UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Commission File
Ended March 31, 2001 Number 0-7445
DATRON SYSTEMS INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 95-2582922
(State of Incorporation) (I.R.S. Employer Ident. No.)
3030 Enterprise Court, Vista, California 92083-8347
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (760) 734-5454
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01
(Title of Class)
Explanatory Note: This Annual Report on Form 10-K/A is being filed by
Datron Systems Incorporated ("Datron" or the "Registrant") to amend Part
III, Items 10 through 13 of the Registrant's Annual Report on Form 10-K
filed with the Securities and Exchange Commission on June 13, 2001.
PART III
Item 10. Directors and Executive Officers of the Registrant.
The following table sets forth certain information regarding each nominee
as of June 21, 2001.
Name Age Positions With the Company
David A. Derby 59 Chairman of the Board, President, Chief
Executive Officer; Director
William L. Stephan 55 Vice President, Chief Financial Officer and
Treasurer
Kent P. Ainsworth 55 Director
Richard W. Flatow 60 Director
Don M. Lyle 61 Director
William A. Preston 65 Director
Robert D. Sherer 65 Director
The following is a biographical summary of the experience of the officers
and directors of the Registrant, each as provided to the Registrant by such
person:
David A. Derby has been a director, President and Chief Executive Officer
of Datron since May 1982. Mr. Derby was elected Chairman of the Board
effective April 1, 1998. He also was President of Datron's wholly owned
subsidiary, Datron World Communications Inc. (formerly known as Trans World
Communications, Inc.), from March 1993 through March 1995 and was President
of its other wholly owned subsidiary, Datron Advanced Technologies Inc.
(formerly known as Datron/Transco Inc.), from August 1997 until March 1998.
He has been a director of AML Communications, Inc. since December 1995 and
a director of the Corporate Directors Forum since June 2001.
William L. Stephan has been Vice President, Chief Financial Officer and
Treasurer of Datron since November 1993.
Kent P. Ainsworth has been a director of Datron since May 1985. Since April
1996, he has been Executive Vice President and Chief Financial Officer of
U.R.S. Corporation. From January 1991 until April 1996, he was Vice
President and Chief Financial Officer of U.R.S. Corporation. From October
1987 through February 1990, he was Chief Financial Officer of Di Giorgio
Corporation.
Richard W. Flatow has been a director of Datron since January 2001. He is
President and owner of RWF Enterprises, a management consulting firm he
founded in 1994. From 1993 to 1994, he was President and Chief Executive
Officer of Futurekids, Inc., and from 1991 to 1993, Mr. Flatow was a
Managing Partner and Senior Consultant for Hankin & Co. From 1986 to 1990,
he was Chairman, President and Chief Executive Officer for Avalon
Marketing, Inc. Mr. Flatow held several executive positions at Avon
Products, Inc. from 1969 to 1986, where his last position was Group Vice
President for Sales and Distribution. He has been a director of AML
Communications, Inc. since December 1995.
1
Don M. Lyle has been a director of Datron since May 2000. He is the
President and owner of Technology Management Company, which he founded in
1983. He has provided technology management assistance to many clients,
including Science Applications International Corporation (SAIC), Tandem
Computers, McKinsey & Company, Hewlett Packard Company and Unisys
Corporation. He has been a director of Emulex Network Systems, Inc. since
February 1994 and a director of the Corporate Directors Forum since
February 1999. He also serves on the boards of several private companies.
William A. Preston has been a director of Datron since February 1998. Since
1977, he has been Chairman and Chief Executive Officer of APM, Inc. He was
a director of Pacific Scientific Corporation from 1979 to January 1998.
Robert D. Sherer has been a director of Datron since May 1989. He is the
President and owner of Quality Concepts, Inc., which he founded in 1986.
From 1959 to 1984, he was employed by A.M. International, where his last
position was National Vice President of Sales.
All directors hold office until the next annual meeting of stockholders and
until their successors are elected and qualified. There are no family
relationships between or among any directors or executive officers of
Datron.
Item 11. Executive Compensation.
