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SECURITIES AND EXCHANGE COMMISSION

FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

OR

Commission file number 000-21770

SIGNAL TECHNOLOGY CORPORATION

Registrant’s telephone number, including area code: (978) 774-2281

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

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

Common Stock, par value $0.01 per share

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:o

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.x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes: x No:o

On June 28, 2002, the last business day of the Registrant’s most recently completed second fiscal quarter, there were 10,000,969 shares of the Registrant’s Common Stock outstanding and the aggregate market value of such shares held by non-affiliates of the Registrant, based on the closing sale price of such shares on the Nasdaq National Market on June 28, 2002, was approximately $93,909,099. Shares of Common Stock held by each executive officer and director and by each person who beneficially owns more than 5% or more of the outstanding Common Stock have been excluded in that such persons may under certain circumstances be deemed to be affiliates. This determination of executive officer or affiliate status is not necessarily a conclusive determination for other purposes.

On March 21, 2003, there were 10,752,288 shares of the Registrant’s Common Stock issued and outstanding.

Documents Incorporated By Reference

Part III incorporates information by reference from the definitive Proxy Statement in connection with the Registrant’s Annual Meeting of Shareholders to be held on May 28, 2003. Certain exhibits are incorporated by reference from the Registrant’s Registration Statement on Form S-1, as amended (File No. 33-61124) and Form 8-K dated November 24, 1993.

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Signal Technology Corporation and Subsidiary

INDEX TO ANNUAL REPORT ON FORM 10-K

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PART I

Item 1. Business

General

Signal Technology Corporation (the “Company” or “Signal”) designs, manufactures, and markets power management products and sophisticated electronic radio frequency (RF) components and subsystems, as well as provides the program management and systems integration for wireless networks of sensors. The Company’s products and systems are used in defense applications and certain space applications. Signal’s defense electronics experience includes over 20 years of proven expertise, providing state-of-the-art RF components and power management systems to the United States government, defense and aerospace prime contractors, and international customers. The Company’s products are often integrated into complex electronic systems and subsystems that require precision control, management and generation of radio, microwave and millimeter-wave frequencies and electrical currents. Current product lines and markets served are summarized below:

	•		Microwave components and subsystems for defense, space and communications applications are largely produced in the Arizona and California operations. Signal’s high-quality, reliable microwave components and subsystems are used to send, receive and redirect data, voice and video transmissions at extremely high frequencies and include state-of-the-art oscillators, amplifiers, and advanced integrated assemblies. Signal has earned positions on a significant number of major United States and foreign defense platforms and systems, satellite and aerospace programs.
	•		Power management, conditioning and control products and amplifiers are designed and manufactured at the Keltec operation. Keltec produces a wide variety of power management components to meet the specialized needs of customers in the defense and aerospace industries. Keltec has become a valuable partner for organizations seeking cost-effective customized power management components, due to Keltec’s unique combination of manufacturing process, technological innovation and rugged design.
	•		Signal’s Olektron operation designs and manufactures passive and active RF components, as well as state-of-the-art crystal oscillators and filters, and switch matrices. Olektron produces active RF components in both standard and customized designs for handling a variety of signal processing functions, including attenuators, discriminators, logarithmic amplifiers, modulators and switches.
	•		In Texas, the newly created Advanced Integrated Systems Division (AISD) is leading the design and integration of two significant Department of Defense (DOD) contracts for wireless networks of sensors for specific Defense Advanced Research Projects Agency (DARPA) related applications. This new capability is the result of leveraging Signal’s former commercial wireless technology and systems engineering expertise as a prime contractor with a team of academia and industry on DOD research contracts.

Signal’s defense electronics technology, manufacturing skill and focus on quality, along with an ability to leverage wireless technology and capability, has allowed Signal to expand into the DOD wireless market and to bundle complex RF microelectronic requirements for defense product solutions, integrating commercial off the shelf cost effective solutions into military applications. Signal’s components and subsystems are used for applications such as radar, communications, and smart weapons and contain technology to receive, transmit and process wireless data signals. The wireless networks of sensors are used for specific information gathering applications in support of definitive military and defense needs. The expertise developed in wireless communications has been leveraged into a new market area referred to as netted sensor systems for homeland security and defense applications. At the newly formed AISD, Signal is providing system design and integration expertise and leading a team of industry and university partners for two DOD development contracts, as well as positioning to pursue and capture additional opportunities in this evolving Homeland Security marketplace.

