-----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, IHVoYOYkp1xFBUgDCL91FOJt7bAoQKWp3YaqZlTZLvblGRk0lBluxVLTIhnokE9n ZID3iN7Y/bRFabTFH1+EUg== 0000027116-97-000005.txt : 19970731 0000027116-97-000005.hdr.sgml : 19970731 ACCESSION NUMBER: 0000027116-97-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970730 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: 97647941 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, 1997 [ ] 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 of (I.R.S. Employer incorporation or organization) Identification No.) 304 Enterprise Street, Escondido, California 92029-1297 - ------------------------------------------------------ (Address of principal executive offices) (zip code) (760) 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 25, 1997, the Registrant had only one class of common stock, par value $0.01, of which there were 2,665,416 shares outstanding. 1 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements.
DATRON SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands) June 30, March 31 1997 1997 -------- -------- (Unaudited) ASSETS Current assets: Cash $790 $1,072 Accounts receivable, net 9,496 17,896 Inventories 14,767 14,309 Deferred income taxes 2,788 2,788 Prepaid expenses and other current assets 1,491 1,168 -------- -------- Total current assets 29,332 37,233 Property, plant and equipment, net 11,671 12,030 Goodwill, net 5,800 5,851 Investment 1,113 1,113 Other assets 243 249 -------- -------- Total assets $48,159 $56,476 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $4,123 $7,647 Accrued expenses 2,757 3,103 Customer advances 2,055 744 Income taxes payable 194 194 Current portion of restructuring reserve 789 789 -------- -------- Total current liabilities 9,918 12,477 Long-term debt 3,900 8,900 Restructuring reserve 191 435 Deferred income taxes 2,056 2,056 -------- -------- Total liabilities 16,065 23,868 -------- -------- 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 10,595 10,602 Retained earnings 23,869 24,417 Treasury stock, at cost; 399,521 and 404,521 shares in June and March, respectively (2,157) (2,198) Stock option plan and stock purchase plan notes rec (244) (244) -------- -------- Total stockholders' equity 32,094 32,608 -------- -------- Total liabilities and stockholders' equity $48,159 $56,476 ======== ======== 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, 1997 1996 ------------------ Net sales $10,341 $12,457 Cost of sales 7,986 9,001 ------------------ Gross profit 2,355 3,456 Selling, general and admin. 2,748 2,731 Research and development 389 558 ------------------ Operating (loss) income (782) 167 Interest expense (118) (117) Other expense (6) --- ------------------ (Loss) income before income taxes (906) 50 Income taxes (benefit) (358) 21 ------------------ Net (loss) income ($548) $29 ================== Net (loss) income per share ($0.21) $0.01 ================== Weighted average number of common and common equivalent shares outstanding 2,664 2,694 ================== 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, 1997 1996 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income ($548) $29 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 693 734 Restructuring (244) (537) Changes in operating assets and liabilities: Accounts receivable 8,400 934 Inventories (458) (481) Prepaid expenses and other assets (321) 547 Accounts payable and accrued expenses (3,870) (2,623) Customer advances 1,311 (1,682) Income taxes payable --- 13 --------- --------- Net cash provided by (used in) operating activities 4,963 (3,066) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (279) (111) Purchase of investment --- (223) --------- --------- Net cash used in investing activities (279) (334) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in long-term debt (5,000) 2,200 Stock options exercised 34 256 --------- --------- Net cash (used in) provided by financing activities (4,966) 2,456 --------- --------- (DECREASE) IN CASH (282) (944) Cash at beginning of period 1,072 1,393 --------- --------- CASH AT END OF PERIOD $790 $449 ========= ========= 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, 1997. 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, 1997 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, 1997 has been derived from audited financial statements. 