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, 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 January 31, 1996.
$.10 par value Common - 13,905,142
<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
___________________ __________________
1995 1994 1995 1994
REVENUES:
Contract revenues $120,605 $80,009 $346,358 $234,170
Interest 659 891 1,735 2,399
_______ _______ _______ _______
121,264 80,900 348,093 236,569
_______ _______ _______ _______
COSTS AND EXPENSES:
Costs of contract revenues 99,532 66,505 290,233 193,662
Selling and administrative expenses 10,144 6,578 27,557 20,784
_______ _______ _______ _______
109,676 73,083 317,790 214,446
_______ _______ _______ _______
Income before taxes on income 11,588 7,817 30,303 22,123
Provision for taxes on income -4,710 -3,091 -12,299 -8,938
_______ _______ _______ _______
NET INCOME 6,878 4,726 18,004 13,185
Retained earnings at beginning
of period 105,780 91,311 95,889 87,742
Cash dividends (Note 2) -694 -540 -1,929 -1,646
Purchase and retirement
of treasury shares -5,391 -9,175
_______ _______ _______ _______
Retained earnings at end of period $111,964 $90,106 $111,964 $ 90,106
======= ======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK $0.48 $0.33 $1.27 $0.92
(Note 3) ======= ======= ======= =======
Cash dividends per share of
common stock (Note 2) $0.05 $0.04 $0.14 $0.12
Average number of common shares,
including common stock equivalents 14,241 14,138 14,178 14,278
(Note 3)
See notes to consolidated financial statements<PAGE>
LOGICON, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
1995
__________________________
December 31 March 31
(unaudited)
ASSETS:
Current assets:
Cash and cash equivalents $ 27,587 $ 31,564
Marketable securities 9,328 9,210
Accounts receivable 84,569 64,233
Prepaid expenses 1,419 2,418
Deferred income tax benefits 8,654 8,308
_______ _______
TOTAL CURRENT ASSETS 131,557 115,733
Property, plant and
equipment, net 9,092 9,090
Excess of purchase price over
net assets of businesses
acquired, net 27,939 27,654
_______ _______
$168,588 $152,477
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable and other
accrued liabilities $ 13,635 $ 12,549
Accrued salaries, wages and
employee benefits 26,941 30,831
Estimated taxes on income 246 1,583
_______ _______
TOTAL CURRENT LIABILITIES 40,822 44,963
_______ _______
STOCKHOLDERS' EQUITY:
Common stock $.10 par value - Authorized
40,000,000 shares, outstanding 13,889,000
and 6,753,000 shares (Note 3) 1,389 675
Other paid-in capital 17,493 14,416
Retained earnings 111,964 95,889
Unrealized loss on available for sale
securities -25 -159
Unearned compensation and notes receivable
under restricted stock purchase plan -3,055 -3,307
_______ _______
TOTAL STOCKHOLDERS' EQUITY 127,766 107,514
_______ _______
$168,588 $152,477
======= =======
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
__________________
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $18,004 $13,185
Income charges (credits) not affecting cash--
Depreciation and amortization 5,060 2,448
Amortization of deferred compensation 409 433
Benefit from deferred taxes -330 -444
Changes in assets and liabilities,
net of acquisition--
Accounts receivable -18,878 3,135
Prepaid expenses 1,017 -350
Accounts payable and other accrued liabilities 975 -1,382
Accrued salaries, wages
and employee benefits -3,890 -3,078
Income taxes payable -1,337 -2,847
_______ _______
Net cash provided from operating activities 1,030 11,100
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipment,
net of sales -3,638 -1,634
Purchase of available for sale securities -1,948
Payment for acquisition, net of cash acquired
(Note 4) -3,074
_______ _______
Net cash used in investing activities -6,712 -3,582
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (Note 2) -1,929 -1,646
Transactions of stock plans 3,634 1,364
Purchase and retirement of treasury shares -9,657
_______ _______
Net cash provided by (used in) financing
activities 1,705 -9,939
______ _______
Net decrease in cash and
cash equivalents -3,977 -2,421
Cash and cash equivalents at beginning
of period 31,564 43,389
_______ _______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $27,587 $40,968
======= =======
Cash paid for income taxes $11,771 $11,956
======= =======
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 nine months ended December 31, 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 the consolidated
financial statements for the unaudited nine months ended December 31,
1995, and 1994 have been made.
NOTE 2. DIVIDENDS.
On December 8, 1995, the Company declared a quarterly cash dividend of
five cents per share, which was paid on January 9, 1996, to stockholders
of record as of December 19, 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. ACQUISITIONS.
