-----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, OXSWeZCLK1gKdpLOHO8SCWPHV9nzMuw0lUOlv5L0jwp5M2NzqFOnjECHhOpGcbqS jF3Dql+4Yo3AeXhtRRBosg== 0000027116-96-000005.txt : 19960731 0000027116-96-000005.hdr.sgml : 19960731 ACCESSION NUMBER: 0000027116-96-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960730 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DATRON SYSTEMS INC/DE CENTRAL INDEX KEY: 0000027116 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [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: 96600874 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, 1996 [ ] 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 St., 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, 1996, the Registrant had only one class of common stock, par value $0.01, of which there were 2,627,192 shares outstanding. 1 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements.
DATRON SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS (In Thousands) June 30, March 31 1996 1996 -------- -------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $449 $1,393 Accounts receivable, net 14,083 15,017 Inventories 16,289 15,808 Deferred income taxes 2,602 2,602 Prepaid expenses and other current assets 1,933 2,478 ---------------- Total current assets 35,356 37,298 Property, plant and equipment, net 13,282 13,835 Goodwill, net 6,004 6,056 Investment 1,113 890 Other assets 360 380 ---------------- Total assets $56,115 $58,459 ================ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $7,706 $8,490 Accrued expenses 3,566 5,405 Customer advances 2,011 3,693 Income taxes payable 253 240 Current portion of restructuring reserve 1,248 1,428 ---------------- Total current liabilities 14,784 19,256 Long-term debt 7,400 5,200 Restructuring reserve 706 1,063 Deferred income taxes 1,069 1,069 ---------------- Total liabilities 23,959 26,588 ---------------- 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 10,637 10,568 Retained earnings 24,178 24,149 Treasury stock, at cost; 436,745 and 459,745 shares in June and March, respectively (2,446) (2,633) Stock option plan and stock purchase plan notes receivable (244) (244) ---------------- Total stockholders' equity 32,156 31,871 ---------------- Total liabilities and stockholders' equity $56,115 $58,459 ================ 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, 1996 1995 ------------------ Net sales $12,457 $14,356 Cost of sales 9,001 8,996 ------------------ Gross profit 3,456 5,360 Selling, general and admin. 2,731 3,694 Research and development 558 995 ------------------ Operating income 167 671 Interest expense (120) (15) Interest income 3 13 ------------------ Income before income taxes 50 669 Income taxes 21 254 ------------------ Net income $29 $415 ================== Net income per share $0.01 $0.16 ================== Weighted average number of common and common equivalent shares outstanding 2,694 2,648 ================== 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, 1996 1995 ------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $29 $415 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Depreciation and amortization 734 713 Restructuring (537) (95) Changes in operating assets and liabilities: Accounts receivable 934 (4,033) Inventories (481) 653 Prepaid expenses and other assets 547 101 Accounts payable and accrued expenses (2,623) (3,097) Customer advances (1,682) 184 Income taxes payable 13 (450) Other liabilities --- 28 ------------------ Net cash used in operating activities (3,066) (5,581) ------------------ CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (111) (516) Purchase of investment (223) --- ------------------ Net cash used in investing activities (334) (516) ------------------ CASH FLOWS FROM FINANCING ACTIVITIES Increase in long-term debt 2,200 3,400 Stock options exercised 256 212 Purchase of treasury stock --- (51) Payment advanced against stock option plan note receivable --- (80) ------------------ Net cash provided by financing activities 2,456 3,481 ------------------ DECREASE IN CASH AND CASH EQUIVALENTS (944) (2,616) Cash and cash equivalents at beginning of period 1,393 3,510 ------------------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $449 $894 ================== 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, 1996. 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, 1996 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, 1996 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 plans. 3. Accounts Receivable ------------------- At June 30, 1996 and March 31, 1996, accounts receivable were as follows:
