Item 1. Business.
Company Overview
Datron Systems Incorporated and its wholly owned subsidiaries (the "Company") provide specialized satellite communication products and systems and high quality radio communication products to worldwide commercial and governmental markets and to several United States Government customers, including the Department of Defense ("DoD"). The Company was founded in 1969 and became an independent publicly held corporation in 1985.
The Company operates its business through two subsidiaries. In October 1985, the Company acquired its wholly owned subsidiary, Datron World Communications Inc., formerly known as Trans World Communications, Inc. ("DWC"). DWC conducts the Company's Communication Products business. In June 1990, the Company acquired its wholly owned subsidiary, Datron/Transco Inc., formerly known as Transco Communications Inc. ("D/T"). D/T conducts the Company's Antenna and Imaging Systems business. In September 1993, the Company formed a wholly owned subsidiary, Datron Telecommunications International Inc., to provide private international telecommunication systems. Datron Telecommunications was merged into DWC on March 31, 1995. The Company discontinued its private international telecommunications business in fiscal 1996.
In March 1996, D/T consolidated its image processing division in San Jose, California, which was acquired in August 1994, with its remote sensing earth station business in Simi Valley, California. In connection with that consolidation, the Company recorded a restructuring charge of $1,421,000 ($855,000, or $0.32 per share, after taxes).
Investment Considerations
This report contains certain forward-looking statements that may be used in evaluating the opportunities and risks associated with future Company performance. However, actual results could differ materially from those described in the forward-looking statements due to, among other things, the following factors:
Dependence on Sales to Foreign Customers; Worldwide Economic Downturns and Currency Devaluations
Sales to foreign customers accounted for 55%, 55% and 49% of consolidated sales in fiscal 1999, 1998 and 1997, respectively. Sales of Communication Products have been even more highly concentrated with foreign customers: 93%, 88% and 94% in fiscal 1999, 1998 and 1997, respectively. Sales to foreign customers often involve risk because of political and economic uncertainties in many foreign countries, which can result in funding delays or inability of those customers to obtain financing for anticipated purchases of Company products. As a result, it is often more difficult to predict order bookings from foreign customers than it is from domestic customers. In addition, foreign political unrest, war, economic downturns and currency devaluations could have a significant negative impact on future Company sales and income.
Reliance on Large Orders from a Small Number of Customers
A substantial percentage of sales may be heavily concentrated with a small number of customers. Within the Communication Products business segment, the same single customer accounted for 7%, 24% and 30% of that segment's sales in fiscal 1999, 1998 and 1997, respectively. Although sales in the Antenna and Imaging Systems business segment have not been so heavily concentrated with one customer, it is common for a small number of customers to each account for approximately 5% to 15% of that segment's sales each year. Because it is unusual to receive large orders from the same customer in successive years, it is necessary to find new customers each year to replace the previous year's sales. There can be no assurance that the Company will be able to do so in the future. In addition, reliance on large orders can result in financial performance varying widely from quarter-to-quarter, and also carries contract cancellation risk that can more adversely affect Company performance than it would if the Company depended on small orders from a large number of customers.
Timely Development and Customer Acceptance of New Products
The Company's products are subject to obsolescence. To prevent this from occurring, the Company has an ongoing new product development program to keep the technologies employed in its products current and to introduce new products that meet changing market requirements. Lack of timely development of new technologies and new products, or lack of acceptance of new products by the Company's customers could have a negative impact on future sales and income.
U.S. Government Export Restrictions
Some of the Company's products are subject to export licensing approval by agencies of the U.S. Government. U.S. security concerns as well as foreign political instability or unrest can affect the licensing process. Although the requirement to obtain export licenses has not prevented any sales of Company products to date, it has on occasion delayed shipments of some products and in some cases has placed the Company at a competitive disadvantage. There can be no assurances that future shipments may not likewise be delayed or that U.S. security concerns may result in the denial of export licenses or the loss of sales opportunities for some Company products.
Fixed Price Development Contracts
The Company often accepts fixed-price contracts that require custom engineering, custom software or the development of new features and capabilities. Such contracts usually include the sale of standard products and components, but not always. Although engineering cost estimates are prepared as a basis for quoting such contracts, there can be no assurance the Company will be able to develop the required features, capabilities or software within established cost budgets. Should development costs exceed established budgets, the result could have a material adverse effect on earnings.
