-----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, CmsxZe59hBu9AflbaV9iz1fUusSBZX53HmAPkBTcg2TO1mZx9ALGLcLPTVOctXDC M6b4AAt5hN9cpm3Sv8by3w== 0000027116-98-000001.txt : 19980128 0000027116-98-000001.hdr.sgml : 19980128 ACCESSION NUMBER: 0000027116-98-000001 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980127 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: SEC FILE NUMBER: 000-07445 FILM NUMBER: 98513894 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 December 31, 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 January 23, 1998, the Registrant had only one class of common stock, par value $0.01, of which there were 2,675,984 shares outstanding. 1 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements.
DATRON SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands) Dec 31, March 31 1997 1997 -------- -------- (Unaudited) ASSETS Current assets: Cash $1,130 $1,072 Accounts receivable, net 18,469 17,896 Inventories 13,119 14,309 Deferred income taxes 2,788 2,788 Prepaid expenses and other current assets 695 1,168 -------- -------- Total current assets 36,201 37,233 Property, plant and equipment, net 10,922 12,030 Goodwill, net 5,697 5,851 Investment 1,113 1,113 Other assets 200 249 -------- -------- Total assets $54,133 $56,476 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $10,560 $7,647 Accrued expenses 3,003 3,103 Customer advances 966 744 Income taxes payable 194 194 Current portion of restructuring reserve 395 789 -------- -------- Total current liabilities 15,118 12,477 Long-term debt 4,200 8,900 Restructuring reserve 81 435 Deferred income taxes 2,056 2,056 -------- -------- Total liabilities 21,455 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, 3,070,063 and 3,063,937 shares issued in December and March, respectively 31 31 Additional paid-in capital 10,659 10,602 Retained earnings 24,365 24,417 Treasury stock, at cost; 394,079 and 404,521 shares in December and March, respectively (2,133) (2,198) Stock option plan and stock purchase plan notes receivable (244) (244) -------- -------- Total stockholders' equity 32,678 32,608 -------- -------- Total liabilities and stockholders' equity $54,133 $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 Nine Months Ended December 31, December 31, 1997 1996 1997 1996 ----------------- ------------------ Net sales $17,081 $12,923 $42,359 $40,000 Cost of sales 12,813 9,311 32,125 29,023 ----------------- ------------------ Gross profit 4,268 3,612 10,234 10,977 Selling, general and admin. 3,143 2,730 8,688 8,452 Research and development 483 680 1,343 1,720 ----------------- ------------------ Operating income 642 202 203 805 Interest expense (76) (153) (275) (447) Other (expense) income (3) 15 (13) 15 ----------------- ------------------ Income (loss) before income taxes 563 64 (85) 373 Income taxes (benefit) 216 44 (33) 169 ----------------- ------------------ Net income (loss) $347 $20 ($52) $204 ================= ================== Earnings (loss) per common share $0.13 $0.01 ($0.02) $0.08 ================= ================== Weighted average number of common shares outstanding 2,672 2,627 2,667 2,625 ================= ================== Earnings (loss) per common share--assuming dilution $0.13 $0.01 ($0.02) $0.08 ================= ================== Weighted average number of common and common equivalent shares outstanding 2,687 2,671 2,680 2,681 ================= ================== See notes to consolidated financial statements.
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DATRON SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands) Nine Months Ended December 31, 1997 1996 ----- ----- CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) income ($52) $204 Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: Depreciation and amortization 1,986 2,161 Restructuring (748) (1,138) Changes in operating assets and liabilities: Accounts receivable (573) 3,011 Inventories 1,190 411 Prepaid expenses and other assets 509 2,107 Accounts payable and accrued expenses 2,813 (5,036) Customer advances 222 (2,860) Income taxes payable --- 136 --------- --------- Net cash provided by (used in) operating activities 5,347 (1,004) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Additions to property, plant and equipment (711) (571) Purchase of investment --- (223) --------- --------- Net cash used in investing activities (711) (794) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES (Decrease) increase in long-term debt (4,700) 2,700 Stock options exercised 130 273 Purchase of treasury stock (53) --- Issuance of common stock 45 --- --------- --------- Net cash (used in) provided by financing activities (4,578) 2,973 --------- --------- INCREASE IN CASH 58 1,175 Cash at beginning of period 1,072 1,393 --------- --------- CASH AT END OF PERIOD $1,130 $2,568 ========= ========= 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's management, 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 December 31, 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. Income (Loss) per Share ----------------------- Effective for the three-month period ended December 31, 1997, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share." This statement provides simplified standards for the computation and presentation of earnings per share ("EPS"), making EPS comparable to international standards. SFAS No. 128 requires dual presentation on the face of the income statement of "Basic" and "Diluted" EPS by entities with complex capital structures, replacing "Primary" and "Fully Diluted" EPS illustrated under Accounting Principles Board ("APB") Opinion No. 15, "Earnings Per Share." Basic EPS excludes dilution from common stock equivalents and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects potential dilution from common stock equivalents, similar to Fully Diluted EPS, but uses only the average stock price during the period as part of the computation. Shares used in computing earnings (loss) per common share - assuming dilution include the weighted average of common stock outstanding plus equivalent shares issuable under the Company's stock option plans, when such amounts are dilutive. Options to purchase 112,000 shares of common stock at prices ranging from $10.13 - $16.00 were not included in the computation of diluted EPS at December 31, 1997 because the effect of such options would be anti-dilutive. Such options expire at various dates from February 20, 1999 to November 30, 2007. 3. Accounts Receivable -------------------- At December 31, 1997 and March 31, 1997, accounts receivable were as follows: December 31, March 31, 1997 1997 ------------ ----------- Billed $11,678,000 $14,019,000 Unbilled 6,937,000 4,103,000 ----------- ----------- Subtotal 18,615,000 18,122,000 Allowance for doubtful accounts (146,000) (226,000) ----------- ----------- Total $18,469,000 $17,896,000 =========== =========== 5 4. Inventories ------------ At December 31, 1997 and March 31, 1997, inventories were as follows: December 31, March 31, 1997 1997 ------------ ----------- Raw materials $ 8,515,000 $ 9,316,000 Work-in-process 2,945,000 2,753,000 Finished goods 1,659,000 2,240,000 ----------- ----------- Total $13,119,000 $14,309,000 =========== =========== Inventories are presented net of allowances for obsolescence of $1,640,000 and $1,350,000 at December 31, 1997 and March 31, 1997, respectively. 5. Property, Plant and Equipment ----------------------------- At December 31, 1997 and March 31, 1997, property, plant and equipment was as follows: December 31, March 31, 1997 1997 ------------ ---------- Land and buildings $ 8,557,000 $ 8,529,000 Machinery and equipment 15,099,000 14,590,000 Furniture and office equipment 1,494,000 1,443,000 Leasehold improvements 822,000 815,000 Construction-in-process 136,000 66,000 ------------ ------------ Subtotal 26,108,000 25,443,000 Accumulated depreciation and amortization (15,186,000) ( 13,413,000) ----------- ------------ Total $10,922,000 $ 12,030,000 =========== ============= 6. Investment ----------- Investment represents preferred stock in EarthWatch Incorporated. It is being carried at cost, which represents the most recent value for sales of similar securities. There is no public market for any of EarthWatch's securities, and as of January 23, 1998, the Company is not able to determine if its cost for the EarthWatch preferred stock continues to represent fair market value. On December 24, 1997, EarthWatch launched its first three- meter resolution remote sensing satellite. Four days after launch EarthWatch lost communications with the satellite and to date has been unable to reestablish communications with it. EarthWatch management had indicated prior to the launch their need to raise additional financing to permit them to continue with their business plan. Although EarthWatch has launch insurance, the Company is unable to determine at this time what impact, if any, recent events will have on EarthWatch's ability to raise additional financing and what effect that might have on the fair market value of the investment carried by the Company. 7. Long-Term Debt -------------- On August 8, 1997, the Company amended and restated its credit agreement and note with its bank. Under the amended agreement, the Company has a committed revolving line of credit with the bank of $19,500,000, of which up to $15,000,000 may be used for letters of credit and up to $9,500,000 may be used for direct working capital advances. Total credit extended may not exceed $19,500,000. The letter of credit facility expires on June 30, 1999 and the working capital facility, by letter from its bank dated January 23, 1998, expires on April 30, 1999. Interest is payable on borrowings under the working capital line at the bank's prime rate plus 0.85% or at LIBOR plus 1.85% at the option of the 6 Company. At December 31, 1997, the bank's prime rate was 8.50%. The line of credit is secured by assets of the Company and contains certain financial covenants with which the Company is in compliance. A commitment fee of 0.25% per annum is payable to the bank on the unused portion of the working capital facility. At December 31,1997, there were borrowings of $4,200,000 under the working capital line and the bank had issued letters of credit against the line totaling $6,265,061. 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. Results of Operations - --------------------- Net income for the third quarter of fiscal 1998 was $347,000, or $0.13 per share, compared with net income of $20,000, or $0.01 per share, in the third quarter of fiscal 1997. Net sales in the third quarter of fiscal 1998 were $17,081,000, a 32% increase from third quarter net sales last fiscal year of $12,923,000. The increase in sales was due to higher sales of radio products, military antennas and DBS antenna products, partially offset by lower sales of remote sensing systems. The increase in net income was primarily due to higher gross profits on the higher radio product sales. Net loss for the nine months ended December 31, 1997 was $52,000, or $0.02 per share, compared with net income of $204,000, or $0.08 per share, for the comparable period last fiscal year. Net sales for the nine months were $42,359,000, a 6% increase from net sales of $40,000,000 for the first nine months last fiscal year. The increase in sales was primarily due to higher sales of radio products and military antennas, partially offset by lower sales of remote sensing systems. The net loss resulted from lower gross profits on sales of remote sensing systems and military antennas. Operating results for each business segment were as follows: Antenna and Imaging Systems
