-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SMnj33BYoX0+OTg+EGHBahd07gjla5IAoaHjOyK+PZv6/aUVXrYvs9K2voghHNjZ t/ziOEMeYPBwYdqYEXfttQ== 0000027116-95-000007.txt : 19951106 0000027116-95-000007.hdr.sgml : 19951106 ACCESSION NUMBER: 0000027116-95-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951101 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: 95586550 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 September 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 October 30, 1995, the Registrant had only one class of common stock, par value $0.01, of which there were 2,597,542 shares outstanding. 1 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements.
DATRON SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS (In Thousands) Sept 30, March 31 1995 1995 -------- -------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $110 $3,510 Accounts receivable, net 21,739 17,611 Inventories 11,287 10,001 Deferred income taxes 2,579 2,579 Prepaid expenses and other current assets 476 635 -------- -------- Total current assets 36,191 34,336 Property, plant and equipment, net 13,730 14,155 Goodwill, net 6,855 6,977 Other assets 441 476 -------- -------- Total assets $57,217 $55,944 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $8,855 $8,909 Accrued expenses 4,989 5,740 Customer advances 2,162 2,457 Income taxes payable 2,554 2,551 Current portion of restructuring reserve 438 438 -------- -------- Total current liabilities 18,998 20,095 Long-term debt 1,200 --- Restructuring reserve 1,949 2,144 Deferred income taxes 817 817 Other liabilities 45 23 -------- -------- Total liabilities 23,009 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 September and March 31 31 Additional paid-in capital 10,463 10,587 Retained earnings 26,645 25,390 Treasury stock, at cost; 466,395 and 504,314 shares in September and March, respectively (2,687) (2,979) Stock option plan and stock purchase plan notes rec (244) (164) -------- -------- Total stockholders' equity 34,208 32,865 -------- -------- Total liabilities and stockholders' equity $57,217 $55,944 ======== ======== See notes to consolidated financial statements.
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DATRON SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Six Months Ended September 30, 1995 1994 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $1,255 $1,166 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 1,445 1,061 Restructuring (195) (408) Changes in operating assets and liabilities: Accounts receivable (4,128) (1,610) Inventories (1,286) (3,279) Deferred income taxes --- 160 Prepaid expenses and other assets 158 203 Accounts payable and accrued expenses (805) 2,321 Customer advances (295) (3,057) Income taxes payable 3 247 Other liabilities 22 (425) --------- --------- Net cash used in operating activities (3,826) (3,621) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (862) (1,534) Acquisition of business --- (415) --------- --------- Net cash used in investing activities (862) (1,949) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Increase in long-term debt 1,200 4,500 Stock options exercised 219 110 Purchase of treasury stock (51) --- Payment advanced against stock option plan note receivable (80) --- --------- --------- Net cash provided by financing activities 1,288 4,610 --------- --------- DECREASE IN CASH AND CASH EQUIVALENTS (3,400) (960) Cash and cash equivalents at beginning of period 3,510 1,955 --------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $110 $995 ========= ========= 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 Six Months Ended September 30, September 30, 1995 1994 1995 1994 ------------------ ------------------ Net sales $17,445 $16,088 $31,801 $28,220 Cost of sales 11,559 11,477 20,555 19,469 ------------------ ------------------ Gross profit 5,886 4,611 11,246 8,751 Selling, general and admin. 