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: JUNE 30, 1996
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 July 31, 1996.
$.10 par value Common - 13,843,404
<PAGE>
LOGICON, INC.
CONSOLIDATED STATEMENT OF INCOME AND RETAINED EARNINGS
(shares and dollars in thousands, except per-share data)
(unaudited)
For the Three Months
Ended June 30
___________________
1996 1995
REVENUES:
Contract revenues $149,210 $111,667
Interest 735 540
______ ______
149,945 112,207
COSTS AND EXPENSES:
Costs of contract revenues 126,149 94,678
Selling and administrative
expenses 10,628 8,482
______ ______
136,777 103,160
_______ _______
Income before taxes on income 13,168 9,047
Provision for taxes on income -5,441 -3,679
_______ _______
NET INCOME 7,727 5,368
Retained earnings at beginning
of period 118,569 95,889
Cash dividends (Note 2) -702 -544
_______ _______
Retained earnings at end of
period $125,594 $100,713
======= =======
EARNINGS PER SHARE OF COMMON
STOCK $ 0.54 $ 0.38
Cash dividends per share of $ 0.05 $ 0.04
Average number of common shares,
including common stock
equivalents 14,335 14,084
See notes to consolidated financial statements.<PAGE>
LOGICON, INC.
CONSOLIDATED BALANCE SHEET
(dollars in thousands)
1996
__________________________
June 30 March31
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 40,700 $ 37,802
Marketable securities 5,220 8,244
Accounts receivable 101,075 87,725
Prepaid expenses 2,886 2,447
Deferred income tax benefits 8,682 8,551
_______ _______
TOTAL CURRENT ASSETS 158,563 144,769
Property, plant and equipment, net 11,098 11,521
Other assets 1,085 1,085
Excess of purchase price over net assets
of businesses acquired, net 35,700 36,063
_______ _______
$206,446 $193,438
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other
accrued liabilities $ 28,023 $ 17,995
Accrued salaries, wages and
employee benefits 29,172 38,522
Estimated taxes on income 5,175 1,023
_______ _______
TOTAL CURRENT LIABILITIES 62,370 57,540
_______ _______
STOCKHOLDERS' EQUITY
Common stock $.10 par value -
Authorized 40,000,000 shares,
outstanding 14,042,000 and 13,975,000
shares 1,404 1,397
Other paid-in capi 19,761 18,853
Retained earnings 125,594 118,569
Unrealized loss on available for sale
securities -5 -13
Unearned compensation and notes
receivableunder restricted stock
purchase plan -2,678 -2,908
_______ _______
TOTAL STOCKHOLDERS' EQUITY 144,076 135,898
_______ _______
$ 206,446 $193,438
======== ========
See notes to consolidated financial statements.
LOGICON, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(dollars in thousands)
(unaudited)
For the Three Months
Ended June 30
__________________
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $7,727 $5,368
Income charges not affecting cash--
Depreciation and amortization 1,699 1,285
Amortization of deferred compensation 111 154
Provision for (benefit from) deferred
taxes -131 504
Changes in assets and liabilities--
Increase in accounts receivable -13,350 -4,681
Increase in prepaid expenses -439 -410
Increase (decrease) in accounts payable
and other accrued liabilities 10,028 -3,083
Decrease in accrued salaries, wages and
employee benefits -9,350 -5,896
Increase in income taxes payable 4,152 996
_______ _______
Net cash provided from (used) in operating
activities 447 -5,763
_______ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment,
net of sales -913 -584
Maturity of available for sale securities 3,032
_______ _______
Net cash provided from (used in) investing
activities 2,119 -584
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends (Note 2) -702 -544
Transactions of stock plans 1,034 360
______ _______
Net cash provided from (used in) financing
activities 332 -184
_______ _______
Net increase (decrease) in cash and cash
equivalents 2,898 -6,531
Cash and cash equivalents at beginning
of period 37,802 31,564
_______ ______
CASH AND CASH EQUIVALENTS AT END
OF PERIOD $40,700 $25,033
======= =======
Cash paid for income taxes $ 309 $ 1,225
======= =======
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, 1996. Results for the three months ended June
30, 1996, 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 three months ended June 30, 1996 and
1995 have been made.
