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, 1995
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, 1995.
$.10 par value Common -13,855,627
<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
___________________ __________________
1995 1994 1995 1994
REVENUES:
Contract revenues $114,086 $78,884 $225,753 $154,161
Interest 536 828 1,076 1,508
_______ _______ _______ _______
114,622 79,712 226,829 155,669
_______ _______ _______ _______
COSTS AND EXPENSES:
Costs of contract revenues 96,023 65,748 190,701 127,157
Selling and administrative expenses 8,931 6,432 17,413 14,206
_______ _______ _______ _______
104,954 72,180 208,114 141,363
_______ _______ _______ _______
Income before taxes on income 9,668 7,532 18,715 14,306
Provision for taxes on income -3,910 -3,078 -7,589 -5,847
_______ _______ _______ _______
NET INCOME 5,758 4,454 11,126 8,459
Retained earnings at beginning
of period 100,713 89,799 95,889 87,742
Cash dividends (Note 2) -691 -554 -1,235 -1,106
Purchase and retirement
of treasury shares -2,388 -3,784
_______ _______ _______ _______
Retained earnings at end of period $105,780 $91,311 $105,780 $ 91,311
======= ======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK $0.41 $0.31 $0.79 $0.59
======= ======= ======= =======
Cash dividends per share of
common stock (Note 2) $0.05 $0.04 $0.09 $0.08
Average number of common shares,
including common stock equivalents 14,209 14,354 14,146 14,349
See notes to consolidated financial statements.
<PAGE>
LOGICON, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
1995
__________________________
September 30 March 31
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 33,283 $ 31,564
Marketable securities 9,408 9,210
Accounts receivable 67,586 64,233
Prepaid expenses 3,706 2,418
Deferred income tax benefits 7,827 8,308
_______ _______
TOTAL CURRENT ASSETS 121,810 115,733
Property, plant and
equipment, net 9,113 9,090
Excess of purchase price over
net assets of businesses
acquired, net 27,127 27,654
_______ _______
$158,050 $152,477
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other
accrued liabilities $ 8,666 $ 12,549
Accrued salaries, wages and
employee benefits 29,346 30,831
Estimated taxes on income 1,583
_______ _______
TOTAL CURRENT LIABILITIES 38,012 44,963
_______ _______
STOCKHOLDERS' EQUITY:
Common stock $.10 par value - Authorized
40,000,000 shares, outstanding 13,825,000
and 6,753,000 shares (Note 3) 1,382 675
Other paid-in capital 15,846 14,416
Retained earnings 105,780 95,889
Unrealized loss on available for sale
securities -58 -159
Unearned compensation and notes receivable
under restricted stock purchase plan -2,912 -3,307
_______ _______
120,038 107,514
_______ _______
$158,050 $152,477
======= =======
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
__________________
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $11,126 $ 8,459
Income charges (credits) not affecting cash--
Depreciation and amortization 2,517 1,569
Amortization of deferred compensation 293 280
Provision for(benefit from)
deferred taxes 384 -118
Changes in assets and liabilities--
Decrease (increase) in accounts receivable -3,353 5,172
Increase in prepaid expenses -1,288 -467
Decrease in accounts payable and other
accrued liabilities -3,883 -1,716
Decrease in accrued salaries, wages
and employee benefits -1,485 -1,420
Decrease in income taxes payable -1,583 -3,066
_______ _______
Net cash provided by operating activities 2,728 8,693
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment,
net of sales -2,013 -1,039
Purchase of available for sale securities -9,923
_______ _______
Net cash used in investing activities -2,013 -10,962
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (Note 2) -1,235 -1,106
Transactions of stock plans 2,239 1,034
Purchase and retirement of treasury shares -3,969
_______ _______
Net cash used in financing activities 1,004 -4,041
_______ _______
Net increase (decrease) in cash and
cash equivalents 1,719 -6,310
Cash and cash equivalents at beginning
of period 31,564 43,389
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $33,283 $37,079
======= =======
Cash paid for income taxes $ 8,341 $ 8,441
======= =======
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, 1995. Results for
the six months ended September 30, 1995, 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, 1995, and 1994 have been made.
NOTE 2. DIVIDENDS.
On August 7, 1995, the Company declared a quarterly cash dividend of
five cents per share, which was paid on October 17, 1995, to
stockholders of record as of September 28, 1995.
NOTE 3. TWO-FOR-ONE STOCK SPLIT.
On August 7, 1995, the Company declared a two-for-one split of the
Company's common stock providing one additional share to be issued for
each share outstanding to shareholders of record on August 23, 1995.
New shares were issued on September 13, 1995. Accordingly, all per
share data presented have been restated to reflect the stock split.
NOTE 4. SUBSEQUENT EVENTS.
On October 3, 1995, Logicon completed the acquisition of the Space and
Engineering Group of Applied Technology Associates, Inc. As a result of
the acquisition, the Space and Engineering Group has become a unit of
Logicon Ultrasystems, Inc. The Space and Engineering Group has annual
revenues of approximately $10 million and is primarily located in
Mountain View, California.
On October 18, 1995, the Company signed an agreement to acquire the
defense business of Geodynamics Corporation. Geodynamics is based in
Torrance, California, and has 410 employees and annual revenues on
defense-related business of approximately $55 million. The transaction
will be consummated through a plan of acquisition whereby holders of
Geodynamics shares will receive between $11.15 and $11.25 per share from
Logicon plus shares in Geodynamics' wholly-owned subsidiary, LaFehr and
Chan Technologies, Inc. (LCT). The agreement is subject to Geodynamics
shareholder approval. Closing is expected after a shareholder vote in
early 1996.