Consumer Products and Markets
In November 1995, the Company introduced its first consumer product, a mobile direct broadcast satellite ("DBS") television reception system for recreational vehicles and buses. This product represents a departure from the Company's historical business that has focused on large contracts, relatively small numbers of deliverables and customers that are primarily government agencies or large corporations. Several additional DBS antenna products have subsequently been introduced, including a marine product line and antenna systems for large business jets and commercial jets. A production line has been established to meet expected demand for these products. In fiscal 1997, the Company determined its method of using exclusive national distributors to sell these products was not effective, and spent the latter part of that year unwinding the distribution agreements, clearing the distribution pipeline and establishing a factory direct to dealer distribution system. The Company does not have previous experience in building or selling a consumer product. Although it believes it can produce DBS products in required quantities, there can be no assurance it will be able to do so. Also, although the Company's new methods of distribution for its DBS products have improved sales, there can be no assurance they will continue to do so or that consumer demand for its DBS products will be as large as the Company anticipates.
Competitors
The Company has competitors for all the products it offers. The level of competition varies by product line and ranges from many competitors for its radio products to a few competitors for its tracking antenna products. New competition has recently emerged for its mobile DBS products. The Company could be adversely affected by competitors' development of new or different products that may provide or be perceived as providing greater value than the Company's products. The Company may or may not be successful in developing competing products. Many of the Company's competitors and potential competitors have substantially greater resources than the Company and may be more successful in developing, producing and marketing their products. In such case, the Company may experience substantial competition, which could have a material adverse effect on the Company's business.
Declining Sales for the U.S. Department of Defense
In fiscal 1993, the Company restructured its operations in response to declining DoD spending. Sales for the DoD have declined from $31.9 million in fiscal 1993 to $11.8 million in fiscal 1999, primarily due to completion of long-term DoD contracts that have not been replaced with new orders. There can be no assurance that new DoD orders will be received or that the orders received will be sufficient to meet the Company's sales objectives.
General
The Company operates in two business segments: Antenna and Imaging Systems, which are supplied by D/T, and Communication Products, which are supplied by DWC.
Antenna and Imaging Systems
This segment designs and manufactures satellite communication terminals, telemetry tracking and control systems, servo control products and high-quality microwave antennas. Its major products are remote sensing satellite earth stations and image processing software for worldwide scientific, military and commercial customers, tracking antennas and systems for U.S. and foreign governmental agencies and commercial satellite service providers, and mobile satellite television reception systems for recreational vehicles, buses, boats and large business jets.
Descriptions of the major product areas follow:
Satellite Communication ("SATCOM") Terminals. The Company is a supplier of satellite communication antenna systems and subsystems used to receive defense-related data and data transmitted through satellites of other government and commercial organizations. The stabilizing and automatic tracking capabilities of its antenna systems make them particularly well suited for use on ships, motor vehicles and other mobile platforms. Over the past two decades, the Company has been a prime contractor and a subcontractor for shipboard SATCOM antenna systems used by the U.S. Navy. More recently, the Company has been developing airborne SATCOM antenna systems for the U.S. Air Force.
Telemetry Tracking and Control ("TT&C") Systems. TT&C systems monitor and control vehicles such as satellites, missiles and aircraft. They receive radio telemetry signals containing vehicle status information, engage in automatic tracking of the vehicle so contact is maintained and transmit command signals so vehicle control can be established and maintained.
Servo Control Products. The Company's involvement with SATCOM and TT&C markets has required a high capability in radio frequency electronics, antenna engineering, servo controls and large precision mechanical systems. The Company has developed a line of pedestals and rotators, servo power amplifiers and positioning control units that are often used as building blocks for specific customer requirements.
Microwave Products. The Company designs and manufactures broad bandwidth microwave antennas for the aerospace industry that are used on high performance aircraft, missiles and space launch vehicles.