NOTE 2. DIVIDENDS.
On June 7, 1996, the Company declared a quarterly cash dividend
of five cents per share, which was paid on July 16, 1996, to
stockholders of record as of June 25, 1996.
NOTE 3. SUBSEQUENT EVENT
On August 5, 1996, the Board of Directors declared a cash
dividend of six cents per share, payable on October 15, 1996, to
stockholders of record as of September 19, 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
June 30
_____________________________________________________________
dollars in thousands) 1996 1995
Revenues from services and systems:
Cost plus fixed fee $ 35,286 $ 30,129
Cost plus award and incentive fee 40,083 36,162
Fixed-price 39,199 13,826
Time and material 34,642 31,550
_______ _______
$149,210 $111,667
======= =======
June 30 March 31
_____________________________________________________________
(dollars in thousands) 1996 1995 1996
Backlog:
Firm Contracts:
Cost plus fixed $ 161,875 $121,803 $155,130
Cost plus award and
incentive fee 171,261 148,492 159,836
Fixed-price 41,325 10,887 42,705
Time and material 171,341 156,026 188,958
_________ _______ _______
545,802 437,208 546,629
_________ _______ _______
Contract options and untasked
indefinite quantity contract
values:
Cost type 617,227 424,199 620,261
Fixed-price 749,666 747,780 749,411
Time and material 114,365 83,690 121,498
_________ _________ _________
1,481,258 1,255,669 1,491,170
_________ ________ _________
Total Backlog $2,027,060 $1,692,877 $2,037,799
========= ======== =========
<PAGE>
REVENUES AND BACKLOG (CONT.)
Contract revenues during the first quarter of fiscal year
1997were 34% higher than in the first quarter of fiscal year
1996. Significantly increased sales of hardware and software
products under the I-CASE contract and the inclusion of the
revenues from Geodynamics, which was acquired on March 28,1996
accounts for a large share of the increase.
Backlog at June 30, 1996, including priced options, increased by
20% from backlog at June 30, 1995, and remained consistent with
backlog at March 31, 1996. Booking highlights for the first
quarter include $28 million for hardware and software products
under the I-CASE contract; the exercise of a contract option,
valued at $17 million, to operate the vertical motion simulator
at the NASA-Ames Research Center; and $9 million in tasks under
the Joint Interoperability Engineering Organization (JIEO)
contract. The company's backlog is not subject to any
significant seasonal fluctuations, but is likely to vary
substantially as contracts near completion and in conjunction
with the execution of major contractual renewals or the award
of major new contracts. The company's contracts with the
government are subject to redirection or termination for
convenience, or may not result in future revenues due to events
and actions taken by the customer outside of the company's
control.
Contract awards that authorize the company to provide services
and products are included in firm backlog. When such
authorizations have become inactive and the company reasonably
anticipates no future revenue from such awards, they are removed
from firm backlog. Firm backlog may be funded or unfunded. The
funded backlog at March 31, 1996, was $225 million and the
funded backlog at June 30, 1996 and 1995, was $249 million and
$228 million, respectively.
Contract awards that allow the customer to contract for services
and products at specified values upon the issuance of contract
modifications, normally referred to as options or delivery
orders, are recorded in backlog at the value stated in the
contract. These amounts are not included in firm backlog until
such future contract modifications are issued. Accordingly,
total backlog reflected above may not result in future revenues.
In recent years the company's customers have increasingly
entered into this form of contract.