Signal’s current lines of business are as follows:

	•		Electronic Warfare and Radar—Signal continues to be a leading supplier of sophisticated, state-of-the-art electronic components and systems for aircraft and shipboard EW and radar platforms, ground based radars, electronic countermeasures (ECM), and electronic intelligence (ELINT). Key programs in ECM include the ALQ-99, ALQ-131, ALQ-135, ALQ-156, ALQ-165 (ASPJ), ALQ-172, ALQ-184, ALQ-211 (SIRFC), IDECM, APR-48A (RFIS), APR-39, ALR-66/67 and Salamander. Radar programs include ARINE, GRIFO, SLQ-32 and a number of active electronically scanned array (AESA) programs.
	•		Missiles and Precision Guidance—Signal supplies products on key missile programs such as the AMRAAM, HARM, HARPOON, Tomahawk, Sparrow, Standard Missile (SM), Patriot and PAC-3 missile systems. These products support a significant number of US, as well as foreign allied defense systems.

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•

Intelligence, Surveillance and Reconnaissance (ISR)—Signal provides products and systems for ISR requirements, including spacecraft and launch vehicles. Principal space applications include satellite communications, intelligence, surveillance and sensing. Signal designs, develops and manufactures frequency components such as isolators, circulators, oscillators and power components. Signal’s products are used in satellite-based communication systems such as Milstar II, Beam Link, Globalstar, Tempo, GPS (Global Positioning System), SBIRS (Space Based Infrared Sensor), Hessi (currently High Energy Solar Spectroscopic Imager), N.E.A.R. (Near Earth Asteroid Rendezvous) and others. Signal’s AISD operation in Texas currently focuses on two contracts, Chameleon and Micro Sensor Systems for force protection, asset protection, perimeter and border security and information gathering. The technologies that AISD is employing will potentially improve the cost effectiveness of the state of the art unattended ground sensors by orders of magnitudes.

Available Information

Signal was incorporated in 1982 in Delaware. The Company’s principal executive office is located at 222 Rosewood Drive, Danvers, MA 01923, and its telephone number at this location is (979) 774-2281. Signal’s Internet website address is www.sigtech.com. The Company’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to such reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available, free of charge, on Signal’s Internet website under “Corporate Information—SEC Filings,” as soon as reasonably practicable after we electronically file such material with, or furnish it to, the United States Securities and Exchange Commission, or SEC. Information on Signal’s website does not constitute a part of this Annual Report on Form 10-K.

Structure and Organization

During 2002, Signal completed its plan to sell its commercial fixed wireless and mobile appliance businesses in response to the global weakness in telecommunication spending. Also in 2002, as described above, the Company formed AISD which focuses on defense and homeland security wireless unmanned sensor systems.

As Signal begins 2003, the Company has five operating divisions engaged in the development, manufacturing and marketing of electronic components and subsystems. The operating divisions, referred to as Arizona, California, Keltec, Olektron and AISD, report their operations within five segments: Microwave Components & Subsystems – Arizona, Microwave Components & Subsystems - - California, Power Management Products (Keltec), Radio Frequency (RF) Components & Subsystems (Olektron and the former Systems division), and AISD (Signal’s new business unit in Texas that focuses on wireless networks of sensors).

Products and Customers

Signal currently offers a wide range of products to serve the defense electronics and commercial wireless markets. These products are categorized as follows:

Defense and Other Products

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Customers

Signal offers defense electronics equipment to the United States DOD and to major defense prime contractors for integration into larger systems. Some of Signal’s customers for defense electronics equipment include the following:

Signal’s principal defense customers are prime contractors and military agencies of the United States government and certain foreign countries. With the exception of Raytheon, which accounted for 23%, 16% and 21% of net sales in 2002, 2001 and 2000, respectively, and BAE Systems which accounted for 11% of net sales in 2002, Signal believes that the loss of any other single customer would not have a material adverse effect on sales.

The following table displays net sales by business segment for years ending December 31:

For selected financial data by business segment see (“Segment Information”) Note 15 to the consolidated financial statements.

