-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qEvTXmALuCz/4saLB7szealGI+aeeXeZzQbAAXkoVZE5u+6yaPCXNMPEf9oJaJ5w IO2LRZnCdr/Y6Sbh4erapQ== 0000027116-95-000006.txt : 19950807 0000027116-95-000006.hdr.sgml : 19950807 ACCESSION NUMBER: 0000027116-95-000006 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950802 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATRON SYSTEMS INC/DE CENTRAL INDEX KEY: 0000027116 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 952582922 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07445 FILM NUMBER: 95558319 BUSINESS ADDRESS: STREET 1: 304 ENTERPRISE ST CITY: ESCONDIDO STATE: CA ZIP: 92029 BUSINESS PHONE: 6197473734 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1995 [ ] 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 0-7445 DATRON SYSTEMS INCORPORATED (Exact name of registrant as specified in its charter) Delaware 95-2582922 (State or other jurisdiction (I.R.S. Employer Identification No) of incorporation or organization) 304 Enterprise Street, Escondido, California 92029-1297 (Address of principal executive offices) (zip code) (619) 747-3734 (Registrant's telephone number, including area code) _______________________________________________________________ (Former name, former address and formal fiscal year, if changed since last report) 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. [ X ] Yes [ ] No APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. [ ] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. As of July 26, 1995, the Registrant had only one class of common stock, par value $0.01, of which there were 2,596,222 shares outstanding. 1 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements.
DATRON SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS (In Thousands) June 30, 1995 March 31, (Unaudited) 1995 ----------- --------- ASSETS Current assets: Cash and cash equivalents $894 $3,510 Accounts receivable, net 21,644 17,611 Inventories 9,348 10,001 Deferred income taxes 2,579 2,579 Prepaid expenses and other current assets 529 635 ------- ------- Total current assets 34,994 34,336 Property, plant and equipment, net 14,039 14,155 Goodwill, net 6,915 6,977 Other assets 462 476 ------- -------- Total assets $56,410 $55,944 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $7,023 $8,909 Accrued expenses 4,529 5,740 Customer advances 2,641 2,457 Income taxes payable 2,101 2,551 Current portion of restructuring reserve 438 438 ------ ------- Total current liabilities 16,732 20,095 Long-term debt 3,400 -- Restructuring reserve 2,049 2,144 Deferred income taxes 817 817 Other liabilities 51 23 ------ ------ Total liabilities 23,049 23,079 ------ ------ Stockholders' equity: Preferred stock -- par value $0.01; authorized 2,000,000 shares, none issued or outstanding --- --- Common stock -- par value $0.01; authorized 10,000,000 shares, 3,063,937 shares issued in June and March 31 31 Additional paid-in capital 10,466 10,587 Retained earnings 25,805 25,390 Treasury stock, at cost; 467,715 and 504,314 shares in June and March, respectively (2,697) (2,979) Stock option plan and stock purchase plan notes receivable (244) (164) ------- ------- Total stockholders' equity 33,361 32,865 ------- ------- Total liabilities and stockholders' equity $56,410 $55,944 ======= ======= See notes to consolidated financial statements.
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DATRON SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per-share amounts) Three Months Ended June 30, 1995 1994 ------- ------- Net sales $14,356 $12,132 Cost of sales 8,996 7,992 ------- ------- Gross profit 5,360 4,140 Selling, general and admin. 3,694 3,141 Research and development 995 334 ------ ------- Operating income 671 665 Interest expense (15) (37) Interest income 13 13 ------- ------- Income before income taxes 669 641 Income taxes 254 248 ------- ------- Net income $415 $393 ======= ======= Net income per share $0.16 $0.15 ======= ======= Weighted average number of common and common equivalent shares outstanding 2,648 2,583 ======= ======= See notes to consolidated financial statements.
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DATRON SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Three Months Ended June 30, 1995 1994 ------ ------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $415 $393 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 713 497 Restructuring (95) (241) Changes in operating assets and liabilities: Accounts receivable (4,033) 1,816 Inventories 653 (2,304) Deferred income taxes --- 160 Prepaid expenses and other assets 101 (485) Accounts payable and accrued expenses (3,097) 180 Customer advances 184 (1,696) Income taxes payable (450) (156) Other liabilities 28 (400) ------- ------- Net cash used in operating activities (5,581) (2,236) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (516) (870) ------- -------- Net cash used in investing activities (516) (870) ------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Increase in long-term debt 3,400 1,200 Stock options exercised 212 110 Purchase of treasury stock (51) --- Payment advanced against stock option plan note receivable (80) --- ------- ------- Net cash provided by financing activities 3,481 1,310 ------- ------- DECREASE IN CASH AND CASH EQUIVALENTS (2,616) (1,796) Cash and cash equivalents at beginning of period 3,510 1,955 ------ ------- Cash and cash equivalents at end of period $894 $159 ====== ======= See notes to consolidated financial statements.
