-----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, POaLbSUEqObWRoeCeYyP4ZndjNiqueV24aG6Vu+JSE+hPcWTwA97mB+7kcQZTWvN nvR2SFaA468s3EiYj+vHtw== 0000311946-97-000003.txt : 19970225 0000311946-97-000003.hdr.sgml : 19970225 ACCESSION NUMBER: 0000311946-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970205 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: 97518686 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: December 31, 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 No.) 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, 1997. $.10 par value Common - 13,977,736 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 ___________________ __________________ 1996 1995 1996 1995 REVENUES: Contract revenues $130,138 $120,605 $408,182 $346,358 Interest 899 659 2,476 1,735 _______ _______ _______ _______ 131,037 121,264 410,658 348,093 _______ _______ _______ _______ COSTS AND EXPENSES: Costs of contract revenues 106,699 99,532 337,977 290,233 Selling and administrative expenses 10,998 10,144 32,810 27,557 _______ _______ _______ _______ 117,697 109,676 370,787 317,790 _______ _______ _______ _______ Income before taxes on income 13,340 11,588 39,871 30,303 Provision for taxes on income -5,505 -4,710 -16,468 -12,299 _______ _______ _______ _______ NET INCOME 7,835 6,878 23,403 18,004 Retained earnings at beginning of period 127,253 105,780 118,569 95,889 Cash dividends (Note 2) -839 -694 -2,376 -1,929 Purchase and retirement of treasury shares -5,347 _______ _______ _______ _______ Retained earnings at end of period $134,249 $111,964 $134,249 $111,964 ======= ======= ======= ======= EARNINGS PER SHARE OF COMMON STOCK $ 0.55 $ 0.48 $ 1.64 $ 1.27 ======= ======= ======= ======= Cash dividends per share of common stock (Note 2) $ 0.06 $ 0.05 $ 0.17 $ 0.14 Average number of common shares, including common stock equivalents 14,290 14,241 14,269 14,178 See notes to consolidated financial statements. LOGICON, INC. CONSOLIDATED BALANCE SHEET (dollars in thousands) 1996 __________________________ December 31 March 31 (unaudited) ASSETS: Current assets: Cash and cash equivalents $ 60,771 $ 37,802 Marketable securities 8,244 Accounts receivable 79,318 87,725 Prepaid expenses 2,064 2,447 Deferred income tax benefits 9,372 8,551 _______ _______ Total Current Assets 151,525 144,769 Property, plant and equipment, net 9,959 11,521 Other assets 971 1,085 Excess of purchase price over net assets of businesses acquired, net 34,639 36,063 _______ _______ $197,094 $193,438 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY: Current liabilities: Accounts payable and other accrued liabilities $ 10,553 $ 17,995 Accrued salaries, wages and employee benefits 31,754 38,522 Estimated taxes on income 444 1,023 _______ _______ Total Current Liabilities 42,751 57,540 _______ _______ STOCKHOLDERS' EQUITY: Common stock $.10 par value - Authorized 40,000,000 shares, outstanding 13,957,000 and 13,975,000 shares 1,396 1,397 Other paid-in capital 22,777 18,853 Retained earnings 134,249 118,569 Unrealized loss on available for sale securities - 13 Unearned compensation and notes receivable under restricted stock purchase plan -4,079 -2,908 _______ _______ Total stockholders' equity 154,343 135,898 _______ _______ $197,094 $193,438 ======= ======= See notes to consolidated financial statements. LOGICON, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (dollars in thousands) (unaudited) For the Nine Months Ended December 31 __________________ 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 23,403 $18,004 Income charges (credits) not affecting cash-- Depreciation and amortization 5,666 5,060 Amortization of deferred compensation 281 409 Benefit from deferred taxes -821 -330 Changes in assets and liabilities-- Decrease (increase) in accounts receivable 8,407 -18,878 Decrease in prepaid expenses and other assets 497 1,017 Increase (decrease) in accounts payable and other accrued liabilities -7,442 975 Decrease in accrued salaries, wages and employee benefits -6,768 -3,890 Decrease in income taxes payable -579 -1,337 _______ _______ Net cash provided from operating activities 22,644 1,030 _______ _______ CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant and equipment -2,680 -3,638 Maturity of available for sale securities 8,257 Payment for acquisition, net of cash acquired -3,074 _______ _______ Net cash provided from (used in) investing activities 5,577 -6,712 _______ _______ CASH FLOWS FROM FINANCING ACTIVITIES: Cash dividends -2,376 -1,929 Transactions of stock plans 2,747 3,634 Purchase and retirement of treasury shares -5,623 _______ _______ Net cash provided from (used in) financing activities -5,252 1,705 _______ _______ Net increase (decrease) in cash and cash 22,969 -3,977 equivalents Cash and cash equivalents at beginning of period 37,802 31,564 _______ _______ CASH AND CASH EQUIVALENTS AT END OF PERIOD $60,771 $27,587 ======= ======= Cash paid for income taxes $ 17,426 $11,771 ======= ======= 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 nine months ended December 31, 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 nine months ended December 31, 1996, and 1995 have been made. NOTE 2. DIVIDENDS. On December 13, 