The following table displays information concerning net sales of products to categories of customers and geographic markets. The net sales information includes direct sales to the customer or market and indirect sales to prime contractors selling to the customer or market.

Government Contracts

A substantial portion of Signal’s business is conducted under United States government contracts and subcontracts. These contracts are either competitively bid or sole source contracts. Competitively bid contracts are awarded after a formal bid and proposal competition among suppliers. Sole source contracts are awarded when a single contractor is deemed to have an expertise or technology that is superior to that of competing contractors.

Except for AISD, virtually all of the United States government contracts and subcontracts are fixed price contracts, pursuant to which the Company agrees to develop a product or to manufacture a product for a fixed price and assume the risk of any cost overrun. The majority of the Company’s net sales are derived from fixed price manufacturing contracts. Based on historical experience, the Company believes that the risk of a cost overrun is lower on fixed price manufacturing contracts than it is on fixed price development contracts.

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Sales and Marketing

Signal markets its products worldwide through its own domestic sales force and a network of specialized independent sales representatives and distributors. The sales force is comprised of divisional marketing vice presidents, regional sales managers, sales personnel and support staff.

Sales managers are responsible for coordinating the independent sales representatives and have extensive knowledge of government and commercial programs within their respective regions. They also advise the engineering, manufacturing and management personnel of anticipated trends and customer requirements.

The key to the Company’s sales and marketing strategy is to develop long-term relationships with its customers and to have its products designed into customers’ systems. This is achieved by regular communications and meetings between the Company’s personnel at all levels and their counterparts in the customer’s organization. The Company actively seeks to form strategic alliances with customers through volume purchase agreements.

Product Engineering and Manufacturing

Signal believes that a principal core competency is the quality of its product design, engineering, manufacturing and testing capabilities. These capabilities enable Signal to design and engineer products that meet or exceed customers’ demanding specifications for performance and reliability and to manufacture products at competitive prices.

Since Signal’s founding in 1982, the Company has been manufacturing products for the defense industry. As a supplier to the defense industry, the Company is subject to rigorous specifications. Signal adheres closely to the principles of total quality management.

Signal maintains engineering product design and related support systems at each of its operating facilities.

Sources of Raw Materials

Signal attempts to utilize standard parts and components that are available from multiple vendors. However, certain components used in products are available from only single sources, and other components are available from only a limited number of sources. Despite the risks associated with purchasing components from single sources or from a limited number of sources, Signal has made the strategic decision to select single source or limited source suppliers in order to obtain higher quality parts and components and lower pricing, and to receive more timely delivery and maintain quality control.

Inflation and Costs

The cost of the Company’s products is influenced by the cost of a wide variety of raw materials from several suppliers. In the past, increases in the cost of raw materials, labor and services have been offset by price increases, productivity improvements and cost saving programs. There can be no assurance, however, that the Company will be able to similarly offset such cost increases in the future.

Research and Development

Continuing investments in research and development are critical to Signal’s ongoing product evolution and market position. Signal places strong emphasis on R&D that improves its existing products and technologies, as well as strong emphasis on R&D for new product offerings that it believes show the greatest production potential for the next few years. Signal works closely with its customers to determine the key product attributes and performance specifications that are demanded by the marketplace and performs R&D activities in all of its operations with each location focused to capitalize on its engineering talents and technology portfolios. A key R&D strategy is to form alliances with companies which possess key technologies to sustain and refresh Signal’s product portfolio. A portion of Signal’s R&D budget will be devoted to the development of new technology in order to further position the Company as a technology leader in selected defense opportunities. Signal also retains certain rights from customer-sponsored development work. Customer-sponsored research and development projects are funded and included as sales and cost of sales. The amounts of company-funded and customer-sponsored development work performed in each of the last three years are as follows:

Backlog

The Company had a backlog of $75.9 million at December 31, 2002 and a backlog of $57.5 million at December 31, 2001. The Company expects to ship the entire December 31, 2002 backlog within 2003, except for approximately $17.5 million which will be shipped in later periods.

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Competition

Signal competes in the defense electronics industry, selling to the United States government and many of its allies. In the defense market, Signal’s primary competitors include Filtronics, Herley, M/A-Com and REMEC.

The Company believes competition is based primarily on price, product performance, reliability and customer support, and competes effectively in all of these areas. Signal’s continued success will depend in part on its ability to develop and introduce innovative, low cost, quality products that meet or exceed customers’ specifications.