3,809 2,934 7,503 6,075 Research and development 704 369 1,699 703 ------------------ ------------------ Operating income 1,373 1,308 2,044 1,973 Interest expense (21) (64) (36) (101) Interest income 6 (1) 19 12 ------------------ ------------------ Income before income taxes 1,358 1,243 2,027 1,884 Income taxes 518 470 772 718 ------------------ ------------------ Net income $840 $773 $1,255 $1,166 ================== ================== Net income per share $0.32 $0.30 $0.47 $0.45 ================== ================== Weighted average number of common and common equivalent shares outstanding 2,663 2,594 2,656 2,588 ================== ================== 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 September 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 September 30, 1995 and March 31, 1995, accounts receivable were as follows: September 30, March 31, 1995 1995 ------------ ----------- Billed $11,869,000 $ 7,363,000 Unbilled 10,042,000 10,495,000 ------------ ----------- Subtotal 21,911,000 17,858,000 Allowance for doubtful accounts (172,000) (247,000) ----------- ----------- Total $21,739,000 $17,611,000 =========== =========== 4. Inventories At September 30, 1995 and March 31, 1995, inventories were as follows: September 30, March 31, 1995 1995 ------------ ----------- Raw materials $5,266,000 $ 4,038,000 Work-in-process 5,092,000 3,779,000 Finished goods 929,000 2,184,000 ------------ ----------- Total $11,287,000 $10,001,000 ============ =========== 5 5. Property, Plant and Equipment At September 30, 1995 and March 31, 1995, property, plant and equipment was as follows: September 30, March 31, 1995 1995 ------------ ---------- Land and buildings $8,443,000 $ 8,406,000 Leasehold improvements 761,000 706,000 Machinery and equipment 12,139,000 11,627,000 Furniture and office equipment 1,464,000 1,365,000 Construction-in-process 537,000 404,000 ---------- ---------- Subtotal 23,344,000 22,508,000 Accumulated depreciation and amortization (9,614,000) (8,353,000) ---------- ---------- Total $13,730,000 $14,155,000 ========== ========== 6. Long-Term Debt On August 17, 1995, the Company increased the limit of its revolving credit line with its bank to $26,535,000, comprised of $18,000,000 for the issuance of letters of credit and $8,535,000 for direct working capital advances. Maturity of the credit line was extended to December 31, 1997 and interest payable on borrowings under the line of credit was reduced to the bank's prime rate plus 0.50% or to LIBOR plus 1.50%, at the option of the Company. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Datron Systems Incorporated and its wholly owned subsidiaries (the "Company") report 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. 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 second quarter of fiscal 1996 increased 9% to $840,000 or $0.32 per share compared with net income of $773,000 or $0.30 per share in the second quarter of fiscal 1995. Net sales in the second quarter of fiscal 1996 were $17,445,000, an 8% increase from net sales of $16,088,000 in the second quarter last fiscal year. The increase in sales was primarily due to higher sales of radio products. The increase in net income resulted from higher gross profits on the higher sales, partially offset by increased selling expenses and research and development expenses. 6 Net income for the six months ended September 30, 1995 increased 8% to $1,255,000 or $0.47 per share, compared with net income of $1,166,000 or $0.45 per share for the comparable period last fiscal year. Net sales for the six months were $31,801,000, a 13% increase from net sales of $28,220,000 for the first six months last fiscal year. The increase in sales was primarily due to higher sales of radio products and 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 resulted from higher gross profits on the higher sales, partially offset by increased selling expenses and research and development expenses. Operating results for each business segment were as follows: Communication Products and Services
Three Months Ended Six Months Ended September 30, September 30, 1995 1994 1995 1994 --------- --------- ---------- ---------- Net sales $7,926,000 $5,657,000 $13,004,000 $10,141,000 ========= ========= ========== ========== Gross profit $2,582,000 $1,731,000 $4,158,000 $3,480,000 ========= ========= ========= ========= Operating income $808,000 $811,000 $1,006,000 $1,071,000 ========= ========= ========= =========