Three Months Ended Nine Months Ended December 31, December 31, 1997 1996 1997 1996 --------------------- ------------------ Net sales $9,339,000 $8,234,000 $26,327,000 $25,995,000 ========== ========== =========== =========== Gross profit $1,999,000 $2,686,000 $ 5,234,000 $ 7,273,000 ========== ========== =========== =========== Operating income (loss) $ 104,000 625,000 ($4,000) $ 1,185,000 ========== ========= ========== ===========
Sales of Antenna and Imaging Systems products increased 13% in the third quarter of fiscal 1998 compared with the third quarter of fiscal 1997. The increase was due to higher sales of military antennas and DBS antenna products, including initial sales of the 7 DBS-2100 antenna system designed for large corporate aircraft, partially offset by lower sales of remote sensing systems. The lower remote sensing sales were partially attributable to the $903,000 EarthWatch sale reversal discussed below. Sales in the first nine months of fiscal 1998 were 1% higher than in the first nine months of fiscal 1997. The increase was primarily due to higher sales of military antennas, partially offset by lower sales of remote sensing systems. Gross profit percentage on sales of Antenna and Imaging Systems products was 21.4% in the third quarter of fiscal 1998 compared with 32.6% in the third quarter last fiscal year. The decrease was primarily due to higher engineering costs, manufacturing inefficiencies and a less favorable product mix. Gross profit percentage for the first nine months of fiscal 1998 was 19.9% of sales compared with 28.0% of sales for the first nine months of fiscal 1997 for the same reason. Operating income percentage on sales of Antenna and Imaging Systems products was 1.1% in the third quarter of fiscal 1998 compared with 7.6% in the third quarter last fiscal year. The decrease resulted from lower gross profits, partially offset by lower product development expenses. Operating loss percentage for the first nine months of fiscal 1998 was less than 1.0% of sales compared with an operating income percentage of 4.6% of sales for the first nine months of fiscal 1997. The decrease was primarily due to lower gross profits, partially offset by lower product development, administrative and selling expenses. In December 1997, EarthWatch Incorporated, a customer of the Company, launched and then subsequently lost communications with, its first three-meter resolution remote sensing satellite. See Note 6 to the Consolidated Financial Statements. The Company has a contract with EarthWatch to deliver three earth stations, of which the first two have been delivered and paid for. The third earth station is available for delivery, but EarthWatch has failed to specify a date and place for delivery in accordance with terms of the contract. Because of this failure and EarthWatch's stated current inability to pay for the third earth station, as well as the uncertainty of EarthWatch's ability to raise additional financing that would permit them to do so, in the third quarter ended December 31, 1997 the Company reversed recognized sales under the EarthWatch contract in the amount of $903,000 and reversed gross profit attributable to those sales in the amount of $120,000. The third earth station is a standard-design product, which the Company believes to be saleable to other customers. The Company is unable to determine what effect recent events at EarthWatch will have on the valuation of its investment in EarthWatch. Communication Products and Services
Three Months Ended Nine Months Ended December 31, December 31, 1997 1996 1997 1996 ------------------ ------------------ Net sales $7,742,000 $4,689,000 $16,032,000 $14,005,000 ========== ========== =========== =========== Gross profit $2,269,000 $ 926,000 $ 5,000,000 $ 3,704,000 ========== ========== =========== =========== Operating income (loss) $ 860,000 $ (353,000) $ 1,241,000 $ 424,000 ========== ========== =========== ===========
Sales of Communication Products and Services increased 65% in the third quarter of fiscal 1998 compared with the third quarter of fiscal 1997. The increase was primarily due to higher order bookings in the recent quarter and to shorter turnaround times from order receipt to shipment. Sales in the first nine months of fiscal 1998 were 14% higher than in the first nine months of fiscal 1997. The increase in sales came from the Company's traditional markets. Gross profit percentage on sales of Communication Products and Services was 29.3% in the third quarter of fiscal 1998 compared with 19.7% in the third quarter last fiscal year. The increase was primarily due to lower labor and overhead expenses, and to production efficiencies resulting from a higher sales level. Gross profit percentage for the first nine months of fiscal 1998 was 31.2% of sales compared with 26.4% of sales for the first nine months of fiscal 1997 for the same reason. Operating income percentage on sales of Communication Products and Services was 11.1% in the third quarter of fiscal 1998 compared with an operating loss percentage of 7.5% in the third quarter last fiscal year. The increase resulted primarily from higher gross profits. Operating