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INDEX TO FINANCIAL STATEMENTS

		Page
Datron Audited Consolidated Financial Statements:
	Independent Auditors' Report	F-2
	Consolidated Balance Sheets at March 31, 2001 and 2000	F-3
	Consolidated Statements of Operations for the Years Ended March 31, 2001, 2000 and 1999	F-4
	Consolidated Statements of Stockholders' Equity for the Years Ended March 31, 2001, 2000 and 1999	F-5
	Consolidated Statements of Cash Flows for the Years Ended March 31, 2001, 2000 and 1999	F-6
	Notes to Consolidated Financial Statements	F-7
Datron Unaudited Consolidated Financial Statements:
	Consolidated Balance Sheets at June 30, 2001 and March 31, 2001	F-20
	Consolidated Statements of Operations for the Three Months Ended June 30, 2001 and 2000	F-21
	Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2001 and 2000	F-22
	Notes to Unaudited Consolidated Financial Statements	F-23

F–1

INDEPENDENT AUDITORS' REPORT

To the Board of Directors
Datron Systems Incorporated
Vista, California

    We have audited the accompanying consolidated balance sheets of Datron Systems Incorporated and its subsidiaries as of March 31, 2001 and 2000, and the related consolidated statements of operations, stockholders' equity, and cash flows for each of the three years in the period ended March 31, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

    We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

    In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Datron Systems Incorporated and its subsidiaries as of March 31, 2001 and 2000 and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2001 in conformity with accounting principles generally accepted in the United States of America.

DELOITTE & TOUCHE LLP
Deloitte & Touche LLP

San Diego, California
May 11, 2001

F–2

DATRON SYSTEMS INCORPORATED

CONSOLIDATED BALANCE SHEETS

			March 31,
			2001			2000
ASSETS
Current assets:
	Cash and cash equivalents		$	8,380,000		$	12,183,000
	Accounts receivable, net			19,652,000			12,658,000
	Inventories			11,495,000			11,626,000
	Deferred income taxes			2,426,000			2,603,000
	Prepaid expenses and other current assets			493,000			343,000
		Total current assets		42,446,000			39,413,000
Property, plant and equipment, net				9,004,000			9,427,000
Goodwill, net				5,032,000			5,237,000
Other assets				787,000			320,000
		Total assets	$	57,269,000		$	54,397,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	4,835,000		$	2,921,000
	Accrued expenses			6,754,000			9,632,000
	Customer advances			1,929,000			1,408,000
	Income taxes payable			1,554,000			1,433,000
	Current portion of long-term debt			96,000			90,000
		Total current liabilities		15,168,000			15,484,000
Long-term debt				2,984,000			3,080,000
Deferred income taxes				1,481,000			1,614,000
Deferred rent				150,000			103,000
		Total liabilities		19,783,000			20,281,000
Commitments and contingencies—Note 8
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, 3,116,292 and 3,098,943 shares issued in 2001 and 2000, respectively			31,000			31,000
	Additional paid-in capital			11,114,000			10,904,000
	Retained earnings			28,417,000			25,460,000
	Treasury stock, at cost; 368,005 and 387,303 shares in 2001 and 2000, respectively			(2,076,000	)		(2,115,000	)
	Stock option plan and stock purchase plan notes receivable			—			(164,000	)
		Total stockholders' equity		37,486,000			34,116,000
		Total liabilities and stockholders' equity	$	57,269,000		$	54,397,000

See notes to consolidated financial statements.

F–3

DATRON SYSTEMS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

	Years Ended March 31,
	2001			2000			1999
Net sales	$	62,262,000		$	61,887,000		$	59,084,000
Cost of sales		44,352,000			42,836,000			40,324,000
Gross profit		17,910,000			19,051,000			18,760,000
Selling, general and administrative		12,567,000			12,100,000			12,610,000
Research and development		3,993,000			3,960,000			3,269,000
Gain on sale of product line		(2,801,000	)		—			—
Operating income		4,151,000			2,991,000			2,881,000
Interest expense		(212,000	)		(217,000	)		(326,000	)
Interest income		405,000			194,000			231,000
Other income		64,000			1,129,000			47,000
Income before income taxes		4,408,000			4,097,000			2,833,000
Income taxes		1,451,000			1,593,000			1,131,000
Net income	$	2,957,000		$	2,504,000		$	1,702,000
Earnings per common share—basic	$	1.08		$	0.93		$	0.63
Weighted average number of common shares outstanding		2,735,000			2,703,000			2,688,000
Earnings per common share—diluted	$	1.06		$	0.92		$	0.63
Weighted average number of common and common equivalent shares outstanding		2,792,000			2,727,000			2,688,000

See notes to consolidated financial statements.

F–4

DATRON SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	Common Stock											Stock Option Plan & Stock Purchase Plan Notes Receivable
					Additional Paid-In Capital		Retained Earnings		Treasury Stock
	Shares		Par Value												Total
Balance at April 1, 1998	2,679,284		$	31,000	$	10,670,000	$	21,254,000	$	(2,106,000	)	$	(244,000	)	$	29,605,000
Stock issued under employee stock purchase plan and tax benefits	14,469			—		75,000		—		—			—			75,000
Stock option compensation	—			—		13,000		—		—			—			13,000
Net income	—			—		—		1,702,000		—			—			1,702,000
Balance at March 31, 1999	2,693,753			31,000		10,758,000		22,956,000		(2,106,000	)		(244,000	)		31,395,000
Stock issued under employee stock purchase plan	14,411			—		79,000		—		—			—			79,000
Treasury stock received for note payment	(5,334	)		—		—		—		(80,000	)		80,000			—
Stock options exercised for treasury stock and tax benefits	8,810			—		45,000		—		71,000			—			116,000
Stock option compensation	—			—		22,000		—		—			—			22,000
Net income	—			—		—		2,504,000		—			—			2,504,000
Balance at March 31, 2000	2,711,640			31,000		10,904,000		25,460,000		(2,115,000	)		(164,000	)		34,116,000
Stock issued under employee stock purchase plan	17,349			—		134,000		—		—			—			134,000
Treasury stock received for note payment and stock option exercise	(23,287	)		—		—		—		(306,000	)		164,000			(142,000	)
Stock options exercised for treasury stock and tax benefits	42,585			—		65,000		—		345,000			—			410,000
Stock option compensation	—			—		11,000		—		—			—			11,000
Net income	—			—		—		2,957,000		—			—			2,957,000
Balance at March 31, 2001	2,748,287		$	31,000	$	11,114,000	$	28,417,000	$	(2,076,000	)		—		$	37,486,000