Sales of Communication Products and Services in the second quarter and in the first six months of fiscal 1996 were 40% higher and 28% higher, respectively, than they were in the comparable periods of fiscal 1995. Sales were higher because of a faster turn around of new order bookings for standard radio products. Gross profit on sales of Communication Products and Services was 32.6% in the second quarter of fiscal 1996 compared with 30.6% in the second quarter last fiscal year. The increase in the recent quarter was primarily due to a reclassification of certain overhead expenses that occurred in the second quarter of fiscal 1995 and which resulted in lower gross profits that quarter. Gross profit for the first six months of fiscal 1996 was 32.0% of sales compared with 34.3% of sales for the first six months of fiscal 1995. The decrease was primarily due to a less favorable sales mix of products and services in the recent six months and to higher materials and overhead expenses. Operating income from sales of Communication Products and Services was 10.2% in the second quarter of fiscal 1996 compared with 14.3% in the second quarter last fiscal year. The decrease resulted primarily from higher international selling expenses and from higher administrative expenses related to the Company's decision not to continue pursuit of the satellite paging business. Operating income for the first six months of fiscal 1996 was 7.7% of sales compared with 10.6% of sales for the first six months of fiscal 1995. The decrease was primarily due to lower gross profits, higher international selling expenses and higher administrative expenses. Antenna and Imaging Systems
Three Months Ended Six Months Ended September 30, September 30, 1995 1994 1995 1994 --------- ---------- ---------- ---------- Net sales $9,519,000 $10,431,000 $18,797,000 $18,079,000 ========= ========== ========== ========== Gross profit $3,304,000 $2,880,000 $7,088,000 $5,271,000 ========= ========== ========== ========== Operating income $901,000 $827,000 $1,756,000 $1,678,000 ========= ========== ========== ==========
7 Sales of Antenna and Imaging Systems products decreased 9% in the second quarter of fiscal 1996 compared with the second quarter of fiscal 1995. The decrease was primarily due to delays in receipt of several anticipated orders for remote sensing satellite systems. Sales in the first six months of fiscal 1996 were 4% higher than in the first six months 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 on sales of Antenna and Imaging Systems products was 34.7% in the second quarter of fiscal 1996 compared with 27.6% in the second quarter last fiscal year. The increase was primarily due to lower manufacturing costs associated with a more favorable mix of profitable contracts. Gross profit for the first six months of fiscal 1996 was 37.7% of sales compared with 29.2% of sales for the first six months of fiscal 1995 for the same reason. Operating income from sales of Antenna and Imaging Systems products was 9.5% in the second quarter of fiscal 1996 compared with 7.9% in the second quarter last fiscal year. The increase resulted from higher gross profits, partially offset by higher research and development expenses and by higher international selling expenses. Operating income for the first six months of fiscal 1996 and the first six months fiscal 1995 was the same, 9.3% of sales. Higher gross profits in the first half of fiscal 1996 were offset by higher research and development expenses and by higher international selling expenses. Consolidated expenses were as follows: Selling, general and administrative expenses were $3,809,000 in the second quarter of fiscal 1996, a 30% increase compared with second quarter of fiscal 1995 expenses of $2,934,000. The increase was primarily due to higher selling expenses associated with the Company's focus on international markets in both segments of its business. Selling, general and administrative expenses for the first six months of fiscal 1996 were $7,503,000, a 24% increase from the first six months of fiscal 1995 expenses of $6,075,000 for the same reason. Research and development (R & D) expenses were $704,000 in the second quarter of fiscal 1996 compared with $369,000 in the second quarter last fiscal year. The 91% increase resulted from an acceleration of development programs for Direct Broadcast Satellite (DBS) television antennas for recreational vehicles, long-haul trucks and commercial aviation. R & D expenses in the first six months of fiscal 1996 were $1,699,000, a 142% increase from the first six months of fiscal 1995 expenses of $703,000. The Company has identified the DBS television market for the mobile user as a potential major new market for its products. R & D expenditures and new market development expenditures are likely to increase during the next several quarters as the Company seeks to establish a dominant position in that market. The Company estimates that