1996, the board of directors declared a quarterly cash dividend of six cents per share, which was paid on January 14, 1997, to stockholders of record as of December 24, 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 Nine Months Ended December 31 December 31 _______________________________________________________________________ (dollars in thousands) 1996 1995 1996 1995 Contract revenues: Cost plus fixed fee $ 32,179 $ 30,195 $ 102,462 $ 91,381 Cost plus award and incentive fee 38,509 36,914 117,807 109,561 Fixed-price 18,494 22,444 77,737 52,870 Time and material 40,956 31,052 110,176 92,546 _______ _______ _______ _______ $130,138 $120,605 $408,182 $346,358 ======= ======= ======= ======= December 31 March 31 __________________________________________________________________________ (dollars in thousands) 1996 1995 1996 Backlog: Firm Contracts: Cost plus fixed fee $ 157,481 $ 155,764 $ 155,130 Cost plus award and incentive fee 191,200 171,518 159,836 Fixed-price 48,646 42,209 42,705 Time and material 167,326 208,663 188,958 _________ _______ _______ 564,653 578,154 546,629 _________ _______ _______ Contract options and untasked indefinite quantity contract values: Cost type 484,432 555,619 620,261 Fixed-price 723,630 724,606 749,411 Time and material 273,271 114,327 121,498 _________ _________ _________ 1,481,333 1,394,552 1,491,170 _________ _________ _________ Total Backlog $2,045,986 $1,972,706 $2,037,799 ========== ========== ========= REVENUES AND BACKLOG (CONT.) Contract revenues during the first nine months of fiscal year 1997 were 18% higher than in the first nine months of fiscal year 1996. Revenues from Geodynamics, which was acquired on March 28, 1996, and sales of hardware and software products under the I-CASE contract account for a large share of the increase. Backlog at December 31, 1996, including priced options, increased by four percent from backlog at December 31, 1995, and remained constant when compared to the backlog at March 31, 1996. Booking highlights during the third quarter include: - $24 million for a contract option to support the U. S. Army's Battle Command Training Program - $10 million for work in support of the Human Engineering Division of the Air Force's Armstrong Laboratory in Dayton, Ohio - $8 million in products and services under the I-CASE contract. 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 December 31, 1996 and 1995, was $267 million and $232 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 Nine Months Ended December 31 December 31 _______________________________________________________________________ 1996 1995 1996 1995 Return on revenue before tax 10.2% 9.6% 9.7% 8.7% Return on revenue after tax 6.0% 5.7% 5.7% 5.2% Income tax rate 41.3% 40.6% 41.3% 40.6% Income for the third quarter and the nine month period ended December 31, 1996 was positively impacted by increased revenues from fixed-price and time and material contracts that on average yield higher operating profit margins than cost type contracts. Additionally, the profit margin for the first nine months of fiscal year 1997 was higher than the same period for 1996 due to a greater amount of interest income earned on a larger cash and marketable securities portfolio. Days sales in receivables decreased to 53 days for December 31, 1996, from 67 days for March 31, 1996. The March 31, 1996 days sales statistic includes the recording of the acquisition of Geodynamics Corporation, under the purchase method, on March 28, 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 $22.6 million in the first nine months of fiscal 1997 and $1 million in the first nine months of fiscal 1996, and is the company's primary source of liquidity. The company's working capital increased to $108.8 million at December 31, 1996, from $87.2 million at March 31, 1996. The strong working capital position is reflected in the current ratio of 3.5 to 1 at December 31, 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 nine months 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 December 31, 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 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 December 31, 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 February 5, 1997. 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 Nine Months Ended December 31 December 31 1996 1995 1996 1995 Weighted average number of shares outstanding during the period 13,951 13,871 13,951 13,704 Net additional shares issuable in connection with dilutive stock options based upon use of the treasury stock method based on average market prices 339 370 318 474 _________ _________ _________ _________ Weighted average number of common shares including common stock equivalents 14,290 14,241 14,269 14,178 ========= ========= ========= ========= 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 Q3 FY97 FOR THE PERIOD ENDED DECEMBER 31, 1996) AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000311946 LOGICON, INC. 1,000 9-MOS MAR-31-1997 DEC-31-1996 60,771 0 70,318 0 0 151,525 42,002 32,043 197,094 42,751 0 0 0 1,396 152,947 197,094 408,182 410,658 337,977 370,787 0 0 0 39,871 16,468 23,403 0 0 0 23,403 1.64 1.64
-----END PRIVACY-ENHANCED MESSAGE-----