2. (Loss) Income per Share ----------------------- Shares used in computing (loss) income per share include the weighted average of common stock outstanding plus equivalent shares issuable under the Company's stock option plans when such amounts are dilutive. In February 1997, the Financial Accounting Standards Board issued SFAS No. 128, Earnings Per Share ("EPS"). This statement requires presentation of income per share to reflect both "Basic EPS" as well as "Diluted EPS" on the face of the income statement. In general, Basic EPS excludes dilution created by stock equivalents and is a function of the weighted-average number of common shares outstanding for the period. Diluted EPS reflects potential dilution created by stock equivalents as if such equivalents are converted into common stock and is calculated in substantially the same manner as Fully Diluted EPS illustrated in Accounting Principles Board ("APB") Opinion No. 15, "Earnings Per Share." The Company will be required to adopt the new method of reporting income per share in the three-month period ended December 31, 1997. Based on the Company's existing capital structure, the anticipated results of implementing SFAS No. 128 would reflect income per share in materially the same manner as currently reported. 3. Accounts Receivable ------------------- At June 30, 1997 and March 31, 1997, accounts receivable were as follows:
June 30, March 31, 1997 1997 ----------- ----------- Billed $ 5,294,000 $14,019,000 Unbilled 4,419,000 4,103,000 ----------- ---------- Subtotal 9,713,000 18,122,000 Allowance for doubtful accounts (217,000) (226,000) ---------- ----------- Total $9,496,000 $17,896,000 ========== ===========
5 4. Inventories ----------- At June 30, 1997 and March 31, 1997, inventories were as follows:
June 30, March 31, 1997 1997 ----------- ------------ Raw materials $ 9,329,000 $ 9,316,000 Work-in-process 3,776,000 2,753,000 Finished goods 1,662,000 2,240,000 ----------- ----------- Total $14,767,000 $14,309,000 =========== ===========
Inventories are presented net of allowances for obsolescence of $1,350,000 at June 30, 1997 and March 31, 1997. 5. Property, Plant and Equipment ----------------------------- At June 30, 1997 and March 31, 1997, property, plant and equipment was as follows:
June 30, March 31, 1997 1997 ------------ ------------ Land and buildings $ 8,529,000 $ 8,529,000 Machinery and equipment 14,728,000 14,590,000 Furniture and office equipment 1,443,000 1,443,000 Leasehold improvements 820,000 815,000 Construction-in-process 177,000 66,000 ----------- ---------- Subtotal 25,697,000 25,443,000 Accumulated depreciation and amortization (14,026,000) (13,413,000) ----------- ----------- Total $11,671,000 $12,030,000 =========== ============
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. Datron Systems Incorporated and its wholly owned subsidiaries (the "Company") report operations in two business segments: Antenna and Imaging Systems, and Communication Products and Services. 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 to worldwide commercial, scientific and military organizations. In fiscal 1996, this segment introduced the DBS-3000, a mobile satellite television reception system for recreational vehicles and long-haul trucks. This system was the Company's first consumer product. Several additional direct broadcast satellite ("DBS") antenna products were introduced in fiscal 1997. 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. 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. 6 Results of Operations - --------------------- Net loss for the first quarter of fiscal 1998 was $548,000, or $0.21 per share, compared with net income of $29,000, or $0.01 per share, in the first quarter of fiscal 1997. Net sales in the first quarter of fiscal 1998 were $10,341,000, a 17% decrease from first quarter sales last fiscal year of $12,457,000. The decrease in sales was primarily due to lower sales of radio products, military antennas and DBS antenna products. The net loss was due to lower gross profits on the lower sales, partially offset by lower product development expenses. Operating results for each business segment were as follows: Antenna and Imaging Systems - ---------------------------
Three Months Ended June 30, 1997 1996 ---------- ---------- Net sales $7,219,000 $8,384,000 ========== ========== Gross profit $1,359,000 $2,094,000 ========== ========== Operating (loss) income ($342,000) $4,000 ========== ==========
Sales of Antenna and Imaging Systems products decreased 14% in the first quarter of fiscal 1998 compared with the first quarter of fiscal 1997. The decrease was primarily due to lower sales of military and DBS antenna products. Gross profit percentage on sales of Antenna and Imaging Systems products was 18.8% in the first quarter of fiscal 1998 compared with 25.0% in the first quarter last fiscal year. The decrease was primarily due to higher engineering costs on military antenna contracts. Operating loss percentage from sales of Antenna and Imaging Systems products was 4.7% in the first quarter of fiscal 1998 compared with operating income of 0.0% in the first quarter last fiscal year. The decrease resulted from lower gross profits, partially offset by lower product development expenses. Communication Products and Services - -----------------------------------
