SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark one)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED: SEPTEMBER 30, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number: 1-7777
LOGICON, INC.
DELAWARE 95-2126773
(State or other jurisdiction of (IRS Employer
incorporation or organization) identification number)
3701 Skypark Drive, Torrance, California 90505-4794
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 373-0220
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
previous 12 months (or for such shorter period that the registrant was required
to file) and (2) has been subject to such filing requirements for the past 90
days.
[X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of October 31, 1994.
$.10 par value Common - 6,849,743
<PAGE>
LOGICON, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(shares and dollars in thousands, except per-share data)
(unaudited)
For the Three Months For the Six Months
Ended September 30 Ended September 30
___________________ __________________
1994 1993 1994 1993
REVENUES:
Services and systems $78,884 $82,743 $154,161 $161,543
Interest 828 443 1,508 830
_______ _______ _______ _______
79,712 83,186 155,669 162,373
_______ _______ _______ _______
COSTS AND EXPENSES:
Costs of services and systems 65,748 63,056 127,157 127,598
Selling and administrative expenses 6,432 6,630 14,206 15,040
_______ _______ _______ _______
72,180 69,686 141,363 142,638
_______ _______ _______ _______
Income before taxes on income 7,532 13,500 14,306 19,735
Provision for taxes on income -3,078 -5,522 -5,847 -8,008
_______ _______ _______ _______
Income before cumulative effect
of a change in accounting principle 4,454 7,978 8,459 11,727
Cumulative effect, on prior years,
of change in accounting for taxes
on income 635
_______ _______ _______ _______
NET INCOME 4,454 7,978 8,459 12,362
Retained earnings at beginning
of period 89,799 84,782 87,742 80,903
Cash dividends (Note 2) -554 -509 -1,106 -1,014
Purchase and retirement
of treasury shares -2,388 -3,784
_______ _______ _______ _______
Retained earnings at end of period $91,311 $92,251 $91,311 $92,251
======= ======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK:
Before cumulative effect of a change
in accounting principle $0.62 $1.05 $1.18 $1.55
Cumulative effect, on prior years,
of a change in accounting for
taxes on income 0.08
_______ _______ _______ _______
Net income $0.62 $1.05 $1.18 $1.63
======= ======= ======= =======
Cash dividends per share of
common stock (Note 2) $0.08 $0.07 $0.16 $0.14
Average number of common shares,
including common stock equivalents 7,177 7,608 7,174 7,561
See notes to consolidated financial statements<PAGE>
LOGICON, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
1994
_________________________
September 30 March 31
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 37,079 $ 43,389
Marketable securities 37,204 27,350
Accounts receivable 33,693 38,865
Prepaid expenses 1,596 1,129
Deferred income tax benefits 6,505 6,387
_______ _______
TOTAL CURRENT ASSETS 116,077 117,120
Equipment and leasehold improvements, net 5,382 5,698
Excess of purchase price over net assets
of businesses acquired, net 6,297 6,511
_______ _______
$127,756 $129,329
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other accrued liabilities $ 4,821 $ 6,537
Accrued salaries, wages and employee benefits 19,570 20,990
Estimated taxes on income 1,061 4,127
_______ _______
TOTAL CURRENT LIABILITIES 25,452 31,654
_______ _______
STOCKHOLDERS' EQUITY:
Common stock $.10 par value - Authorized 40,000,000
shares, outstanding 6,888,000 and 6,922,000 shares 689 692
Other paid-in capital 14,123 11,976
Retained earnings 91,311 87,742
Unrealized loss on available for sale securities -205 -136
Unearned compensation and notes receivable under
restricted stock purchase plan -3,614 -2,599
_______ _______
102,304 97,675
_______ _______
$127,756 $129,329
======= =======
See notes to consolidated financial statements.
<PAGE>
LOGICON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
For the Six Months
Ended September 30
__________________
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,459 $12,362
Income charges (credits) not affecting cash--
Depreciation and amortization 1,569 1,470
Amortization of deferred compensation 280 174
Effect of change in accounting for
taxes on income -635
Changes in assets and liabilities--
Decrease in accounts receivable 5,172 9,814
Increase in deferred income tax benefits -118 -68
Increase in prepaid expenses -467 -385
Decrease in accounts payable and other
accrued liabilities -1,716 -2,333
Decrease in accrued salaries, wages
and employee benefits -1,420 -4,317
Increase (decrease) in income taxes payable -3,066 1,948
_______ _______
Net cash provided by operating activities 8,693 18,030
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold
improvements, net of sales -1,039 -1,033
Purchase of available for sale securities -9,923
_______ _______
Net cash used in investing activities -10,962 -1,033
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (Note 2) -1,106 -1,014
Transactions of stock plans 1,034 713
Purchase and retirement of treasury shares -3,969
_______ _______
Net cash used in financing activities -4,041 -301
_______ _______
Net increase (decrease) in cash and cash equivalents -6,310 16,696
Cash and cash equivalents at beginning
of period 43,389 48,089
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $37,079 $64,785
======= =======
Cash paid for income taxes $ 8,441 $ 5,563
======= =======
See notes to consolidated financial statements.
