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, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-7445
DATRON SYSTEMS INCORPORATED
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 95-2582922
------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
304 Enterprise Street, Escondido, California 92029-1297
-------------------------------------------- ----------
(Address of principal executive offices) (zip code)
(619) 747-3734
----------------------------------------------------
(Registrant's telephone number, including area code)
(Former name, former address and formal fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
[ X ] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of January 24, 1997, the Registrant had only one class of common
stock, par value $0.01, of which there were 2,627,192 shares outstanding.
<PAGE>1
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
DATRON SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In Thousands)
Dec 31, March 31,
1996 1996
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $2,568 $1,393
Accounts receivable, net 12,006 15,017
Inventories 15,397 15,808
Deferred income taxes 2,602 2,602
Prepaid expenses and other current assets 413 2,478
-------- --------
Total current assets 32,986 37,298
Property, plant and equipment, net 12,443 13,835
Goodwill, net 5,902 6,056
Investment 1,113 890
Other assets 294 380
-------- --------
Total assets $52,738 $58,459
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,718 $8,490
Accrued expenses 3,141 5,405
Customer advances 833 3,693
Income taxes payable 376 240
Current portion of restructuring reserve 968 1,428
-------- --------
Total current liabilities 11,036 19,256
Long-term debt 7,900 5,200
Restructuring reserve 385 1,063
Deferred income taxes 1,069 1,069
-------- --------
Total liabilities 20,390 26,588
-------- --------
Stockholders' equity:
Preferred stock -- par value $0.01; authorized
2,000,000 shares, none issued or outstanding --- ---
Common stock -- par value $0.01; authorized
10,000,000 shares, 3,063,937 shares issued
in December and March 31 31
Additional paid-in capital 10,654 10,568
Retained earnings 24,353 24,149
Treasury stock, at cost; 436,745 and 459,745
shares in December and March, respectively (2,446) (2,633)
Stock option plan and stock purchase plan notes
receivable (244) (244)
-------- --------
Total stockholders' equity 32,348 31,871
-------- --------
Total liabilities and stockholders' equity $52,738 $58,459
======== ========
See notes to consolidated financial statements.
</TABLE>
<PAGE>2
<TABLE>
<CAPTION>
DATRON SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per-share amounts)
Three Months Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $12,923 $19,339 $40,000 $49,355
Cost of sales 9,311 14,181 29,023 33,907
------------------ ------------------
Gross profit 3,612 5,158 10,977 15,448
Selling, general and admin. 2,730 3,812 8,452 11,215
Research and development 680 746 1,720 2,445
------------------ ------------------
Operating income 202 600 805 1,788
Interest expense (159) (68) (456) (104)
Interest income 6 6 9 25
Other income (expense) 15 (260) 15 (260)
------------------ ------------------
Income before income taxes 64 278 373 1,449
Income taxes 44 101 169 530
------------------ ------------------
Net income $20 $177 $204 $919
================== ==================
Net income per share $0.01 $0.07 $0.08 $0.34
================== ==================
Weighted average number of
common and common equivalent
shares outstanding 2,674 2,679 2,683 2,663
================== ==================
See notes to consolidated financial statements.
</TABLE>
<PAGE>3
<TABLE>
<CAPTION>
DATRON SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine Months Ended
December 31,
1996 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $204 $919
Adjustments to reconcile net income to net
cash (used in) provided by operating activities:
Depreciation and amortization 2,161 2,677
Restructuring (1,138) (260)
Changes in operating assets and liabilities:
Accounts receivable 3,011 (6,451)
Inventories 411 (4,730)
Prepaid expenses and other assets 2,107 (359)
Accounts payable and accrued expenses (5,036) 2,232
Customer advances (2,860) 711
Income taxes payable 136 (2,046)
Other liabilities --- (23)
--------- ---------
Net cash used in operating activities (1,004) (7,330)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (571) (1,987)
Purchase of investment (223) (890)
--------- ---------
Net cash used in investing activities (794) (2,877)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in long-term debt 2,700 7,400
Stock options exercised 273 242
Purchase of treasury stock --- (51)
Payment advanced against stock option
plan note receivable --- (80)
--------- ---------
Net cash provided by financing activities 2,973 7,511
--------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,175 (2,696)
Cash and cash equivalents at beginning of period 1,393 3,510
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,568 $814
========= =========
See notes to consolidated financial statements.
