  incurred in 1992, 1993, 1994 and 1995 for which
the Company claimed federal tax credits.  The Company's Rocky Mountain  facility
is also located in a State of Colorado  enterprise  zone.  The Company  receives
state tax  credits  for  capital  expenditures  and  increases  in the number of
Company  employees but, as sales  increase,  these state tax credits will have a
relatively smaller effect on the Company's effective income tax rate.

         Quarterly  results.  The following table presents  unaudited  quarterly
operating  data for the most  recent  eight  quarters  for the two  years  ended
December 31, 1997. The information includes all adjustments,  consisting only of
normal recurring  adjustments,  that the Company considers  necessary for a fair
presentation thereof.
<TABLE>
<CAPTION>


                                                                Quarter Ended
                             March 31,   June 30,  September 30,  December 31,  March 31,  June 30,  September 30,  December 31,
                                1996       1996       1996           1996        1997       1997         1997           1997
                           --------------------------------------------------------------------------------------------------
                                                         (In thousands, except per share data)
                           
<S>                          <C>         <C>       <C>            <C>           <C>         <C>      <C>            <C>

Net Sales..................  $15,003     $15,941   $13,632        $12,304       $14,037    $22,745   $28,191        $48,271
Cost of goods sold.........   14,403      15,177    13,096         11,304        12,529     19,756    24,454         39,932
                              --------    --------  --------     --------      --------   --------   --------       --------

Gross profit...............      600         764       536          1,000         1,508      2,989     3,737          8,339
Impairment of fixed assets.        -          -        726              -             -          -         -              -
Goodwill Amortization......        -           -         -              -            23         67        67            390
Selling, general and
  administrative expenses..      812         845     1,747            792         1,103      1,884     2,140          4,409
                              ------     -------  ---------       --------      --------   --------   --------       --------

Operating income (loss)....     (212)        (81)   (1,937)            208          382      1,038     1,530          3,540
Interest expense and other, net (102)       (123)     (141)            (77)        (169)      (330)      651         (1,217)
                               ------    -------  ---------       --------     ---------  --------   ---------      --------

Income (loss) before income
  taxes....................     (314)       (204)   (2,078)            131          213        708     2,181          2,323
Income tax expense (benefit)    (126)        (75)     (719)             48           73        265       794            976
                               ------    -------  ---------       --------     ---------  --------   ----------     --------

Net income (loss)..........  $  (188)    $  (129)  $(1,359)       $     83      $   140    $   443   $ 1,387       $  1,347
                            ==========  =========  =========       ========    =========  =========   ========      ========

Income (loss) per share -
  diluted..................$   (0.05)    $   (.03) $ (0.34)       $   0.02      $  0.03  $    0.07   $  0.21       $   0.13
                           ===========  =========  =========      ========      =========  ========= ========      ========

Weighted average shares
  Outstanding - diluted....    3,958       3,955     3,968           3,942        4,858      6,121     6,676         10,638
</TABLE>

         Although  management  does not believe that the  Company's  business is
materially  affected by seasonal  factors,  the Company's sales and earnings may
vary from quarter to quarter,  depending  primarily  upon the timing of customer
orders and product  mix.  Therefore,  the  Company's  operating  results for any
particular  quarter may not be indicative of the results for any future  quarter
or year.

Liquidity and Capital Resources

         At December 31, 1997,  working capital  totaled $41.2 million.  Working
capital at  December  31,  1996 was $8.5  million  compared  to $9.9  million at
December 31, 1995. The decrease in working  capital in 1996 is  attributable  to
the  purchase of fixed assets and  long-term  debt  retirement.  The increase in
working capital in 1997 is primarily  attributable to a public offering that was
completed in November of 1997 with net proceeds to the Company of  approximately
$39.5  million,  the  proceeds  of  which  were  used  to pay a  portion  of the
acquisition price for the CTI Companies and, to repay


<PAGE>



a portion of the Bank One Loan. The portion of the Bank Loan that had ben repaid
was  subsequently  reborrowed  to  fund  increases  in  inventory  and  accounts
receivable related to increased business  associated with the CE and CTI Mergers
and the AlliedSignal Asset Purchase in 1997.

         Cash used in operations for the year ended December 31, 1997, was $29.3
million  compared to cash used in operations of $0.4 million for the same period
in 1996.  The  AlliedSignal  Asset  Purchase  in Florida and Arizona and the CTI
Merger resulted in a significant  use of funds,  particularly in the purchase of
inventory  and  equipment  in the third  quarter  of 1997.  Accounts  receivable
increased 531.9% to $24.4 million at December 31, 1997 from $3.9 at December 31,
1996. A  comparison  of  receivable  turns (e.g.,  annualized  sales  divided by
current  accounts  receivable)  for  1997  compared  to 1996  is 4.6  and  14.7,
respectively. Inventories increased 399.1% to $45.7 million at December 31, 1997
from $9.1 million at December 31, 1996. A comparison  of inventory  turns (i.e.,
annualized  cost of sales divided by current  inventory) for the year ended 1997
and 1996 shows a decrease  to 2.2 from 5.9,  respectively.  The 1997  receivable
turns and inventory  turns are distorted  because the cost of sales for the year
includes  only ten months from the CE  Companies,  three months of cost of sales
from the CTI Companies,  and only four and one-half months from the AlliedSignal
Asset  Purchase in Arizona and  Florida,  while the balance  sheet  includes the
receivables and inventories from these operations.

