DATRON SYSTEMS INC

DATRON SYSTEMS INC

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Company Overview
Datron Systems, Inc., based in Vista, California, provides products and services to the satellite and radio communication markets worldwide. The company supplies products and services to major commercial and governmental markets and to several United States government customers, including the Department of Defense.
Datron Systems operates in two business segments, comprising antenna and imaging systems, and communication products. The antenna and imaging systems division designs and manufactures satellite communication systems, subsystems and antennas. Its main product lines include satellite tracking antenna systems used for remote sensing, telemetry, tracking and control, satellite communication and mobile broadband communications for airlines, military and direct broadcast satellite television users.
Lastly, the company’s communication products division designs, manufactures and distributes radios and accessories for voice and data communication radios with high frequency for over-the-horizon radio communication and very high frequency for line-of-sight communication used for military and civilian purposes.
Datron Systems, Inc. merged with Titan Systems Corporation (later L-3 Titan Group) in 2001. With more than 1,600 active contracts, Titan Systems is a leader in providing comprehensive information systems solutions and services to the United States government.
Business Summary
Datron Systems, Incorporated and its wholly owned subsidiaries provide products and services for emerging satellite and radio communication markets. The Company is a supplier of tracking antenna products that can provide television, Internet and other broadband communication connections to the land, sea and air mobile markets. Major products include remote sensing satellite earth stations, satellite communication systems, mobile satellite television reception systems, and voice and data communication radios that are sold to worldwide commercial and governmental markets and to several United States Government customers, including the Department of Defense.
Description and history
Datron Systems, Incorporated (Datron) and its wholly owned subsidiaries provide products and services for emerging satellite and radio communication markets. Datron is a supplier of tracking antenna products that can provide television, Internet and other broadband communication connections to the land, sea and air mobile markets. Major products include remote sensing satellite earth stations, satellite communication systems, mobile satellite television reception systems, and voice and data communication radios that are sold 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.

Datron 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 Advanced Technologies Inc., formerly known as Datron/Transco Inc. (DAT). DAT conducts the Company’s Antenna and Imaging Systems business.

The Company operates in two business segments: Antenna and Imaging Systems, whose business is conducted by DAT; and Communication Products, whose business is conducted by DWC.

Antenna and Imaging Systems

This business segment designs and manufactures satellite communication systems, subsystems and antennas that are sold worldwide to commercial and governmental customers, including the DoD. Its major product lines are satellite tracking antenna systems used for telemetry, tracking and control, remote sensing and satellite communication purposes by government and commercial users; and mobile broadband communication systems for airlines, military transports and mobile land and marine DBS television users.

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, Datron has been a prime contractor and a subcontractor for shipboard antenna systems used by the U.S. Navy. More recently, the Company has been developing airborne antenna systems for the U.S. Air Force.

Telemetry, tracking and control 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.

The remote sensing 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 ground antennas 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 offers its customers complete remote sensing earth stations, including image-processing capability.

The Company previously designed and manufactured broad bandwidth microwave antennas for the aerospace industry that are used on high performance aircraft, missiles and space launch vehicles. That product line was sold in the third quarter of fiscal 2001.

The Company designs and markets mobile broadband communication systems. In fiscal 1996, the Company introduced its first DBS antenna product, which 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. In fiscal 2000, the Company licensed the manufacturing rights to its DBS-2100T tail-mounted antenna for business jets to Airshow Inc. and announced it intended to concentrate its airborne efforts on the commercial airline market.

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 high speeds, the frequency at which they are transmitted. This technology utilizes 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 2001, two Asian customers accounted for 36% and 29% of this business segment’s sales. In fiscal 2000, an African customer accounted for 44% of this business segment’s sales and a European customer accounted for 11% of its sales. And, in fiscal 1999, another African customer accounted for 20% of this business segment’s sales and an Asian customer accounted for 13% of its 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.

In March 2001, the Company introduced its new Guardian family of radios intended to address the estimated $800 million federal public safety wireless network (PSWN) market. This is a domestic market the Company has not previously served. It is being driven by a federal government mandate that requires all [non-military] VHF radios to comply with certain radio spectrum utilization and interoperability standards by 2005. Although initial reaction from potential customers to the Guardian radio has been positive, market acceptance of the radio is uncertain.

Business Line
Designs and manufactures satellite communication systems, subsystems and antennas
Subsidiary

Advisor
DELOITTE & TOUCHE LLP
IPO date

US SIC Code
3663
Company Address
3030, Enterprise Court

City province or state postal code
92083, VISTA, CA
Phone: +1 760 734 5454
Fax: +1 760 734 5450
Country address: UNITED STATES OF AMERICA
Website url: www.dtsi.com