4 Datron Systems Incorporated Notes to Consolidated Financial Statements (Unaudited) 1. Basis of Presentation The unaudited consolidated financial statements included herein contain the accounts of Datron Systems Incorporated and its wholly owned subsidiaries (the "Company") and have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. It is suggested that these financial statements be read in connection with the financial statements and notes thereto included in the Company's annual report on Form 10-K for the fiscal year ended March 31, 1995. In the opinion of the Company, the accompanying unaudited financial statements contain all adjustments, consisting only of normal recurring adjustments, unless otherwise stated, which are necessary to present fairly its financial position at June 30, 1995 and the results of its operations and its cash flows for the periods presented. Results of operations for the periods presented herein are not necessarily indicative of what results will be for the entire fiscal year. The balance sheet at March 31, 1995 has been derived from audited financial statements. 2. Income per Share Shares used in computing income per share include the weighted average of common stock outstanding plus equivalent shares issuable under the Company's stock option plan. 3. Accounts Receivable At June 30, 1995 and March 31, 1995, accounts receivable were as follows: June 30, March 31, 1995 1995 --------- ----------- Billed $12,004,000 $ 7,363,000 Unbilled 9,812,000 10,495,000 ----------- ----------- Subtotal 21,816,000 17,858,000 Allowance for doubtful accounts (172,000) (247,000) ----------- ----------- Total $21,644,000 $17,611,000 =========== =========== 4. Inventories At June 30, 1995 and March 31, 1995, inventories were as follows: June 30, March 31, 1995 1995 ---------- ---------- Raw materials $4,021,000 $ 4,038,000 Work-in-process 3,832,000 3,779,000 Finished goods 1,495,000 2,184,000 ---------- ----------- Total $9,348,000 $10,001,000 ========== =========== 5 5. Property, Plant and Equipment At June 30, 1995 and March 31, 1995, property, plant and equipment was as follows: June 30, March 31, 1995 1995 ---------- ---------- Land and buildings $8,441,000 $ 8,406,000 Leasehold improvements 733,000 706,000 Machinery and equipment 11,943,000 11,627,000 Furniture and office equipment 1,450,000 1,365,000 Construction-in-process 456,000 404,000 ---------- ---------- Subtotal 23,023,000 22,508,000 Accumulated depreciation and amortization (8,984,000) (8,353,000) ----------- ----------- Total $14,039,000 $14,155,000 =========== =========== Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Datron Systems Incorporated and its wholly owned subsidiaries (the "Company") reports operations in two business segments: Communication Products and Services (formerly called the Radio Communication Products business segment), and Antenna and Imaging Systems (formerly called the Antenna and Satellite Communication Systems business segment). The Communication Products and Services business segment designs, manufactures and distributes high frequency and very high frequency radios and accessories. It recently introduced private international telephone service and began carrying satellite paging traffic. The Antenna and Imaging Systems business segment designs and manufactures specialized satellite communication systems, subsystems and antennas, and provides ground station hardware, software and image processing systems for the remote sensing market. Results of Operations Net income for the first quarter of fiscal 1996 was $415,000 or $0.16 per share compared with net income of $393,000 or $0.15 per share in the first quarter of fiscal 1995, an increase of 6%. Net sales in the first quarter of fiscal 1996 were $14,356,000, an 18% increase over first quarter sales last fiscal year of $12,132,000. The increase in sales was primarily due to sales of remote sensing products by the Company's International Imaging Systems division, which was acquired in August 1994. The increase in net income was lower than the increase in sales because of a significant increase in research and development expenditures in the recent quarter, most of which related to expanded development programs for Direct Broadcast Satellite (DBS) TV antennas and remote sensing. 6 Operating results for each business segment were as follows: Communication Products and Services Three Months Ended June 30, 1995 1994 ---------- ---------- Net sales $5,078,000 $4,484,000 =========== ========== Gross profit $1,576,000 $1,749,000 =========== ========== Operating income $ 198,000 $ 260,000 =========== ========== Sales of Communication Products and Services increased 13% in the first quarter of fiscal 1996 compared with the first quarter of fiscal 1995. The increase resulted from improved sales of standard radio products. Gross profit percentage on sales of Communication Products and Services was 31.0% in the first quarter of fiscal 1996 compared with 39.0% in the first quarter last fiscal year. The decrease was primarily due to a less favorable sales mix of products and services in the recent quarter and to higher overhead costs. Operating income percentage from sales of Communication Products and Services was 3.9% in the first quarter of fiscal 1996 compared with 5.8% in the first quarter last fiscal year. The decrease resulted primarily from lower gross profits and higher international selling expenses. This segment is developing new markets for its communication systems and services. That activity, which is expected to continue for the next few