UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-7445
DATRON SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 95-2582922
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
304 Enterprise Street, Escondido, California 92029-1297
(Address of principal executive offices) (zip code)
(760) 747-3734
(Registrant's telephone number, including area code)
(Former name, former address and formal fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [ X ] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15 (d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
[ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
As of January 23, 1998, the Registrant had only one class
of common stock, par value $0.01, of which there were 2,675,984
shares outstanding.
<PAGE>1
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
DATRON SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEETS
(In thousands)
Dec 31, March 31
1997 1997
-------- --------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $1,130 $1,072
Accounts receivable, net 18,469 17,896
Inventories 13,119 14,309
Deferred income taxes 2,788 2,788
Prepaid expenses and other current assets 695 1,168
-------- --------
Total current assets 36,201 37,233
Property, plant and equipment, net 10,922 12,030
Goodwill, net 5,697 5,851
Investment 1,113 1,113
Other assets 200 249
-------- --------
Total assets $54,133 $56,476
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $10,560 $7,647
Accrued expenses 3,003 3,103
Customer advances 966 744
Income taxes payable 194 194
Current portion of restructuring reserve 395 789
-------- --------
Total current liabilities 15,118 12,477
Long-term debt 4,200 8,900
Restructuring reserve 81 435
Deferred income taxes 2,056 2,056
-------- --------
Total liabilities 21,455 23,868
-------- --------
Stockholders' equity:
Preferred stock -- par value $0.01; authorized
2,000,000 shares, none issued or outstanding --- ---
Common stock -- par value $0.01; authorized
10,000,000 shares, 3,070,063 and 3,063,937
shares issued in December and March,
respectively 31 31
Additional paid-in capital 10,659 10,602
Retained earnings 24,365 24,417
Treasury stock, at cost; 394,079 and 404,521
shares in December and March, respectively (2,133) (2,198)
Stock option plan and stock purchase
plan notes receivable (244) (244)
-------- --------
Total stockholders' equity 32,678 32,608
-------- --------
Total liabilities and stockholders' equity $54,133 $56,476
======== ========
See notes to consolidated financial statements.
</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,
1997 1996 1997 1996
----------------- ------------------
<S> <C> <C> <C> <C>
Net sales $17,081 $12,923 $42,359 $40,000
Cost of sales 12,813 9,311 32,125 29,023
----------------- ------------------
Gross profit 4,268 3,612 10,234 10,977
Selling, general and admin. 3,143 2,730 8,688 8,452
Research and development 483 680 1,343 1,720
----------------- ------------------
Operating income 642 202 203 805
Interest expense (76) (153) (275) (447)
Other (expense) income (3) 15 (13) 15
----------------- ------------------
Income (loss) before
income taxes 563 64 (85) 373
Income taxes (benefit) 216 44 (33) 169
----------------- ------------------
Net income (loss) $347 $20 ($52) $204
================= ==================
Earnings (loss) per common
share $0.13 $0.01 ($0.02) $0.08
================= ==================
Weighted average number of
common shares outstanding 2,672 2,627 2,667 2,625
================= ==================
Earnings (loss) per common
share--assuming dilution $0.13 $0.01 ($0.02) $0.08
================= ==================
Weighted average number of
common and common equivalent
shares outstanding 2,687 2,671 2,680 2,681
================= ==================
See notes to consolidated financial statements.
</TABLE>
<PAGE>3
<TABLE>
<CAPTION>
DATRON SYSTEMS INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine Months Ended
December 31,
1997 1996
----- -----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income ($52) $204
Adjustments to reconcile net (loss) income to net
cash provided by (used in) operating activities:
Depreciation and amortization 1,986 2,161
Restructuring (748) (1,138)
Changes in operating assets and liabilities:
Accounts receivable (573) 3,011
Inventories 1,190 411
Prepaid expenses and other assets 509 2,107
Accounts payable and accrued expenses 2,813 (5,036)
Customer advances 222 (2,860)
Income taxes payable --- 136
--------- ---------
Net cash provided by (used in) operating activities 5,347 (1,004)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (711) (571)
Purchase of investment --- (223)
--------- ---------
Net cash used in investing activities (711) (794)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
(Decrease) increase in long-term debt (4,700) 2,700
Stock options exercised 130 273
Purchase of treasury stock (53) ---
Issuance of common stock 45 ---
--------- ---------
Net cash (used in) provided by financing activities (4,578) 2,973
--------- ---------
INCREASE IN CASH 58 1,175
Cash at beginning of period 1,072 1,393
--------- ---------
CASH AT END OF PERIOD $1,130 $2,568
========= =========
See notes to consolidated financial statements.
