<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1997
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
----------------- ---------------------
Commission file no. 0-6272
DATUM INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-2512237
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9975 TOLEDO WAY, IRVINE, CA 92618-1819
(Address of principal executive offices) (Zip code)
(714) 598-7500
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by a 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 the
filing requirements for the past 90 days.
YES X . NO .
----- -----
The registrant had 5,317,344 shares of common stock outstanding as of
September 30, 1997.
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<PAGE> 2
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.................................................. 3
Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations............. 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk ...........12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................13
Signatures......................................................................14
Exhibit Index...................................................................15
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
A S S E T S 1997 1996
------------ ------------
<S> <C> <C>
Current assets
Cash and cash equivalents $ 9,887 $ 1,389
Accounts receivable 14,763 16,816
Inventories
Purchased parts 8,184 7,074
Work-in-process 14,694 9,096
Finished products 7,104 3,100
------- -------
29,982 19,270
Prepaid expenses 423 425
Deferred income taxes 2,007 2,007
------- -------
Total current assets 57,062 39,907
Plant and equipment
Land 2,040 2,040
Buildings 4,553 4,494
Equipment 18,287 15,685
Leasehold improvements 963 930
------- -------
25,843 23,149
Less accumulated depreciation and amortization 9,582 7,894
------- -------
16,261 15,255
------- -------
Excess of purchase price over net assets acquired 12,349 13,020
Other assets 446 506
------- -------
$86,118 $68,688
======= =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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<PAGE> 4
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996
------------ ------------
<S> <C> <C>
Current liabilities
Accounts payable $ 6,165 $ 7,542
Accrued salaries and wages 2,910 2,693
Accrued warranty 1,165 1,434
Other accrued expenses 1,568 1,119
Income taxes payable 336 1,049
Current portion of long-term debt 31 41
-------- --------
Total current liabilities 12,175 13,878
-------- --------
Long-term debt 17,388 17,318
-------- --------
Postretirement benefits 563 446
-------- --------
Other long-term liabilities 135 1,428
-------- --------
Deferred income taxes 995 995
-------- --------
Stockholders' equity
Preferred stock, par value $.25 per share
Authorized - 1,000,000 shares
Issued - none -- --
Common stock, par value $.25 per share
Authorized - 10,000,000 shares
Issued - 5,317,344 shares in 1997
4,091,291 shares in 1996 1,329 1,023
Additional paid-in capital 41,360 25,845
Retained earnings
Beginning of period 7,956 5,982
Net income 4,774 1,974
-------- --------
End of period 12,730 7,956
Cumulative translation adjustment (557) (201)
-------- --------
Total stockholders' equity 54,862 34,623
-------- --------
$ 86,118 $ 68,688
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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<PAGE> 5
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1997 1996 1997 1996
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 30,209 $ 24,507 $ 91,984 $ 64,357
-------- -------- -------- --------
Costs and expenses
Cost of goods sold 18,125 15,203 55,135 39,182
Selling 3,976 2,944 12,245 8,590
Product development 2,529 1,895 7,450 5,810
General and administrative 2,440 2,843 7,728 7,463
Interest expense 513 530 1,567 1,662
Interest (income) (110) (7) (233) (14)
-------- -------- -------- --------
27,473 23,408 83,892 62,693
-------- -------- -------- --------
Income before income taxes 2,736 1,099 8,092 1,664
Income tax provision 1,122 450 3,318 682
-------- -------- -------- --------
Net income $ 1,614 $ 649 $ 4,774 $ 982
======== ======== ======== ========
Net income per share $ .28 $ .15 $ .90 $ .23
======== ======== ======== ========
Weighted average number of
shares outstanding 5,799 4,237 5,307 4,229
======== ======== ======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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<PAGE> 6
DATUM INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------------
SEPTEMBER 30, September 30,
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 4,774 $ 982