It is the Company’s opinion that Signal’s technological legacy and financial strength will make the Company a strong competitor in the defense electronics market. Some of Signal’s competitors have greater financial and operating resources. In addition, certain customers have technological capabilities in Signal’s product areas and could choose to manufacture certain products themselves rather than to purchase from suppliers such as Signal.

Employees

As of December 31, 2002, the Company had 545 full-time employees. No employees are represented by unions. The Company believes its relationship with its employees is good.

Intellectual Property

The Company holds patents issued in the United States and certain European countries. While Signal considers its patents to be of some value, the Company believes that its technological position depends primarily on the technical competence and creative ability of its engineering staff in the areas of product design and manufacturing processes, as well as on closely held proprietary information. Signal requires its key personnel to execute confidentiality agreements and relies on a combination of copyrights and trademarks to protect certain of Signal’s intellectual property.

Government Regulation

All of Signal’s operations are subject to compliance with regulatory requirements of federal, state and municipal authorities, including regulations concerning employment obligations and affirmative action, workplace safety and protection of the environment. While compliance with applicable regulations has not adversely affected Signal’s operations in the past, there can be no assurance that Signal will continue to be in compliance in the future or that these regulations will not change.

In particular, Signal must comply with detailed government procurement and contracting regulations and with United States government security regulations, certain of which carry substantial penalty provisions for non-performance or misrepresentation in the course of negotiations. Failure to comply with government procurement, contracting or security obligations could result in penalties or suspension from government contracting, which would have a material adverse effect on the Company’s results of operations.

Signal is required to maintain a United States government facility security clearance at each of its locations. This clearance could be suspended or revoked if found not to be in compliance with applicable security regulations. Any such revocation or suspension would delay delivery of Signal’s products to customers. Although Signal has adopted policies directed at ensuring compliance with applicable regulations and there have been no suspensions or revocations of any of the Company’s facilities, there can be no assurance that the approved status of Signal’s facilities will continue without interruption. United States government regulations require a license for the export of advanced weapons systems. Changes in the United States government policies towards the export of these systems may impact Signal’s international business.

Item 2. Properties

Signal’s principal executive offices are located in Danvers, Massachusetts. Principal operating facilities, containing light manufacturing and associated engineering and support services, are located in five states:

Arizona

•

Signal owns a modern 84,260 square foot building in Chandler.

California

	•		Signal leases a modern 54,280 square foot building in Sunnyvale.
	•		The lease does not include utilities, maintenance and repairs, insurance and real estate taxes of approximately $9.00 per square foot.
	•		The lease expires in November 2003.
	•		The current annual rent is $727,897.

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Florida

•

Signal owns a modern 68,000 square foot building in Fort Walton Beach.

Massachusetts

•

Signal owns a modern 40,350 square foot building in Beverly.

Texas

	•		Signal leases a modern 4,197 square foot office in Plano.
	•		The lease does not include insurance or electricity exceeding $1.75 per square foot.
	•		The lease expires in September 2005.
	•		The current annual rent is $81,842 with an escalation of 2.6% for the last two years of the lease.

The Company believes that its properties are in good operating condition and repair and considers its facilities to be suitable and adequate for current and reasonably foreseeable future activities. The Company believes that there is capacity at its facilities to absorb acquired businesses of a certain size and product lines and/or internal growth. The properties owned are all subject to mortgages. During 2001, the Company consolidated the operations that occupied its Webster, MA building into its Beverly, MA facility and the 25,000 square foot building the Company owns in Webster, MA is idle and for sale.

Item 3. Legal Proceedings

From time to time, the Company is involved in litigation incidental to its business. Ongoing legal proceedings include the following:

Weymouth Environmental Contamination:

In April 1996, the Company sold its manufacturing facility in Weymouth, MA but retained the environmental liability and responsibility associated with groundwater contaminants present at and associated with the site. This site has been classified as a Tier 1A disposal site by the Massachusetts Department of Environmental Protection, or DEP, as a result of past releases of petroleum based solvents. Environmental assessment reports prepared by independent consultants indicate that contaminants present in the Town of Weymouth well field across the street from the facility are similar to those reportedly released at the site and still present in the groundwater at the site; however, these reports also indicate that the contaminants do not exceed safe drinking water levels in the finished water after normal treatment. Other contaminants, which did not originate at the facility, have also been detected in the well field.