Three Months Ended June 30, 1997 1996 ---------- ---------- Net sales $3,122,000 $4,073,000 ========== ========== Gross profit $996,000 $1,362,000 ========== ========== Operating (loss) income ($87,000) $555,000 ========== ==========
Sales of Communication Products and Services decreased 23% in the first quarter of fiscal 1998 compared with the first quarter of fiscal 1997. The decrease in sales was due to low order bookings of radio products resulting primarily from delays in new product development and introduction. Gross profit percentage on sales of Communication Products and Services was 31.9% in the first quarter of fiscal 1998 compared with 33.4% in the first quarter last fiscal year. The decrease was primarily due to inefficiencies resulting from the low level of sales in the recent quarter. Operating loss percentage from sales of Communication Products and Services was 2.8% in the first quarter of fiscal 1998 compared with operating income of 13.6% in the first quarter last fiscal year. The decrease resulted from higher administrative and product development expenses, lower gross profits and from the low level of sales in the recent quarter. 7 Consolidated expenses were as follows: Selling, general and administrative expenses were $2,748,000 in the first quarter of fiscal 1998, a 1% increase compared with first quarter of fiscal 1997 expenses of $2,731,000. The increase resulted from higher administrative expenses being partially offset by lower selling expenses. Research and development expenses were $389,000 in the first quarter of fiscal 1998 compared with $558,000 in the first quarter last fiscal year. The 30% decrease was due to significantly lower spending on development programs for mobile DBS television products, partially offset by increased spending on development programs for new radio products. Order backlog at June 30 was as follows:
1997 1996 ----------- ----------- Antenna and Imaging Systems $25,906,000 $22,690,000 Communication Products and Services 4,793,000 2,576,000 ----------- ----------- Total $30,699,000 $25,266,000 =========== ===========
The 14% increase in Antenna and Imaging Systems backlog at June 30, 1997 compared with June 30, 1996 resulted primarily from higher order bookings for remote sensing systems. This segment's first quarter fiscal 1998 order bookings were $20.0 million, of which over $11 million were for remote sensing systems. The 86% increase in Communication Products and Services backlog at June 30, 1997 compared with June 30, 1996 was primarily due to improved order bookings in the fourth fiscal quarter ended March 31, 1997. Liquidity and Capital Resources - ------------------------------- At June 30, 1997, working capital was $19,414,000 compared with $24,756,000 at March 31, 1997, a decrease of $5,342,000 or 22%. Major changes affecting working capital during this period were the following: accounts receivable decreased $8,400,000 due to good collections; inventories increased $458,000 primarily to meet production requirements for new antenna orders; accounts payable and accrued expenses decreased $3,870,000; and customer advances increased $1,311,000. The Company's cash position at June 30, 1997 was $790,000 compared with $1,072,000 at March 31, 1997, a decrease of 26%. At June 30, 1997, the Company had borrowed $3,900,000 in term debt from its bank to meet operating cash requirements. These borrowings represent a 56% decrease in term debt from the $8,900,000 of borrowings at March 31, 1997. Capital equipment expenditures were $279,000 during the first three months of fiscal 1998 compared with $111,000 in the first three months last fiscal year. Although the Company anticipates expenditures for capital equipment will be higher in fiscal 1998 than they were in fiscal 1997, there were no material commitments for capital expenditures at June 30, 1997. At June 30, 1997, 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 is in negotiations with its bank to amend the working capital and letter of credit sublimits and to extend the maturity date of the credit agreement. 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, 1997 By: /s/ 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, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS MAR-31-1998 JUN-30-1997 790 0 9,713 217 14,767 29,332 25,697 14,026 48,159 9,918 0 0 0 31 32,063 48,159 10,341 10,341 7,986 7,986 3,143 0 118 (906) (358) (548) 0 0 0 (548) (0.21) (0.21)
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