SUMMARY COMPENSATION TABLE
The following table sets forth information regarding the compensation for
services in all capacities paid or accrued for the Fiscal Years indicated
by Datron (a) to the Chief Executive Officer of Datron and (b) to the Chief
Financial Officer of Datron. No other executive officer of Datron received
salary and bonus of more than $100,000 during Fiscal 2001.
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
OTHER SECURITIES
FISCAL ANNUAL UNDERLYING ALL OTHER
NAME AND YEAR COMPEN- OPTIONS/ COMPEN-
PRINCIPAL ENDED SALARY BONUS SATION<F1> SARS<F2> SATION<F3>
POSITION MARCH 31 ($) ($) ($) (#) ($)
David A. Derby 2001 275,000 129,937 3,293 40,000 (243)
Chairman, President 2000 275,962 113,796 4,839 10,000 43,275
and Chief Executive 1999 250,000 58,406 5,316 0 20,775
Officer
William L. Stephan 2001 174,998 64,969 2,607 0 1,784
Vice President and 2000 178,364 56,898 3,039 10,000 23,887
Chief Financial 1999 162,014 29,203 3,138 0 19,746
Officer and
Treasurer
- ------------------
[FN]
<F1> Amounts paid under an arrangement by which Datron reimburses officers
of Datron for medical expenses and life insurance not paid under
Datron's regular health insurance plan.
<F2> Options granted in Fiscal 2001 for Mr. Derby were 15,001 non-qualified
options ("NQOs") and 24,999 incentive stock options ("ISOs"), each
with terms of ten years. Options granted in Fiscal 2000 were NQOs for
Mr. Derby and ISOs for Mr. Stephan, each with terms of ten years. The
options vest in substantially equal portions at the end of the first,
second and third years following the date of grant. The exercise price
for each NQO granted in fiscal 2001 and fiscal 2000 was set at 100%
and 85%, respectively, of the fair market value of Datron Common Stock
at the date of grant, and the exercise price for each ISO granted in
both years was set at 100% of the fair market value of Datron Common
Stock at the date of grant.
<F3> Represents contributions to Datron's Qualified Employee Profit Sharing
Plan and contributions to Datron's Non-Qualified Supplemental
Executive Profit Sharing Plan and earnings (loss) accrual under that
plan.
</FN>
2
FISCAL 2001 OPTION GRANTS
The following table sets forth information relating to options granted
during Fiscal 2001 to Datron's Chief Executive Officer and the Chief
Financial Officer named in the Summary Compensation Table. In addition, and
in accordance with the rules of the SEC, the table shows hypothetical gains
or "option spreads" that would exist for such options based on assumed
rates of annual compound stock price appreciation of 5% and 10% per year
from the date the options were granted over the full option term.
POTENTIAL
REALIZABLE VALUE AT
INDIVIDUAL GRANTS ASSUMED ANNUAL
RATES OF STOCK
PRICE APPRECIATION
FOR OPTION TERM
<F1>
PERCENT OF
NUMBER OF TOTAL OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE EXPIRATION
OPTIONS/SARS IN FISCAL OR BASE DATE OF 5% PER 10% PER
NAME GRANTED<F2> YEAR<F3> PRICE OPTION YEAR YEAR
David A. Derby 40,000 30% $12.00 May 16, 2010 $301,869 $764,996
William L. Stephan -0- -0- -- -- -- --
- -----------------
</TABLE
<FN>
<F1> The amounts represent certain assumed rate of appreciation, based on
the requirements of the SEC, over the exercise price per share. Actual
gains, if any, on stock option exercises and Datron Common Stock
holdings are dependent on future performance of Datron Common Stock.
There is no assurance that any of the values reflected in the table
will be achieved.
<F2> For a description of the material terms of the options, see footnote
(2) to the Summary Compensation Table.
<F3> Based on the total number of options granted during Fiscal 2001.
