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: DECEMBER 31, 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
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 January 31, 1995.
$.10 par value Common - 6,742,567
<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 Nine Months
Ended December 31 Ended December 31
___________________ __________________
1994 1993 1994 1993
REVENUES:
Services and systems $80,009 $76,955 $234,170 $238,498
Interest 891 550 2,399 1,380
_______ _______ _______ _______
80,900 77,505 236,569 239,878
_______ _______ _______ _______
COSTS AND EXPENSES:
Costs of services and systems 66,505 65,505 193,662 193,103
Selling and administrative expenses 6,578 5,295 20,784 20,335
_______ _______ _______ _______
73,083 70,800 214,446 213,438
_______ _______ _______ _______
Income before taxes on income 7,817 6,705 22,123 26,440
Provision for taxes on income -3,091 -2,765 -8,938 -10,773
_______ _______ _______ _______
Income before cumulative effect
of a change in accounting principle 4,726 3,940 13,185 15,667
Cumulative effect, on prior years,
of change in accounting for taxes
on income 635
_______ _______ _______ _______
NET INCOME $ 4,726 $ 3,940 $ 13,185 $ 16,302
Retained earnings at beginning
of period 91,311 92,251 87,742 80,903
Cash dividends (Note 2) -540 -506 -1,646 -1,520
Purchase and retirement
of treasury shares -5,391 -6,885 -9,175 -6,885
_______ _______ _______ _______
Retained earnings at end of period $90,106 $88,800 $ 90,106 $ 88,800
======= ======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK:
Before cumulative effect of a change
in accounting principle $ .67 $ .52 $1.85 $2.07
Cumulative effect, on prior years,
of a change in accounting for
taxes on income .08
_______ _______ _______ _______
Net income $ .67 $ .52 $1.85 $2.15
======= ======= ======= =======
Cash dividends per share of
common stock (Note 2) .08 .07 .24 .21
Average number of common shares,
including common stock equivalents 7,069 7,592 7,139 7,571
See notes to consolidated financial statements<PAGE>
LOGICON, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
1994
__________________________
December 31 March 31
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 40,968 $ 43,389
Marketable securities 29,173 27,350
Accounts receivable 35,730 38,865
Prepaid expenses 1,479 1,129
Deferred income tax benefits 6,831 6,387
_______ _______
TOTAL CURRENT ASSETS 114,181 117,120
Equipment and leasehold
improvements, net 5,205 5,698
Excess of purchase price over
net assets of businesses
acquired, net 6,190 6,511
_______ _______
$125,576 $129,329
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other
accrued liabilities $ 5,155 $ 6,537
Accrued salaries, wages and
employee benefits 17,912 20,990
Estimated taxes on income 1,280 4,127
_______ _______
TOTAL CURRENT LIABILITIES 24,347 31,654
_______ _______
STOCKHOLDERS' EQUITY:
Common stock $.10 par value - Authorized
40,000,000 shares, outstanding 6,725,000
and 6,922,000 shares 672 692
Other paid-in capital 14,172 11,976
Retained earnings 90,106 87,742
Unrealized loss on available for sale
securities -261 -136
Unearned compensation and notes receivable
under restricted stock purchase plan -3,460 -2,599
_______ _______
TOTAL STOCKHOLDERS' EQUITY 101,229 97,675
_______ _______
$125,576 $129,329
======= =======
See notes to consolidated financial statements.