ROFIT MARGINS
Three Months
Ended June 30
____________________________________________________________
1996 1995
Return on revenue before tax 8.8% 8.1%
Return on revenue after tax 5.2% 4.8%
Income tax rate 41.3% 40.7%
<PAGE>
The profit margin for the quarter ended June 30, 1996 is
consistent with the profit margins experienced by the company for
the fiscal years 1996 and 1995. The profit margin for the first
quarter of fiscal year 1996 was lower than the same period this
year due to lower profit margins on revenues from Syscon
Corporation which was acquired on February 16, 1995.
Day sales in receivables decreased to 62 days at June 30, 1996
from 67 days at March 31, 1996. The company has adequate cash
and credit lines available to fund fluctuations in receivable
balances.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided from operating activities was $.4 million in
the first quarter of fiscal year 1997 as compared to net cash
used in operating activities of $5.8 million in the first
quarter of fiscal year 1996, and is the company's primary source
of liquidity. The company's working capital increased to $96.2
million at June 30, 1996 from $87.2 million at March 31, 1996.
The strong working capital position is reflected in the current
ratio of 2.5 to 1 at June 30, 1996.
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 quarter of fiscal year 1997.
FORWARD-LOOKING STATEMENTS
To the extent the information contained in this discussion and
analysis of consolidated financial condition and results of
operations and the information included elsewhere in this Form
10-Q, for the quarter ended June 30, 1996, are viewed as
forward-looking statements, the reader is cautioned that various
risks and uncertainties exist that could cause the actual future
results to differ materially from that inferred by the
forward-looking statements. Since the company's primary customer
is the U.S. government, future results could be impacted by: the
right of the government to redirect, modify, terminate or
otherwise cause work to be stopped on contracts issued by it;
government customers' budgetary constraints; and the contracting
practices of the company's current and prospective customers.
Some additional factors, among others, that also need to be
considered are: the likelihood that actual future revenues that
are realized may differ from those inferred from existing total
backlog; the ability of the company to attract and retain highly
trained professional employees; the availability of capital
and/or financing; and changes in the utilization of the company's
leased facilities that could result in higher costs. The reader
is further cautioned that risks and uncertainities exist that
have not been mentioned herein due to their unforeseeable nature,
but which, nevertheless, may impact the company's future
operations.
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
or results of operations.
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.
(b) Reports on Form 8-K
A report on Form 8-K was filed on April 11, 1996, pursuant to
Item 2 "Acquisition or Disposition of Assets" for the acquisition
of Geodynamics Corporation by Logicon. The financial statements
of Geodynamics Corporation for the year ended June 2, 1995 and
for the six month period ended December 1, 1995, were part of
that filing along with pro forma financial information for
Logicon and Geodynamics Corporation.
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 August 8, 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
June 30
1996 1995*
Weighted average number of share 13,997,000 13,550,000
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 338,000 534,000
_________ _______
Weighted average number of common
shares including common stock
equivalents 14,335,000 14,084,000
========= ========
Fully diluted earnings per share of common stock are omitted
because there
is less than 3% dilution in any period.
* Per share data reflects a two-for-one stock split paid on
September 13, 1995.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q, Q1, FY 1997 FOR THE PERIOD ENDED JUNE 30, 1996 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> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> JUN-30-1996
<CASH> 40,700
<SECURITIES> 5,220
<RECEIVABLES> 101,075
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 158,563
<PP&E> 43,192
<DEPRECIATION> 32,094
<TOTAL-ASSETS> 206,446
<CURRENT-LIABILITIES> 62,370
<BONDS> 0
0
0
<COMMON> 1,404
<OTHER-SE> 142,672
<TOTAL-LIABILITY-AND-EQUITY> 206,446
<SALES> 149,210
<TOTAL-REVENUES> 149,945
<CGS> 126,149
<TOTAL-COSTS> 136,777
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 13,168
<INCOME-TAX> 5,441
<INCOME-CONTINUING> 7,727
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,727
<EPS-PRIMARY> .54
<EPS-DILUTED> .54
</TABLE>