Remote Sensing Satellite ("RSS") Systems. The RSS systems market is a subset of the broader earth observation market. It involves using several types of satellites containing optical and radar sensors in conjunction with specific earth acquisition and data processing equipment to produce images. The images are in the form of hard copy and/or digital data that allow the user to study changes on the earth's surface or environment. Applications include locating minerals, updating maps, forecasting weather, monitoring crops, studying the environment, monitoring earth resources and gathering economic or military intelligence.
The Company entered the commercial RSS market in fiscal 1994 and in fiscal 1995 acquired International Imaging Systems, Inc. ("I2S"), a privately-held company in Milpitas, California, to provide complete RSS systems for the international marketplace. I2S's expertise was in the fields of digital image processing and photogrammetry. The Company now offers its customers complete RSS earth stations, including image processing capability. In fiscal 1999, RSS sales accounted for 41% of the sales of the Antenna and Imaging Systems segment compared with 33% of its sales in fiscal 1998.
Mobile DBS Television Systems. The Company introduced its first DBS antenna product in fiscal 1996. That product allows a recreational vehicle owner to receive DBS television from a parked vehicle at the touch of a button by automatically locating the satellite. During fiscal 1997, the Company introduced several additional DBS antenna products including systems for boats at anchor, boats underway, and RVs and buses on the open road. Also during fiscal 1997, the Company was first to demonstrate live DBS television on a commercial airliner, and in fiscal 1998, was first to obtain Federal Aviation Administration certification of an airborne DBS system designed for large business jets.
Customers and Marketing
Sales of Antenna and Imaging Systems' products have historically been concentrated with the DoD, which accounted for 28% of this segment's fiscal 1999 sales and 31% of its fiscal 1998 sales. Marketing and sales activities for its DoD customers and other non-defense governmental agencies are conducted by internal sales and engineering personnel. Most customers for the RSS systems business are foreign government space and communications agencies. Marketing and sales activities for those products are conducted through independent sales representatives in Europe, South America and Asia.
Introduction of mobile DBS television systems required the establishment of new distribution methods to sell these consumer products. The Company's initial approach of using exclusive national distributors was not effective and the Company is now selling its DBS products direct to dealers and original equipment manufacturers, as well as through select distributors and agents. Company employees provide sales and marketing support and installation training for the dealers.
Manufacturing, Assembly and Sources of Supply
Products for the Company's Antenna and Imaging Systems segment are designed, manufactured and assembled at facilities in Simi Valley, California. The Company purchases certain components and subsystems from subcontractors and vendors. Some of these items are standard off-the-shelf components and others are fabricated to Company specifications. The Company also fabricates electronic assemblies from purchased electronic components and circuit boards. A production line for DBS antenna products was established in fiscal 1996 and expanded in fiscal 1997.
The Company is rarely dependent on a single source of supply for materials, parts or components. However, once a subcontractor is selected to provide components built to Company specifications, the Company is often dependent on that subcontractor. Failure of the subcontractor to perform could jeopardize the ability of the Company to meet its required delivery schedules.
Communication Products
This business segment designs, manufactures and distributes high frequency ("HF") radios and accessories for over-the-horizon radio communications and very high frequency ("VHF") radios and accessories for line-of- sight communications. The Company's HF radios operate in the frequency range of 1.6 to 30 megahertz, where radio waves generated from the transmitter reflect off the ionosphere back to the point of receipt on earth. The Company's VHF radio products, which operate in the frequency range of 30 to 88 megahertz, provide users high-quality transmission for line-of-sight communications.
In addition to its standard radios, the Company offers frequency hopping and encryption options to its VHF product line and automatic link establishment options to its HF product line. Frequency hopping is a technique that prevents interruption or interception of radio signals by changing, at very high speeds, the frequency at which they are transmitted. This technology utilizes advanced synchronized mechanisms that ensure all radios in a network are synchronized and frequency hop at the same time. Automatic link establishment, when used in HF radio equipment, automatically determines the best available frequencies on which to communicate.
The Company offers a wide range of accessory products to complement the HF and VHF product lines. These accessory products include antennas and antenna tuners, power sources, amplifiers, remote control systems, modems, data communications equipment and audio accessories.