<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:
Three Months Ended Six Months Ended
September 30 September 30
_______________________________________________________________________
(dollars in thousands) 1995 1994 1995 1994
Contract revenues:
Cost plus fixed fee $ 31,057 $19,133 $ 61,186 $ 37,364
Cost plus award and
incentive fee 36,485 28,860 72,647 59,935
Fixed-price 16,600 11,596 30,426 19,685
Time and material 29,944 19,295 61,494 37,177
_______ _______ _______ _______
$114,086 $78,884 $225,753 $154,161
======= ======= ======= =======
September 30 March 31
______________________________________________________________________
(dollars in thousands) 1995 1994 1995
Backlog:
Firm Contracts:
Cost plus fixed fee $ 118,123 $ 164,896 $ 155,283
Cost plus award and
incentive fee 143,732 120,039 163,044
Fixed-price 42,326 49,214 34,166
Time and material 171,924 103,544 165,385
_________ _______ _______
476,105 437,693 517,878
_________ _______ _______
Contract options and
untasked indefinite
quantity contract values:
Cost type 628,829 350,193 367,904
Fixed-price 739,353 740,702 743,261
Time and material 123,411 21,165 57,285
_________ _______ _______
1,491,593 1,112,060 1,168,450
_________ _______ _______
Total Backlog $1,967,698 $1,549,753 $1,686,328
========= ======= =======
<PAGE>
REVENUES AND BACKLOG (CONT.)
Contract revenues during the first half of fiscal year 1996 were 46%
higher than in the first half of fiscal year 1995. Backlog at September
30, 1995, including priced options, increased by 27% from backlog at
September 30, 1994, and increased by 17% from backlog at March 31, 1995.
The increase in revenue and net income in the first half of fiscal year
1996 from the first half of fiscal year 1995 is primarily the result of
the acquisition of Syscon Corporation (Syscon) on February 16, 1995.
Second quarter bookings include the award of an indefinite-delivery/indefinite
quantity contract, valued at $200 million from the
Internal Revenue Service to provide engineering and software services in
support of its program to modernize its information systems; $30 million
in additional tasks under the Joint Interoperability Engineering
Organization (JIEO) contract; a one-year extension on the Navy Center
for Tactical Systems Interoperability (NCTSI) contract, valued at $16.8
million; and a five-year subcontract, valued at $20 million, from
Computer Sciences Corporation, for automated data processing facilities
management support services to the Health Care Financing Administration.
PROFIT MARGINS
Three Months Ended Six Months Ended
September 30 September 30
_______________________________________________________________________
1995 1994 1995 1994
Return on revenue before tax 8.4% 9.4% 8.3% 9.2%
Return on revenue after tax 5.0% 5.6% 4.9% 5.4%
Income tax rate 40.4% 40.9% 40.6% 40.9%
The profit margin for the first half of fiscal year 1996 decreased from the
margin reported in the first half of fiscal year 1995 due to lower profit
margins on the Syscon revenues and to a decrease in interest income earned
on a smaller cash and marketable securities portfolio.
Days sales in receivables decreased to 55 days for September 30, 1995, from
69 days for March 31, 1995. 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 $2.7 million in the first
half of fiscal 1996 and $8.7 million in the first half of fiscal 1995, and
is the Company's primary source of liquidity. The Company's working
capital increased to $83.8 million at September 30, 1995, from $70.8
million at March 31, 1995. The strong working capital position is
reflected in the current ratio of 3.2 to 1 at September 30, 1995.
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 1996.
PURCHASE OF TREASURY STOCK
On October 13, 1995, the Board of Directors authorized the Company to spend
up to $10 million to repurchase additional shares of the Company's common
stock in open market transactions.
SUBSEQUENT EVENTS
On October 3, 1995, Logicon completed the acquisition of the Space and
Engineering Group of Applied Technology Associates. The Space and
Engineering Group has annual revenues of approximately $10 million, and is
primarily located in Mountain View, California.
On October 18, 1995, the Company signed an agreement to acquire the defense
business of Geodynamics Corporation. Geodynamics is based in Torrance,
California, and has 410 employees and annual revenues on defense-related
business of approximately $55 million. The transaction will be consummated
through a plan of acquisition whereby holders of Geodynamics shares will
receive between $11.15 and $11.25 per share from Logicon plus shares in
Geodynamics' wholly-owned subsidiary, LaFehr and Chan Technologies, Inc.
(LCT). The agreement is subject to Geodynamics shareholder approval.
Closing is expected after a shareholder vote in early 1996.
<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
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the six months ended September
30, 1995.
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.
<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 October 31, 1995.
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
1995 1994 1995 1994
Weighted average number
of shares outstanding
during the period 13,692,000 13,804,000 13,621,000 13,791,000
Net additional shares
issuable in connection
with dilutive stock
options based upon use
of the treasury stock
method based on average
market prices 517,000 550,000 525,000 558,000
_________ _________ _________ _________
Weighted average number
of common shares
including common stock
equivalents 14,209,000 14,354,000 14,146,000 14,349,000
========= ========= ========= =========
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 SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM (FORM 10-Q Q2 FY96 FOR THE PERIOD ENDED SEPTEMBER 30, 1995)
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-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 33,283
<SECURITIES> 9,408
<RECEIVABLES> 67,586
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 121,810
<PP&E> 36,015
<DEPRECIATION> 26,902
<TOTAL-ASSETS> 158,050
<CURRENT-LIABILITIES> 38,012
<BONDS> 0
<COMMON> 1,382
0
0
<OTHER-SE> 118,656
<TOTAL-LIABILITY-AND-EQUITY> 158,050
<SALES> 225,753
<TOTAL-REVENUES> 226,829
<CGS> 190,701
<TOTAL-COSTS> 208,114
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 18,715
<INCOME-TAX> 7,589
<INCOME-CONTINUING> 11,126
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 11,126
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