-------- -------
Adjustments to reconcile income to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,291 2,358
Amortization of goodwill 671 671
Contribution of shares of common stock to
the Company's 401(k) plan 477 348
Changes in assets and liabilities
(Increase) decrease in accounts receivable 2,053 (3,295)
Decrease in income tax refund receivable -- 1
(Increase) decrease in inventories (10,712) 2,358
(Increase) decrease in prepaid expenses 2 (221)
Increase in other assets (27) (11)
Increase (decrease) in accounts payable (1,377) 1,031
Increase (decrease) in accrued expenses 397 (1,121)
Decrease in customer deposits -- (74)
Increase (decrease) in income taxes payable (713) 575
Increase in postretirement benefits 117 117
Decrease in other long-term liabilities (1,293) (23)
-------- -------
Total reconciling items (8,114) 2,714
-------- -------
Net cash provided by (used in) operating activities (3,340) 3,696
-------- -------
Cash flows from investing activities:
Book value of equipment disposals 32 56
Capital expenditures (3,151) (1,554)
Other (343) (48)
-------- -------
Net cash used in investing activities (3,462) (1,546)
-------- -------
Cash flows from financing activities:
Proceeds from line of credit -- 203
Reductions to long-term debt (45) (1,351)
Issuance of common stock 14,156 --
Exercise of stock options 1,189 98
-------- -------
Net cash provided by (used in) financing activities 15,300 (1,050)
-------- -------
Net increase in cash and cash equivalents 8,498 1,100
Cash and cash equivalents at beginning of period 1,389 587
-------- -------
Cash and cash equivalents at end of period $ 9,887 $ 1,687
======== =======
</TABLE>
See Notes to Condensed Consolidated Financial Statements
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<PAGE> 7
DATUM INC. AND SUBSIDIARIES
---------------------------
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
----------------------------------------------------
SEPTEMBER 30, 1997 AND 1996
---------------------------
NOTE A - BASIS OF PRESENTATION
------------------------------
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the requirements of Form 10-Q and, therefore, do not
include all information and footnotes which would be presented were such
financial statements prepared in accordance with generally accepted accounting
principles, and should be read in conjunction with the audited financial
statements presented in the Company's 1996 Annual Report to Stockholders. In the
opinion of management, the accompanying financial statements reflect all
adjustments which are necessary for a fair presentation of the results for the
interim period presented. The results of operations for such interim period are
not necessarily indicative of results to be expected for the full year.
NOTE B - EARNINGS PER SHARE
- ---------------------------
Earnings per share is calculated by dividing net earnings by the weighted
average number of common and common equivalent shares outstanding during each
period taking into consideration dilutive effects of common stock equivalents.
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<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The following should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" presented in the
Company's 1996 Annual Report to Stockholders.
INTRODUCTORY NOTE
All statements other than statements of historical fact included in this Report
on Form 10-Q are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934 and Datum Inc. ("Datum" or the "Company") intends that such forward-looking
statements be subject to the safe harbors created thereby. Although the Company
believes that the expectations reflected in such forward-looking statements are
reasonable at this time, it can give no assurance that such expectations will
prove to have been correct. The Company makes no undertaking to correct or
update any such statements in the future. Important factors that could cause
actual results to differ materially from the Company's expectations ("Cautionary
Statements") are set forth in "Management's Discussion and Analysis of Financial
Condition or Results of Operations" as well as in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by the Cautionary Statements.
Overview
- --------
Datum designs, manufactures and markets a wide variety of high performance time
and frequency products used to synchronize the flow of information in
telecommunications networks. The Company is also a leading supplier of precise
timing products for enterprise computing networks and a wide variety of space,
scientific and industrial test and measurement applications.