income percentage for the first nine months of fiscal 1998 was 7.7% of sales compared with 3.0% 8 of sales for the first nine months of fiscal 1997. The increase was primarily due to higher gross profits and lower selling expenses, partially offset by higher administrative and product development expenses. Consolidated expenses were as follows: Selling, general and administrative expenses were $3,143,000 in the third quarter of fiscal 1998, a 15% increase compared with third quarter of fiscal 1997 expenses of $2,730,000. The increase was primarily due to the absence of reserve reductions for commitments and contingencies that were included in third quarter results in fiscal 1997 and to higher recent quarter administrative expenses in the Communication Products and Services business segment. Selling, general and administrative expenses for the first nine months of fiscal 1998 were $8,688,000, a 3% increase compared with first nine months of fiscal 1997 expenses of $8,452,000. The increase was primarily due to higher administrative expenses, partially offset by lower selling expenses. Research and development (R&D) expenses were $483,000 in the third quarter of fiscal 1998 compared with $680,000 in the third quarter last fiscal year. The 29% decrease resulted from lower spending on development programs for mobile DBS antenna products, partially offset by increased spending on development programs for new radio products. R&D expenses in the first nine months of fiscal 1998 were $1,343,000, a 22% decrease compared with first nine months of fiscal 1997 expenses of $1,720,000 for the same reason. Order backlog at December 31 was as follows: 1997 1996 ----------- ---------- Antenna and Imaging Systems $20,860,000 $15,451,000 Communication Products and Services 3,381,000 2,928,000 ----------- ----------- Total $24,241,000 $18,379,000 =========== =========== The 35% increase in Antenna and Imaging Systems backlog at December 31, 1997 compared with December 31, 1996 was primarily due to higher order bookings for remote sensing systems. The 15% increase in Communication Products and Services backlog at December 31, 1997 compared with December 31, 1996 was primarily due to improved order bookings in the recent quarter ended December 31, 1997. Liquidity and Capital Resources - ------------------------------- At December 31, 1997, working capital was $21,083,000 compared with $24,756,000 at March 31, 1997, a decrease of $3,673,000 or 15%. Major changes affecting working capital during this period were the following: accounts receivable increased $573,000 as sales exceeded collections; inventories decreased $1,190,000 primarily due to reductions in radio products inventories and to increases in the provision for inventory obsolescence; and accounts payable and accrued expenses increased $2,813,000. The Company's cash position at December 31, 1997 was $1,130,000 compared with $1,072,000 at March 31, 1997, an increase of 5%. At December 31, 1997, the Company had borrowed $4,200,000 in term debt from its bank to meet operating cash requirements. These borrowings represent a 53% decrease in term debt from the $8,900,000 of borrowings at March 31, 1997. Capital equipment expenditures were $711,000 during the first nine months of fiscal 1998 compared with $571,000 in the first nine months last fiscal year. The increase was primarily due to higher purchases of equipment for the Antenna and Imaging Systems business segment. At December 31, 1997, the Company had a $19,500,000 committed revolving line of credit with its bank, of which up to $15,000,000 may be used for the issuance of letters of credit and up to $9,500,000 may be used for direct working capital advances provided that total credit extended does not exceed $19,500,000. See Note 7 to Consolidated Financial Statements. 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 1. Legal Proceedings. In August 1992, Trans World Communications, Inc. (Trans World), a wholly owned subsidiary of the Company and which was renamed Datron World Communications Inc. on March 31, 1995, was named as defendant in a lawsuit filed by ATACS Corporation (ATACS) and AIRTACS Corporation (AIRTACS) relating to a contract to provide radio communication shelters. ATACS and AIRTACS contend that Trans World entered into an agreement to team with them on the contract and then wrongfully failed to use them as subcontractors. They seek damages in excess of $2,000,000. In a May 28, 1997 ruling, the court found Trans World in breach of a teaming agreement but was not able to determine what damages, if any, were incurred by ATACS and AIRTACS. The court ordered both parties to submit supplemental findings to support their positions regarding damages. On September 3, 1997, the court awarded ATACS and AIRTACS one dollar ($1.00) in damages. ATACS and AIRTACS have appealed the court's decision. The Company has taken a cross appeal with respect to the issue of whether the Company was in breach of any teaming agreement. The Company believes that final resolution of this matter will not materially affect the consolidated financial position of the Company. 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. 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 January 27, 1998 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 NINE MONTHS ENDED DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS MAR-31-1998 DEC-31-1997 1,130 0 18,615 146 13,119 36,201 26,108 15,186 54,133 15,118 0 0 0 31 32,647 54,133 42,359 42,359 32,125 32,125 10,044 0 275 (85) (33) (52) 0 0 0 (52) (0.02) (0.02)
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