<PAGE>
LOGICON, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1. ACCOUNTING POLICIES.
The consolidated financial information included in this report has been
prepared in accordance with the accounting principles reflected in the
consolidated financial statements in Form 10-K filed with the Securities and
Exchange Commission for the year ended March 31, 1994. Results for the six
months ended September 30, 1994, are not necessarily indicative of results for
the entire year. In the opinion of Company management, all adjustments
consisting of recurring accruals and other normal month-end adjustments
necessary for a fair presentation of net income for the unaudited six months
ended September 30, 1994, and 1993 have been made.
NOTE 2. DIVIDENDS.
On August 1, 1994, the Company declared a quarterly cash dividend of eight
cents per share, which was paid on October 11, 1994, to stockholders of record
as of September 11, 1994.
<PAGE>
LOGICON, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
REVENUES AND BACKLOG
The following tables present an analysis of the Company's revenues and backlog
by contract type:
<TABLE>
<S>
<CAPTION>
Three Months Ended Six Months Ended
September 30 September 30
_______________________________________________________________________________
(dollars in thousands) 1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues from services and systems:
Cost plus fixed fee $19,133 $46,880 $ 37,364 $68,988
Cost plus award and incentive fee 28,860 9,583 59,935 45,947
Fixed-price 11,596 10,845 19,685 17,792
Time and material 19,295 15,435 37,177 28,816
_______ _______ _______ _______
$78,884 $82,743 $154,161 $161,543
======= ======= ======= =======
At
At September 30 March 31
______________________________________________________________________________
(dollars in thousands) 1994 1993 1994
Backlog:
Firm Contracts:
Cost plus fixed fee $ 164,896 $163,338 $139,118
Cost plus award and incentive fee 120,039 107,445 102,952
Fixed-price 49,214 20,324 17,919
Time and material 103,544 69,783 87,078
_________ _______ _______
437,693 360,890 347,067
_________ _______ _______
Contract options and untasked
indefinite quantity contract values:
Cost type 350,193 271,546 259,882
Fixed-price 740,702 96,997 98,521
Time and material 21,165 31,615 21,941
_________ _______ _______
1,112,060 400,158 380,344
_________ _______ _______
Total Backlog $1,549,753 $761,048 $727,411
========= ======= =======
</TABLE>
<PAGE>
REVENUES AND BACKLOG (CONT.)
Contract revenues during the first half of fiscal year 1995 were five percent
lower than in the first half of fiscal year 1994. Backlog at September 30,
1994, including priced options, increased by 104% from backlog at September 30,
1993, and increased by 113% from backlog at March 31, 1994. The large increase
in backlog during the first half of fiscal 1995 is primarily attributable to
the award of the I-CASE contract to Logicon by the U.S. Air Force Standard
Systems Center in April. The estimated value of this contract is $670 million
over a 10-year period. Logicon will provide Integrated Computer-Aided Software
Engineering (I-CASE) systems to the DOD which will be used to establish
software engineering environments and standardize the software development
process for automated information systems.
The Company enjoyed a very active booking period during the second quarter of
fiscal year 1995, recording $269 million in contract awards. Highlights
include: a five-year contract, potentially valued at $135 million, for
Logicon's continued support of the U.S. Army's Battle Command Training Program;
$28.4 million in additional funding under the JIEO (Joint Interoperability
Engineering Organization) contract; a four-year contract with the U.S. Army
Reserve Component, potentially valued at $11 million, for support of the Battle
Command Staff Training Program at seven Army reserve sites across the U.S.; a
six-year contract with the U.S. Air Force, potentially valued at $8.6 million,
for development and integration of the B-1B aircraft's mission planning system;
a five-year follow-on contract from the U.S. Army, potentially valued at $15.9
million, for combat training simulation support to the XVIII Airborne Corps at
five U.S. sites; a five-year follow-on contract from the U.S. Naval Sea Systems
Command, potentially valued at $9.1 million, for data link test equipment and
services for the Aegis Cruiser shipbuilding program; and a three-year follow-on
contract valued at $8.4 million from the U.S. Air Force's Phillips Laboratory
for operation and maintenance support for several Laser Site Research Centers.