The Company was formed in 1959 and has grown its operations through acquisitions
and internal product development. In 1983, the Company acquired its cesium
standards operation and, in the process, commenced its evolution from a company
primarily supplying timing equipment for military applications to a manufacturer
of a broad range of time and frequency products for telecommunications and other
applications. In 1986, the Company acquired the business that is now enterprise
computing and in 1988, it acquired its current wireline business. In March 1995,
the Company acquired Efratom Time and Frequency Products, Inc. and Efratom
Elektronik GmbH (collectively "Efratom"), the inventor and leading manufacturer
of rubidium oscillators used in cellular and Personal Communications Services
("PCS") networks. The Company now manufactures each class of time and frequency
products in wide-spread commercial use: cesium standards, rubidium oscillators,
quartz oscillators and GPS timing receivers. In addition, in April 1997, the
Company acquired the assets of Sigma Tau Standards Corporation, a leading
manufacturer of hydrogen masers, which provide an extremely stable frequency
source over short periods of time in controlled environments.
The Company serves the markets for high-precision time and frequency devices in
the telecommunications industry which is rapidly expanding as a result of the
conversion of analog to digital systems. The Company also provides extremely
stable cesium standards and GPS receivers that generate and capture timing and
frequency products for use in wireline telecommunications networks. In addition
to providing time and frequency standards for telecommunications applications,
the Company is a leading supplier of timing products used to ensure the
integrity of information transmitted through enterprise computing networks. The
Company also manufactures frequency sources for satellites, including GPS
satellites that utilize the Company's cesium clocks to provide highly accurate
timing and navigation information throughout the world. Finally, the Company
provides time and frequency products and systems for a wide range of scientific
and industrial test and measurement applications, including missile guidance,
geographic mapping and electric utility operations.
A small number of customers account for a substantial portion of the Company's
net sales and the Company expects that a limited number of customers will
continue to represent a substantial portion of the Company's net sales for the
foreseeable future. There can be no assurance that a major customer will not
reduce, delay or eliminate its purchases from the Company. Any such reduction,
delay or loss in orders could have a material adverse effect on the Company's
business, financial condition and results of operations.
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<PAGE> 9
Results of Operations
- ---------------------
The following table sets forth, for the periods indicated, certain income and
expense items expressed as a percentage of the Company's net sales:
<TABLE>
<CAPTION>
Percentage of Net Sales
---------------------------------------------------
Three Months Ended
September 30, Year Ended December 31,
1997 1996 1996 1995 1994
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0% 100.0%
----- ----- ----- ----- -----
Costs and expenses
Cost of goods sold 60.0% 62.0% 61.3% 59.5% 56.6%
Selling 13.2% 12.0% 13.3% 14.6% 16.8%
Product development 8.4% 7.7% 8.3% 10.5% 8.1%
General and administrative 8.1% 11.6% 11.0% 12.6% 12.7%
Interest, net 1.3% 2.1% 2.5% 2.5% 0.8%
----- ----- ----- ----- -----
Income before income taxes 9.1% 4.5% 3.6% 0.3% 5.0%
Income tax provision 3.7% 1.8% 1.5% 0.2% 2.0%
----- ----- ----- ----- -----
Net income 5.3% 2.6% 2.1% 0.1% 3.0%
===== ===== ===== ===== =====
</TABLE>
Net Sales. The Company's net sales are derived primarily from the sale of time
and frequency products for use in telecommunications networks, enterprise
computing networks, satellites and in a variety of other test and measurement
applications. The Company's net sales increased 23.3% to $30.2 million for the
quarter ended September 30, 1997 from $24.5 million for the corresponding
quarter in 1996. All business units showed double digit growth for the quarter
ended September 30, 1997 over the corresponding quarter of 1996. Net sales were
impacted by a major customer's enactment of a consignment finished goods policy
resulting in a net sales reduction for the quarter ended September 30, 1997 of
approximately $2.5 million. For the nine months ended September 30, 1997, net
sales increased 42.9% to $92.0 million from $64.4 million for the corresponding
period of 1996. The increase was primarily the result of increased sales into
the wireless telecommunications market. In particular, net sales were positively
impacted by increased product deliveries to Lucent Technologies, Inc., the
Company's largest customer, for implementation in cellular and PCS networks. The
future success of the Company depends to a considerable extent upon the
continued growth and increased availability of cellular and other wireless
communications services in the United States and internationally. There can be
no assurance that either subscriber use or the implementation of wireless
communications services will continue to grow, or that such factors will create
demand for the Company's products.