June 30, March 31, 1996 1996 ----------- ----------- Billed $ 6,272,000 $ 6,858,000 Unbilled 7,946,000 8,406,000 ----------- ----------- Subtotal 14,218,000 15,264,000 ----------- ----------- Allowance for doubtful accounts (135,000) (247,000) ----------- ----------- Total $14,083,000 $15,017,000 =========== ===========
4. Inventories ----------- At June 30, 1996 and March 31, 1996, inventories were as follows:
June 30, March 31, 1996 1996 ----------- ----------- Raw materials $ 8,711,000 $ 7,487,000 Work-in-process 4,478,000 5,231,000 Finished goods 3,100,000 3,090,000 ----------- ----------- Total $16,289,000 $15,808,000 =========== ===========
5 5. Property, Plant and Equipment ----------------------------- At June 30, 1996 and March 31, 1996, property, plant and equipment was as follows:
June 30, March 31, 1996 1996 ----------- ---------- Land and buildings $ 8,490,000 $ 8,479,000 Machinery and equipment 13,907,000 13,658,000 Furniture and office equipment 1,399,000 1,462,000 Leasehold improvements 806,000 910,000 Construction-in-process 96,000 183,000 ----------- ----------- Subtotal 24,698,000 24,692,000 Accumulated depreciation and amortization (11,416,000) (10,857,000) ----------- ----------- Total $13,282,000 $13,835,000 =========== ===========
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, and Antenna and Imaging Systems. The Communication Products and Services business segment designs, manufactures and distributes high frequency and very high frequency radios and accessories for worldwide military and civilian purposes. The Antenna and Imaging Systems business segment designs and manufactures specialized satellite communication systems, subsystems and antennas that are sold worldwide to commercial and governmental customers, including the U.S. Department of Defense (DoD). This segment also sells remote sensing satellite earth stations, sales of which represented 29% and 26% of this segment's sales in fiscal 1996 and 1995, respectively. In fiscal 1996, this segment introduced the DBS-3000 TM, a mobile satellite television reception system for recreational vehicles and long-haul trucks. This system is the Company's first consumer product. This Management's Discussion and Analysis of Financial Condition and Results of Operations contains certain forward-looking statements. Actual results could differ materially. Reference is hereby made to the statement of Investment Considerations contained in Part I, Item 1 of the Company's Form 10-K, which is available from the Company upon request. Results of Operations - --------------------- Net income for the first quarter of fiscal 1997 was $29,000, or $0.01 per share, compared with net income of $415,000, or $0.16 per share, in the first quarter of fiscal 1996. Net sales in the first quarter of fiscal 1997 were $12,457,000, a 13% decrease from first quarter sales last fiscal year of $14,356,000. The decrease in sales and net income was primarily due to lower sales of radio products and remote sensing systems, partially offset by sales of the new DBS-3000. Operating results for each business segment were as follows: 6
Communication Products and Services Three Months Ended June 30, 1996 1995 ---------- ---------- Net sales $4,073,000 $5,078,000 Gross profit $1,362,000 $1,576,000 Operating income $ 555,000 $ 198,000
Sales of Communication Products and Services decreased 20% in the first quarter of fiscal 1997 compared with the first quarter of fiscal 1996. The decrease in sales resulted from recent low order bookings of radio products. Gross profit percentage on sales of Communication Products and Services was 33.4% in the first quarter of fiscal 1997 compared with 31.0% in the first quarter last fiscal year. The increase was primarily due to lower overhead expenses in the recent quarter. Operating income percentage from sales of Communication Products and Services was 13.6% in the first quarter of fiscal 1997 compared with 3.9% in the first quarter last fiscal year. The increase resulted from higher gross profits and from reductions in selling and administrative expenses.