</TABLE>
<PAGE>4
Datron Systems Incorporated
Notes to Consolidated Financial Statements (Unaudited)
1. Basis of Presentation
The unaudited consolidated financial statements included herein contain the
accounts of Datron Systems Incorporated and its wholly owned subsidiaries (the
"Company") and have been prepared in accordance with the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that these financial
statements be read in connection with the financial statements and notes
thereto included in the Company's annual report on Form 10-K for the fiscal
year ended March 31, 1996.
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments, consisting only of normal recurring adjustments,
unless otherwise stated, which are necessary to present fairly its financial
position at December 31, 1996 and the results of its operations and its cash
flows for the periods presented. Results of operations for the periods
presented herein are not necessarily indicative of what results will be for
the entire fiscal year. The balance sheet at March 31, 1996 has been derived
from audited financial statements.
2. Income per Share
Shares used in computing income per share include the weighted average of
common stock outstanding plus equivalent shares issuable under the Company's
stock option plans.
3. Accounts Receivable
At December 31, 1996 and March 31, 1996, accounts receivable were as follows:
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
----------- -----------
<S> <C> <C>
Billed $ 7,459,000 $ 6,858,000
Unbilled 4,683,000 8,406,000
Subtotal 12,142,000 15,264,000
Allowance for doubtful
accounts (136,000) (247,000)
------------ -----------
Total $ 12,006,000 $15,017,000
============ ===========
</TABLE>
4. Inventories
At December 31, 1996 and March 31, 1996, inventories were as follows:
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
----------- -----------
<S> <C> <C>
Raw materials $ 9,216,000 $ 7,487,000
Work-in-process 3,899,000 5,231,000
Finished goods 2,282,000 3,090,000
------------ -----------
Total $ 15,397,000 $15,808,000
============ ===========
<PAGE>5
5. Property, Plant and Equipment
At December 31, 1996 and March 31, 1996, property, plant and equipment was as
follows:
</TABLE>
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
---------- ------------
<S> <C> <C>
Land and buildings $ 8,496,000 $ 8,479,000
Machinery and equipment 14,312,000 13,658,000
Furniture and office equipment 1,459,000 1,462,000
Leasehold improvements 814,000 910,000
Construction-in-process 46,000 183,000
---------- -----------
Subtotal 25,127,000 24,692,000
Accumulated depreciation and
amortization (12,684,000) (10,857,000)
----------- -----------
Total $12,443,000 $13,835,000
=========== ===========
</TABLE>
6. Long-Term Debt
On November 25, 1996, the Company extended the maturity date of its revolving
line of credit with its bank from December 31, 1997 to June 30, 1998.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Datron Systems Incorporated and its wholly owned subsidiaries (the "Company")
reports operations in two business segments: Communication Products and
Services, and Antenna and Imaging Systems. The Communication Products and
Services business segment designs, manufactures and distributes high frequency
and very high frequency radios and accessories for worldwide military and
civilian purposes. The Antenna and Imaging Systems business segment designs
and manufactures specialized satellite communication systems, subsystems and
antennas that are sold worldwide to commercial and governmental customers,
including the U.S. Department of Defense. This segment also sells remote
sensing satellite earth stations. In fiscal 1996, this segment introduced the
Company's first consumer product, the DBS-3000, a mobile satellite television
reception system for recreational vehicles and long-haul trucks.
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 1997 was $20,000, or $0.01 per
share, compared with net income of $177,000, or $0.07 per share, in the third
quarter of fiscal 1996. Net sales in the third quarter of fiscal 1997 were
$12,923,000, a 33% decrease from third quarter net sales last fiscal year of
$19,339,000. The decrease in sales was primarily due to lower sales of radio
products. The decrease in net income was primarily due to lower gross profits
on the lower radio sales, partially offset by lower operating expenses.
Net income for the nine months ended December 31, 1996 was $204,000, or $0.08
per share, compared with net income of $919,000, or $0.34 per share, for the
comparable period last fiscal year. Net sales for the nine months were
$40,000,000, a 19% decrease from net sales of $49,335,000 for the first nine
months last fiscal year. The decrease in sales was primarily due to lower
sales of radio products and military antennas, partially offset by sales of
<PAGE> 6
new direct broadcast satellite ("DBS") television antenna products and by
higher sales of remote sensing systems. The decrease in net income was
primarily due to lower gross profits on the lower sales, partially offset by
lower operating expenses.