the increased spending will lower fiscal 1996 net income from what it would otherwise have been without the pursuit of the DBS market by as much as $1,300,000 or approximately $0.50 per share. Order backlog at September 30 was as follows: 1995 1994 ---------- ---------- Communication Products and Services $12,658,000 $14,911,000 Antenna and Imaging Systems 26,206,000 37,417,000 ---------- ---------- Total $38,864,000 $52,328,000 ========== ========== 8 The 15% decrease in Communication Products and Services backlog at September 30, 1995 resulted primarily from a faster turn around of new order bookings to sales during the first six months of fiscal 1996 than for the comparable period in fiscal 1995. The 30% decrease in Antenna and Imaging Systems backlog at September 30, 1995 was primarily due to delays in receipt of several anticipated international orders for remote sensing systems and to a continued decline in U.S Department of Defense business. Liquidity and Capital Resources At September 30, 1995, working capital was $17,193,000 compared with $14,241,000 at March 31, 1995, an increase of $2,952,000 or 21%. Major changes affecting working capital during this period were the following: accounts receivable increased $4,128,000 due to strong September sales; inventories increased $1,286,000 to meet production requirements for new radio orders and for anticipated DBS antenna orders; and accounts payable and accrued expenses decreased $805,000. The Company borrowed $1,200,000 in term debt from its bank during the first six months to meet the resulting cash requirement. Capital equipment expenditures were $862,000 during the first six months of fiscal 1996 compared with $1,534,000 for the first six months last fiscal year. The decrease was primarily due to lower purchases of equipment for the Communication Products and Services business segment. On August 17, 1995, the Company increased the limit of its revolving credit line with its bank to $26,535,000, comprised of an $18,000,000 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. 9 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 4. Submission of Matters to a Vote of Security Holders. On August 15, 1995, the Company held its annual meeting of stockholders, proxies for which were solicited pursuant to Regulation 14 under the Act. All existing directors were re- elected. Also, the stockhholders approved the Company's 1995 Stock Option Plan with 1,331,008 votes cast in favor of approval and 451,660 votes cast against approval. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits: 10.50 Fifth Amendment to Credit Agreement and Note between the Registrant and Union Bank dated as of August 17, 1995. (b) Reports on Form 8-K: No reports on Form 8-K were filed during the quarter. 10 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: November 1, 1995 By: /s/ WILLIAM L. STEPHAN William L. Stephan Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) EX-10.50 2 FIFTH AMENDMENT TO CREDIT AGREEMENT AND NOTE DATED 08/17/95 FIFTH AMENDMENT TO CREDIT AGREEMENT AND NOTE THIS FIFTH AMENDMENT TO CREDIT AGREEMENT AND NOTE ("Fifth Amendment"), made and entered into as of the 17th day of August 1995, by and between DATRON SYSTEMS INCORPORATED, a Delaware corporation ("Company"), and UNION BANK, a California banking corporation ("Bank"), W I T N E S S E T H: WHEREAS, on May 11, 1994, the Company and the Bank entered into a certain Credit Agreement and Note (as amended by those certain First, Second, Third and Fourth Amendments to Credit Agreement and Note, dated as of October 26, 1994, December 29, 1994, February 28, 1995 and March 31, 1995, respectively, the "Credit Agreement") pursuant to which the Bank agreed to extend to the Company and the Company agreed to accept from the Bank certain credit facilities more particularly described therein; and WHEREAS, the Company and the Bank desire to amend the Credit Agreement (i) to extend the Facilities Termination Date through and including December 31, 1997, (ii) to increase availability under the Standby Facility from Fifteen Million Dollars ($15,000,000.00) to Eighteen Million Dollars ($18,000,000.00), (iii) to reduce the rate of interest payable with respect to Revolving Loans under the Revolving Loan Facility, and (iv) to provide for certain ancillary matters; NOW, THEREFORE, for and in consideration of the premises hereof, and other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. All capitalized terms used in this Fifth Amendment shall, unless otherwise defined herein or unless the context otherwise requires, have the meanings given thereto in the Credit Agreement. 