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 generates annual
defense-related business revenues of approximately $55 million. The
transaction will be consummated through a plan of acquisition whereby
holders of Geodynamics shares will receive between $11.25 per share, as
adjusted pursuant to the agreement, from Logicon plus the net proceeds
from the sale of Geodynamics' wholly-owned subsidiary, LaFehr and Chan
Technologies, Inc. (LCT). The agreement is subject to Geodynamics
shareholder approval. Closing is expected after a Geodynamics
shareholder vote in March 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 Nine Months Ended
December 31 December 31
_______________________________________________________________________
(dollars in thousands) 1995 1994 1995 1994
Contract revenue:
Cost plus fixed fee $ 30,195 $ 21,607 $ 91,381 $ 58,971
Cost plus award and
incentive fee 36,914 27,099 109,561 87,034
Fixed-price 22,444 11,361 52,870 31,046
Time and material 31,052 19,942 92,546 57,119
_______ _______ _______ _______
$ 120,605 $ 80,009 $346,358 $ 234,170
======= ======= ======= =======
December 31 March 31
________________________________________________________________________
(dollars in thousands) 1995 1994 1995
Backlog:
Firm Contracts:
Cost plus fixed fee $ 155,764 $ 158,729 $ 155,283
Cost plus award and
incentive fee 171,518 101,246 163,044
Fixed-price 42,209 45,924 34,166
Time and material 208,663 119,564 165,385
_________ _______ _______
578,154 425,463 517,878
_________ _______ _______
Contract options and
untasked indefinite
quantity contract values:
Cost type 555,619 342,317 367,904
Fixed-price 724,606 738,711 743,261
Time and material 114,327 24,762 57,285
_________ _________ _________
1,394,552 1,105,790 1,168,450
_________ _________ _________
Total Backlog $1,972,706 $1,531,253 $1,686,328
========= ========= =========
<PAGE>
REVENUES AND BACKLOG (CONT.)
Contract revenues during the first nine months of fiscal year 1996 were
48% higher than in the first nine months of fiscal year 1995. The
increase in revenues and net income in the first nine months of fiscal
year 1996 from the first nine months of fiscal year 1995 is primarily
the result of the acquisition of Syscon Corporation (Syscon) on February
16, 1995. Backlog at December 31, 1995, including priced options,
increased by 29% from backlog at December 31, 1994 primarily as a result
of including Syscon's backlog in the total and by 17% from March 31,
1995 as the result of strong third quarter bookings valued at $220
million.
Third quarter firm contract awards include: the exercise of a one-year
contract option, valued at $39 million, from the Naval Surface Warfare
Center for test and evaluation services on the Aegis program; $25
million in additional tasks under the Joint Interoperability Engineering
Organization (JIEO) contract; the exercise of the first of four one-year
contract options, valued at $23 million, for continued training and
technical support to the U.S. Army's Battle Command Training Program; a
four-year contract, valued at $21 million, from the U.S. Air Force for
systems analysis, imaging and laser support to the Air Force's Phillips
Laboratory; and a contract extension, valued at $16 million from the
U.S. Army for additional tasks in support of test and evaluation of C3I
systems at the Army's Experimentation Site at Fort Lewis in Tacoma,
Washington.
PROFIT MARGINS
Three Months Ended Nine Months Ended
December 31 December 31
_______________________________________________________________________
1995 1994 1995 1994
Return on revenue before tax 9.6% 9.7% 8.7% 9.4%
Return on revenue 5.7% 5.8% 5.2% 5.6%
Income tax rate 40.6% 39.5% 40.6% 40.4%
The profit margin for the first nine months of fiscal year 1996
decreased from the margin reported in the first nine months 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 protfolio.
Days sales in receivables decreased to 67 days at December 31, 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 $1.0 million in the first
nine months of fiscal 1996 and $11.1 million in the first nine months of
fiscal 1995, and is the Company's primary source of liquidity. The
Company's working capital increased to $90.7 million at December 31,
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 December 31,
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 nine months of fiscal year
1996.
ACQUISITIONS
On October 3, 1995, Logicon completed the acquisition of the Space and
Engineering Group of Applied Technology Associates, 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 generates annual
defense-related business revenues of approximately $55 million. The
transaction will be consummated through a plan of acquisition whereby
holders of Geodynamics shares will receive $11.25 per share, as adjusted
pursuant to the agreement, from Logicon plus the net proceeds from the
sale of Geodynamics' wholly-owned subsidiary, LaFehr and Chan
Technologies, Inc. (LCT). The agreement is subject to Geodynamics
shareholder approval. Closing is expected after a Geodynamics
shareholder vote in March 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 nine months ended
December 31, 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 February 9, 1996.
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
1995 1994 1995 1994
Weighted average number 13,871,000 13,622,000 13,704,000 13,735,000
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 370,000 516,000 474,000 543,000
_________ _________ _________ _________
Weighted average number
of common shares,
including common stock
equivalents 14,241,00 14,138,00 14,178,000 14,278,000
========= ========= ========== ==========
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 96 FOR THE PERIOD ENDED DECEMBER 31, 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> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> DEC-31-1995
<CASH> 27,587
<SECURITIES> 9,328
<RECEIVABLES> 84,569
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 131,557
<PP&E> 37,132
<DEPRECIATION> 28,040
<TOTAL-ASSETS> 168,588
<CURRENT-LIABILITIES> 40,822
<BONDS> 0
<COMMON> 1,389
0
0
<OTHER-SE> 126,377
<TOTAL-LIABILITY-AND-EQUITY> 168,588
<SALES> 346,358
<TOTAL-REVENUES> 348,093
<CGS> 290,233
<TOTAL-COSTS> 317,790
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 30,303
<INCOME-TAX> 12,299
<INCOME-CONTINUING> 18,004
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,004
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
</TABLE>