F–5

DATRON SYSTEMS INCORPORATED

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Years Ended March 31,
			2001			2000			1999
Cash Flows from Operating Activities
Net income			$	2,957,000		$	2,504,000		$	1,702,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation and amortization			1,851,000			1,924,000			2,301,000
	Gain on sale of product line			(2,801,000	)		—			—
	Changes in operating assets and liabilities:
		Accounts receivable		(7,270,000	)		(1,691,000	)		4,520,000
		Inventories		(419,000	)		264,000			2,158,000
		Deferred income taxes		44,000			257,000			342,000
		Prepaid expenses and other assets		(620,000	)		397,000			6,000
		Accounts payable and accrued expenses		(1,218,000	)		2,663,000			(2,787,000	)
		Customer advances		521,000			(186,000	)		629,000
		Income taxes payable		121,000			1,151,000			79,000
		Restructuring reserve		—			—			(320,000	)
		Deferred rent		47,000			103,000			—
	Other			40,000			40,000			13,000
Net cash provided by (used in) operating activities				(6,747,000	)		7,426,000			8,643,000
Cash Flows from Investing Activities
Additions to property, plant and equipment				(1,266,000	)		(1,289,000	)		(1,535,000	)
Proceeds from sales of property, plant and equipment				17,000			387,000			77,000
Proceeds from sale of product line				3,881,000			—			—
Net cash provided by (used in) investing activities				2,632,000			(902,000	)		(1,458,000	)
Cash Flows from Financing Activities
Proceeds from long-term debt				—			—			3,300,000
Repayments of long-term debt				(90,000	)		(84,000	)		(46,000	)
Decrease in revolving credit facility				—			—			(5,600,000	)
Stock options exercised and tax benefits				268,000			116,000			1,000
Issuance of common stock				134,000			79,000			74,000
Net cash provided by (used in) financing activities				312,000			111,000			(2,271,000	)
Increase (decrease) in cash and cash equivalents				(3,803,000	)		6,635,000			4,914,000
Cash and cash equivalents at beginning of year				12,183,000			5,548,000			634,000
Cash and cash equivalents at end of year			$	8,380,000		$	12,183,000		$	5,548,000
Supplemental Cash Flow Information
Interest paid			$	212,000		$	217,000		$	327,000
Income tax paid (refunds received)			$	1,216,000		$	(355,000	)	$	596,000

See notes to consolidated financial statements.

F–6

DATRON SYSTEMS INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. NATURE OF OPERATIONS

    Datron Systems Incorporated and its wholly-owned subsidiaries (the "Company") provide products and services addressing the needs of emerging satellite and radio communication markets. The Company reports operations in two business segments: Antenna and Imaging Systems, which operates from facilities in Simi Valley, California, and Communication Products, which operates from facilities in Vista, California. The Antenna and Imaging Systems business segment designs and manufactures two primary product lines: (i) satellite tracking antenna systems used for remote sensing, TT&C (telemetry, tracking and control) and satellite communication purposes by government and commercial users, and (ii) mobile broadband communication systems for airlines, military transports, and mobile land and marine direct broadcast satellite ("DBS") TV users. The Communication Products business segment designs, manufactures and distributes voice and data communication radios and accessories for worldwide military and commercial purposes. The Company's products are sold worldwide through a network of Company salespersons and independent dealers and sales representatives.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

    The consolidated financial statements include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior year amounts to conform to the presentation for fiscal 2001.

Estimates

    The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and contingent assets and liabilities at the date of the financial statements. These estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash Equivalents

    Cash equivalents consist of highly liquid investments purchased with maturities of three months or less and which are readily convertible into cash.

Inventories

    Inventories are carried at the lower of cost (first-in, first-out) or market (determined on the basis of estimated realizable value).

Property, Plant and Equipment

    Property, plant and equipment are carried at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. Useful lives range from two to ten years for machinery and equipment and furniture and fixtures, and from seven to forty years for buildings and building improvements. Leasehold improvements are amortized over the related lease term.

F–7

Goodwill

    Goodwill represents the excess of the cost of purchased businesses over the fair value of their net assets at date of acquisition and is being amortized on a straight-line basis over 38 years. Accumulated amortization of goodwill was $2,669,000 at March 31, 2001 and $2,464,000 at March 31, 2000.

Treasury Stock

    Repurchased shares of the Company's common stock are included in treasury stock at cost. Shares issued from treasury stock for exercise of stock options are issued at cost on a first-in, first-out basis.

Revenue Recognition

    Revenue from product sales is recognized at the time of shipment, except in the case of certain fixed-price contracts requiring substantial performance over several periods prior to commencement of deliveries, which are accounted for under the percentage-of-completion (cost-to-cost) method of accounting. Expected profits or losses on these contracts are based on the Company's estimates of total sales value and cost at completion. These estimates are reviewed and revised periodically throughout the lives of the contracts, and adjustments resulting from such revisions are recorded in the periods in which revisions are made. Losses on contracts are recorded in full as they are identified.

    Accounts receivable include unbilled costs and accrued profits related to contracts accounted for under the percentage-of-completion method of accounting. There are no material amounts of contract holdbacks or claims subject to uncertainty of realization. Substantially all amounts are expected to be collected within one year. Funds received from customers in advance of contract work are classified as current liabilities.

Foreign Sales

    All foreign sales are denominated in U.S. Dollars.

Income Taxes

    The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." This statement requires that deferred income taxes be reported in the Company's financial statements utilizing the asset and liability method. Under this method, deferred income taxes are determined based on enacted tax rates applied to the differences between the financial statement and tax bases of assets and liabilities.

Earnings Per Share

    Basic earnings per share ("EPS") is calculated based on the weighted average number of shares outstanding during the year. Diluted EPS is calculated based on the weighted average number of shares outstanding during the year plus equivalent shares issuable under the Company's stock option plans when such amounts are dilutive. Options to purchase 82,000 shares of common stock at prices ranging from $12.75 - $15.73 were not included in the computation of diluted EPS at March 31, 2001 because the effect of such options would be anti-dilutive. Such options expire at various dates from November 10, 2005 to January 30, 2011. At March 31, 2000 and 1999, options to purchase 87,000 shares and 311,000 shares, respectively, of common stock at exercise prices ranging from

F–8

$12.75 - $15.73 and $6.50 - $15.73, respectively, were not included in the computation of diluted EPS because the effect of such options would be anti-dilutive.

Stock-Based Compensation

    As permitted by SFAS No. 123, "Accounting for Stock-Based Compensation," the Company accounts for costs of stock-based compensation in accordance with Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and, accordingly, discloses the pro forma effect on net income (loss) and related per share amounts using the fair value-based method to account for its stock-based compensation (see Note 7).

Recent Accounting Pronouncements

    In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement requires all derivatives to be recorded on the balance sheet at fair value and established accounting standards for hedging activities. In June 1999, the FASB issued SFAS No. 137, which amended SFAS No. 133 by deferring its effective date one year to fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, which amended certain accounting and reporting standards of SFAS No. 133. The Company adopted SFAS No. 133 as of April 1, 2001. The adoption of SFAS 133 did not have a material affect on the Company's financial position, results of operations or cash flows.

NOTE 3. GAIN ON SALE OF PRODUCT LINE

    In November 2000, the Company sold its microwave products line, part of the Antenna and Imaging Systems business segment, to Nurad Technologies, Inc. for $3,881,000 cash. A gain on the sale of $2,801,000 was recorded in the third quarter of fiscal 2001.