</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, 1997.
In the opinion of the Company's management, the accompanying
unaudited financial statements contain all adjustments,
consisting only of normal recurring adjustments, unless otherwise
stated, which are necessary to present fairly its financial
position at December 31, 1997 and the results of its operations
and its cash flows for the periods presented. Results of
operations for the periods presented herein are not necessarily
indicative of what results will be for the entire fiscal year.
The balance sheet at March 31, 1997 has been derived from audited
financial statements.
2. Income (Loss) per Share
-----------------------
Effective for the three-month period ended December 31, 1997, the
Company adopted Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share." This statement provides
simplified standards for the computation and presentation of
earnings per share ("EPS"), making EPS comparable to
international standards. SFAS No. 128 requires dual presentation
on the face of the income statement of "Basic" and "Diluted" EPS
by entities with complex capital structures, replacing "Primary"
and "Fully Diluted" EPS illustrated under Accounting Principles
Board ("APB") Opinion No. 15, "Earnings Per Share."
Basic EPS excludes dilution from common stock equivalents and is
computed by dividing income available to common stockholders by
the weighted average number of common shares outstanding for the
period. Diluted EPS reflects potential dilution from common
stock equivalents, similar to Fully Diluted EPS, but uses only
the average stock price during the period as part of the
computation.
Shares used in computing earnings (loss) per common share -
assuming dilution include the weighted average of common stock
outstanding plus equivalent shares issuable under the Company's
stock option plans, when such amounts are dilutive. Options to
purchase 112,000 shares of common stock at prices ranging from
$10.13 - $16.00 were not included in the computation of diluted
EPS at December 31, 1997 because the effect of such options would
be anti-dilutive. Such options expire at various dates from
February 20, 1999 to November 30, 2007.
3. Accounts Receivable
--------------------
At December 31, 1997 and March 31, 1997, accounts receivable were
as follows:
December 31, March 31,
1997 1997
------------ -----------
Billed $11,678,000 $14,019,000
Unbilled 6,937,000 4,103,000
----------- -----------
Subtotal 18,615,000 18,122,000
Allowance for
doubtful accounts (146,000) (226,000)
----------- -----------
Total $18,469,000 $17,896,000
=========== ===========
<PAGE>5
4. Inventories
------------
At December 31, 1997 and March 31, 1997, inventories were as
follows:
December 31, March 31,
1997 1997
------------ -----------
Raw materials $ 8,515,000 $ 9,316,000
Work-in-process 2,945,000 2,753,000
Finished goods 1,659,000 2,240,000
----------- -----------
Total $13,119,000 $14,309,000
=========== ===========
Inventories are presented net of allowances for obsolescence of
$1,640,000 and $1,350,000 at December 31, 1997 and March 31,
1997, respectively.
5. Property, Plant and Equipment
-----------------------------
At December 31, 1997 and March 31, 1997, property, plant and
equipment was as follows:
December 31, March 31,
1997 1997
------------ ----------
Land and buildings $ 8,557,000 $ 8,529,000
Machinery and equipment 15,099,000 14,590,000
Furniture and office
equipment 1,494,000 1,443,000
Leasehold improvements 822,000 815,000
Construction-in-process 136,000 66,000
------------ ------------
Subtotal 26,108,000 25,443,000
Accumulated depreciation
and amortization (15,186,000) ( 13,413,000)
----------- ------------
Total $10,922,000 $ 12,030,000
=========== =============
6. Investment
-----------
Investment represents preferred stock in EarthWatch Incorporated.
It is being carried at cost, which represents the most recent
value for sales of similar securities. There is no public market
for any of EarthWatch's securities, and as of January 23, 1998,
the Company is not able to determine if its cost for the
EarthWatch preferred stock continues to represent fair market
value. On December 24, 1997, EarthWatch launched its first three-
meter resolution remote sensing satellite. Four days after
launch EarthWatch lost communications with the satellite and to
date has been unable to reestablish communications with it.
EarthWatch management had indicated prior to the launch their
need to raise additional financing to permit them to continue
with their business plan. Although EarthWatch has launch
insurance, the Company is unable to determine at this time what
impact, if any, recent events will have on EarthWatch's ability
to raise additional financing and what effect that might have on
the fair market value of the investment carried by the Company.