A substantial percentage of sales of Communication Products are often concentrated with a small number of customers. In fiscal 1999, an African customer accounted for 20% of this segment's sales. In fiscal 1998, two Asian customers accounted for 24% and 10% of this segment's sales and a South American customer accounted for 12% of its sales. And, in fiscal 1997, the same two Asian customers accounted for 30% and 24% of this segment's sales. Because it is unusual to receive large orders from the same customer in successive years, it is often necessary to find new customers each year to replace the previous year's sales. To minimize the impact fluctuating sales may have on the Company's operations, temporary employees are used when practical.
Customers and Marketing
Sales to foreign customers accounted for 93% of this segment's fiscal 1999 sales and 88% of the segment's fiscal 1998 sales. Most of its international customers are agencies of foreign governments that perform civil defense, paramilitary and military operations, and foreign governmental agencies that perform civilian tasks unrelated to military operations, such as civil aviation agencies, drug interdiction agencies, embassies and disaster relief organizations. Domestic customers are primarily various agencies of the United States Government, including the Drug Enforcement Administration and Department of State.
The Company's products are sold in over 80 countries by a network of independent sales and service representatives, most of whom are non exclusive sales agents of the Company. These representatives provide both pre-sale and post-sale support. Many of them operate service facilities that offer both warranty and long-term maintenance of the Company's products. Sales are denominated in U.S. Dollars.
In addition to direct sales, the Company sometimes sells its radio products to international suppliers of complementary equipment. It also sometimes licenses the local manufacturing of its products to customers in certain countries. The latter practice is usually followed where local regulations discourage the importation of complete units.
Manufacturing, Assembly and Sources of Supply
Communication products are designed and manufactured at facilities in Vista, California. Company engineers work closely with manufacturing and marketing personnel to improve existing designs and to introduce new products that meet the ever changing demands of the marketplace. A new family of tactical VHF radios was introduced in fiscal 1998 and a new family of handheld radios was introduced in fiscal 1997. The Company purchases certain electronic components, circuit boards and fabricated metal parts, and painting and silk screening services. Other than when it licenses overseas manufacturing for a particular local market, the Company performs most other manufacturing functions necessary for the production of its products.
The Company is rarely dependent on any single source of supply for the manufacture of its communication products. Although only one supplier may be used for certain parts, the Company believes that multiple sources are usually available.
Backlog
Order backlog at March 31 was as follows:
1999 1998 ----------- ----------- Antenna and Imaging Systems $20,484,000 $19,949,000 Communication Products 2,211,000 5,494,000 ----------- ----------- Total $22,695,000 $25,443,000 =========== ===========
The 3% increase in Antenna and Imaging Systems backlog at March 31, 1999 compared with March 31, 1998 was primarily due to higher bookings of remote sensing systems and DBS antenna products, partially offset by lower bookings of antennas for the DoD and other governmental agencies. Additional orders for remote sensing systems and antennas in the amount of $6 million were received in April 1999 after the close of fiscal 1999.
The 60% decrease in Communication Products backlog at March 31, 1999 compared with March 31, 1998 was due to lower order bookings in fiscal 1999. Worldwide economic instability was responsible for the delay of several anticipated orders. Future results of operations may be adversely affected if those delayed orders are further delayed or canceled or if procurements the Company has identified as promising opportunities are canceled.
Competition
The Company competes in each of its business segments with several companies. Depending on the specific product, these companies may be similar in size to the Company or may be large diversified companies which at times may also be customers of the Company. The Company believes its major competitive advantages are the quality of its products, their cost effective designs, timeliness of delivery, ease of use and easy serviceability.
Patents, Trademarks, Copyrights and Licenses
The Company has applied for several patents related to its DBS products. However, the Company believes that patents are not a significant factor in the Company's business and that the success of the Company depends primarily on the technical competence and managerial and marketing ability of the Company's personnel.
DATRON(R) and design, TRANSWORLD(R), I2S(R), PRI2SM(R), OPEN 2000(R), DBS-2000(R), DBS-3000(R), DBS-4000(R) and VI2STA(R) are registered trademarks of the Company. DBS-2100(TM), DBS- 2400(TM), CruiseTV(TM) and We Cover the Global Spectrum(TM) are trademarks of the Company by application for registration with the U.S. Patent and Trademark Office.