Gross Margins. Gross Margins are derived from net sales and cost of goods sold,
which consist primarily of raw materials, labor, overhead and warranty costs.
Gross margins increased to 40.0% for the quarter ended September 30, 1997 from
38.0% for the corresponding quarter in 1996. For the nine months ended September
30, 1997, gross margins increased to 40.1% from 39.1% for the corresponding
period of 1996. The increase in gross margins was primarily the result of
efficiency improvements and cost reductions. Gross margins can be adversely
affected by a number of factors, including product mix, pricing pressure from
the Company's customers and the difficulty of reducing fixed expenses in
connection with the rescheduling of customers orders.
Selling Expense. Selling expense consists primarily of sales commissions paid to
the Company's third-party representatives and distributors and salaries and
other expenses for its sales and marketing personnel. Selling expense also
includes expenses related to advertising, and trade shows. Selling expense
increased by 35.1% to $4.0 million for the quarter ended September 30, 1997,
from $2.9 million for the corresponding quarter of 1996. For the nine months
ending September 30, 1997, selling expense increased by 42.5% to $12.2 million
from $8.6 million for the corresponding period of 1996. The increase was due to
additional marketing programs and commissions on increased sales volume and
product mix. The increase was partially offset by increased sales to OEM
customers which involve substantially lower commission rates. As a percentage of
net sales, selling expense increased to 13.2% for the quarter ended September
30, 1997, from 12.0% for the corresponding quarter of 1996. For the nine months
ending September 30, 1997 and the corresponding nine months of 1996, selling
expense, as a percentage of sales, was 13.3%
Product Development. Product development expense consists primarily of salary,
applied overhead, materials and third-party design services. Product development
expense increased by 33.5% to $2.5 million for the
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<PAGE> 10
quarter ended September 30, 1997, from $1.9 million for the corresponding
quarter of 1996. For the nine months ending September 30, 1997, product
development expense increased by 28.2% to $7.5 million from $5.8 million for the
corresponding nine months of 1996. The increase was primarily due to increased
telecommunication-related software development. As a percentage of net sales,
product development expenses increased to 8.4% for the quarter ended September
30, 1997, from 7.7% for the corresponding quarter of 1996. For the nine months
ending September 30, 1997, product development expense, as a percentage of
sales, decreased to 8.1% from 9.0% for the corresponding nine months of 1996.
The decrease was due to a larger sales base. The Company believes that product
development projects will result in increased expenses in the remainder of 1997.
Failure to develop, or introduce on a timely basis, new products or product
enhancements that achieve market acceptance could materially adversely affect
the Company's business, financial condition and results of operations.
General and Administrative. General and administrative expense consists
primarily of salaries and other expenses for management, finance, accounting and
human resources, as well as amortization of goodwill and depreciation charges.
General and administrative expense decreased by 14.2% to $2.4 million for the
quarter ended September 30, 1997, from $2.8 million for the corresponding
quarter of 1996. The decrease was primarily due to the reorganizing and
consolidating of functions in the latter part of 1996. For the nine months ended
September 30, 1997, general and administrative expense increased by 3.6% to $7.7
million from $7.5 million for the corresponding nine months of 1996. The
increase was primarily due to increased bonus accruals resultant from the
Company's increased income. As a percentage of net sales, general and
administrative expense decreased to 8.1% for the quarter ended September 30,
1997, from 11.6% for the corresponding quarter of 1996. For the nine months
ended September 30, 1997, general and administrative expense decreased to 8.4%
from 11.6% for the corresponding nine months of 1996. The decrease was due to a
larger sales base.