Antenna and Imaging Systems Three Months Ended June 30, 1996 1995 ---------- ---------- Net sales $8,384,000 $9,278,000 Gross profit $2,094,000 $3,784,000 Operating income $ 4,000 $ 855,000
Sales of Antenna and Imaging Systems products decreased 10% in the first quarter of fiscal 1997 compared with the first quarter of fiscal 1996. The decrease was primarily due to lower sales of remote sensing systems, partially offset by sales of the new DBS-3000. Gross profit percentage on sales of Antenna and Imaging Systems products was 25.0% in the first quarter of fiscal 1997 compared with 40.8% in the first quarter last fiscal year. The decrease was primarily due to higher manufacturing costs associated with a less favorable product mix and to higher materials costs related to initial production of the DBS-3000. Operating income percentage from sales of Antenna and Imaging Systems products was 0.0% in the first quarter of fiscal 1997 compared with 9.2% in the first quarter last fiscal year. The decrease resulted from lower gross profits, partially offset by lower selling and administrative expenses. 7 Consolidated expenses were as follows: Selling, general and administrative expenses were $2,731,000 in the first quarter of fiscal 1997, a 26% decrease compared with first quarter of fiscal 1996 expenses of $3,694,000. The decrease was due to lower selling and administrative expenses at both business segments. Cost reductions related to the Company's fourth quarter of fiscal 1996 consolidation and restructuring as well as spending reductions in the first quarter at both segments were responsible for most of the decrease. Research and development expenses were $558,000 in the first quarter of fiscal 1997 compared with $995,000 in the first quarter last fiscal year. The 44% decrease was due to significantly lower spending on development programs for mobile direct broadcast satellite (DBS) television products, some of which are now in production, and from the absence of spending on programs to develop remote sensing services for the agricultural community. Order backlog at June 30 was as follows: 1996 1995 ---------- ---------- Communication Products and Services $ 2,576,000 $ 5,877,000 Antenna and Imaging Systems 22,690,000 22,466,000 ----------- ----------- Total $25,266,000 $28,343,000 The 56% decrease in Communication Products and Services backlog at June 30, 1996 compared with June 30, 1995 was due to continued low order bookings. Although bookings in this business segment have been low during the last six months and although there can be no assurances that bookings will improve, recent customer inquiries suggest that order bookings may improve in the second quarter. The 1% increase in Antenna and Imaging Systems backlog at June 30, 1996 compared with June 30, 1995 resulted primarily from orders for DBS television products, partially offset by lower orders for remote sensing systems. Liquidity and Capital Resources - ------------------------------- At June 30, 1996, working capital was $20,572,000 compared with $18,042,000 at March 31, 1996, an increase of $2,530,000 or 14%. Major changes affecting working capital during this period were the following: accounts receivable decreased $934,000 primarily due to low sales during the quarter; inventories increased $481,000 to meet production requirements for new DBS television reception system products; accounts payable and accrued expenses decreased $2,623,000; and customer advances decreased $1,682,000. The Company's cash position at June 30, 1996 was $449,000 compared with $1,393,000 at March 31, 1996, a decrease of 68%. At June 30, 1996, the Company had borrowed $7,400,000 in term debt from its bank to meet operating cash requirements. These borrowings represented a 42% increase in term debt from the $5,200,000 of borrowings at March 31, 1996. Capital equipment expenditures were $111,000 during the first three months of fiscal 1997 compared with $516,000 in the first three months last fiscal year. The decrease was primarily due to lower purchases of equipment for the Antenna and Imaging Systems business segment. At June 30, 1996, the Company had a $19,500,000 committed revolving line of credit with its bank, of which up to $12,000,000 may be used for the issuance of letters of credit and up to $10,500,000 may be used for direct working capital advances provided that total credit extended does not exceed $19,500,000. 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 July 30, 1996 By: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, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAR-31-1997 JUN-30-1996 449 0 14,218 135 16,289 35,356 24,698 11,416 56,115 14,784 0 0 0 31 32,125 56,115 12,457 12,460 9,001 9,001 3,289 0 120 50 21 29 0 0 0 29 0.01 0.01
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