Operating results for each business segment were as follows:
Communication Products and Services
<TABLE>
<CAPTION
Three Months Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $4,689,000 $11,617,000 $14,005,000 $24,621,000
========== =========== =========== ===========
Gross profit $ 926,000 $ 4,069,000 $ 3,704,000 $ 8,227,000
========== =========== =========== ===========
Operating (loss)income $ (353,000) $ 2,267,000 $ 424,000 $ 3,273,000
========== =========== =========== ===========
</TABLE>
Sales of Communication Products and Services in the third quarter and in the
first nine months of fiscal 1997 were 60% lower and 43% lower, respectively,
than they were in the comparable periods of fiscal 1996. Third quarter fiscal
1996 sales included shipment of an $8.3 million order to a customer in Asia.
There was no similar sale in the third quarter of fiscal 1997, nor was there
such a sale in the first six months of fiscal 1997. The lack of an order of
that size and softness in the worldwide radio market has resulted in lower
sales for the first nine months of fiscal 1997 compared with the first nine
months of fiscal 1996.
Gross profit percentage on sales of Communication Products and Services was
19.7% in the third quarter of fiscal 1997 compared with 35.0% in the third
quarter of fiscal 1996. The decrease in the recent quarter was primarily due
to higher labor and overhead costs and to production inefficiencies resulting
from a lower sales level than in the comparable period last year. Gross
profit for the first nine months of fiscal 1997 was 26.4% of sales compared
with 33.4% of sales for the first nine months of fiscal 1996 for the same
reason.
An operating loss of 7.5% of sales of Communication Products and Services was
incurred in the third quarter of fiscal 1997 compared with operating income of
19.5% of sales in the third quarter last fiscal year. The loss resulted
primarily from lower gross profits, partially offset by lower selling and
administrative expenses. Operating income for the first nine months of fiscal
1997 was 3.0% of sales compared with 13.3% of sales for the first nine months
of fiscal 1996. The decrease was primarily due to lower gross profits,
partially offset by lower selling and administrative expenses.
Antenna and Imaging Systems
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $8,234,000 $7,722,000 $25,995,000 $24,734,000
========== ========== =========== ===========
Gross profit $2,686,000 $1,089,000 $ 7,273,000 $ 7,221,000
========== ========== =========== ===========
Operating income(loss) $ 625,000 ($1,343,000) $ 1,185,000 ($443,000)
========== =========== =========== ==========
</TABLE>
Sales of Antenna and Imaging Systems products increased 7% in the third
quarter of fiscal 1997 compared with the third quarter of fiscal 1996. The
increase was primarily due to higher sales of remote sensing systems,
partially offset by lower sales of military antennas. Sales in the first
nine months of fiscal 1997 were 5% higher than in the first nine months of
fiscal 1996. The increase was primarily due to sales of new DBS antenna
products and higher sales of remote sensing systems, partially offset by
lower sales of military antennas.
<PAGE>7
Gross profit percentage on sales of Antenna and Imaging Systems products was
32.6% in the third quarter of fiscal 1997 compared with 14.1% in the third
quarter of fiscal 1996. The increase was primarily due to a more favorable
product mix in the recent quarter and to the absence of a write-off of non
recoverable expenses associated with a canceled remote sensing order in the
third quarter of fiscal 1996. Gross profit for the first nine months of
fiscal 1997 was 28.0% of sales compared with 29.2% of sales for the first
nine months of fiscal 1996. The decrease was primarily due to
higher materials costs associated with start-up quantities of DBS
antenna products.
Operating income percentage on sales of Antenna and Imaging Systems products
was 7.6% in the third quarter of fiscal 1997 compared with an operating loss
percentage of 17.4% of sales in the third quarter last fiscal year. The
improvement was primarily due to higher gross profits and lower selling and
research and development ("R&D") expenses in the recent quarter. Operating
income for the first nine months of fiscal 1997 was 4.6% of sales compared
with an operating loss percentage of 1.8% of sales for the first nine months
of fiscal 1996. The improvement was primarily due to lower R&D and selling
expenses in the first nine months of fiscal 1997.
Consolidated expenses were as follows:
Selling, general and administrative expenses were $2,730,000 in the third
quarter of fiscal 1997, a 28% decrease compared with third quarter of fiscal
1996 expenses of $3,812,000. Selling, general and administrative expenses for
the first nine months of fiscal 1997 were $8,452,000, a 25% decrease compared
with the first nine months of fiscal 1996 expenses of $11,215,000. Cost
reductions related to the Company's fourth quarter of fiscal 1996
consolidation and restructuring as well as spending reductions in the first
nine months of fiscal 1997 at both business segments were responsible for most
of the decrease.