Interest, Net. Interest expense decreased by $17,000 to $513,000 for the quarter
ended September 30, 1997 from $530,000 in the corresponding quarter in 1996. For
the nine months ending September 30, 1997, interest expense decreased by $95,000
to $1.6 from $1.5 million in the corresponding nine months of 1996.
Weighted Average Number of Shares Outstanding. The weighted average number of
shares outstanding increased for the quarter ended September 30, 1997, as a
result of shares issued in the follow-on offering, an increase in the average
market price of the Company's common stock, and the exercise of stock options.
Liquidity and Capital Resources
- -------------------------------
The Company finances its operations primarily through a combination of cash
provided from operations, a commercial bank line of credit and long-term debt.
In addition, on April 11, 1997, the Company completed a follow-on public
offering of 1,035,000 shares of its common stock, raising net proceeds of
approximately $14.2 million.
Cash used in operations was approximately $3.3 million for the nine months ended
September 30, 1997, compared to cash provided by operations of $3.7 million for
the corresponding nine months of 1996. Cash flows in the first nine months of
1997 were adversely affected by greater working capital needs in connection with
increased production levels associated with building inventories for sales into
the cellular and PCS markets.
Cash used in investing activities was approximately $3.5 million for the nine
months ended September 30, 1997, compared to $1.5 million for the corresponding
period in 1996, reflecting increased expenditures for property and equipment.
The Company currently anticipates that capital expenditures for fiscal 1997 will
be approximately $4 million.
Cash provided by financing activities was approximately $15.3 million for the
nine months ended September 30, 1997, compared to $1.1 million cash used in
financing activities for the corresponding period in 1996. The increase was
primarily due to the Company's follow-on offering of common stock.
Accounts receivable decreased by $2.0 million to $14.8 million at September 30,
1997, from $16.8 million at December 31, 1996, due to decreased billable
shipment levels in the latter part of the period ended September 30, 1997, as
compared to the corresponding period ended December 31, 1996. Approximately $2.5
million in
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<PAGE> 11
shipments in the latter part of the period ended September 30, 1997 were to
consignment inventory, a purchasing policy change at a major customer, and
therefore were not billable.
Inventories increased to $30.0 million at September 30, 1997, from $19.3 million
at December 31, 1996. The Company's production rate had increased since late
1996 to meet strong demand for wireless telecommunication products. However, due
to fluctuations in demand, the inventory level at of September 30, 1997, exceeds
short term demand. Production is being reduced to lower inventory to more
appropriate levels.
Accounts payable decreased to $6.2 million at September 30, 1997, from $7.5
million at December 31, 1996, due to the timing of vendor invoicing.
At September 30, 1997, the Company had working capital of $44.9 million and a
current ratio of 4.7:1 compared to working capital of $26.0 million and a
current ratio of 2.9:1 at December 31, 1996. The Company's long-term debt is
provided by The Prudential Insurance Company of America ("Prudential"). This
credit facility consists of: (i) $6.0 million of Series A senior secured
promissory notes to mature September 27, 2000, bearing interest at the rate of
9.07% on the unpaid principal, payable quarterly, with the principal re-paid in
equal installments of $1.5 million on March 27 and September 27 of each year,
commencing March 27, 1999 and (ii) $12.0 million of Series B senior secured
promissory notes to mature September 27, 2003, bearing interest at the rate of
10.25% on the unpaid principal, payable quarterly, with the principal re-paid in
equal installments of $2.0 million on March 27 and September 27 of each year,
commencing March 27, 2001. In connection with entering into this facility, the
Company issued common stock warrants for the purchase of 175,000 shares of
common stock at an exercise price per share of $11.50. As of September 30, 1997,
none of the warrants had been exercised.
Under the Company's line of credit with Wells Fargo Bank, the Company has a
two-year revolving line of credit not to exceed the principal amount of $12.0
million, expiring November 1, 1998, bearing interest at the Bank's prime rate or
at LIBOR plus 2.25%. The Wells Fargo credit facility and the Prudential credit
facility provide the Company with the aggregate borrowing capacity of $30
million.