2. Section 1.01 of the Credit Agreement is amended to read as follows: 1.01 Availability of the Facilities. Subject to the terms and conditions of this Agreement, the Bank shall, from time to time during the period commencing on the Fifth Amendment Effective Date and ending on December 31, 1997 (the "Facilities Termination Date"), advance to the Company such loans as the Company may request under the Revolving Loan Facility (individually a "Revolving Loan" and collectively the "Revolving Loans"), issue for the account of the Company such standby letters of credit as the Company may request under the Standby Facility (individually a "Standby L/C" and collectively the "Standby L/C's"), and issue for the account of the Company such commercial documentary letters of credit as the Company may request under the L/C Facility (individually a "Commercial L/C" and collectively the "Commercial L/C's"); provided, however, that: (a) The principal amount of all Revolving Loans shall not exceed Eight Million Five Hundred Thirty-five Thousand Dollars ($8,535,000.00) in the aggregate at any one time outstanding (the "Revolving Loan Commitment"); (b) Except as otherwise provided in Subsections 1.01(c), (d) and (e) hereof, the sum of: (i) the aggregate amount available to be drawn under all Standby L/C's; (ii) the aggregate amount of unpaid reimbursement obligations in respect of all drafts drawn under Standby L/C's (the sum of the aggregate amounts described in Subsection 1.01(b)(i) hereof and in this Subsection 1.01(b)(ii) being hereinafter referred to as "Standby L/C Utilization"); (iii) the aggregate amount available to be drawn under all Commercial L/C's; and (iv) the aggregate amount of unpaid reimbursement obligations in respect of all drafts drawn under Commercial L/C's (the sum of the aggregate amounts described in Subsection 1.01(b)(iii) hereof and in this Subsection 1.01(b)(iv) being hereinafter referred to as "Commercial L/C Utilization"); shall not exceed in the aggregate at any one time Eighteen Million Dollars ($18,000,000.00); (c) Commercial L/C Utilization shall not exceed in the aggregate at any one time the lesser of (i) Two Million Dollars ($2,000,000.00), or (ii) the difference between Eighteen Million Dollars ($18,000,000.00) and Standby L/C Utilization; (d) Standby L/C Utilization relating to Standby L/C's issued in favor of beneficiaries located in countries listed in Column B or Column C of Exhibit A hereto shall not exceed, as to all beneficiaries located in any given country listed in Column B or Column C of Exhibit A hereto, Three Million Five Hundred Thousand Dollars ($3,500,000.00) in the aggregate at any one time; and (e) Standby L/C Utilization relating to Standby L/C's issued in favor of beneficiaries located in countries listed in Column D of Exhibit A hereto (individually a "Column D Country" and collectively the "Column D Countries") shall not exceed in the aggregate at any one time (i) in the case of all beneficiaries located in any given Column D Country, Five Hundred Thousand Dollars ($500,000.00), and (ii) in the case of all beneficiaries located in all Column D Countries, the lesser of (A) Two Million Five Hundred Thousand Dollars ($2,500,000.00), or (B) the difference between (1) Eighteen Million Dollars ($18,000,000.00), and (2) the sum of (I) Standby L/C Utilization relating to Standby L/C's issued in favor of all beneficiaries located in all countries other than Column D Countries, and (II) Commercial L/C Utilization. Within the limits set forth above, and except as otherwise provided herein, the Company may utilize the Facilities, repay amounts owing thereunder, and reutilize the Facilities. 