</FN>
AGGREGATE OPTIONS EXERCISED IN FISCAL 2001 AND YEAR-END FISCAL 2001
OPTION VALUES
The following table sets forth information with respect to the options held
at the end of Fiscal 2001 by Datron's Chief Executive Officer and the Chief
Financial Officer named in the Summary Compensation Table.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS/SARs AT FISCAL YEAR- MONEY OPTIONS/SARS AT
ACQUIRED END (#) FISCAL YEAR-END <F1>
ON
EXERCISE VALUE
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
David A. Derby 22,500 $88,313 28,300 46,700 $56,145 $37,855
William L. Stephan -0- -0- 53,300 6,700 102,500 0
- -------------------
[FN]
<F1> Market value of the underlying securities at fiscal year-end minus the
exercise price of "in the money" options.
</FN>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth as of July 24, 2001, unless otherwise noted
in the footnotes, certain information concerning (a) each person known to
Datron to own beneficially more than 5% of Datron Common Stock, (b) each of
the executive officers named in the Summary Compensation Table, (c) each
director, and (d) all directors and executive officers as a group.
3
NAME/ADDRESS OF BENEFICIAL OWNER <F1> SHARES OF % OF
COMMON STOCK CLASS
Acquisitor plc 411,400 14.92%
190 The Strand
London WC2R 1JN
England <F2>
J. B. Greenwell 238,180 8.64%
318 South Maple
Carroll, Iowa 51401
Dimensional Fund Advisors 219,004 7.94%
1299 Ocean Avenue
11th Floor
Santa Monica, California 90401 <F3>
Entities affiliated with Loeb Partners Corporation 165,100 5.99%
61 Broadway, New York, New York, 10006 <F4>
David A. Derby <F5> 109,157 3.89%
William L. Stephan <F5> 59,751 2.13%
Kent P. Ainsworth <F5> 17,825 *%
Richard W. Flatow <F5> 800 *%
Don M. Lyle <F5> 6,975 *%
William A. Preston <F5> 13,425 *%
Robert D. Sherer <F5> 12,425 *%
All directors and executive officers as a group 220,358 7.61%
(7 persons) <F5>
* Less than one percent.
- ----------------------
[FN]
<F1> Information with respect to beneficial ownership is based upon
information furnished by each stockholder or contained in filings made
with the Securities and Exchange Commission (the "SEC"). The
calculation of beneficial ownership does not include 291,906 shares of
Datron common stock which are subject to Stockholder Tender Agreements
entered into between the Titan Corporation ("Titan") and officers and
directors of Datron, of which 210,000 shares are issuable upon
exercise of outstanding options which are either vested or will vest
within 60 days of July 24, 2001, assuming consummation of the exchange
offer pursuant to the terms of the Agreement and Plan of Merger and
Reorganization dated as of June 24, 2001 by and among Titan, Datron
and a wholly owned subsidiary of Titan. Titan in a filing on Form 13-
D (filed with the SEC on July 3, 2001) has expressly disclaimed
beneficial ownership of any of the shares of Datron common stock
covered by the Stockholder Tender Agreements.
<F2> Information provided is based on the Schedule 13D/A filed on May 21,
2001 by Acquisitor plc ("Acquisitor"), American Opportunity Trust plc
("American Trust"), Christopher Harwood Bernard Mills ("Mills"),
Duncan Soukup, Glen Lindman, J.O. Hambro Capital Management (Holdings)
Limited ("Holdings"), J.O. Hambro Capital Management Limited ("Capital
Management"), James Ozanne and Peter Melhado. Includes 380,700 shares
of Datron Common Stock beneficially owned by Acquisitor plc and 30,700
shares of Datron Common Stock beneficially owned by Holdings. Each of
Acquisitor and Messrs. Soukup, Ozanne and Melhado may be deemed to
beneficially own, and have shared power to vote or dispose of, the
380,700 shares of Datron Common Stock owned by Acquisitor. None of
Acquisitor or Messrs. Soukup, Ozanne or Melhado has the sole power to
vote or dispose of any shares of Datron Common Stock. Capital
Management is a subsidiary of Holdings. American Trust is a publicly
held investment trust company. Mills and Capital Management serve as
co-investment advisor to American Trust. Mills is a director of
Acquisitor.