Under both agreements, the Company is required to maintain certain financial
ratios, limit other indebtedness and may not pay dividends. Other restrictions
include limitations on the amount of leases and capital expenditures that may be
incurred. The Company currently is in compliance with all such covenants and
restrictions.
Information Regarding Potential Fluctuations in Quarterly Operating Results
- ---------------------------------------------------------------------------
The Company has experienced, and expects to continue to experience, fluctuations
in sales and operating results from quarter to quarter. As a result, the Company
believes that period-to-period comparisons of its operating results are not
necessarily meaningful, and that such comparisons cannot be relied upon as
indicators of future performance. In addition, there can be no assurance that
the Company will maintain its current profitability in the future. A significant
component of the fluctuations results from rescheduling of orders by the
Company's major customers, in some cases due in part to the customers' attempts
to minimize inventories. Other factors that could cause the Company's sales and
operating results to vary significantly from period to period include:
contractual price reductions on products sold to certain major customers; the
time, availability and sale of new products; changes in the mix of products
having differing gross margins; variations in manufacturing capacities,
efficiencies and costs; the availability and cost of components; warranty
expenses; and variations in product development and other operating expenses. In
addition, the sales cycles for many of the Company's products are often lengthy
and unpredictable, and can take up to 36 months. Further, there can be no
assurance that the Company will be successful in closing large transactions on a
timely basis or at all. The timing of these transactions could cause additional
variability in the Company's operating results. The Company's quarterly results
of operations are also influenced by competitive factors, including pricing and
availability of the Company's and competing time and frequency products. A large
portion of the Company's expenses are fixed and difficult to reduce in a short
period of time. If net sales do not meet the Company's expectations, the
Company's fixed expenses would exacerbate the effect of such net sales
shortfall. Furthermore, announcements by the Company or its competitors
regarding new products and technologies could cause customers to defer purchases
of the Company's products. Order deferrals by the Company's customers,
purchasing policy changes, delays in the Company's introduction of new products
and longer than anticipated sales cycles for the Company's products have in the
past materially adversely affected the Company's quarterly results of
operations. Due to the foregoing factors, as well as other unanticipated
factors,
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<PAGE> 12
it is likely that in some future quarter the Company's operating results will be
below the expectations of public market analysts or investors. In such event,
the price of the Company's Common Stock would be materially adversely affected.
Item 3. Quantitative and Qualitative Disclosures About Market Risks.
Omitted as inapplicable to the Company.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
--------------------------
Items 1 through 5 have been omitted because the related information is either
inapplicable or has been previously reported.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit No. Description
----------- -----------
27.3 Financial Data Schedule
(b) No current reports on Form 8-K were filed during the quarter
covered by this report.
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<PAGE> 14
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.
DATUM INC.
/s/ Louis B. Horwitz Date November 13, 1997
- ---------------------------------------------- ----------------------
Louis B. Horwitz, President
/s/ David A. Young Date November 13, 1997
- ---------------------------------------------- ----------------------
David A. Young, Chief Financial Officer
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<PAGE> 15
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description Page
- ----------- ----------- ----
<C> <S> <C>
27.3 Financial Data Schedule
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,887
<SECURITIES> 0
<RECEIVABLES> 14,763
<ALLOWANCES> 79
<INVENTORY> 29,982
<CURRENT-ASSETS> 57,062
<PP&E> 25,843
<DEPRECIATION> 9,582
<TOTAL-ASSETS> 86,118
<CURRENT-LIABILITIES> 12,175
<BONDS> 17,388
0
0
<COMMON> 1,329
<OTHER-SE> 53,533
<TOTAL-LIABILITY-AND-EQUITY> 86,118
<SALES> 30,209
<TOTAL-REVENUES> 30,209
<CGS> 18,125
<TOTAL-COSTS> 27,070
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 403
<INCOME-PRETAX> 2,736
<INCOME-TAX> 1,122
<INCOME-CONTINUING> 1,614
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,614
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