NOTE 4. BALANCE SHEET INFORMATION

    Accounts receivable at March 31:

		2001			2000
Billed		$	15,484,000		$	9,108,000
Unbilled			4,285,000			3,659,000
Subtotal		$	19,769,000			12,767,000
Allowance for doubtful accounts			(117,000	)		(109,000	)
	Total	$	19,652,000		$	12,658,000

F–9

    Inventories at March 31:

		2001		2000
Raw materials		$	7,714,000	$	7,587,000
Work-in-process			2,395,000		2,233,000
Finished goods			1,386,000		1,806,000
	Total	$	11,495,000	$	11,626,000

    Inventories are presented net of allowances for obsolescence of $1,665,000 and $1,527,000 at March 31, 2001 and 2000, respectively.

    Property, plant and equipment at March 31:

		2001			2000
Land and buildings		$	9,052,000		$	8,901,000
Machinery and equipment			15,400,000			15,298,000
Furniture and office equipment			1,552,000			1,548,000
Leasehold improvements			751,000			726,000
Construction-in-process			57,000			—
Subtotal			26,812,000			26,473,000
Accumulated depreciation and amortization			(17,808,000	)		(17,046,000	)
	Total	$	9,004,000		$	9,427,000

    Accrued expenses at March 31:

		2001		2000
Salaries and employee benefits		$	2,825,000	$	2,911,000
Commission and service fees			2,103,000		4,540,000
Warranty allowance			1,079,000		1,085,000
Royalties			190,000		257,000
Other			557,000		839,000
	Total	$	6,754,000	$	9,632,000

NOTE 5. LONG-TERM DEBT

    At March 31, 2001, the Company had a committed $13,000,000 revolving line of credit with its bank. The line may be used for the issuance of letters of credit and for direct working capital advances, of which $2,000,000 is restricted to working capital and letters of credit required to finance non-military international business. That portion of the line of credit expired on April 1, 2001 and was subject to a borrowing base formula. The remaining $11,000,000 credit facility expires on April 1, 2002. Interest is payable on borrowings under the line of credit at the bank's prime rate plus 0.50%. At March 31, 2001, the bank's prime rate was 8.0%. The line of credit is secured by assets of the Company and contains certain financial covenants with which the Company is in compliance. At March 31, 2001, there were

F–10

no borrowings under the line and the bank had issued letters of credit against the line totaling $3,871,000.

    In May 2001, the Company entered into a $15,000,000 revolving line of credit with a new bank, replacing the line of credit described above. The line may be used for the issuance of standby letters of credit up to $15,000,000 and working capital advances up to $5,000,000 provided total credit extended does not exceed $15,000,000. The line of credit expires August 2, 2002 and is not subject to a borrowing base formula. Interest is payable on borrowings under the line of credit at the bank's prime rate, which at March 31, 2001 was 8.0%. The line of credit is secured by assets of the Company and contains certain financial covenants with which the Company is in compliance.

    On August 7, 1998, the Company issued a promissory note to a life insurance company in the amount of $3,300,000 pursuant to a loan agreement under which the Company borrowed the same amount. The note is secured by a deed of trust on the Company's Simi Valley facility and has a maturity date of September 1, 2008. Monthly payments are calculated on a 20-year amortization. Interest is payable at a rate of 6.76% per annum through September 1, 2003, at which date the interest rate becomes variable and tied to LIBOR, adjusting every quarter for the remainder of the term. On September 1, 2003, the Company may either prepay the note without penalty or accept the variable rate provisions as determined at that time.

    At March 31, long-term debt was as follows:

	2001			2000
6.76% note payable due September 1, 2008	$	3,080,000		$	3,170,000
Less current portion		(96,000	)		(90,000	)
Long-term debt	$	2,984,000		$	3,080,000

    Aggregate principal payments for each of the years ending March 31 are as follows:

Year		Principal Payments
2002		$	96,000
2003			103,000
2004			110,000
2005			118,000
2006			126,000
Thereafter			2,527,000
	Total	$	3,080,000

    The Company believes the carrying amount of its outstanding long-term debt at March 31, 2001 and 2000 is a reasonable estimate of its fair value. This was determined based on a review of borrowing rates available to the Company at March 31, 2001 and 2000 for loans with similar terms and maturities.

F–11

NOTE 6. INCOME TAXES

    The Company's deferred income tax assets and liabilities at March 31 are as follows:

			2001			2000
Deferred income tax assets:
	Contract loss and other allowances		$	1,590,000		$	1,801,000
	Accrued employee benefits			467,000			503,000
	Amortization of intangibles			179,000			200,000
	Deferred rent			65,000			—
	Other			125,000			99,000
		Total		2,426,000			2,603,000
Deferred income tax liabilities:
	Depreciation			(1,356,000	)		(1,479,000	)
	State taxes			(125,000	)		(135,000	)
		Total		(1,481,000	)		(1,614,000	)
Net deferred income tax asset			$	945,000		$	989,000

    As of March 31, 2001, the Company had no federal or California net operating loss carryforwards or credit carryforwards.

    The provision for income taxes for the years ended March 31 is as follows:

			2001		2000		1999
Federal:
	Current		$	1,238,000	$	1,233,000	$	746,000
	Deferred			12,000		50,000		139,000
State:
	Current			169,000		103,000		43,000
	Deferred			32,000		207,000		203,000
		Total	$	1,451,000	$	1,593,000	$	1,131,000

    The provision for income taxes differs from the federal statutory tax rate for the years ended March 31 due to the following:

		2001			2000			1999
Expected tax at statutory rate		$	1,499,000		$	1,393,000		$	963,000
State tax, net of federal tax effect			133,000			205,000			163,000
Research & Development credit			(160,000	)		(36,000	)		—
Foreign Sales Corporation earnings			(141,000	)		(132,000	)		(104,000	)
Goodwill amortization			70,000			70,000			70,000
Other differences			50,000			93,000			39,000
	Total	$	1,451,000		$	1,593,000		$	1,131,000

F–12

NOTE 7. EMPLOYEE INCENTIVE PLANS

    In May 1985, the Company adopted the 1985 Stock Option Plan (the "1985 Plan"). Under the 1985 Plan, as amended, 500,000 shares of common stock may be issued upon the exercise of options granted to employees of the Company at not less than the fair market value on the date of grant and to directors of the Company at not less than 85% of the fair market value on the date of grant. Options become exercisable ratably over three years and expire ten years from the date of grant. The 1985 Plan expired in May 1995. During the fiscal year ended March 31, 2000, a promissory note in the amount of $80,000 that had been issued in connection with the exercise of an option granted pursuant to the 1985 Plan was paid in full by the maker.

    In February 1995, the Company adopted the 1995 Stock Option Plan (the "1995 Plan"), authorizing the issuance of 206,700 option shares of which 61,073 were available under the 1985 Plan at the time of its expiration. In August 1999, the 1995 Plan was amended to increase by 200,000 the number of shares available for grant and to require all options be granted at fair market value. Other terms of issuance and exercise of options granted under the 1995 Plan are similar to those under the 1985 Plan.

