-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HjPJYfXboUKF0Pf55ubQG9S7kINvumslUe+wG9AzVS33UuENuFSaMYPwexiSHTjU dlkKqnf+OWB3zzcMsNn0lg== 0000311946-96-000024.txt : 19961104 0000311946-96-000024.hdr.sgml : 19961104 ACCESSION NUMBER: 0000311946-96-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961101 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: LOGICON INC /DE/ CENTRAL INDEX KEY: 0000311946 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 952126773 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07777 FILM NUMBER: 96651823 BUSINESS ADDRESS: STREET 1: 3701 SKYPARK DR CITY: TORRANCE STATE: CA ZIP: 90505-4794 BUSINESS PHONE: 3103730220X3237 MAIL ADDRESS: STREET 1: 3701 SKYPARK DRIVE CITY: TORRANCE STATE: CA ZIP: 90505-4794 10-Q 1 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, 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 October 31, 1996. $.10 par value Common - 13,949,743 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 ___________________ __________________ 1996 1995 1996 1995 REVENUES: Contract revenues $128,834 $114,086 $278,044 $225,753 Interest 842 536 1,577 1,076 _______ _______ _______ _______ 129,676 114,622 279,621 226,829 _______ _______ _______ _______ COSTS AND EXPENSES: Costs of contract revenues 105,129 96,023 231,278 190,701 Selling and administrative expenses 11,184 8,931 21,812 17,413 _______ _______ _______ _______ 116,313 104,954 253,090 208,114 _______ _______ _______ _______ Income before taxes on income 13,363 9,668 26,531 18,715 Provision for taxes on income 5,522 3,910 10,963 7,589 _______ _______ _______ _______ NET INCOME 7,841 5,758 15,568 11,126 Retained earnings at beginning of period 125,594 100,713 118,569 95,889 Cash dividends (Note 2) -835 -691 -1,537 -1,235 Purchase and retirement of treasury shares -5,347 -5,347 _______ _______ _______ _______ Retained earnings at end of period $127,253 $105,780 $127,253 $105,780 ======= ======= ======= ======= EARNINGS PER SHARE OF COMMON STOCK $ 0.55 $ 0.41 $ 1.09 $ 0.79 ======= ======= ======= ======= Cash dividends per share of common stock (Note 2) $ 0.06 $ 0.05 $ 0.11 $ 0.09 Average number of common shares, including common stock equivalents 14,182 14,209 14,259 14,146 See notes to consolidated financial statements. LOGICON, INC. CONSOLIDATED BALANCE SHEET (dollars in thousands) 1996 __________________________ September 30 March 31 (unaudited) ASSETS: Current assets: Cash and cash equivalents $ 65,381 $ 37,802 Marketable securities 8,244 Accounts receivable 72,551 87,725 Prepaid expenses 2,196 2,447 Deferred income tax benefits 9,043 8,551 _______ _______ Total Current Assets 149,171 144,769 Property, plant and equipment, net 10,424 11,521 Other assets 971 1,085 Excess of purchase price over net assets of businesses acquired, net 35,169 36,063 _______ _______ $195,735 $193,438 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $ 12,528 $ 17,995 Accrued salaries, wages and employee benefits 35,578 38,522 Estimated taxes on income 854 1,023 _______ _______ Total Current Liabilities 48,960 57,540 _______ _______ STOCKHOLDERS' EQUITY: Common stock $.10 par value - Authorized 40,000,000 shares, outstanding 13,938,000 and 13,975,000 shares 1,394 1,397 Other paid-in capital 22,329 18,853 Retained earnings 127,253 118,569 Unrealized loss on available for sale securities - 13 Unearned compensation and notes receivable under restricted stock purchase plan -4,201 -2,908 _______ _______ 146,775 135,898 _______ _______ $195,735 $193,438 ======= ======= See notes to consolidated financial statements. LOGICON, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (dollars in thousands) (unaudited) For the Six Months Ended September 30 __________________ 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 15,568 $11,126 Income charges (credits) not affecting cash-- Depreciation and amortization 3,650 2,517 Amortization of deferred compensation 159 293 Provision for (benefit from) deferred taxes -492 384 Changes in assets and liabilities-- Decrease (increase) in accounts receivable 15,174 -3,353 Decrease (increase) in prepaid expenses and other assets 365 -1,288 Decrease in accounts payable and other accrued liabilities -5,467 -3,883 Decrease in accrued salaries, wages and employee benefits -2,944 -1,485 Decrease in income taxes payable -169 -1,583 _______ _______ Net cash provided from operating activities 25,844 2,728 _______ _______ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment -1,659 -2,013 Maturity of available for sale securities 8,257 _______ _______ Net cash provided from (used in) investing activities 6,598 -2,013 _______ _______ CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends -1,537 -1,235 Transactions of stock plans 2,297 2,239 Purchase and retirement of treasury shares -5,623 _______ _______ Net cash provided from (used in) financing activities -4,863 1,004 _______ _______ Net increase in cash and cash equivalents 27,579 1,719 Cash and cash equivalents at beginning of period 37,802 31,564 _______ _______ CASH AND CASH EQUIVALENTS AT END OF PERIOD $65,381 $33,283 ======= ======= Cash paid for income taxes $ 10,617 $ 8,341 ======= ======= See notes to consolidated financial statements. 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 six months ended September 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 six months ended September 30, 1996, and 1995 have been made. NOTE 2. DIVIDENDS. On August 5, 1996, the Board of Directors declared a quarterly cash dividend of six cents per share, which was paid on October 15, 1996, to stockholders of record as of September 19, 1996. 