3. Subsection 1.02(d) of the Credit Agreement is amended to read as follows: (d) Revolving Loan Interest Rate Options. The Company shall pay interest on the unpaid principal amount of each Revolving Loan from the date of such loan (if such loan is made on or after the Fifth Amendment Effective Date), from the Fifth Amendment Effective Date (if such loan is a Reference Rate Revolving Loan made prior to the Fifth Amendment Effective Date), or from the first day of the first Interest Period for such loan which commences on or after the Fifth Amendment Effective Date (if such loan is a LIBOR Revolving Loan made prior to the Fifth Amendment Effective Date), until the maturity thereof (whether by acceleration or otherwise), at one of the following rates per annum: (i) Reference Rate Option - During such periods as such Revolving Loan is a Reference Rate Revolving Loan, a rate per annum equal to the Reference Rate plus one-half of one percent (1/2 of 1%), such rate to change from time to time as the Reference Rate shall change; or (ii) LIBO Rate Option - During such periods as such Revolving Loan is a LIBOR Revolving Loan, a rate per annum equal at all times during each Interest Period for such loan to the LIBO Rate for such Interest Period plus one and one-half percent (1-1/2%). Each Revolving Loan shall, at any given time prior to maturity, bear interest at one, and only one, of the above rates. 4. The first sentence of Subsection 1.05(c) of the Credit Agreement is amended to read as follows: All amounts due or to become due hereunder are secured by (i) a Security Agreement (Chattel Mortgage), dated April 21, 1994, executed by the Company, (ii) a Continuing Guaranty, dated August 1, 1995, executed by Datron/Transco Inc. ("D/T"), which Continuing Guaranty is in turn secured by (A) a Security Agreement (Chattel Mortgage), dated April 21, 1994, executed by D/T, and (B) a Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing, dated February 28, 1995, executed by D/T, as amended, and (iii) a Continuing Guaranty, dated August 1, 1995, executed by Datron World Communications Inc. (formerly known as Trans World Communications, Inc.) ("DWC"), which Continuing Guaranty is in turn secured by a Security Agreement (Chattel Mortgage), dated March 31, 1995, executed by DWC. 5. Section 7.01 of the Credit Agreement is amended by the addition thereto of the following definitions in proper alphabetic order: "Fifth Amendment" shall mean that certain Fifth Amendment to Credit Agreement and Note, dated as of August 17, 1995, by and between the Company and the Bank. "Fifth Amendment Effective Date" shall mean the date on which the Fifth Amendment becomes effective as provided in Paragraph 6 thereof. "First Amendment to Deed of Trust" shall have the meaning given to that term in Subparagraph 6(h) of the Fifth Amendment. 6. This Fifth Amendment shall become effective on the date on which the Bank shall have received the following: (a) This Fifth Amendment, duly executed by the Company; (b) A certificate of the Company's secretary or an assistant secretary, dated not later than the date of this Fifth Amendment, certifying the following documents, copies of which shall be attached to or incorporated in such certificate: (i) resolutions, adopted by the Company's Board of Directors and continuing in effect, which authorize the execution, delivery and performance by the Company of this Fifth Amendment and all other documents and instruments to be executed, delivered and performed by the Company in connection herewith; and (ii) all other documents evidencing additional corporate action and governmental or other approvals, if any, necessary for the execution, delivery and performance by the Company of this Fifth Amendment and all other documents and instruments to be executed, delivered and performed by the Company in connection herewith; (c) A certificate of the Company's secretary or an assistant secretary, dated not later than the date of this Fifth Amendment, certifying the incumbency and signatures of the officers of the Company authorized to execute, deliver and perform on behalf of the Company this Fifth Amendment and all other documents and instruments to be executed, delivered and performed by the Company in connection herewith; (d) A Continuing Guaranty on the Bank's standard form, dated not later than the date of this Fifth Amendment and duly executed by DWC; (e) A Judicial Reference Agreement on the Bank's standard form, dated not later than the date of this Fifth Amendment and duly executed by DWC; (f) A Continuing Guaranty on the Bank's standard form, dated not later than the date of this Fifth Amendment and duly executed by D/T; (g) A Judicial Reference Agreement on the Bank's standard form, dated not later than the date of this Fifth Amendment and duly executed by D/T; (h) A First Amendment to Deed of Trust, Assignment of rents, Security Agreement and Fixture Filing in the form appended to this Fifth Amendment as Exhibit I ("First Amendment to Deed of Trust"), dated the date