Research and development expenses were $680,000 in the third quarter of fiscal
1997 compared with $746,000 in the third quarter last fiscal year. The 9%
decrease was due to 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 1997 were $1,720,000, a 30% decrease compared with the first nine
months of fiscal 1996 expenses of $2,445,000 for the same reason. In fiscal
1996, the Company significantly increased R&D spending to develop DBS antenna
products. Several of those products are now in production and although
development of new DBS products and enhancements to existing products are
ongoing, the level of R&D spending in fiscal 1997 is expected to be lower than
it was in fiscal 1996.
Order backlog at December 31 was as follows:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Communication Products and Services $ 2,928,000 $ 5,982,000
Antenna and Imaging Systems 15,451,000 16,116,000
----------- -----------
Total $18,379,000 $22,098,000
=========== ===========
</TABLE>
The 51% decrease in Communication Products and Services backlog at December
31, 1996 was due to continued low order bookings. Although bookings in this
business segment showed improvement during the second quarter of fiscal 1997,
that improvement did not continue into the third quarter. The Company is
developing several new radio products, some of which are undergoing final
testing, and believes the introduction of those new products in fiscal 1998
will improve the overall competitiveness of its products, although there can
be no assurances that the new products will have that effect.
The 4% decrease in Antenna and Imaging Systems backlog at December 31, 1996
was primarily due to completion of several long-term U.S. Department of
Defense ("DoD") contracts and to lower order bookings of remote sensing
systems. The Company had expected orders for its new DBS antenna products to
offset the decline in its DoD business. That has not occurred and the Company
has implemented a new dealer training program and is changing its method of
distribution to improve sales of those products. However, because of the need
to clear the existing distribution pipeline and because of the current winter
season, the Company does not expect to see improvement in DBS antenna product
sales before spring. Although the Company believes these actions will improve
DBS sales, there can be no assurances of that effect.
<PAGE>8
Liquidity and Capital Resources
At December 31, 1996, working capital was $21,950,000 compared with
$18,042,000 at March 31, 1996, an increase of $3,908,000 or 22%. Major
changes affecting working capital during this period were the following:
accounts receivable decreased $3,011,000 due to lower sales and faster
collections; inventories decreased $411,000 as declines in radio product
inventories were partially offset by increases in materials for DBS antenna
products; prepaid expenses and other current assets decreased $2,065,000
primarily due to collection of an income tax refund; accounts payable and
accrued expenses decreased $5,036,000 due to lower recent purchases of
materials and to cost reduction efforts; and customer advances decreased
$2,860,000. The Company's cash position at December 31, 1996 was $2,568,000
compared with $1,393,000 at March 31, 1996, an increase of 84%. At December
31, 1996, the Company had borrowed $7,900,000 in term debt from its bank to
meet operating cash requirements. These borrowings represented a 52% increase
in term debt from the $5,200,000 of borrowings at March 31, 1996.
Capital equipment expenditures were $571,000 during the first nine months of
fiscal 1997 compared with $1,987,000 in the first nine months last fiscal
year. The decrease was primarily due to lower purchases of equipment for the
Antenna and Imaging Systems business segment.
At December 31, 1996, the Company had a $19,500,000 committed revolving line
of credit with its bank, of which up to $12,000,000 may be used for the
issuance of letters of credit and up to $10,500,000 may be used for direct
working capital advances provided that total credit extended does not exceed
$19,500,000. The Company believes that its existing working capital,
anticipated future cash flows from operations and available credit with its
bank are sufficient to finance presently planned capital and working capital
requirements.
<PAGE>9
PART II -- OTHER INFORMATION
Item 2. Changes in Securities.
Pursuant to a business loan agreement with a bank, the Company must comply
with certain financial covenants. The agreement also prohibits the Company
from declaration or payment of dividends or other distributions on the
Company's stock, except under certain conditions specified in the agreement.
The Company is in compliance with both requirements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
10.56 Ninth Amendment to Credit Agreement and Note between the
Registrant and Union Bank of California dated as of November 25,
1996.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter.