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) 1996 1995 1996 1995 Contract revenues: Cost plus fixed fee $ 34,997 $ 31,057 $ 70,283 $ 61,186 Cost plus award and incentive fee 39,215 36,485 79,298 72,647 Fixed-price 20,044 16,600 59,243 30,426 Time and material 34,578 29,944 69,220 61,494 _______ _______ _______ _______ $128,834 $114,086 $278,044 $225,753 ======= ======= ======= ======= At At September 30 March 31 ________________________________________________________________________ (dollars in thousands) 1996 1995 1996 Backlog: Firm Contracts: Cost plus fixed fee $ 150,705 $ 118,123 $ 155,130 Cost plus award and incentive fee 190,667 143,732 159,836 Fixed-price 47,765 42,326 42,705 Time and material 172,012 171,924 188,958 _________ _______ _______ 561,149 476,105 546,629 _________ _______ _______ Contract options and untasked indefinite quantity contract values: Cost plus fixed fee $ 515,077 $ 628,829 $ 620,261 Fixed-price 737,768 739,353 749,411 Time and material 288,075 123,411 121,498 _________ _______ _______ 1,540,920 1,491,593 1,491,170 _________ _______ _______ Total Backlog $2,102,069 $1,967,698 $2,037,799 ========= ======= ======= REVENUES AND BACKLOG (CONT.) Contract revenues during the first half of fiscal year 1997 were 23% higher than in the first half of fiscal year 1996. Revenues from Geodynamics, which was acquired on March 28, 1996, and increased sales of hardware and software products under the I-CASE contract account for a large share of the increase. Backlog at September 30, 1996, including priced options, increased by seven percent from backlog at September 30, 1995, and increased by three percent from backlog at March 31, 1996. Booking highlights during the second quarter include: - $21 million for support on a classified contract - $10 million for development of the U.S. Army's next generation Command and control training simulation environment, called WARSIM 2000 - $10 million for support of the Navy Center for Tactical Systems Interoperability; and - $8 million worth of products and services under the I-CASE contract. During the quarter, Logicon was also awarded two indefinite delivery/indefinite quantity (ID/IQ) contracts: a five-year contract from the National Institutes of Health for support of its Chief Information Officer Solutions and Partners Program (CIOSP), under which Logicon will compete with other information technology companies for business worth an estimated $1 billion; and a five-year contract from the Department of Justice for support of its Information Technology Support Services (ITSS) 2001 Program, under which Logicon will compete for business worth an estimated $100 million. 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 September 30, 1996 and 1995, was $225 million and $220 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. PROFIT MARGINS Three Months Ended Six Months Ended September 30 September 30 _______________________________________________________________________ 1996 1995 1996 1995 Return on revenue before tax 10.3% 8.4% 9.5% 8.3% Return on revenue after tax 6.0% 5.0% 5.6% 4.9% Income tax rate 41.3% 40.4% 41.3% 40.6% Net income for the second quarter of fiscal 1997 was increased by $0.7 million or 5 cents per share, as a result of adjustments on two contracts. A one hundred percent award fee was received on one contract, which exceeded prior estimates, and a second contract experienced a significant reduction in the estimated costs to complete. The profit margin for the first half of fiscal year 1996 was also lower than the same period this year due to a lesser amount of interest income earned on a smaller cash and marketable securities portfolio. Days sales in receivables decreased to 48 days for September 30, 1996, from 67 days for 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 $25.8 million in the first half of fiscal 1997 and $2.7 million in the first half of fiscal 1996, and is the company's primary source of liquidity. The company's working capital increased to $100.2 million at September 30, 1996, from $87.2 million at March 31, 1996. The strong working capital position is reflected in the current ratio of 3.0 to 1 at September 30, 1996. The working capital improvement during the second quarter of fiscal 1997 was due to increased collections of accounts receivables. 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 1997. PURCHASE OF TREASURY STOCK The company purchased 208,700 shares for an aggregate cost of $5.6 million during the second quarter of fiscal year 1997. On August 5, 1996, the board of directors authorized the company to spend up to $20 million to purchase additional shares of the company's common stock in open market transactions. FORWARD-LOOKING STATEMENTS To the extent the information contained in this discussion and analysis of consolidated financial condition and results of operations, as well as the information included elsewhere in this Form 10-Q, for the quarter ended September 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 customer's 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 uncertainties 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. 27 Financial Data Schedule (b) Reports on Form 8-K No reports on Form 8-K were filed during the three months ended September 30, 1996. 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. 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, 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) Exhibit 11 LOGICON, INC. COMPUTATION OF EARNINGS PER SHARE (shares in thousands) 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 1996 1995 1996 1995 Weighted average number of shares outstanding during the period 13,904 13,692 13,951 13,621 Net additional shares issuable in connection with dilutive stock options based upon use of the treasury stock method based on average market prices 278 517 308 525 _________ _________ _________ _________ Weighted average number of common shares including common stock equivalents 14,182 14,209 14,259 14,146 ========= ========= ========= ========= Fully diluted earnings per share of common stock are omitted because there is less than 3% dilution in any period. EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q,Q2, FY 1997 FOR THE PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 0000311946 LOGICON,INC 1,000 6-MOS MAR-31-1997 SEP-30-1996 65,381 0 72,551 0 0 149,171 43,713 33,289 195,735 48,960 0 0 0 1,394 145,381 195,735 278,044 279,621 231,278 253,090 0 0 0 26,531 10,963 15,568 0 0 0 15,568 1.09 1.09
-----END PRIVACY-ENHANCED MESSAGE-----