of the Continuing Guaranty of D/T referred to in Subparagraph 6(f) of this Fifth Amendment and duly executed and acknowledged by D/T, reflecting the supersession and replacement of the Continuing Guaranty of D/T, dated February 28, 1995, with the Continuing Guaranty of D/T referred to in Subparagraph 6(f) of this Fifth Amendment, together with evidence that the First Amendment to Deed of Trust has been duly recorded; (i) A 110.5 endorsement to the ALTA policy of title insurance delivered to the Bank pursuant to Subparagraph 10(j) of the Third Amendment, insuring that the interest of the Bank under the Deed of Trust as amended by the First Amendment to Deed of Trust is and continues to be a valid, perfected and enforceable lien on the Property subject to no mortgages, deeds of trust, liens, charges, security interests or other encumbrances of any character whatsoever other than liens for current real property taxes and assessments not yet due and payable and such other liens and encumbrances as may be approved in writing by the Bank; (j) A certificate of the secretary or an assistant secretary of each of D/T and DWC, each dated not later than the date of this Fifth Amendment, certifying the following documents, copies of which shall be attached to or incorporated in such certificate: (i) resolutions, adopted by the Board of Directors of D/T or DWC, as the case may be, and continuing in effect, which authorize the execution, delivery and performance by D/T or DWC, as the case may be, of such corporation's Continuing Guaranty and Judicial Reference Agreement (and, in the case of D/T, the First Amendment to Deed of Trust); and (ii) all other documents evidencing additional corporate action and governmental or other approvals, if any, necessary for the execution, delivery and performance by D/T or DWC, as the case may be, of such corporation's Continuing Guaranty and Judicial Reference Agreement (and, in the case of D/T, the First Amendment to Deed of Trust); together with a certificate of the secretary or an assistant secretary of each of D/T and DWC, each dated not later than the date of this Fifth Amendment, certifying the incumbency and signatures of the officers of D/T or DWC, as the case may be, authorized to execute, deliver and perform on behalf of D/T or DWC, as the case may be, such corporation's Continuing Guaranty and Judicial Reference Agreement (and, in the case of D/T, the First Amendment to Deed of Trust); and (k) Such other documents and agreements as the Bank may reasonably require to effectuate the intent and purpose of this Fifth Amendment. 7. Except as expressly provided herein, the Credit Agreement is unchanged and remains in full force and effect. 8. This Fifth Amendment shall be governed by and construed in accordance with the laws of the State of California. 9. This Fifth Amendment may be executed in any number of identical counterparts, any set of which signed by both parties hereto shall be deemed to constitute a complete, executed original for all purposes. IN WITNESS WHEREOF, the Bank and the Company have caused this Fifth Amendment to be executed as of the day and year first above written. UNION BANK DATRON SYSTEMS INCORPORATED By: /s/ RICHARD C. PETRIE By: /s/ WILLIAM L. STEPHAN Title:Vice President Title: Vice President and CFO By:/s/ JOSEPH OTTING By:/s/ DAVID A. DERBY Title:S.V.P. Title:President, CEO EXHIBIT I RECORDING REQUESTED BY AND WHEN RECORDED RETURN TO: Union Bank Commercial Documentation Center Attn: AREVALOS - 40061 P. O. Box 30115 Los Angeles, California 90030-0115 Assessor's Identification Number: 95000649 FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING THIS FIRST AMENDMENT TO DEED OF TRUST, ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING ("First Amendment"), made and entered into as of the 17th day of August, 1995, by and among DATRON/TRANSCO INC., a California corporation ("Trustor"), UNION BANK, a California banking corporation (in its capacity as trustee, "Trustee"), and UNION BANK, a California banking corporation (in its capacity as beneficiary, "Beneficiary"), W I T N E S S E T H: WHEREAS, on February 28, 1995, Trustor entered into that certain Deed of Trust, Assignment of Rents, Security Agreement and Fixture Filing ("Deed of Trust") in favor of Trustee and Beneficiary, which Deed of Trust was recorded on March 13, 1995, as Instrument No. 95-027943, in the Official Records of Ventura County, California, and which