<PAGE>
LOGICON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
For the Nine Months
Ended December 31
__________________
1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $13,185 $16,302
Income charges (credits) not affecting cash--
Depreciation and amortization 2,448 2,383
Provision for the collectibility of
accounts receivable -2,000
Amortization of deferred compensation 433 294
Effect of change in accounting for
taxes on income -635
Changes in assets and liabilities--
Decrease in accounts receivable 3,135 16,605
Increase in deferred income tax benefits -444 -861
Increase in prepaid expenses -350 -264
Decrease in accounts payable and other
accrued liabilities -1,382 -2,351
Decrease in accrued salaries, wages
and employee benefits -3,078 -5,704
Increase (decrease) in income taxes payable -2,847 1,894
_______ _______
Net cash provided by operating activities 11,100 25,663
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold
improvements, net of sales -1,634 -1,836
Purchase of available for sale securities -1,948 -37,195
_______ _______
Net cash used in investing activities -3,582 -39,031
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (Note 2) -1,646 -1,520
Transactions of stock plans 1,364 1,352
Purchase and retirement of treasury shares -9,657 -7,202
_______ _______
Net cash used in financing activities -9,939 -7,370
_______ _______
Net decrease in cash and
cash equivalents -2,421 -20,738
Cash and cash equivalents at beginning
of period 43,389 48,089
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $40,968 $27,351
======= =======
Cash paid for income taxes $11,956 $ 8,944
======= =======
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 nine months ended December 31, 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 nine months ended December 31, 1994, and 1993 have been made.
NOTE 2. DIVIDENDS.
On December 9, 1994, the Company declared a quarterly cash dividend of
eight cents per share, which was paid on January 10, 1995, to
stockholders of record as of December 20, 1994.
NOTE 3. SUBSEQUENT EVENTS.
On January 20, 1995, Logicon and Harnischfeger Industries, Inc. signed
an agreement whereby Logicon will acquire Harnischfeger's Syscon
Corporation subsidiary. Syscon had revenues of approximately $130
million for its fiscal year ended October 31, 1994, and has 1,500
employees. Its headquarters are in Falls Church, Virginia, and there
are major offices in Arlington, Dahlgren and Virginia Beach, Virginia;
Gautier, Mississippi; Newport,Rhode Island; and San Diego, California.
The company specializes in systems engineering, software development
and systems development and integration for the Department of Defense
and other government customers.<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 Nine Months Ended
December 31 December 31
_______________________________________________________________________
(dollars in thousands) 1994 1993 1994 1993
Revenues from services
and systems:
Cost plus fixed fee $21,607 $23,542 $58,971 $69,489
Cost plus award and
incentive fee 27,099 29,614 87,034 98,602
Fixed-price 11,361 7,347 31,046 25,139
Time and material 19,942 16,452 57,119 45,268
_______ _______ _______ _______
$80,009 $76,955 $234,170 $238,498
======= ======= ======= =======
At
At December 31 March 31
_________________________________________________________________________
(dollars in thousands) 1994 1993 1994
Backlog:
Firm Contracts:
Cost plus fixed fee $158,729 $152,015 $139,118
Cost plus award and
incentive fee 101,246 105,111 102,952
Fixed-price 45,924 18,468 17,919
Time and material 119,564 87,936 87,078
_________ _______ _______
425,463 363,530 347,067
_________ _______ _______
Contract options and
untasked indefinite
quantity contract values:
Cost type 342,317 230,033 259,882
Fixed-price 738,711 105,302 98,521
Time and material 24,762 24,299 21,941
_________ _______ _______
1,105,790 359,634 380,344
_________ _______ _______
Total Backlog $1,531,253 $723,164 $727,411
========= ======= =======
<PAGE>
REVENUES AND BACKLOG (CONT.)
Contract revenues during the first nine months of fiscal year 1995 were
1.8% less than in the first nine months of fiscal year 1994. Backlog at
December 31, 1994, including priced options, increased by more than 110%
from backlog at December 31, 1993 and March 31, 1994. The large
increase in backlog during the first nine months 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. During the third quarter of fiscal 1995,
the DOD's Formal Qualification Tests (FQT) associated with Logicon's
I-CASE contract were successfully completed, resulting in the formal
establishment of the I-CASE baseline. At the close of the quarter, the
first six of the LOGICORE (TM) systems were shipped to Navy, Air Force,
Marine Corps and Defense Logistics sites.