<F3> Dimensional Fund Advisors Inc. ("Dimensional"), an investment advisor
registered under Section 203 of the Investment Advisors Act of 1940,
furnishes investment advice to four investment companies registered
under the Investment Company Act of 1940, and serves as investment
manager to certain other investment vehicles, including commingled
group trusts. (These investment companies and investment vehicles are
the "Portfolios."). In its role as investment advisor and investment
manager, Dimensional possesses both voting and investment power over
219,004 shares of Datron Common Stock as of March 31, 2001. The
Portfolios own all securities reported in this statement, and
Dimensional disclaims beneficial ownership of such securities.
4
<F4> Information provided is based on Schedule 13D filed by Loeb Partners
Corporation and Loeb Arbitrage Fund on July 12, 2001. Loeb Arbitrage
Fund ("LAF"), 61 Broadway, New York, New York, 10006, is a New York
limited partnership. LAF is a registered broker/dealer. LAF's general
partner is Loeb Arbitrage Management, Inc., ("LAM"), a Delaware
corporation, with the same address. LAM's President is Arthur E. Lee,
who is also an Executive Vice President of Loeb Partners Corporation.
The other officers of LAM are Thomas L. Kempner, Chairman of the
Board, Gideon J. King, Senior Vice President, Peter A. Tcherepnine,
Vice President, Edward J. Campbell, Vice President. Loeb Partners
Corporation ("LPC"), 61 Broadway, New York, New York, 10006, is a
Delaware corporation. LPC is a registered broker/dealer and a
registered investment adviser. Thomas L. Kempner is LPC's President
and a director and LPC's Chief Executive Officer. Norman N. Mintz is a
Vice President and also a director. Gideon J. King is a Senior Vice
President. Loeb Holding Corporation ("LHC"), a Maryland corporation,
61 Broadway, New York, New York, 10006 is the sole stockholder of LAM
and LPC. Thomas L. Kempner is LHC's President and a director as well
as LHC's Chief Executive Officer and majority stockholder. Edward E.
Matthews, Norman N. Mintz and Peter A. Tcherepnine are also directors.
Mr. Matthews' address is 70 Pine Street, New York, New York 10270.
<F5> Includes 44,799, 53,300, 12,425, 2,475, 12,425 and 12,425 shares
obtainable upon the exercise of stock options, exercisable within 60
days after July 24, 2001, held by Messrs. Derby, Stephan, Ainsworth,
Lyle, Preston and Sherer, respectively. Amounts shown do not include
30,201, 6,700, 7,575, 7,500, 5,025, 7,575 and 7,575 shares obtainable
as the result of accelerated vesting of options that will occur at the
Offer Acceptance Time, assuming consummation of the Titan exchange
offer referred to in Note 1 above, held by Messrs. Derby, Stephan,
Ainsworth, Flatow, Lyle, Preston and Sherer, respectively.
</FN>
Item 13. Certain Relationships and Related Transactions.
Employment Contracts
Datron has an employment agreement with Mr. Derby (the "Agreement")
providing for Mr. Derby's services as President and Chief Executive Officer
of Datron pursuant to which he is currently paid an annual salary of
$275,000, with vacation, holidays, insurance and other benefits permitted
under policies established by the Datron Board. Should Mr. Derby be
involuntarily terminated by Datron for any reason other than cause, he will
receive a lump sum equal to three times his then current annual salary. The
Agreement provides that, upon an assignment of the Agreement by Datron, Mr.
Derby has the right to terminate the Agreement if any successor entity is
not acceptable to him. The Agreement will expire upon notice not less than
two years from its next anniversary date, unless sooner terminated under
terms of the Agreement. Datron may terminate the Agreement if Mr. Derby
commits any material act of dishonesty in the discharge of his duties.
Datron has a severance agreement with Mr. Stephan that provides 12 months
of severance pay through salary continuance in the event Mr. Stephan is
involuntarily terminated by Datron for any reason other than cause. If
within the 12-month period following involuntary termination, Mr. Stephan
engages in activities directly competing with Datron, severance benefits
would cease.