Deed of Trust encumbers certain real property located in the City of Simi Valley, County of Ventura, State of California, more particularly described in Exhibit "A" appended thereto; and WHEREAS Trustor and Beneficiary desire to amend the Deed of Trust to reflect that certain of the obligations of Trustor to Beneficiary secured by the Deed of Trust as originally executed have been superseded and replaced by certain other obligations of Trustor to Beneficiary more particularly described herein; NOW, THEREFORE, for and in consideration of the premises hereof and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, it is hereby agreed as follows: 1. Section 2(I) of the Deed of Trust is amended by deleting the same in its entirety and by substituting in lieu thereof the following: (I) Payment of all sums at any time owing and the performance of all other obligations arising under that certain Continuing Guaranty in the original principal amount of Twenty-nine Million and no/100 Dollars ($29,000,000.00), dated August 1, 1995, executed by Datron/Transco Inc. ("Obligor") to the order of or in favor of Beneficiary (the "Debt Instrument"), and any and all modifications, replacements, extensions and renewals thereof, whether hereafter evidenced by the Debt Instrument or otherwise; 2. Trustor and Beneficiary hereby expressly acknowledge and agree (a) that the obligations arising under the Continuing Guaranty which is described in Section 2(I) of the Deed of Trust as amended by this First Amendment (the "Replacement Guaranty") supersede and replace, but do not constitute payment, satisfaction or extinguishment of, the obligations arising under the Continuing Guaranty in the original principal amount of Twenty-six Million and no/100 Dollars ($26,000,000.00), dated February 28, 1995, executed by Trustor to the order of or in favor of Beneficiary which is described in Section 2(I) of the Deed of Trust as originally executed (the "Original Guaranty"), and (b) that the Replacement Guaranty supersedes and replaces but does not constitute payment, satisfaction or extinguishment of, the Original Guaranty. 3. Trustor hereby expressly agrees that the obligations arising under the Replacemnt Guaranty shall in all respects be secured by the Deed of Trust, as amended hereby. 4. Except as otherwise expressly provided herein, the Deed of Trust is unchanged and remains in full force and effect. 5. Trustee accepts these modifications to the trust when this First Amendment, duly executed and acknowledged, is made a public record as provided by law. IN WITNESS WHEREOF, Trustor and Beneficiary have executed ths First Amendment as of the date first hereinabove set forth. DATRON/TRANSCO INC. UNION BANK By: /s/ DAVID A. DERBY By: /s/ RICHARD A. PETRIE Title: Chairman Title: By: /s/ WILLIAM L. STEPHAN By: /s/ JOSEPH OTTING Title: Asst. Secretary Title: S.V.P. STATE OF CALIFORNIA ) ) ss. COUNTY OF SAN DIEGO ) On August 14, 1995, before me, J. BEUKMAN a Notary Public in and for said State, personally appeared JOSEPH OTTING AND RICHARD A. PETRIE, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/ARE subscribed to the within instrument and acknowledged to me that he/she/THEY executed the same in his/her/THEIR authorized capacity(ies), and that by his/her/THEIR signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (graphic Notary Seal) /s/ J. BEUKMAN J. BEUKMAN Notary Public COMM #1039373 in and for said State NOTARY PUBLIC-CALIFORNIA SAN DIEGO COUNTY MY COMMISSION EXPIRES OCTOBER 5, 1988 STATE OF CALIFORNIA ) ) ss. COUNTY OF VENTURA ) On August 17, 1995, before me, E. L. HOWE a Notary Public in and for said State, personally appeared DAVID A. DERBY AND WILLIAM L. STEPHAN, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/ARE subscribed to the within instrument and acknowledged to me that he/she/THEY executed the same in his/her/THEIR authorized capacity(ies), and that by his/her/THEIR signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. (graphic Notary Seal) /s/ ELLEN L. HOWE ELLEN L. HOWE Notary Public COMM #1043039 in and for said State Notary Public - California VENTURA COUNTY MY COMM. Expires OCT 23, 1998 EX-27 3
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS MAR-31-1996 SEP-30-1995 110 0 21,911 172 11,287 36,191 23,344 9,614 57,217 18,998 0 31 0 0 34,177 57,217 31,801 31,820 20,555 20,555 9,202 0 36 2,027 772 1,255 0 0 0 1,255 0.47 0.47
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