    The Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Had compensation expense for the Company's two fixed stock option plans (the 1985 Plan and 1995 Plan) been determined consistent with the provisions of SFAS No. 123 based on the fair value at date of grant for awards made subsequent to March 31, 1995, and assumed forfeiture rates of 19%, 17% and 21%, respectively, net income and earnings per share would have been reduced to the pro forma amounts indicated below:

	2001		2000		1999
Net income
As reported	$	2,957,000	$	2,504,000	$	1,702,000
Pro forma	$	2,315,000	$	2,071,000	$	1,460,000
Earnings per common share—basic
As reported	$	1.08	$	0.93	$	0.63
Pro forma	$	0.85	$	0.77	$	0.54
Earnings per common share—diluted
As reported	$	1.06	$	0.92	$	0.63
Pro forma	$	0.83	$	0.76	$	0.54

    The weighted-average fair value of options granted under the two stock option plans with exercise prices equal to market price during fiscal years 2001, 2000 and 1999 is estimated at $7.24, $7.04 and $2.87, respectively, and the weighted-average exercise prices for those options was $12.15, $12.32 and $6.54, respectively. The weighted-average fair value of options granted under the two stock option plans with exercise prices at less than market price during fiscal years 2001, 2000 and 1999 is estimated at zero, $3.58 and zero, respectively, and the weighted-average exercise prices for those options was zero, $5.10 and zero, respectively. These estimates were determined by using the Black-Scholes option-pricing model with the following weighted-average assumptions for grants awarded in fiscal years 2001, 2000 and 1999, respectively: dividend yield of 0%, 0% and 0%; expected volatility of 64%, 59% and 41%; risk-free rate of return of 6.13%, 6.15% and 5.31%; and expected lives of 5 years, 5 years and 5 years. A change in these assumptions could result in a significant change to the indicated fair value amounts.

F–13

    A summary of the status of the Company's two fixed stock option plans as of March 31, 2001, 2000 and 1999 and activity during the years then ended is as follows:

	2001				2000				1999
	Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price		Shares		Weighted- Average Exercise Price
Outstanding at beginning of year	379,690		$	9.41	311,130		$	9.32	319,960		$	9.96
Granted	134,000		$	12.15	124,500		$	10.00	53,000		$	6.54
Canceled	(33,725	)	$	10.63	(47,130	)	$	10.24	(61,830	)	$	10.22
Exercised	(42,585	)	$	8.00	(8,810	)	$	10.14	—			—
Outstanding at end of year	437,380		$	10.08	379,690		$	9.41	311,130		$	9.32
Options exercisable at end of year	228,880		$	9.60	186,190		$	9.61	173,667		$	10.35

    Stock option compensation expense related to options granted at less than fair value on date of grant pursuant to the 1995 Plan was $11,000, $22,000 and $13,000 in fiscal years 2001, 2000 and 1999, respectively.

    Information about fixed stock options outstanding at March 31, 2001 is as follows:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number Outstanding	Weighted-Ave. Remaining Contractual Life	Weighted-Ave. Exercise Price		Number Exercisable	Weighted-Ave. Exercise Price
$5.10 - $7.23	87,210	7.7 years	$	6.03	43,210	$	6.23
$8.13 - $9.50	111,170	5.7 years	$	8.71	111,170	$	8.71
$10.00 - $12.75	159,500	8.2 years	$	11.31	40,500	$	11.51
$13.50 - $15.73	79,500	8.2 years	$	13.99	34,000	$	14.48
$5.10 - $15.73	437,380	7.5 years	$	10.08	228,880	$	9.60

    At March 31, 2001, 65,455 shares were available for grant under the 1995 Plan.

    In March 1988, the Company adopted the 1988 Key Employee Stock Purchase Plan (the "Purchase Plan"). Under terms of the Purchase Plan, 75,000 shares of common stock may be made available for purchase at fair market value to key employees as determined by the board of directors. During the fiscal year ended March 31, 2001, a promissory note in the amount of $164,000 that had been issued pursuant to the Purchase Plan was paid in full by the maker.

    The Company has a non-contributory qualified profit sharing plan. Employees are eligible to participate on April 1 following their date of employment and benefits vest over seven years. Annual contributions are determined by the board of directors. Such amounts were $171,000, $195,000 and $151,000 for the fiscal years ended March 31, 2001, 2000 and 1999, respectively.

    In November 1995, the Company adopted the Supplemental Executive Profit Sharing Plan, effective as of April 1, 1994. The plan is a deferred compensation plan intended to provide certain executive employees with additional funds for their retirement. Terms of participation and vesting of benefits are similar to those of the qualified profit sharing plan. Eligibility for participation and annual

F–14

contributions are determined by the board of directors. Contributions for the fiscal years ended March 31, 2001, 2000 and 1999 were $5,000, $9,000 and $14,000, respectively.

    In August 1997, the Company adopted the Employee Stock Purchase Plan, effective as of July 1, 1997. Employees are eligible to participate in the plan if they have been employed a minimum of five months and work at least 20 hours per week. Eligible employees may use funds from accumulated payroll deductions to purchase shares of Company common stock at the end of six-month offering periods. They may contribute up to 10% of gross earnings toward such purchases, not to exceed $12,500 per offering period, and may purchase a maximum of 1,000 shares per offering period. The purchase price for the shares is 85% of the lesser of the fair market value of the common stock at the beginning of the offering period or at the end of the offering period. Shares purchased must be held for a minimum of three months before they can be sold. A total of 200,000 shares has been authorized for issuance under the Employee Stock Purchase Plan.

    Common stock issued under the Employee Stock Purchase Plan is summarized as follows:

		2000			1999			1998
Offering Period Ended		Shares Issued	Purchase Price		Shares Issued	Purchase Price		Shares Issued	Purchase Price
June 30		7,938	$	7.12	7,713	$	4.68	6,648	$	5.74
December 31		9,411	$	8.23	6,698	$	6.22	7,821	$	4.62
	Total	17,349			14,411			14,469

NOTE 8. COMMITMENTS AND CONTINGENCIES

    The Company leases certain production and office facilities and certain equipment under noncancelable operating leases. In March 1998, the Company signed a ten-year lease for a production and office facility located in Vista, California. That lease commenced March 26, 1999. Future minimum operating lease obligations for each of the years ending March 31 are as follows:

Year		Total Lease Obligation
2002		$	657,000
2003			648,000
2004			625,000
2005			585,000
2006			599,000
Thereafter			1,949,000
	Total	$	5,063,000

    Total rent expense under noncancelable operating leases was $772,000, $793,000 and $624,000 for the fiscal years ended March 31, 2001, 2000 and 1999, respectively. Additional rent payments in the amount of $175,000 were charged to a restructuring reserve during the fiscal year ended March 31, 1999.