Indemnification Agreements
Mr. Derby and Mr. Stephan (as well as Datron's other officers and
directors) are parties to indemnification agreements with Datron in
substantially the form approved by the stockholders at the 1992 Annual
Meeting of Stockholders.
Loans
In 1988, Datron established the 1988 Key Employee Stock Purchase Plan to
assist key employees in acquiring an equity stake in Datron. Pursuant to
the plan, Mr. Derby was loaned $164,000 by Datron to acquire 25,000 shares
of Datron Common Stock in 1988, and he executed a full recourse promissory
note in the same amount payable to Datron. The promissory note provided an
interest rate of 4.64% per annum. Mr. Derby paid this note in full during
Fiscal 2001 by tender of 11,408 shares of Datron Common Stock at the then
market price of $14.375 per share.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
Set forth below is a report of the Compensation Committee with respect to
Datron's compensation policies during Fiscal 2001 as they affect Datron's
Chief Executive Officer and Chief Financial Officer.
5
Compensation Policies for Executive Officers
Datron's compensation policies for its executive officers are designed to
provide compensation levels that are competitive with those of other
similar companies, thereby permitting Datron to attract and retain
qualified executives. More specifically, Datron's compensation policies
aim, through a combination of base salary, annual bonus and equity-based
compensation, to motivate executive officers to meet Datron's annual and
long-range business objectives, thereby enhancing stockholder value. The
cumulative effect of Datron's compensation policies for executive officers
is to tie such compensation closely to Datron's performance.
Each of Datron's executive officers receives a base salary. Datron sets
base salary for executive officers based upon a number of factors,
including the particular qualifications of the executive, levels of pay for
similar positions at public and private companies of comparable size and in
comparable businesses to those of Datron, the degree to which the executive
can help Datron achieve its goals, and direct negotiation with the
executive.
An important element of Datron's compensation for executive officers are
bonuses tied closely to Datron's annual financial results. The executive
officers named in the Summary Compensation Table participate in three bonus
plans. The first of these is Datron's Qualified Employee Profit Sharing
Plan (the "Qualified Plan"). The Qualified Plan provides employees with
supplemental retirement benefits through a plan treated favorably for tax
purposes. The Qualified Plan reflects the belief that some portion of all
employees' compensation should be tied to the performance of Datron in
order to provide a sound incentive to enhance that performance and to keep
Datron's compensation policies competitive with those of other similar
companies. All employees of Datron are eligible to participate in the
Qualified Plan beginning on the April 1 following their date of employment.
Annual contributions to the plan are determined by the Datron Board. Fiscal
2001 contributions were $15,847 each for Mr. Derby and Mr. Stephan.
Participant accounts in the Qualified Plan vest over a seven-year period
beginning after three years of service.
The second bonus plan is Datron's Non-Qualified Supplemental Executive
Profit Sharing Plan (the "Non-Qualified Plan"). The Non-Qualified Plan was
established to provide the executive officers named in the Summary
Compensation Table with retirement benefits in excess of those permitted by
the Qualified Plan. The benefits provided by the Non-Qualified Plan are in
the form of deferred compensation, which is not treated favorably for tax
purposes. The Non-Qualified Plan is designed to supplement retirement
benefits provided by the Qualified Plan, which are limited by federal
regulation and which the Compensation Committee believes are not
competitive with other similar companies. The Datron Board determines which
executive officers are eligible to participate in the Non-Qualified Plan
and the amount of annual contributions. Fiscal 2001 contributions and
earnings (loss) accruals were ($16,091) for Mr. Derby and ($14,064) for Mr.
Stephan. Earnings (loss) accruals under the Non-Qualified Plan are based on
performance of the investments each participant holds in the Qualified
Plan. Because those investments performed poorly in Fiscal 2001, loss
accruals exceeded contributions for both Mr. Derby and Mr. Stephan during
that period, and Datron recorded income to the extent of the net loss
accruals. Participant accounts in the Non-Qualified Plan vest over a seven-
year period beginning after three years of service.