quarters, requires initial expenditures that do not result in immediate sales and accordingly reduce operating income. As a result, operating income percentages for the next few quarters will likely be lower than they were for comparable periods last fiscal year. Antenna and Imaging Systems Three Months Ended June 30, 1995 1994 --------- --------- Net sales $9,278,000 $7,648,000 =========== ========== Gross profit $3,784,000 $2,391,000 =========== ========== Operating income $ 855,000 $ 851,000 =========== ========== Sales of Antenna and Imaging Systems products increased 21% in the first quarter of fiscal 1996 compared with the first quarter of fiscal 1995. The increase was primarily due to sales of remote sensing image processing products by this segment's International Imaging Systems division, which was acquired in August 1994. Gross profit percentage on sales of Antenna and Imaging Systems products was 40.8% in the first quarter of fiscal 1996 compared with 31.3% in the first quarter last fiscal year. The increase was primarily due to lower manufacturing costs associated with a more favorable mix of profitable contracts. Operating income percentage from sales of Antenna and Imaging Systems products was 9.2% in the first quarter of fiscal 1996 compared with 11.1% in the first quarter last fiscal year. The decrease resulted from higher research and development expenditures and from higher international selling expenses associated with the products of International Imaging Systems, partially offset by higher gross profits. 7 Consolidated expenses were as follows: Selling, general and administrative expenses were $3,694,000 in the first quarter of fiscal 1996, an 18% increase compared with first quarter of fiscal 1995 expenses of $3,141,000. The increase was primarily due to higher selling expenses associated with the Company's focus on international markets in both segments of its business and to selling expenses associated with the products of International Imaging Systems. Research and development expenses were $995,000 in the first quarter of fiscal 1996 compared with $334,000 in the first quarter last fiscal year. The 198% increase resulted from an acceleration of development programs for DBS TV antennas for commercial aviation, recreational vehicles and long-haul trucks, and for remote sensing services to the agricultural community. The Company believes the markets for these new products and services are nearing the commercialization stage. Order backlog at June 30 was as follows: 1995 1994 ---------- ---------- Communication Products and Services $ 5,877,000 $ 8,381,000 Antenna and Imaging Systems 22,466,000 37,997,000 ----------- ----------- Total $28,343,000 $46,378,000 =========== =========== The 30% decrease in Communication Products and Services backlog and the 41% decrease in Antenna and Imaging Systems backlog at June 30, 1995 resulted primarily from continued delays in receipt of several anticipated international orders for communication products and remote sensing systems. One of those delayed orders, an $8.8 million remote sensing satellite image processing facility for use in the Middle East, was received in July 1995. Liquidity and Capital Resources At June 30, 1995, working capital was $18,262,000 compared with $14,241,000 at March 31, 1995, an increase of $4,021,000 or 28%. Major changes affecting working capital during this period were the following: accounts receivable increased $4,033,000 due to strong June sales and slower collections; inventories decreased $653,000 in response to lower than expected new order bookings; and accounts payable and accrued expenses decreased $3,097,000 as payments were made for expenses associated with large fourth quarter fiscal 1995 sales. As a result of these changes, cash decreased $2,616,000 and the Company borrowed $3,400,000 from its bank to meet the additional cash requirement. Capital equipment expenditures were $516,000 during the first three months of fiscal 1996 compared with $870,000 in the first three months last fiscal year. The decrease was primarily due to lower purchases of equipment for the Communication Products and Services business segment. At June 30, 1995, the Company had a $23,535,000 revolving line of credit with its bank that contains a $15,000,000 credit limit for the issuance of letters of credit and an $8,535,000 credit limit for direct working capital advances. The Company believes that its existing working capital, anticipated future cash flows from operations and available credit with its bank are sufficient to finance presently planned capital and working capital requirements. 8 PART II -- OTHER INFORMATION Item 2. Changes in Securities. Pursuant to a business loan agreement with a bank, the Company must comply with certain financial covenants. The agreement also prohibits the Company from declaration or payment of dividends or other distributions on the Company's stock, except under certain conditions specified in the agreement. The Company is in compliance with both requirements. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: None (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter. 9 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. DATRON SYSTEMS INCORPORATED Date: August 2, 1995 By: /s/ WILLIAM L. STEPHAN William L. Stephan Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAR-31-1996 JUN-30-1995 894 0 21,816 172 9,348 34,994 23,023 8,984 56,410 16,732 0 31 0 0 33,330 56,410 14,356 14,369 8,996 8,996 4,689 0 15 669 254 415 0 0 0 415 0.16 0.16
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