PROFIT MARGINS
Three Months Ended Six Months Ended
September 30 September 30
_____________________________________________________________________________
1994 1993 1994 1993
Return on revenue before tax 9.4% 16.2% 9.2% 12.2%
Return on revenue before
cumulative effect 5.6% 9.6% 5.4% 7.2%
Income tax rate 40.9% 40.9% 40.9% 40.6%
Return on revenue 5.6% 9.6% 5.4% 7.6%
Second quarter and six month results for the period ended September 30, 1993,
include net income of $3.9 million or 51 cents per share, and revenues of $4
million resulting from the settlement of two claims the Company had filed with
the United States Court of Federal Claims. The claims were for increased costs
relating to changes in contract requirements for two fixed-price development
contracts with the U.S. Navy to provide air traffic controller training
systems, which were delivered and accepted by the U.S. Navy in prior periods.
Net income during the first six months of fiscal 1994 was also increased by <PAGE>
$635,000, or eight cents per share, as a result of the Financial Accounting
Standard No. 109, "Accounting for Income Taxes". These two events added 2.8%
to the first half of fiscal 1994 after tax results.
Excluding the non-recurring items mentioned above, after tax results improved
for the first half of fiscal year 1995 by .6% over the first half of fiscal
year 1994 due to an increase in interest income received on a larger cash and
marketable securities portfolio earning interest at a higher short-term rate
and improved margins on award fees and time and material contracts.
Days sales in receivables decreased to 40 days for September 30, 1994, from 45
days for March 31, 1994. The Company has adequate cash and credit lines
available to fund fluctuations in receivable balances.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $8.7 million in the first half of
fiscal 1995 and $18 million in the first half of fiscal 1994, and is the
Company's primary source of liquidity. The Company's working capital increased
to $90.6 million at September 30, 1994, from $85.5 million at March 31, 1994.
The strong working capital position is reflected in the current ratio of 4.6 to
1 at September 30, 1994.
The Company's Consolidated Balance Sheet is exceptionally strong, with no debt.
Management believes that the Company's existing capital resources are
sufficient to provide for its operating needs and continued growth. A
$25,000,000 unsecured line of credit exists to provide working capital for
temporary requirements. There were no borrowings under the line during the
first half of fiscal year 1995.
PURCHASE OF TREASURY STOCK
The Company purchased 86,300 shares for an aggregate cost of $2.5 million
during the second quarter of fiscal year 1995. On August 1, 1994, the Board of
Directors renewed the authorization for the Company to spend up to $20 million
to repurchase additional shares of the Company's common stock in open market
transactions.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no pending or existing legal proceedings which, in the opinion of
Company management, if decided against the Company, would have any material
adverse effect on its financial position.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
a) Exhibits
Exhibit
No. Description
4 Instruments defining rights of security holders
(a) Common Stock Certificate (1)
(b) Stockholder Rights Plan (2)
11 Statement regarding computation of earnings per share.
27 Financial Data Schedule
Note:
(1) Filed with the Securities and Exchange Commission in Form 8-A on December
14, 1984, registration No. 1-7777.
(2) Filed with the Securities and Exchange Commission in Form 8-A on May 7,
1990.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the six months ended September 30,
1994.
<PAGE>
LOGICON, INC.
SIGNATURE
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, in the City of Torrance, State of
California, on November 1, 1994.
LOGICON, INC.
registrant
RALPH L. WEBSTER
Ralph L. Webster,
Vice President -
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized to Sign
on Behalf of Registrant)
<PAGE>
Exhibit 11
LOGICON, INC.
COMPUTATION OF EARNINGS PER SHARE
Earnings per share of common stock, including common stock equivalents, have
been computed based on the following weighted average number of shares:
Three Months Ended Six Months Ended
September 30 September 30
1994 1993 1994 1993
Weighted average number of shares
outstanding during the period 6,902,000 7,254,000 6,895,000 7,226,000
Net additional shares issuable in
connection with dilutive stock
options based upon use of the
treasury stock method based on
average market prices 275,000 354,000 279,000 335,000
_________ _________ _________ _________
Weighted average number of
common shares including common
stock equivalents 7,177,000 7,608,000 7,174,000 7,561,000
========= ========= ========= =========
Earnings per share of common stock fully diluted are omitted because there is
less than 3% dilution in any period.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDLE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (FORM 10-Q Q2
FY95 FOR THE PERIOD ENDED SEPTEMBER 30, 1994) AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000311946
<NAME> LOGICON, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> SEP-30-1994
<CASH> 37,079
<SECURITIES> 37,204
<RECEIVABLES> 33,693
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 116,077
<PP&E> 29,338
<DEPRECIATION> 23,956
<TOTAL-ASSETS> 127,756
<CURRENT-LIABILITIES> 25,452
<BONDS> 0
<COMMON> 689
0
0
<OTHER-SE> 101,615
<TOTAL-LIABILITY-AND-EQUITY> 127,756
<SALES> 154,161
<TOTAL-REVENUES> 155,669
<CGS> 127,157
<TOTAL-COSTS> 141,363
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,306
<INCOME-TAX> 5,847
<INCOME-CONTINUING> 8,459
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,459
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
</TABLE>