The Company has obtained licenses for the VHF frequency hopping technology and for the automatic link establishment technology used in the Company's VHF and HF radio products, respectively.
Employees
The Company employed approximately 331 employees at the end of fiscal 1999 compared with approximately 319 employees at the end of fiscal 1998. The 4% increase in employment during fiscal 1999 was necessitated by the 8% increase in sales for fiscal 1999.
None of the Company's employees are covered by a collective bargaining agreement and the Company considers its employee relations to be good.
Financial Information
Additional financial information concerning segment, geographic and major customers is included in Note 9 of the Notes to Consolidated Financial Statements. See Part II, Item 8.
Item 2.
Item 2. Properties.
DWC leases approximately 70,000 square feet of office, engineering and manufacturing space in Vista, California. The lease commenced on March 26, 1999 and expires on April 30, 2009 and contains a renewal option of five years. DWC and the Company's corporate headquarters operate from that facility. The Company relocated from Escondido, California to Vista, California in April 1999.
D/T owns through a subsidiary, Datron Resources Inc., a 110,000 square foot office, engineering and manufacturing building located on a nine-acre site in Simi Valley, California. D/T conducts operations from that facility.
Information with respect to obligations for lease rentals is included in Note 8 of the Notes to Consolidated Financial Statements. See Part II, Item 8. The Company considers its properties to be suitable and adequate for its present needs. The facilities in Vista and Simi Valley are being fully utilized.
Item 3.
Item 3. Legal Proceedings.
The Company is not involved in any litigation that is expected to have a material effect on the Company's business or consolidated financial position.
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. 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.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Executive Officers of the Registrant
David A. Derby, 57, has been President and Chief Executive Officer of the Company since May 1982, and Chairman of the Board since April 1998.
William L. Stephan, 53, has been Vice President, Chief Financial Officer and Treasurer of the Company since November 1993.
Executive officers are elected by and serve at the discretion of the Board of Directors. There are no family relationships among directors or executive officers of the Company.
PART II
Item 5.
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
Information required by Item 5 of Form 10-K is incorporated herein by reference from the information contained in the section captioned "Common Stock Activity" on the inside back cover of the Annual Report, that portion of which is attached hereto as Exhibit 13.
Item 6.
Item 6. Selected Financial Data.
Information required by Item 6 of Form 10-K is incorporated herein by reference from the information contained in the section captioned "Datron Systems Incorporated Selected Financial Data" on the inside front cover of the Annual Report, that portion of which is attached hereto as Exhibit 13.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Information required by Item 7 of Form 10-K is incorporated herein by reference from the information contained in the section captioned "Management's Discussion and Analysis of Financial Condition and Results of Operations" on pages 6 through 11 of the Annual Report, that portion of which is attached hereto as Exhibit 13.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The Company does not currently use derivative financial instruments for speculative purposes that expose the Company to market risk. The Company is exposed to cash flow and fair value risk due to changes in interest rates with respect to its long-term debt. Information with respect to this item is set forth in Note 5 of the Notes to Consolidated Financial Statements and is incorporated herein by reference to that note. See Item 8
Item 8. Financial Statements and Supplementary Data.
Information required by Item 8 of Form 10-K is incorporated herein by reference from the consolidated financial statements of the Company at March 31, 1999 and 1998 and for each of the three years in the period ended March 31, 1999 and the Independent Auditors' Report appearing on pages 12 through 24 of the Annual Report, that portion of which is attached hereto as Exhibit 13.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
During the two most recent fiscal years ended March 31, 1999, there has not been a change in accountants or a reported disagreement with accountants on any matter of accounting principles or practices or financial statement disclosure.
PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant.
Information required by Item 10 of Form 10-K with respect to directors is incorporated herein by reference from the information contained in the section captioned "Nomination and Election of Directors" in the Company's Notice of Annual Meeting of Stockholders to be Held Monday, August 9, 1999 at 11:00 A.M. and Proxy Statement ("Proxy Statement"), a copy of which is to be filed as Exhibit 22 within 120 days of the end of the Registrant's fiscal year.