The third bonus plan is Datron's Key Employee Incentive Plan (the "Key
Employee Plan"). The Key Employee Plan further ties key executive
compensation to Datron financial performance by providing a cash bonus to
be allocated among designated employees selected by the Datron Board, upon
recommendation by the Compensation Committee, after pre-determined profit
goals and other criteria have been reached and after provision for the
Qualified Plan and the Non-Qualified Plan. Income and profit goals for the
Key Employee Plan, and associated contributions to the bonus pool, are
determined annually by the board. Fiscal 2001 contributions were $129,937
for Mr. Derby and $64,969 for Mr. Stephan.
6
The fourth element in Datron's executive officer compensation package is
equity-based compensation. The Compensation Committee believes that by
providing executive officers with an equity interest in Datron those
officers are provided with additional incentives to work to maximize
stockholder value over the long term. Such incentives have been provided
principally by the granting of options under Datron's 1995 Stock Option
Plan. Under the 1995 Stock Option Plan, options vest over a three-year
period and are designed to encourage officers to continue in the employ of
Datron. As such, they provide a longer term incentive than do the annual
bonus plans. During Fiscal 2001, Mr. Derby received a grant of 40,000 stock
options.
CEO Compensation
Mr. Derby has been President and Chief Executive Officer of Datron since
1982 and Chairman since April 1998. Mr. Derby's base salary for Fiscal
2001, pursuant to his employment agreement, was set at $275,000, where it
has been since May 1999. Mr. Derby's participation in Datron's Qualified
Plan, Non-Qualified Plan and Key Employee Plan, pursuant to which his bonus
is determined, provides an incentive to maximize Datron profitability on an
annual basis. Through his equity ownership in Datron, consisting of 64,358
shares of Datron Common Stock and options to purchase 75,000 shares of
Datron Common Stock, and his participation in the Employee Stock Purchase
Plan, Mr. Derby shares with the other stockholders of Datron a significant
stake in the long-range success of Datron's business.
COMPENSATION COMMITTEE
Kent P. Ainsworth
William A. Preston
Robert D. Sherer
Compensation Committee and Insider Participation
As noted above, during Fiscal 2001 executive compensation policy was set by
the Compensation Committee, consisting of Messrs. Ainsworth, Preston and
Sherer. Each member of the Compensation Committee is a non-employee
director of Datron.
Director Compensation
Regular meetings of the Board are generally held on a quarterly basis,
while special meetings are called when necessary. The Board held eight
meetings during the fiscal year ended March 31, 2001 ("Fiscal 2001").
During Fiscal 2001, each nominated incumbent director attended 75% or more
of the meetings of the Board and of Board committees on which such director
served. Each director who is not an employee of the Company received an
attendance fee of $1,000 for each meeting of the Board and $500 for each
meeting of any committee on which the director serves and an annual
retainer of $12,000.
The Board presently has three standing committees, the Audit
Committee, the Compensation Committee and the Nominating Committee.
7
Audit Committee
During the first eight months of Fiscal 2001, the Audit Committee consisted
of Messrs. Preston, Sherer and Michael F. Bigham, who resigned from the
Board on December 4, 2000. On January 29, 2001, Mr. Lyle was elected to
replace Mr. Bigham on the Audit Committee for the remainder of Fiscal 2001.
This committee consults with the Company's auditors concerning their
auditing plan, the results of their audit, the appropriateness of
accounting principles utilized by the Company and the adequacy of the
Company's general accounting controls. This committee met five (5) times
during Fiscal 2001.
Compensation Committee
During Fiscal 2001, the Compensation Committee consisted of Messrs.
Ainsworth, Preston and Sherer. The function of the Compensation Committee
is to recommend to the Board of Directors the salary and bonus levels of
officers and directors of the Company and to administer the Company's 1985
Stock Option Plan, the Company's 1995 Stock Option Plan (collectively, the
"Stock Option Plans") and the Employee Stock Purchase Plan. This committee
met four (4) times during Fiscal 2001.