         The Company  used cash to purchase  capital  equipment  totaling  $13.2
million for the year ended 1997  compared  with $2.0  million in the same period
last year.  The Company also used cash to pay part of the purchase  price of the
CE Companies  and CTI  Companies,  as  explained  earlier in the amount of $31.0
million.  Proceeds  from  long-term  borrowings of $35 million were used to help
fund the purchase of the CE Companies and CTI  Companies.  The Company used cash
from investing activities of $1.6 million in 1996, compared to providing cash of
$1.3  million in 1995.  The  Company  used cash to  purchase  capital  equipment
totaling $2.0 million in 1996,  compared with $2.5 million in 1995. In 1995, the
Company received cash from the sale of equipment  primarily a sale-leaseback  in
the amount of $3.7 million.

         In connection with the CTI Merger and the AlliedSignal  Asset Purchase,
the Company entered into a Credit Facility,  dated as of September 30, 1997 (the
"Bank  One  Loan"),  provided  by Bank  One,  Colorado,  N.A.  The Bank One Loan
initially  provided  for a $25  million  revolving  line of credit,  maturing on
September  30, 2000 and a $20 million term Loan  maturing on September 30, 2002.
The  proceeds  of the Bank One Loan were used for (i) funding the CTI Merger and
(ii) repayment of the then-existing Bank One line of credit, bridge facility and
equipment  Loan.  The Bank One Loan bears interest at a rate based on either the
London Inter-Bank Offering Rate ("LIBOR") or Bank One prime rate plus applicable
margins ranging from 3.25% to 0.50% for the term facility and 2.75% to 0.00% for
the revolving  facility.  Borrowings  on the  revolving  facility are subject to
limitation based on the value of the available collateral.  The Bank One Loan is
collateralized  by  substantially  all of the Company's  assets,  including real
estate and all of the outstanding capital stock and membership  interests of the
Company's  subsidiaries,  whether now owned or later acquired. The agreement for
the Bank One Loan contains covenants  restricting liens,  capital  expenditures,
investments,  borrowings,  payment of dividends,  mergers,  and acquisitions and
sale of assets. In addition,  the loan agreement  contains  financial  covenants
restricting  maximum annual capital  expenditures,  recapturing excess cash flow
and requiring  maintenance of the following  ratios:  (i) maximum senior debt to
EBITDA (as defined in the agreement  for the Bank One Loan);  (ii) maximum total
debt to EBITDA;  (iii) minimum  fixed charge  coverage;  (iv) minimum  EBITDA to
interest; and (v) minimum tangible net worth requirement with periodic step-up.

         In addition to the Bank One Loan,  the Company  issued to a director of
the Company $15 million in aggregate  principal  amount of  Subordinated  Notes,
with a maturity  date of December  31,  2002 and bearing  interest at LIBOR plus
2.0%, in order to fund the acquisition of certain assets from AlliedSignal.  The
Company  issued a warrant (the  "Warrant") to purchase  500,000 shares of Common
Stock at a price of $8.00 per share in connection with the  Subordinated  Notes.
The Warrant was  exercised  in October  1997,  resulting  in net proceeds to the
Company of $4 million.

         In  November  1997,  the  Company   completed  a  public   offering  of
approximately 3,500,000 shares of Common Stock. The Company used the proceeds of
such offering to make a $6.0 million  payment to the previous  owners of the CTI
Companies  and to repay  approximately  $32 million of the Bank One Loan.  As of
December 31, 1997, the outstanding principal amount of borrowings under the Bank
One Loan was $37.4  million and the  borrowing  availability  under the Bank One
Loan was  approximately  $7.6  million.  The  Company  believes  it will need to
increase its availability  under the Bank One Loan to fund the Company's current
operations,  and it is  currently  discussing  with Bank One an  increase in the
combined facilities to $60 million.


<PAGE>



         The Company is  implementing a new management  information  system (the
"MIS System") throughout all of its facilities,  including those it has recently
acquired. The MIS System is designed to be "Year 2000 Compliant." Therefore,  in
the absence of unanticipated  difficulties in implementing  the MIS System,  the
Company does not anticipate that year 2000 problems will have a material adverse
effect on the Company's operations.  The Company is evaluating the impact of the
year 2000 issue on vendors with a goal of completion during 1998.

Cautionary Statement

         The  information  set forth in this report  includes  "forward  looking
statements" within the meaning of the federal  securities laws.  Forward-looking
statements  consist of statements of  expectations,  beliefs,  plans and similar
expressions concerning matters that are not historical facts. They involve known
and unknown  risks,  uncertainties  and other  factors that may cause the actual
results,  market  performance  or  achievements  of the  Company,  growth of the
electronic manufacturing services industry, or growth of the electronic hardware
maintenance market to differ materially from any future results,  performance or
achievements  expressed  or  implied  by  such  forward-looking   statements  or
forecasts.  Important factors that could cause such differences include, but are
not  limited  to,  changes in  economic  or  business  conditions  in general or
affecting the electronic products industry in particular,  changes in the use of
outsourcing by OEM's,  increased material prices and service  competition within
the electronic component contract  manufacturing and repair industries,  changes
in the  competitive  environment  in which the Company  operates,  the continued
growth of the industries targeted by the Company or its competitors,  or changes
in the Company's  management  information  needs,  changes in customer needs and
expectations  and  the  Company's  ability  to  keep  pace  with   technological
developments and governmental actions.





<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) 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, in the City of Denver,
State of Colorado, on this 14th day of May, 1998.


                                         EFTC CORPORATION,
                                         a Colorado corporation



                                         By: /s/ Stuart W. Fuhlendorf
                                                   Stuart W. Fuhlendorf
                                                   Chief Financial Officer




<PAGE>