7. Long-Term Debt
--------------
On August 8, 1997, the Company amended and restated its credit
agreement and note with its bank. Under the amended agreement,
the Company has a committed revolving line of credit with the
bank of $19,500,000, of which up to $15,000,000 may be used for
letters of credit and up to $9,500,000 may be used for direct
working capital advances. Total credit extended may not exceed
$19,500,000. The letter of credit facility expires on June 30,
1999 and the working capital facility, by letter from its bank dated
January 23, 1998, expires on April 30, 1999. Interest is payable
on borrowings under the working capital line at the bank's prime
rate plus 0.85% or at LIBOR plus 1.85% at the option of the
<PAGE>6
Company. At December 31, 1997, the bank's prime rate was 8.50%.
The line of credit is secured by assets of the Company and
contains certain financial covenants with which the Company is in
compliance. A commitment fee of 0.25% per annum is payable to
the bank on the unused portion of the working capital facility.
At December 31,1997, there were borrowings of $4,200,000 under
the working capital line and the bank had issued letters of
credit against the line totaling $6,265,061.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Datron Systems Incorporated and its wholly owned subsidiaries
(the "Company") report operations in two business segments:
Antenna and Imaging Systems, and Communication Products and
Services. The Antenna and Imaging Systems business segment
designs and manufactures specialized satellite communication
systems, subsystems and antennas that are sold worldwide to
commercial and governmental customers, including the U.S.
Department of Defense (DoD). This segment also sells remote
sensing satellite earth stations to worldwide commercial,
scientific and military organizations. In fiscal 1996, this
segment introduced the DBS-3000, a mobile satellite television
reception system for recreational vehicles and long-haul trucks.
This system was the Company's first consumer product. Several
additional direct broadcast satellite ("DBS") antenna products
were introduced in fiscal 1997. The Communication Products and
Services business segment designs, manufactures and distributes
high frequency and very high frequency radios and accessories for
worldwide military and civilian purposes.
This Management's Discussion and Analysis of Financial Condition
and Results of Operations contains certain forward-looking
statements. Actual results could differ materially. Reference
is hereby made to the statement of Investment Considerations
contained in Part I, Item 1, of the Company's Form 10-K, which is
available from the Company upon request.
Results of Operations
- ---------------------
Net income for the third quarter of fiscal 1998 was $347,000, or
$0.13 per share, compared with net income of $20,000, or $0.01
per share, in the third quarter of fiscal 1997. Net sales in the
third quarter of fiscal 1998 were $17,081,000, a 32% increase
from third quarter net sales last fiscal year of $12,923,000.
The increase in sales was due to higher sales of radio products,
military antennas and DBS antenna products, partially offset by
lower sales of remote sensing systems. The increase in net
income was primarily due to higher gross profits on the higher
radio product sales.
Net loss for the nine months ended December 31, 1997 was $52,000,
or $0.02 per share, compared with net income of $204,000, or
$0.08 per share, for the comparable period last fiscal year. Net
sales for the nine months were $42,359,000, a 6% increase from
net sales of $40,000,000 for the first nine months last fiscal
year. The increase in sales was primarily due to higher sales of
radio products and military antennas, partially offset by lower
sales of remote sensing systems. The net loss resulted from
lower gross profits on sales of remote sensing systems and
military antennas.
Operating results for each business segment were as follows:
Antenna and Imaging Systems
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1997 1996 1997 1996
--------------------- ------------------
<S> <C> <C> <C> <C>
Net sales $9,339,000 $8,234,000 $26,327,000 $25,995,000
========== ========== =========== ===========
Gross profit $1,999,000 $2,686,000 $ 5,234,000 $ 7,273,000
========== ========== =========== ===========
Operating income
(loss) $ 104,000 625,000 ($4,000) $ 1,185,000
========== ========= ========== ===========
</TABLE>
Sales of Antenna and Imaging Systems products increased 13% in
the third quarter of fiscal 1998 compared with the third quarter
of fiscal 1997. The increase was due to higher sales of military
antennas and DBS antenna products, including initial sales of the
<PAGE>7
DBS-2100 antenna system designed for large corporate aircraft,
partially offset by lower sales of remote sensing systems. The
lower remote sensing sales were partially attributable to the
$903,000 EarthWatch sale reversal discussed below. Sales in the
first nine months of fiscal 1998 were 1% higher than in the first
nine months of fiscal 1997. The increase was primarily due to
higher sales of military antennas, partially offset by lower
sales of remote sensing systems.
Gross profit percentage on sales of Antenna and Imaging Systems
products was 21.4% in the third quarter of fiscal 1998 compared
with 32.6% in the third quarter last fiscal year. The decrease
was primarily due to higher engineering costs, manufacturing
inefficiencies and a less favorable product mix. Gross profit
percentage for the first nine months of fiscal 1998 was 19.9% of
sales compared with 28.0% of sales for the first nine months of
fiscal 1997 for the same reason.