Information required by Item 10 of Form 10-K with respect to executive officers is set forth in Part I of this report under the section captioned "Executive Officers of the Registrant," pursuant to instruction 3 to paragraph (b) of Item 401 of Regulation S-K.
Item 11.
Item 11. Executive Compensation.
Information required by Item 11 of Form 10-K is incorporated herein by reference from the information contained in the section captioned "Executive Compensation" in the Proxy Statement, a copy of which is to be filed as Exhibit 22 within 120 days of the end of the Registrant's fiscal year.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
Information required by Item 12 of Form 10-K is incorporated herein by reference from the information contained in the section captioned "Security Ownership of Certain Beneficial Owners and Management" in the Proxy Statement, a copy of which is to be filed as Exhibit 22 within 120 days of the end of the Registrant's fiscal year.
Item 13.
Item 13. Certain Relationships and Related Transactions.
Information required by Item 13 of Form 10-K is incorporated herein by reference from the information contained in the section captioned "Executive Compensation" in the Proxy Statement, a copy of which is to be filed as Exhibit 22 within 120 days of the end of the Registrant's fiscal year.
PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as part of this report:
Page in 1999 Annual Report (1)Financial Statements:
Consolidated Balance Sheets at March 31, 1999 and 1998 12
Consolidated Statements of Operations for the Years Ended March 31, 1999, 1998 and 1997 13
Consolidated Statements of Stockholders' Equity for the Years Ended March 31, 1999, 1998 and 1997 14
Consolidated Statements of Cash Flows for the Years Ended March 31, 1999, 1998 and 1997 15
Notes to Consolidated Financial Statements 16-23
Independent Auditors' Report 24
(2)Financial Statement Schedules:
Page
Independent Auditors' Report on Financial Statement Schedule S-1
Schedule II. Valuation and Qualifying Accounts S-2
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.
(b) No reports on Form 8-K were filed during the last quarter of the period covered by this report.
(c) Exhibits. The following exhibits are filed as part of this report:
Exhibit Number Description - ------ ----------- 3.1 Certificate of Incorporation.(1)
3.2 Bylaws.(1)
4.15 Stockholder Rights Agreement dated August 21, 1990.(6)
4.16 First Amendment to Stockholder Rights Agreement dated as of October 29, 1993.(7)
10.5 1988 Key Employee Stock Purchase Plan.(2)
10.8 Employment Agreement between the Registrant and David A. Derby.(3)
10.31 Lease of Trans World Communications, Inc. facilities at 298, 302 and 304 Enterprise Street, Escondido, California.(4)
10.36 Amended and Restated 1985 Stock Option Plan.(5)
10.37 First Amendment to Trans World Communications, Inc. Lease Agreement dated January 15, 1993.(8)
10.46 1995 Stock Option Plan.(9)
10.47 Second Amendment to Trans World Communications, Inc. Lease Agreement dated February 8, 1995.(9)
10.48 Agreement and Plan of Merger between Datron Telecommunications International Inc. and Trans World Communications, Inc. dated as of March 14, 1995.(9)
10.53 Datron Systems Incorporated Supplemental Executive Profit Sharing Plan (Effective as of April 1, 1994).(10)
10.54 Third Amendment to Trans World Communications, Inc. Lease Agreement dated May 1, 1995.(10)
10.58 Datron Systems Incorporated Employee Stock Purchase Plan (Adopted Effective July 1, 1997).(11)
10.59 Amended and Restated Credit Agreement and Note between the Registrant and Union Bank of California dated August 8, 1997.(12)
10.60 Waiver and First Amendment to Amended and Restated Credit Agreement and Note between Registrant and Union Bank of California dated February 10, 1998.(13)
10.61 Datron World Communications Inc. Lease Agreement dated as of February 13, 1998.(13)
10.62 Fourth Amendment to Trans World Communications, Inc. Lease Agreement dated March 1, 1998.(13)
10.64 Waiver and Second Amendment to Amended and Restated Credit Agreement and Note between Registrant and Union Bank of California dated April 30, 1998.(13)
10.65 Loan Agreement between Datron Resources Inc. and Jackson National Life Insurance Company dated August 7, 1998.(14)
10.66 Datron Systems Incorporated Profit Sharing and Savings Plan (Amended and Restated as of April 1, 1998).(14)
10.67 Credit Agreement between Datron World Communications Inc., Datron/Transco Inc. and Comerica Bank-California dated March 24, 1999. 10.68 Borrower Agreement between Datron/Transco Inc. and Comerica Bank-California dated March 24, 1999.