In accordance with the applicable provisions of the Massachusetts Contingency Plan, the Company has completed its investigation of the site and has submitted an evaluation of remedial alternatives to the DEP. The recommended remedial alternative involves continued operation of the currently operating groundwater remediation system, with the addition of a supplemental well and wellhead treatment at Weymouth Winter Street Well No. 2 through an agreement with the Town of Weymouth. The Company has been informed that no recovery of costs incurred in the treatment of the groundwater at the facility is possible under existing insurance arrangements. No agreement with the Town of Weymouth relative to wellhead treatment has been reached. It is not possible at this stage of the proceedings to predict whether the DEP will approve the recommended alternative and, if not, the specific remedial actions, if any, that it will require.

Sunnyvale Indemnification Claim:

Eaton Corporation filed a suit against Signal in U.S. District Court, Northern District of California, alleging that the Company has a contractual duty to indemnify Eaton Corporation for costs incurred as a result of environmental contamination and subsequent remediation. The claim is based upon allegations that the Company assumed certain liabilities when it acquired one of the divisions of Eaton Corporation in 1989. The indemnification claim was dismissed at the trial level, but the Ninth Circuit of the U.S. Court of Appeals reversed this decision and found that Signal does owe Eaton a duty of indemnification. In December 2000, the decision by a jury was in favor of an indemnification claim by Eaton and Eaton was awarded a judgment of $4.2 million, related to environmental liabilities assumed by the Company when it purchased Eaton’s Microwave Products division in 1989. On March 7, 2001, the U.S. District Court ruled on various motions pending before it, including denying our motion for a new trial and denying certain of Eaton’s motions. The U.S. District Court amended the judgment to increase it to an aggregate of $7.0 million and clarified that Signal is responsible for fifty percent of the reasonable costs and expenses of remediation. At December 31, 2000, the Company recorded liabilities of $9.0 million for anticipated costs including the judgment, legal and consulting fees, site studies, implementation of remediation plans, post-remediation monitoring and related activities to be performed during the next 20 years. Cash deposits of $7.0 million were made during the first nine months of 2001 with the Clerk, United States District Court by order of the United States District Court for the Northern District of California. Recorded liabilities have been reduced by the cash deposits described above and are $2.0 million at December 31, 2002. On April 26, 2001, the U.S. District Court denied Signal’s motion to reopen the amended judgment and to amend our answer and counterclaim. The Company appealed the amended judgment on May 24, 2001. By Order filed November 26, 2002, the United States Court of Appeals denied Signal’s Appeal and Eaton’s Cross-Appeal. The judgment of the United States District Court was affirmed. By Order filed January 6, 2003, the United States Court of Appeals denied Signal’s Petition for Panel Rehearing filed on December 10, 2002. On January 27, 2003, the United States Court of Appeals forwarded a Certified copy of the Decree of the Court to the United States District Court, reaffirming the order filed and entered on November 26, 2002.

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SEC Proceedings:

On March 27, 2002, the Securities and Exchange Commission (the “SEC”), with the consent of the Company, entered an order requiring that Signal cease and desist from committing or causing any violations and any future violations of the periodic reporting, record keeping, and internal control provisions of the federal securities laws set forth in Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, and 13a-13 promulgated thereunder, related to the SEC’s completed investigation of the Company’s financial statements for 1996, 1997 and the first quarter of 1998.

In connection with the above matter, the SEC has filed a civil injunctive action against several former officers, directors, and employees of the Company. Some of these individuals are seeking reimbursement or payment of certain costs or damages allegedly incurred as a result of the SEC investigation or ensuing civil proceeding.