Operating income percentage on sales of Antenna and Imaging
Systems products was 1.1% in the third quarter of fiscal 1998
compared with 7.6% in the third quarter last fiscal year. The
decrease resulted from lower gross profits, partially offset by
lower product development expenses. Operating loss percentage
for the first nine months of fiscal 1998 was less than 1.0% of sales
compared with an operating income percentage of 4.6% of sales for
the first nine months of fiscal 1997. The decrease was primarily
due to lower gross profits, partially offset by lower product
development, administrative and selling expenses.
In December 1997, EarthWatch Incorporated, a customer of the
Company, launched and then subsequently lost communications with,
its first three-meter resolution remote sensing satellite. See
Note 6 to the Consolidated Financial Statements. The Company has
a contract with EarthWatch to deliver three earth stations, of
which the first two have been delivered and paid for. The third
earth station is available for delivery, but EarthWatch has
failed to specify a date and place for delivery in accordance
with terms of the contract. Because of this failure and
EarthWatch's stated current inability to pay for the third earth
station, as well as the uncertainty of EarthWatch's ability to
raise additional financing that would permit them to do so, in
the third quarter ended December 31, 1997 the Company reversed
recognized sales under the EarthWatch contract in the amount of
$903,000 and reversed gross profit attributable to those sales in
the amount of $120,000. The third earth station is a standard-design
product, which the Company believes to be saleable to other customers.
The Company is unable to determine what effect recent events at
EarthWatch will have on the valuation of its investment in EarthWatch.
Communication Products and Services
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1997 1996 1997 1996
------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $7,742,000 $4,689,000 $16,032,000 $14,005,000
========== ========== =========== ===========
Gross profit $2,269,000 $ 926,000 $ 5,000,000 $ 3,704,000
========== ========== =========== ===========
Operating
income (loss) $ 860,000 $ (353,000) $ 1,241,000 $ 424,000
========== ========== =========== ===========
</TABLE>
Sales of Communication Products and Services increased 65% in the
third quarter of fiscal 1998 compared with the third quarter of
fiscal 1997. The increase was primarily due to higher order
bookings in the recent quarter and to shorter turnaround times
from order receipt to shipment. Sales in the first nine months
of fiscal 1998 were 14% higher than in the first nine months of
fiscal 1997. The increase in sales came from the Company's
traditional markets.
Gross profit percentage on sales of Communication Products and
Services was 29.3% in the third quarter of fiscal 1998 compared
with 19.7% in the third quarter last fiscal year. The increase
was primarily due to lower labor and overhead expenses, and to
production efficiencies resulting from a higher sales level.
Gross profit percentage for the first nine months of fiscal 1998
was 31.2% of sales compared with 26.4% of sales for the first
nine months of fiscal 1997 for the same reason.
Operating income percentage on sales of Communication Products
and Services was 11.1% in the third quarter of fiscal 1998
compared with an operating loss percentage of 7.5% in the third
quarter last fiscal year. The increase resulted primarily from
higher gross profits. Operating income percentage for the first
nine months of fiscal 1998 was 7.7% of sales compared with 3.0%
<PAGE>8
of sales for the first nine months of fiscal 1997. The increase
was primarily due to higher gross profits and lower selling
expenses, partially offset by higher administrative and product
development expenses.
Consolidated expenses were as follows:
Selling, general and administrative expenses were $3,143,000 in
the third quarter of fiscal 1998, a 15% increase compared with
third quarter of fiscal 1997 expenses of $2,730,000. The
increase was primarily due to the absence of reserve reductions
for commitments and contingencies that were included in third
quarter results in fiscal 1997 and to higher recent quarter
administrative expenses in the Communication Products and
Services business segment. Selling, general and administrative
expenses for the first nine months of fiscal 1998 were
$8,688,000, a 3% increase compared with first nine months of
fiscal 1997 expenses of $8,452,000. The increase was primarily
due to higher administrative expenses, partially offset by lower
selling expenses.
Research and development (R&D) expenses were $483,000 in the
third quarter of fiscal 1998 compared with $680,000 in the third
quarter last fiscal year. The 29% decrease resulted from lower
spending on development programs for mobile DBS antenna products,
partially offset by increased spending on development programs
for new radio products. R&D expenses in the first nine months of
fiscal 1998 were $1,343,000, a 22% decrease compared with first
nine months of fiscal 1997 expenses of $1,720,000 for the same
reason.