F–15

    In the normal course of business, the Company is subject to claims and litigation that may be raised by governmental agencies in connection with U.S. government contracts, U.S. government export control regulations and other regulatory issues, and civil claims by private parties. In connection with a Defense Contract Audit Agency ("DCAA") audit of a $9.6 million U.S. Navy contract completed in 1989, DCAA has submitted a report to the Contracting Officer alleging deficiencies in the information provided to the Navy at the time the contract was negotiated and recommending a reduction in the contract value. During the second fiscal quarter ended September 30, 2000, the Company reached a settlement with the Contracting Officer and refunded a portion of the contract value plus accrued interest using amounts previously reserved. Resolution of this matter did not have a material effect on the consolidated financial position of the Company or its results of operations.

    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 rulings on May 28, 1997 and September 3, 1997, the court found Trans World in breach of a teaming agreement and awarded ATACS and AIRTACS one dollar ($1.00) in damages. On September 8, 1998, the appeal court affirmed the district court's decision except as to the award of nominal damages, and remanded the matter to the district court for further hearing on damages. On June 14, 2000, the district court issued an order awarding ATACS and AIRTACS damages of $30,075 including prejudgment interest. On July 12, 2000, ATACS and AIRTACS appealed the district court's judgment to the U.S. Court of Appeals. The Company believes that final resolution of this matter will not materially affect the consolidated financial position of the Company or its results of operations.

    In December 2000, Datron World Communications Inc. ("DWC"), a wholly-owned subsidiary of the Company, was named as defendant in a lawsuit filed by Jose Maria Santos Ramos, an individual, and Tecserve (Private) Limited trading as Vista Communications ("Plaintiffs"). In the lawsuit, Plaintiffs allege that DWC breached a representative agreement and that Plaintiffs are entitled to payment of a commission in the amount of $3,750,000 based on the alleged agreement. DWC denies that it breached the agreement and/or that it owes any commissions to Plaintiffs. The Company believes that final resolution of this matter will not materially affect the consolidated financial position of the Company or its results of operations.

NOTE 9. SEGMENT AND GEOGRAPHIC INFORMATION

    The Company operates in two business segments: Antenna and Imaging Systems, and Communication Products. See Note 1. Management evaluates performance and allocates resources by focusing on operating income as the principal measurement of segment performance. Operating income is before net interest expense, other income (expense) and income taxes. Accounting policies of the two segments are the same as those described in Note 2, Summary of Significant Accounting Policies. The following table contains certain segment, geographic and customer information about the Company.

F–16

There were no intersegment sales during the periods presented. All assets of the Company are located in the U.S.

		2001			2000			1999
Net sales:
	Antenna and Imaging Systems	$	36,930,000		$	39,756,000		$	39,084,000
	Communication Products		25,332,000			22,131,000			20,000,000
	Consolidated net sales	$	62,262,000		$	61,887,000		$	59,084,000
Operating income:
	Antenna and Imaging Systems	$	3,444,000		$	2,763,000		$	3,133,000
	Communication Products		2,393,000			1,801,000			1,137,000
	General corporate expenses		(1,686,000	)		(1,573,000	)		(1,389,000	)
	Consolidated operating income		4,151,000			2,991,000			2,881,000
Interest income (expense), net			193,000			(23,000	)		(95,000	)
Other income			64,000			1,129,000			47,000
Income before income taxes		$	4,408,000		$	4,097,000		$	2,833,000
Identifiable assets:
	Antenna and Imaging Systems	$	19,736,000		$	18,848,000		$	19,146,000
	Communication Products		24,656,000			19,068,000			18,579,000
	Corporate		12,877,000			16,481,000			10,442,000
	Consolidated total	$	57,269,000		$	54,397,000		$	48,167,000
Capital expenditures:
	Antenna and Imaging Systems	$	777,000		$	788,000		$	404,000
	Communication Products		483,000			486,000			1,046,000
	Corporate		6,000			15,000			85,000
	Consolidated total	$	1,266,000		$	1,289,000		$	1,535,000
Depreciation and amortization:
	Antenna and Imaging Systems	$	768,000		$	836,000		$	1,226,000
	Communication Products		1,061,000			1,069,000			1,060,000
	Corporate		22,000			19,000			15,000
	Consolidated total	$	1,851,000		$	1,924,000		$	2,301,000

F–17

Net sales by customer location:
	Asia	$	22,921,000	$	10,867,000	$	9,009,000
	Europe		6,409,000		9,132,000		11,841,000
	Africa		3,603,000		12,287,000		6,620,000
	South America		2,493,000		1,100,000		4,405,000
	Other		421,000		452,000		488,000
	Subtotal foreign net sales		35,847,000		33,838,000		32,363,000
	U.S.		26,415,000		28,049,000		26,721,000
	Consolidated net sales	$	62,262,000	$	61,887,000	$	59,084,000
Sales for U.S. Department of Defense:
	Antenna and Imaging Systems	$	8,875,000	$	12,670,000	$	11,105,000
	Communication Products		113,000		670,000		713,000
	Consolidated total	$	8,988,000	$	13,340,000	$	11,818,000

    For the fiscal year ended March 31, 2001, two customers accounted for 36% and 29% of Communication Products' net sales. For the fiscal year ended March 31, 2000, two customers accounted for 13% and 11% of Antenna and Imaging Systems' net sales and two customers accounted for 44% and 11% of Communication Products' net sales. For the fiscal year ended March 31, 1999, two customers accounted for 14% and 13% of Antenna and Imaging Systems' net sales and one customer accounted for 20% of Communication Products' net sales.

NOTE 10. QUARTERLY FINANCIAL DATA—Unaudited

	Fiscal Year 2001
	Net Sales		Gross Profit		Net Income (Loss)			Earnings (Loss) Per Share—Diluted
	(in thousands, except per-share data)
First Quarter	$	13,354	$	3,408	$	(327	)	$	(0.12	)
Second Quarter		14,616		4,722		373			0.13
Third Quarter		13,070		3,401		1,369			0.49
Fourth Quarter		21,222		6,379		1,542			0.55
Fiscal Year	$	62,262	$	17,910	$	2,957		$	1.06

    First quarter results reflect a net loss due to low sales of Communication Products. Sales of Communication Products were higher in the second and third quarters due to an $8 million radio order booked in the first quarter, but were partially offset by lower sales of Antenna and Imaging Systems products primarily due to lower sales of remote sensing satellite earth stations. The improvement in net income in the third quarter resulted from a $2,801,000 pre-tax gain (approximately $1,685,000, or $0.60 per diluted share after-tax) on the sale of the Company's microwave products line. Excluding the one-time gain, the Company would have recorded a net loss for the third quarter of approximately $316,000, or $0.11 per diluted share. Sales and gross profits were significantly higher in the fourth quarter primarily due to a $7 million radio order received in the third quarter, most of which was

F–18

shipped in the fourth quarter. The higher Communication Product sales in the fourth quarter were partially offset by lower sales of Antenna and Imaging Systems products due to lower order bookings resulting from fewer contract awards and aggressive competition.