Nominating Committee
The Company presently has a Nominating Committee consisting of Messrs.
Flatow, Lyle and Preston. The duties of the Nominating Committee are to
review and recommend to the Board of Directors candidates for election to
the Board of Directors of the Company. Stockholders who wish to suggest
nominees for election at the 2002 Annual Meeting should submit their
suggestions in writing in accordance with the provisions of the Company's
Bylaws, as described below under the caption "Notice of Business to be
Conducted at Annual Meeting." The Nominating Committee has nominated the
six incumbent directors for election at the Annual Meeting. The Nominating
Committee did not meet during Fiscal 2001. It met once in June 2001 to
make nominations for the Annual Meeting.
Audit Committee Report
In accordance with its written charter adopted by the Board of
Directors (see Exhibit 99), the Audit Committee assists the Board in
fulfilling its oversight responsibilities for management's conduct of the
Company's financial reporting processes. The committee consists of three
"independent" directors as defined in the listing standards for companies
quoted on the Nasdaq Stock Market.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended March 31, 2001 with
management and with Deloitte & Touche LLP, the Company's independent
auditors. The Audit Committee has reviewed and discussed with Deloitte &
Touche LLP all the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees). It has
also received the written disclosures and letter from Deloitte & Touche LLP
required by Independence Standards Board Standard No. 1 (Independence
Discussions with Audit Committees) and has discussed with Deloitte & Touche
LLP their independence.
Based on this review and the discussions referred to herein, the Audit
Committee recommended to the Company's Board of Directors that the
Company's audited financial statements be included in its Annual Report on
Form 10-K to be filed with the Securities and Exchange Commission for the
fiscal year ended March 31, 2001.
8
Audit Fees
Aggregate fees billed by Deloitte & Touche LLP for professional
services rendered in connection with the audit of the Company's financial
statements for fiscal 2001 and the reviews of financial statements included
in the Company's Forms 10-Q for said fiscal year were $121,000.
Financial Information Systems Design and Implementation Fees
There were no fees billed by Deloitte & Touche LLP for professional
services rendered in fiscal 2001 in connection with Financial Information
Systems Design and Implementation as defined in Rule 2-01(c)(4)(ii) of
Regulation S-X.
All Other Non-Audit Fees
Aggregate fees billed by Deloitte & Touche LLP for professional
services rendered in fiscal 2001 in connection with all other non-audit
services were $59,000. Of this amount, $31,000 was for tax related
services, $13,000 was for audit services for employee benefit plans and
$15,000 was for consulting services. The Audit Committee considers the
provision of these non-audit services to be compatible with maintaining the
independence of Deloitte & Touche LLP.
AUDIT COMMITTEE
Don M. Lyle
William A. Preston
Robert D. Sherer
9
PART IV
Item 14(c). Exhibits
The following exhibit is filed as part of this report.
Exhibit Number Description
-----------------------------------------------
99 Audit Committee Charter
10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this
Amendment No. 1 to the Annual Report on Form 10-K to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: July 26, 2001 DATRON SYSTEMS INCORPORATED
By: DAVID A. DERBY
David A. Derby
Chairman of the Board, President,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Amendment no. 1 to Annual Report on Form 10-K has been
signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated:
Title Date
Signature
Chairman of the Board, President,
Chief Executive
By: DAVID A. DERBY Officer and Director
David A. Derby (Principal Executive Officer) July 26, 2001
Vice President, Chief Financial
Officer (Principal Financial and
By: WILLIAM L. STEPHAN
William L. Stephan Accounting Officer) July 26, 2001
By: * Director July 26, 2001
Kent P. Ainsworth
By: * Director July 26, 2001
Richard W. Flatow
By: * Director July 26, 2001
Don M. Lyle
By: * Director July 26, 2001
William A. Preston
By: * Director July 26, 2001
Robert D. Sherer
*DAVID A. DERBY
David A. Derby
Attorney-in-Fact
10