<PAGE>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 30, 1997 By: WILLIAM L. STEPHAN
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
NINTH AMENDMENT TO CREDIT AGREEMENT AND NOTE
THIS NINTH AMENDMENT TO CREDIT AGREEMENT AND NOTE ("Ninth Amendment"), made
and entered into as of the 25th day of November 1996, by and between DATRON
SYSTEMS INCORPORATED, a Delaware corporation ("Company"), and UNION BANK OF
CALIFORNIA, N.A., a national banking association ("Bank"),
W I T N E S S E T H:
WHEREAS, on May 11, 1994, the Company and the Bank entered into a certain
Credit Agreement and Note (as amended by those certain First, Second, Third,
Fourth, Fifth , Sixth, Seventh and Eighth Amendments to Credit Agreement and
Note, dated as of October 26, 1994, December 29, 1994, February 28, 1995,
March 31, 1995, August 17, 1995, January 3, 1996, January 31, 1996 and
May 24, 1996, respectively, the "Credit Agreement") pursuant to which the
Bank agreed to extend to the Company and the Company agreed to accept from
the Bank certain credit facilities more particularly described therein; and
WHEREAS, the Company and the Bank desire to amend the Credit Agreement
(i) to extend the Facilities Termination Date through and including
June 30, 1998, and (ii) to modify certain of the covenants with which the
Company is to comply;
NOW, THEREFORE, for and in consideration of the premises hereof, and other
good and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used in this Ninth Amendment shall, unless
otherwise defined herein or unless the context otherwise requires, have the
meanings given thereto in the Credit Agreement.
2. Section 1.01 of the Credit Agreement is amended by deleting
therefrom the date "December 31, 1997" where it appears on the fourth line
of said section and by substituting in lieu thereof the date "June 30, 1998".
3. Subsection 4.02(i) of the Credit Agreement is amended to read as
follows:
(i) Tangible Net Worth. The Company will not, as at the end of any
fiscal quarter of the Company, permit its consolidated Tangible Net Worth
to be less than the sum of (i) Twenty-four Million Two Hundred Fifty
Thousand Dollars ($24,250,000.00), (ii) seventy-five percent (75%) of the
cumulative consolidated net after tax profits of the Company for all fiscal
quarters of the Company ending after March 31, 1996 and on or prior to the
date of computation (without reduction, however, for consolidated net after
tax losses sustained by the Company for any of such fiscal quarters) and
(iii) the aggregate amount of all infusions of equity
made on or after April 1, 1996.
4. Subsection 4.02(k) of the Credit Agreement is amended to read as
follows:
(k) Profitability. The Company will not (i) permit its consolidated net
after tax profits to be less than (A) Seven Hundred Thousand Dollars
($700,000.00) for the year-to-date fiscal period of the Company ending
December 31, 1996, and (B) One Million Five Hundred Thousand Dollars
($1,500,000.00) for the fiscal year of the Company ending March 31, 1997 or
for any subsequent fiscal year of the Company, and (ii) suffer or incur a
consolidated net after tax loss for any two (2) consecutive fiscal quarters
of the Company.
5. This Ninth Amendment shall become effective on the date on which
the Bank shall have received the following:
(a) This Ninth Amendment, duly executed by the Company; and
(b) Two (2) written consents to entry by the Company into this Ninth
Amendment, each in form and substance satisfactory to the Bank and its
counsel, one (1) duly executed by each of D/T and DWC.
6. Except as expressly provided herein, the Credit Agreement is
unchanged and remains in full force and effect.
7. This Ninth Amendment shall be governed by and construed in
accordance with the laws of the State of California.
8. This Ninth Amendment may be executed in any number of identical
counterparts, any set of which signed by both parties hereto shall be deemed
to constitute a complete, executed original for all purposes.
IN WITNESS WHEREOF, the Bank and the Company have caused this Ninth
Amendment to be executed as of the day and year first above written.
UNION BANK OF CALIFORNIA, DATRON SYSTEMS INCORPORATED
N.A.
By: RICHARD A. PETRIE By: WILLIAM L. STEPHAN
Title: Vice President Title: Vice President and CFO
By: JACK LENHOF By: DAVID A. DERBY
Title: Vice President Title: President and CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 2,568
<SECURITIES> 0
<RECEIVABLES> 12,142
<ALLOWANCES> 136
<INVENTORY> 15,397
<CURRENT-ASSETS> 32,986
<PP&E> 25,127
<DEPRECIATION> 12,684
<TOTAL-ASSETS> 52,738
<CURRENT-LIABILITIES> 11,036
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 32,317
<TOTAL-LIABILITY-AND-EQUITY> 52,738
<SALES> 40,000
<TOTAL-REVENUES> 40,009
<CGS> 29,023
<TOTAL-COSTS> 29,023
<OTHER-EXPENSES> 10,172
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 456
<INCOME-PRETAX> 373
<INCOME-TAX> 169
<INCOME-CONTINUING> 204
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 204
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