	Fiscal Year 2000
	Net Sales		Gross Profit		Net Income (Loss)			Earnings (Loss) Per Share—Diluted
First Quarter	$	13,523	$	3,885	$	52		$	0.02
Second Quarter		14,130		3,718		603			0.22
Third Quarter		12,729		3,457		(291	)		(0.11	)
Fourth Quarter		21,505		7,991		2,140			0.77
Fiscal Year	$	61,887	$	19,051	$	2,504		$	0.92

    Results for the first three quarters reflect low gross profits primarily due to low sales of Communication Products and lower gross margins on mobile DBS antenna products. Gross profits improved significantly in the fourth quarter due to receipt and shipment of a $9 million international radio order that had experienced several delays. Net income (loss) for the first three quarters reflects the low gross profits on the low sales and a 64% increase in new product development expenses for the nine months compared with the same nine-month period in fiscal 1999. The increase in net income in the second quarter resulted primarily from the licensing of manufacturing rights to the Company's airborne DBS-2100 antenna for business jets. The increase in net income in the fourth quarter was due to increased gross profits on the much higher sales.

    The total of quarterly earnings (loss) per share-diluted for fiscal years 2001 and 2000 does not equal the fiscal year earnings per share—diluted because the calculation for each period is based on the weighted average number of common and common equivalent shares outstanding for each period.

F–19

DATRON SYSTEMS INCORPORATED

CONSOLIDATED BALANCE SHEETS

(In thousands)

			June 30, 2001		March 31, 2001
			(Unaudited)
ASSETS
Current assets:
	Cash and cash equivalents		$	3,678	$	8,380
	Accounts receivable, net			17,137		19,652
	Inventories			12,803		11,495
	Deferred income taxes			2,426		2,426
	Prepaid expenses and other current assets			1,235		493
		Total current assets		37,279		42,446
Property, plant and equipment, net				8,771		9,004
Goodwill, net				4,981		5,032
Other assets				885		787
		Total assets	$	51,916	$	57,269
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
	Accounts payable		$	3,173	$	4,835
	Accrued expenses			5,579		6,754
	Customer advances			1,627		1,929
	Income taxes payable			370		1,554
	Current portion of long-term debt			98		96
		Total current liabilities		10,847		15,168
Long-term debt				2,958		2,984
Deferred income taxes				1,481		1,481
Deferred rent				159		150
		Total liabilities		15,445		19,783
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, 2,758,257 and 3,116,292 shares issued in June and March, respectively			27		31
	Additional paid-in capital			9,148		11,114
	Retained earnings			27,296		28,417
	Treasury stock, at cost;no shares in June and 368,005 shares in March			—		(2,076	)
		Total stockholders' equity		36,471		37,486
		Total liabilities and stockholders' equity	$	51,916	$	57,269

See notes to unaudited consolidated financial statements.

F–20

DATRON SYSTEMS INCORPORATED

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended June 30,
	2001			2000
Net sales	$	10,609		$	13,354
Cost of sales		8,102			9,946
Gross profit		2,507			3,408
Selling, general and administrative		3,655			2,996
Research and development		708			1,023
Operating loss		(1,856	)		(611	)
Interest expense		(52	)		(53	)
Interest income		62			130
Other income (expense)		21			(8	)
Loss before income taxes		(1,825	)		(542	)
Income taxes (benefit)		(704	)		(215	)
Net loss	$	(1,121	)	$	(327	)
Loss per common share—basic	$	(0.41	)	$	(0.12	)
Weighted average number of common shares outstanding		2,752			2,721
Loss per common share—diluted	$	(0.41	)	$	(0.12	)
Weighted average number of common and common equivalent shares outstanding		2,752			2,721

See notes to unaudited consolidated financial statements.

F–21

DATRON SYSTEMS INCORPORTED

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

			Three Months Ended June 30,
			2001			2000
Cash Flows from Operating Activities
Net loss			$	(1,121	)	$	(327	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
	Depreciation and amortization			458			482
	Changes in operating assets and liabilities:
		Accounts receivable		2,515			1,318
		Inventories		(1,308	)		(79	)
		Prepaid expenses and other assets		(842	)		(347	)
		Accounts payable and accrued expenses		(2,837	)		(4,045	)
		Customer advances		(302	)		(793	)
		Income taxes payable		(1,184	)		(1,062	)
		Deferred rent		9			15
	Other			1			14
Net cash used in operating activities				(4,611	)		(4,824	)
Cash Flows from Investing Activities Additions to property, plant and equipment				(172	)		(154	)
Net cash used in investing activities				(172	)		(154	)
Cash Flows from Financing Activities Repayments of long-term debt				(24	)		(23	)
Stock options exercised				23			39
Issuance of common stock				82			57
Net cash provided by financing activities				81			73
Decrease in cash and cash equivalents				(4,702	)		(4,905	)
Cash and cash equivalents at beginning of period				8,380			12,183
Cash and cash equivalents at end of period			$	3,678		$	7,278

See notes to unaudited consolidated financial statements.

F–22

Datron Systems Incorporated

Notes to Unaudited Consolidated Financial Statements

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, 2001.

    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 June 30, 2001 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, 2001 has been derived from audited financial statements.

    In June 2001, the Financial Accounting Standards Board ("FASB") issued two new pronouncements: Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001 and that the use of the pooling-of-interests method is no longer allowed. SFAS No. 142 requires that upon adoption, amortization of goodwill will cease and instead, the carrying value of goodwill will be evaluated for impairment on an annual basis. Identifiable intangible assets will continue to be amortized over their useful lives and reviewed for impairment in accordance with SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The Company is required to implement SFAS No. 141 on July 1, 2001 and SFAS No. 142 at the beginning of its next fiscal year, April 1, 2002. The Company is evaluating the impact of the adoption of these standards and has not yet determined the effect, if any, that their adoption will have on its consolidated financial position or results of operations.

    On July 3, 2001, The Titan Corporation ("Titan") commenced an exchange offer (the "Offer") through its wholly owned subsidiary, Gem Acquisition Corp. ("Merger Sub"), for all of the outstanding shares of common stock ("Datron Common Stock") of Datron Systems Incorporated ("Datron"). The Offer expired at midnight (NYC time) on August 3, 2001 and the Merger Sub accepted for payment approximately 1,953,682 shares tendered by Datron stockholders in the Offer. As a result, Titan owns approximately 69.6% of Datron Common Stock. Each validly tendered share of Datron Common Stock will be exchanged for 0.81919 shares of Titan common stock, and cash will be issued for fractional shares of Titan common stock. In addition, pursuant to the terms of an Agreement and Plan of Merger and Reorganization dated as of June 24, 2001 by and among Datron, Merger Sub and Titan, effective August 3, 2001, Datron's board of directors was increased from six to seven members, three of Datron's board members resigned and Titan designated four directors who were elected to Datron's board. Titan designees now constitute a majority of the Board of Directors of Datron.

    The Offer is the first step of Titan's two-step acquisition of Datron. The second step will be the merger (the "Merger") of Merger Sub with and into Datron, which will take place as soon as practicable subject to applicable legal requirements. Upon completion of the Merger, Datron will be a wholly owned subsidiary of Titan.