10.69 Guaranty of Datron Systems Incorporated of the indebtedness of Datron World Communications Inc. and Datron/Transco Inc. to Comerica Bank- California dated March 24, 1999.
10.70 Severance Agreement between the Registrant and William L. Stephan.
13 Certain portions of Registrant's Annual Report to Stockholders for the fiscal year ended March 31, 1999 containing information required by Part I and Part II of this report.
21 Subsidiaries.
22 Proxy Statement, Notice of Annual Meeting of Stockholders to be Held Monday, August 9, 1999 at 11:00 A.M. and Form of Proxy (to be deemed filed only to the extent required by the instructions to exhibits for reports on Form 10-K) to be filed within 120 days of the end of the Registrant's fiscal year.
23 Independent Auditors' Consent - Deloitte and Touche.
24 Power of Attorney (on signature page 16).
27 Financial Data Schedule for the Twelve Months Ended March 31, 1999.
99.1 Annual Report of the Datron Systems Incorporated Employee Stock Purchase Plan.
- --------------
(1) Incorporated by this reference to the Exhibit bearing the same number filed with the Registration Statement on Form 8-B of the Registrant on November 13, 1987.
(2) Incorporated by this reference to the Registration Statement on Form S-8 of the Registrant filed March 22, 1988.
(3) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1988.
(4) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1989.
(5) Incorporated by this reference to the Registration Statement on Form S-8 of the Registrant filed April 16, 1993.
(6) Incorporated by this reference to Exhibit I to the Registrant's Registration Statement on Form 8-A filed November 5, 1990.
(7) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Quarterly Report on Form 10-Q for the quarter ended December 31, 1993.
(8) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1994.
(9) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1995.
(10) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1996.
(11) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1997.
(12) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1997.
(13) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Annual Report on Form 10-K for the fiscal year ended March 31, 1998.
(14) Incorporated by this reference to the Exhibit bearing the same number filed with the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998.
Supplemental Information
Copies of the Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held August 9, 1999 and copies of the form of proxy to be used for such Annual Meeting will be furnished to the Securities and Exchange Commission prior to the time they will be distributed to Stockholders.
SIGNATURES ----------
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: June 24, 1999 DATRON SYSTEMS INCORPORATED
By: /s/ David A. Derby Chairman of the Board, President, Chief Executive Officer and Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below appoints David A. Derby and William L. Stephan, jointly and severally, as his true and lawful attorney-in-fact, each with full power of substitution and re-substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact, jointly and severally, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in- fact, jointly and severally, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
Signature Title Date - --------------------- ---------------------------- ------------ Chairman of the Board, President, Chief Executive By:/s/ David A. Derby Officer and Director David A. Derby (Principal Executive Officer) June 24, 1999
Vice President, Chief Financial By:/s/ William L. Stephan Officer (Principal Financial William L. Stephan and Accounting Officer) June 24, 1999
By:/s/ Kent P. Ainsworth Director June 21, 1999 Kent P. Ainsworth
By:/s/ Michael F. Bigham Director June 14, 1999 Michael F. Bigham
By:/s/ Adrian C. Cassidy Director June 14, 1999 Adrian C. Cassidy
By:/s/ William A. Preston Director June 17, 1999 William A. Preston
By: Director June __, 1999 Peter F. Scott
By:/s/ Robert D. Sherer Director June 14, 1999 Robert D. Sherer
S-1
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE
Board of Directors Datron Systems Incorporated Vista, California
We have audited the consolidated financial statements of Datron Systems Incorporated (the "Company") as of March 31, 1999 and 1998, and for each of the three years in the period ended March 31, 1999, and have issued our report thereon dated May 12, 1999; such financial statements and report are included in your 1999 Annual Report to Stockholders and are incorporated herein by reference. Our audits also included the financial statement schedule of the Company listed in Item 14(a)(2). This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Deloitte & Touche LLP San Diego, California May 12, 1999