Third quarter fiscal 1995 bookings include $17 million in additional
tasks under the Joint Interoperability Engineering Organization
contract; $15.4 million for support of the U.S. Army's Battle Command
Training Program; $10.6 million for development, testing and fielding of
advanced C3I systems at the U.S. Army's Experimentation Site at Fort
Lewis in Tacoma, Washington; and $7.9 million for continued support of
the Strategic/Mating and Ranging Software contract.
PROFIT MARGINS
Three Months Ended Nine Months Ended
December 31 December 31
_______________________________________________________________________
1994 1993 1994 1993
Return on revenue before tax 9.7% 8.7% 9.4% 11.0%
Return on revenue before cumulative
effect of an accounting change 5.8% 5.1% 5.6% 6.5%
Return on revenue 5.8% 5.1% 5.6% 6.8%
Income tax rate 39.5% 41.2% 40.4% 40.7%
Nine month results for the period ended December 31, 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 nine
months of fiscal 1994 was also increased by $635,000, or eight cents per
share, as a result of the Company's adoption of Financial Accounting
Standard No. 109, "Accounting for Income Taxes". These two events added
1.9% to the first nine months of fiscal 1994 after tax results.
Excluding the non-recurring items mentioned above, after tax results
improved for the first nine months of fiscal year 1995 by .7% over the
first nine months of fiscal year 1994 due to an increase in interest
income received on a larger cash and marketable securities portfolio
earning interest at higher short-term rates and improved margins on
award fees and time and material contracts.
Days sales in receivables decreased to 42 days for December 31, 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 $11.1 million in the first
nine months of fiscal 1995 and $25.7 million in the first nine months of
fiscal 1994, and is the Company's primary source of liquidity. The
Company's working capital increased to $89.8 million at December 31,
1994, from $85.5 million at March 31, 1994. The strong working capital
position is reflected in the current ratio of 4.7 to 1 at December 31,
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 nine months of fiscal year
1995.
PURCHASE OF TREASURY STOCK
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. The Company
purchased and retired 331,300 shares during the first nine months of
fiscal 1995.
SUBSEQUENT EVENTS
On January 20, 1995, Logicon and Harnischfeger Industries, Inc. signed
an agreement whereby Logicon will acquire Harnischfeger's Syscon
Corporation subsidiary. Syscon had revenues of approximately $130
million for its fiscal year ended October 31, 1994, and has 1,500
employees. Its headquarters are in Falls Church, Virginia, and there
are major offices in Arlington, Dahlgren and Virginia Beach, Virginia;
Gautier, Mississippi; Newport, Rhode Island; and San Diego, California.
The company specializes in systems engineering, software development
and systems development and integration for the Department of Defense
and other government customers.<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 nine months ended
December 31, 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 February 3, 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 Nine Months Ended
December 31 December 31
1994 1993 1994 1993
Weighted average number 6,811,000 7,252,000 6,867,000 7,234,000
of shares outstanding
during the period
Net additional shares
issuable in connection
with dilutive stock
options based upon use
of the treasury stock
method based on average
market prices 258,000 340,000 272,000 337,000
_________ _________ _________ _________
Weighted average number
of common shares
including common stock
equivalents 7,069,000 7,592,000 7,139,000 7,571,000
========= ========= ========= =========
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,
Q3, FY 1995 FOR THE PERIOD ENDED DECEMBER 31, 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1995
<PERIOD-END> DEC-31-1994
<CASH> 40,968
<SECURITIES> 29,173
<RECEIVABLES> 35,730
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 114,181
<PP&E> 29,743
<DEPRECIATION> 24,538
<TOTAL-ASSETS> 125,576
<CURRENT-LIABILITIES> 24,347
<BONDS> 0
<COMMON> 672
0
0
<OTHER-SE> 100,557
<TOTAL-LIABILITY-AND-EQUITY> 125,576
<SALES> 234,170
<TOTAL-REVENUES> 236,569
<CGS> 193,662
<TOTAL-COSTS> 214,446
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 22,123
<INCOME-TAX> 8,938
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<CHANGES> 0
<NET-INCOME> 13,185
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</TABLE>