F–23

2. Earnings (Loss) per Share

    Basic earnings per share ("EPS") is calculated based on the weighted average number of shares outstanding during the period. Diluted EPS is calculated based on the weighted average number of shares outstanding during the period plus equivalent shares issuable under the Company's stock option plans when such amounts are dilutive. Options to purchase 441,365 shares of common stock at prices ranging from $5.10 to $15.73 were not included in the computation of diluted EPS at June 30, 2001 because the effect of such options would be anti-dilutive. Such options expire at various dates from March 12, 2002 to May 13, 2011. At June 30, 2000, options to purchase 433,150 shares of common stock at prices ranging from $5.10 to $15.73 were not included in the computation of diluted EPS because the effect of such options would be anti-dilutive.

3. Accounts Receivable

    At June 30, 2001 and March 31, 2001, accounts receivable were as follows:

	June 30, 2001			March 31, 2001
Billed	$	13,276,000		$	15,484,000
Unbilled		3,983,000			4,285,000
Subtotal		17,259,000			19,769,000
Allowance for doubtful accounts		(122,000	)		(117,000	)
Total	$	17,137,000		$	19,652,000

4. Inventories

    At June 30, 2001 and March 31, 2001, inventories were as follows:

	June 30, 2001		March 31, 2001
Raw materials	$	7,139,000	$	7,714,000
Work-in-process		3,599,000		2,395,000
Finished goods		2,065,000		1,386,000
Total	$	12,803,000	$	11,495,000

    Inventories are presented net of allowances for obsolescence of $1,732,000 and $1,665,000 at June 30, 2001 and March 31, 2001, respectively.

F–24

5. Property, Plant and Equipment

    At June 30, 2001 and March 31, 2001, property, plant and equipment was as follows:

	June 30, 2001			March 31, 2001
Land and buildings	$	9,052,000		$	9,052,000
Machinery and equipment		15,530,000			15,400,000
Furniture and office equipment		1,558,000			1,552,000
Leasehold improvements		752,000			751,000
Construction-in-process		92,000			57,000
Subtotal		26,984,000			26,812,000
Accumulated depreciation and amortization		(18,213,000	)		(17,808,000	)
Total	$	8,771,000		$	9,004,000

6. Segment Information

    Segment information was as follows for the periods shown:

		Three Months Ended June 30,
		2001			2000
Net sales:
	Antenna and Imaging Systems	$	7,450,000		$	9,848,000
	Communication Products		3,159,000			3,506,000
	Consolidated net sales	$	10,609,000		$	13,354,000
Operating income (loss):
	Antenna and Imaging Systems	$	151,000		$	206,000
	Communication Products		(1,090,000	)		(464,000	)
	General corporate expenses		(917,000	)		(353,000	)
	Consolidated operating income (loss)		(1,856,000	)		(611,000	)
Interest income, net			10,000			77,000
Other income (expense)			21,000			(8,000	)
Loss before income taxes		$	(l,825,000	)	$	(542,000	)

F–25

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA

    Titan's proposed acquisition of Datron will be accounted for as a purchase. Titan has presented below unaudited pro forma condensed combined financial data that reflects the proposed acquisition of Datron and is intended to give you a better picture of what the businesses of Titan and Datron might have looked like if the merger between the two companies had occurred on January 1, 2000, the first day of the first period for which financial information is presented. The unaudited pro forma combined statements of operations combine the Titan consolidated statement of operations data for the year ended December 31, 2000 and for the six months ended June 30, 2001 with the Datron consolidated statements of operations for the year ended March 31, 2001 and for the six months ended June 30, 2001, respectively, to reflect the proposed acquisition of Datron by Titan. The unaudited pro forma condensed combined statements of operations are not necessarily indicative of the results that would have occurred had the proposed acquisition been consummated at the beginning of the periods presented or the results that may be attained in the future.

    The unaudited pro forma condensed combined balance sheet has been prepared as of June 30, 2001, giving effect to the acquisition of Datron by Titan as though it had been consummated on that date.

72

The Titan Corporation and Datron Systems Incorporated

Unaudited Pro Forma Condensed Combined Statement of Operations

for the Year Ended December 31, 2000

(in thousands, except per share data)

			Titan			Datron			Pro Forma Adjustments (Note 2)			Pro Forma Combined
Revenues			$	1,033,213		$	62,262		$	—		$	1,095,475
Costs and expenses:
	Cost of revenues			757,266			44,352			—			801,618
	Selling, general and administrative expense			208,956			12,567			128	(d)		221,651
	Research and development expense			12,261			3,993			—			16,254
	Acquisition related charges and other			39,358			—			—			39,358
	Gain on sale of product line			—			(2,801	)		—			(2,801	)
		Total costs and expenses		1,017,841			58,111			128			1,076,080
Operating profit				15,372			4,151			—			19,395
Interest expense				(39,592	)		(212	)		—			(39,804	)
Interest income				3,582			405			—			3,987
Other income				—			64			—			64
Income (loss) from continuing operations before income taxes and minority interests				(20,638	)		4,408			(128	)		(16,358	)
Income tax provision (benefit)				(3,985	)		1,451			—			(2,534	)
Income from continuing operations before minority interests and extraordinary loss				(16,653	)		2,957			(128	)		(13,824	)
Minority interests				4,131			—			—			4,131
Income (loss) from continuing operations before extraordinary loss			$	(12,522	)	$	2,957		$	(128	)	$	(9,693	)
Basic earnings per share:
Income (loss) from continuing operations before extraordinary loss(1)			$	(0.31	)	$	1.08		$	—		$	(0.25	)
Weighted average shares				52,717			2,735			(495	)(f)		54,957
Diluted earnings per share:
Income (loss) from continuing operations before extraordinary loss(1)			$	(0.32	)	$	1.06		$	—		$	(0.25	)
Weighted average shares				52,717			2,792			(505	)(f)		55,004

Note(1): Calculation of Pro Forma Combined earnings per share includes dividend requirements on preferred stock of $692.

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

73

The Titan Corporation and Datron Systems Incorporated

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Six Months Ended June 30, 2001

(in thousands, except per share data)

			Titan			Datron			Pro Forma Adjustments (Note 2)			Pro Forma Combined
Revenues			$	540,080		$	31,831		$	—		$	571,911
Costs and expenses:
	Cost of revenues			399,835			22,945			—			422,780
	Selling, general and administrative expense			164,885			7,137			64	(d)		172,086
	Research and development expense			9,051			1,485			—			10,536
	Acquisition and integration related charges and other			34,818			—			—			34,818
		Total costs and expenses		608,589			31,567			64			640,220
Operating profit (loss)				(68,509	)		264			—			(68,309	)
Interest expense				(22,534	)		(105	)		—			(22,639	)
Interest income				1,268			166			—			1,434
Other income				—			28			—			28
Income (loss) from continuing operations before income taxes and minority interests				(89,775	)		353			(64	)		(89,486	)
Income tax provision (benefit)				(7,720	)		(68	)		—			(7,788	)
Income (loss) from continuing operations before minority interests				(82,055	)		421			(64	)		(81,698	)
Minority interests				14,379			—			—			14,379
Income (loss) from continuing operations			$	(67,676	)	$	421		$	(64	)	$	(67,319	)
Basic earnings per share:
	Income (loss) from continuing operations(2)		$	(1.41	)	$	0.15		$	—		$	1.34
	Weighted average shares			53,521			2,749			(497	)(f)		55,773
Diluted earnings per share:
	Income (loss) from continuing operations(2)		$	(1.41	)	$	0.15		$	—		$	1.34
	Weighted average shares			53,521			2,788			(504	)(f)		55,805

Note(2): Calculation of Pro Forma Combined earnings per share includes dividend requirements on preferred stock of $345.