Order backlog at December 31 was as follows:
1997 1996
----------- ----------
Antenna and Imaging
Systems $20,860,000 $15,451,000
Communication Products
and Services 3,381,000 2,928,000
----------- -----------
Total $24,241,000 $18,379,000
=========== ===========
The 35% increase in Antenna and Imaging Systems backlog at
December 31, 1997 compared with December 31, 1996 was primarily
due to higher order bookings for remote sensing systems.
The 15% increase in Communication Products and Services backlog
at December 31, 1997 compared with December 31, 1996 was
primarily due to improved order bookings in the recent quarter
ended December 31, 1997.
Liquidity and Capital Resources
- -------------------------------
At December 31, 1997, working capital was $21,083,000 compared
with $24,756,000 at March 31, 1997, a decrease of $3,673,000 or
15%. Major changes affecting working capital during this period
were the following: accounts receivable increased $573,000 as
sales exceeded collections; inventories decreased $1,190,000
primarily due to reductions in radio products inventories and to
increases in the provision for inventory obsolescence; and
accounts payable and accrued expenses increased $2,813,000. The
Company's cash position at December 31, 1997 was $1,130,000
compared with $1,072,000 at March 31, 1997, an increase of 5%.
At December 31, 1997, the Company had borrowed $4,200,000 in term
debt from its bank to meet operating cash requirements. These
borrowings represent a 53% decrease in term debt from the
$8,900,000 of borrowings at March 31, 1997.
Capital equipment expenditures were $711,000 during the first
nine months of fiscal 1998 compared with $571,000 in the first
nine months last fiscal year. The increase was primarily due to
higher purchases of equipment for the Antenna and Imaging Systems
business segment.
At December 31, 1997, the Company had a $19,500,000 committed
revolving line of credit with its bank, of which up to
$15,000,000 may be used for the issuance of letters of credit and
up to $9,500,000 may be used for direct working capital advances
provided that total credit extended does not exceed $19,500,000.
See Note 7 to Consolidated Financial Statements. The Company
believes that its existing working capital, anticipated future
cash flows from operations and available credit with its bank are
sufficient to finance presently planned capital and working
capital requirements.
<PAGE>9
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
In August 1992, Trans World Communications, Inc. (Trans World), a
wholly owned subsidiary of the Company and which was renamed
Datron World Communications Inc. on March 31, 1995, was named as
defendant in a lawsuit filed by ATACS Corporation (ATACS) and
AIRTACS Corporation (AIRTACS) relating to a contract to provide
radio communication shelters. ATACS and AIRTACS contend that
Trans World entered into an agreement to team with them on the
contract and then wrongfully failed to use them as
subcontractors. They seek damages in excess of $2,000,000. In
a May 28, 1997 ruling, the court found Trans World in breach of a
teaming agreement but was not able to determine what damages, if
any, were incurred by ATACS and AIRTACS. The court ordered both
parties to submit supplemental findings to support their
positions regarding damages. On September 3, 1997, the court
awarded ATACS and AIRTACS one dollar ($1.00) in damages. ATACS
and AIRTACS have appealed the court's decision. The Company has
taken a cross appeal with respect to the issue of whether the
Company was in breach of any teaming agreement. The Company
believes that final resolution of this matter will not materially
affect the consolidated financial position of the Company.
Item 2. Changes in Securities.
Pursuant to a business loan agreement with a bank, the Company
must comply with certain financial covenants. The agreement also
prohibits the Company from declaration or payment of dividends or
other distributions on the Company's stock, except under certain
conditions specified in the agreement. The Company is in
compliance with both requirements.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits: None
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter.
<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 27, 1998 By:/s/ William L. Stephan
William L. Stephan
Vice President and Chief Financial
Officer (Principal Financial and
Accounting Officer)
<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, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,130
<SECURITIES> 0
<RECEIVABLES> 18,615
<ALLOWANCES> 146
<INVENTORY> 13,119
<CURRENT-ASSETS> 36,201
<PP&E> 26,108
<DEPRECIATION> 15,186
<TOTAL-ASSETS> 54,133
<CURRENT-LIABILITIES> 15,118
<BONDS> 0
0
0
<COMMON> 31
<OTHER-SE> 32,647
<TOTAL-LIABILITY-AND-EQUITY> 54,133
<SALES> 42,359
<TOTAL-REVENUES> 42,359
<CGS> 32,125
<TOTAL-COSTS> 32,125
<OTHER-EXPENSES> 10,044
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 275
<INCOME-PRETAX> (85)
<INCOME-TAX> (33)
<INCOME-CONTINUING> (52)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