Claims Related to Signal Wireless Group:

In mid-September 2002, Richardson Electronics, Ltd., a supplier, issued to Signal for the first time an invoice for $2.0 million allegedly owed for orders going back approximately 18 months. The Company informed Richardson that these were blanket purchase orders requiring subsequent releases, which were never issued, and that all of these orders were either cancelled or put on hold. On December 20, 2002, Richardson filed a breach of contract action against Signal in the United States District Court for the Northern District of Illinois (the Federal Case). On February 14, 2003, Signal filed motions in the Federal Case seeking to dismiss the complaint based on lack of subject matter jurisdiction, lack of personal jurisdiction and improper venue. On the same date, Signal commenced an action (the Massachusetts State Action) in the Massachusetts Essex County Superior Court (Signal Technology Corporation vs. Richardson Electronics, Ltd., No. 3-0335) seeking a declaratory judgment of the relative rights of the parties. Richardson subsequently withdrew its Federal Case and filed a new complaint on March 4, 2003 (the Illinois State Action) in the Circuit Court of Cook County, Illinois (Richardson Electronics, Ltd. vs. Signal Technologies [sic] Corporation, No. 03 L 002661) seeking damages in excess of $1.75 million. Both the Massachusetts State Action and the Illinois State Action are pending. In management’s opinion, the Company does not have any liability to this supplier.

In mid-October 2002, Northrop Grumman stated that certain milestones related to the Company’s technology license and manufacturing agreement with Northrop Grumman had been reached and that the Company was obligated to issue Northrop Grumman an additional 300,776 shares. The Company informed Northrop Grumman that it believed that under the terms of such agreement, no additional shares were then due to be issued and no such shares would become due to be issued to Northrop Grumman because such milestones had not been and would not be achieved. On March 20, 2003, the Company entered into a settlement agreement with Northrop Grumman, whereby all controversies regarding this matter would be settled and the technology license and manufacturing agreement would be terminated upon the Company buying back the 300,776 shares of stock held by Northrop Grumman at an agreed price of $12.00 per share, which occurred on March 26, 2003. As further stipulated by the settlement agreement, if at any time on or before February 29, 2004, the Company should sell shares of its common stock in a transaction or series of related transactions in which the aggregate gross proceeds to the Company equal at least $10 million and at which the price per share of common stock is greater than $12.00 per share, or if the Company should merge or consolidate with or into another corporation, which results in the exchange of outstanding shares of the Company’s common stock for securities or other consideration issued or paid by such other corporation, then the Company will pay to Northrop Grumman in cash, an amount per share equal to the difference between $12.00 per share and the per share value of the consideration received in such transaction.

In-mid October 2002, Vitesse sent the Company an invoice for approximately $1.2 million, in connection with the Company’s manufacturing supply agreement with Vitesse. The Company informed Vitesse that it believed, that under the terms of such agreement, no payment was then due and no further payment would become due to Vitesse because the requirements set forth in such agreement had not been and would not become fulfilled. On March 19, 2003, the Company entered into a settlement agreement with Vitesse, whereby all controversies regarding this matter would be settled and the manufacturing supply agreement would be terminated upon the Company buying back 500,000 outstanding Company warrants held by Vitesse at an agreed upon price of $3.00 per warrant, which occurred on March 19, 2003. As further stipulated by the settlement agreement, if, at any time on or before January 31, 2004, the Company should sell shares of its common stock in a transaction or series of related transactions in which the aggregate gross proceeds to the Company equals at least $10 million and at which the price per share of common stock is greater than $12.29 per share, or the Company should merge or consolidate with or into another corporation, which results in the exchange of outstanding shares of Signal’s common stock for securities or other consideration issued or paid by such other corporation, then as part of either of such transactions referred to, the Company will pay, in cash, an amount equal to the difference between $12.29 and the per share value of the consideration received in such transaction.

Item 4. Submission of Matters to a Vote of Security Holders

None

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Part II

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Signal’s common stock is traded on the Nasdaq National Market under the symbol “STCO”. The following table sets forth, for the periods indicated, the high and low closing prices per share of the Company’s common stock as reported in the Nasdaq National Market.

On March 21, 2003 the last reported sale price of the Company’s common stock as reported on the Nasdaq National Market was $10.20 per share. As of March 21, 2003 there were approximately 77 stockholders of record of the common stock.

Signal has never paid cash dividends on its common stock. The Company anticipates retaining all available funds for use in operations and expansion of its business and does not anticipate paying any cash dividends in the foreseeable future.

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Item 6. Selected Consolidated Financial Data

The following selected consolidated financial data should be read in conjunction with Signal’s audited consolidated financial statements and related notes thereto and with Management’s Discussion and Analysis of Financial Condition and Results of Operations, which are included elsewhere in the Form 10-K.