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

74

The Titan Corporation and Datron Systems Incorporated

Unaudited Pro Forma Condensed Combined Balance Sheet

as of June 30, 2001

(in thousands)

			Titan			Datron		Pro Forma Adjustments (Note 2)			Pro Forma
Assets
Current assets:
	Cash and cash equivalents		$	29,775		$	3,678	$	—		$	33,453
	Investments			24,522			—		—			24,522
	Accounts receivable—net			352,857			17,137		—			369,994
	Inventories			33,814			12,803		—			46,617
	Prepaid expenses and other			37,432			1,235		—			38,667
	Deferred income taxes			28,888			2,426		—			31,314
		Total current assets		507,288			37,279		—			544,567
Property and equipment—net				101,257			8,771		—			110,028
Goodwill—net				350,493			4,981		16,793	(a)		372,267
Other assets				71,118			885		4,198	(a)		76,201
Net assets of discontinued operations				13			—		—			13
Total assets			$	1,030,169		$	51,916	$	20,991		$	1,103,076
Liabilities and Stockholders' Equity
Current liabilities:
	Amounts outstanding under line of credit		$	10,937		$	—	$	—		$	10,937
	Accounts payable			73,163			3,173		—			76,336
	Acquisition debt			2,200			—		—			2,200
	Current portion of long-term debt			697			98		—			795
	Income taxes payable			—			370		—			370
	Accrued compensation and benefits			55,242			—		—			55,242
	Other accrued liabilities			68,321			7,206		4,000	(b)		79,527
	Net liabilities of discontinued operations			100			—		—			100
		Total current liabilities		210,660			10,847		4,000			225,507
Amounts outstanding under line of credit				329,063			—		—			329,063
Long-term debt				1,201			2,958		—			4,159
Other non-current liabilities				38,190			1,640		—			39,830
Company obligated mandatory redeemable preferred securities of a subsidiary trust whose sole assets are senior subordinated debentures of Titan				250,000			—		—			250,000
Minority interests				2,144			—		—			2,144
Stockholders' equity:
	Preferred stock
		Cumulative convertible		690			—		—			690
		Series A junior participating		—			—		—			—
	Common stock			544			27		—			571
	Capital in excess of par value			271,565			9,148		44,670	(c)		325,383
	Deferred compensation			(46,320	)		—		(383	)(d)		(46,703	)
	Retained earnings (deficit)			(25,956	)		27,296		(27,296	)(c)		(25,956	)
	Accumulated other comprehensive income			(397	)		—		—			(397	)
	Treasury stock, at cost			(1,215	)		—		—			(1,215	)
		Total stockholders' equity		198,911			36,471		16,991			252,373
Total liabilities and stockholders' equity			$	1,030,169		$	51,916	$	20,991		$	1,103,076

See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.

75

THE TITAN CORPORATION AND DATRON SYSTEMS INCORPORATED

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

(in thousands, except share information)

Note 1.  Basis of Presentation

    The accompanying unaudited pro forma condensed combined statements of operations combine the consolidated statements of operations of Titan for the year ended December 31, 2000 and for the six months ended June 30, 2001 with the consolidated statements of operations of Datron for the year ended March 31, 2001 and for the six months ended June 30, 2001, respectively, to reflect the proposed acquisition of Datron by Titan.

    The unaudited pro forma condensed combined statements of operations assume the proposed acquisition was consummated at the beginning of the periods presented. The unaudited pro forma condensed combined statements of operations are not necessarily indicative of results that would have occurred had the proposed acquisition been consummated at the beginning of the periods presented or the results that may be attained in the future.

    The unaudited pro forma condensed combined balance sheet has been prepared as of March 31, 2001, giving effect to the acquisition of Datron by Titan as though it had been consummated on that date.

    Certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. The pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements of Titan and the historical consolidated financial statements of Datron.

Note 2.  Pro Forma Adjustments

(a)

Record allocation of excess of Titan's purchase price over the fair value of the assets acquired, to goodwill and other intangibles. Upon completion of the proposed transaction, an independent valuation will be performed to determine the purchase price allocation based upon the fair value of the assets and liabilities acquired.



(b)

Record estimated other accrued liabilities arising as a result of the transaction as follows:

Employment termination agreements for Datron employees	$	2,400
Direct transaction costs to consummate acquisition including investment banking, legal, printing and accounting fees		1,600
	$	4,000

(c)

Issue 2,621,000 shares, assuming 2,749,000 Datron shares outstanding and 451,000 Datron stock options outstanding, assuming a $16.01 price per share paid for Datron shares and a ten-day average Titan stock price of $19.54, equivalent to an .81919 exchange ratio of Titan shares paid for each Datron share outstanding. Eliminate Datron common stock, capital in excess of par value and retained earnings as of June 30, 2001.



(d)

Record deferred compensation of $383 for all unvested Datron stock options based on the difference between the fair value on the date of consummation of the acquisition and the exercise price of the unvested Datron stock options, after giving effect to the exchange ratio described in Note (c) above. Amortization of deferred compensation of $128 and $64 has been reflected in the pro forma condensed combined statements of operations for the year ended December 31, 2000 and the three months ended June 30, 2001, respectively.



(f)

Reflect the net change to the combined shares outstanding after calculating the number of shares to be issued by Titan in the transaction less the Datron shares currently outstanding, using the price and exchange assumptions described in Note (c) above.

76

QuickLinks

INDEX TO FINANCIAL STATEMENTS
INDEPENDENT AUDITORS' REPORT
DATRON SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS
DATRON SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS
DATRON SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS
DATRON SYSTEMS INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DATRON SYSTEMS INCORPORATED CONSOLIDATED BALANCE SHEETS (In thousands)
DATRON SYSTEMS INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited)
DATRON SYSTEMS INCORPORTED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
Datron Systems Incorporated Notes to Unaudited Consolidated Financial Statements
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
The Titan Corporation and Datron Systems Incorporated Unaudited Pro Forma Condensed Combined Statement of Operations for the Year Ended December 31, 2000 (in thousands, except per share data)
The Titan Corporation and Datron Systems Incorporated Unaudited Pro Forma Condensed Combined Statement of Operations For the Six Months Ended June 30, 2001 (in thousands, except per share data)
The Titan Corporation and Datron Systems Incorporated Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2001 (in thousands)
THE TITAN CORPORATION AND DATRON SYSTEMS INCORPORATED NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS (in thousands, except share information)