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SEC Filings
10-Q
ARGON ST, INC. filed this Form 10-Q on 06/13/1995
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month periods ended April 30, 1995 as compared to the same periods of fiscal
1994 due to the low level of standard product orders in the Company's backlog
at the beginning of fiscal 1995 and the low level of standard product orders
received in the first nine months of fiscal 1995.  Standard product margins
decreased significantly due to the lack of any major standard product
contracts in fiscal 1995.  Approximately $795,000 of standard product revenue
and $233,000 of standard product cost of revenue during the first nine months
of fiscal 1994 were related to the Defaulted Contract.  See "Business
Development - New Orders and Backlog" for a further discussion of this
contract.  Standard product contracts generally have a much higher margin than
product development contracts.  Therefore, it is a goal of Management to
increase the percentage of revenue derived from standard product contracts. 
Another goal of management is to develop new products that will reduce the
fluctuations in standard product revenue between periods while increasing the
Company's profits.  See "Business Development - Growth Plan".

       Customer-funded product development revenue generated 83% and 84% of
operating revenue during the nine and three month periods ended April 30,
1995, respectively, as compared to 59% and 52% of operating revenue during the
comparable periods of fiscal 1994, respectively, but declined overall by 33%
in the first nine months of fiscal 1995 due to the low level of backlog at the
beginning of the fiscal year and the low level of product development orders
received in the first nine months of fiscal 1995.  Customer-funded product
development revenue increased by 26% in the third quarter of fiscal 1995 as
compared to the comparable period of fiscal 1994 as  the low level of standard
product workload allowed the Company to focus additional resources on
customer-funded product development contracts.  Margins during such periods in
fiscal 1995 improved over the comparable periods in fiscal 1994 due to cost
overruns on the development of MIVIS and its related image processing system
in fiscal 1994.  The customer-funded product development contract for the
development of MIVIS accounted for approximately 19% and 3% of operating
revenue for the nine and three month periods ended April 30, 1994,
respectively.  This contract was completed in fiscal 1994 and therefore did
not generate any revenue in fiscal 1995.  

Domestic vs. International Sales and Revenue

       International revenue accounted for 14% and 54% of operating revenue
during the first nine months fiscal 1995 and 1994, respectively, while
generating 20% and 43% of operating revenue during the third quarters of
fiscal 1995 and 1994, respectively.  Had the Company not recognized revenue on
the Defaulted Contract in the nine and three month periods ended April 30,
1994, international customers would have accounted for approximately 35% and
8% of operating revenue in the nine and three month periods ended April 30,
1994, respectively.  Historically, the majority of the product development
projects received by the Company have been received from domestic customers,
and the majority of major standard product contracts have been received from
international customers.  For this reason, the level of international sales
tends to mirror the level of standard product revenue.  Management is hopeful
that the international market will be a major source of revenue in the
remainder of fiscal 1995 and future years.  See "Business Development - New
Orders and Backlog".  

       To insure against foreign currency transaction losses, international
contracts are denominated in U.S. dollars and large standard product contracts
are generally secured by irrevocable letters of credit.  The Company also
receives substantial deposits on many large contracts with international
customers.  Many such deposits are backed up by standby letters of credit
issued by the Company. 




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