Simula Reports Loss for 2000 and Fourth Quarter; Principally Due to One Time Charges; Results Matched Company's Guidance to Investors
PHOENIX--April 17, 2001--Simula Inc. (AMEX:SMU) reported a loss for the fourth quarter and the twelve months ended December 31, 2000. The results were in line with guidance the Company had previously provided to investors. The loss relates primarily to non-recurring fourth quarter charges arising from management's actions to refocus the Company's operations and return to profitability. The fourth quarter charges include $4.2 million write-down of under-producing assets, a $1.4 million expense related to termination of its self insured medical plan, severance and restructuring charges and, $953,000 for the redemption of all remaining preferred stock.
For the fourth quarter, Simula reported revenues of $24.6 million and a loss of $8.8 million or $0.72 per share after extraordinary items. This compares with a year-earlier fourth quarter loss of $25.2 million or $2.36 per share on revenues of $32.3 million.
For the year ended December 31, 2000, Simula had a loss of $6.0 million, $0.52 per share, after extraordinary items and preferred stock dividends, on revenues of $97.3 million. This compares with a year-earlier loss of $23.1 million, or $2.26 per share, on revenues of $131.4 million. Year-to-year revenues were down due to the February 2000 sale of the Company's commercial airliner seat manufacturing subsidiary, which contributed revenues of $42.2 million in 1999.
Brad Forst, President and Chief Executive Officer commented that "despite the write-offs, and a $2.2 million charge for severance, we ended the year with positive income from operations. Sales were good and margins improved for our ongoing businesses, and the worst should be behind us from an operational point of view."
Because of the loss in 2000, one of the Company's lenders has asserted technical (non-monetary) violations of certain loan covenants, even though this lender has received all payments due, including default payments. The Company's other primary lender, who provides the company's revolving credit line, has waived all covenant violations.
"Our working capital line of credit, cash reserves, and liquidity are not impaired and it is business as usual with our customers and vendors," said Mr. Forst. "The Company is current with all creditors and will remain so," he added.
Mr. Forst noted, "unfortunately, because we were unable to negotiate acceptable fees for covenant waivers, Simula has reclassified the $20 million outstanding to that lender as a current obligation. This, in turn, has required the auditors to issue an opinion that contains a `going concern' expression from the auditors."
Mr. Forst emphasized that the auditor's opinion is unqualified -- "the auditors agree that our financial statements are fairly stated -- but has included the `going concern' emphasis solely as a result of the Company's covenant violation and lender dispute."
"We have made substantial progress in arranging new financing to replace our current senior lender," said Mr. Forst. "When new financing is arranged, we expect that our auditors will concur that the new senior debt can be classified as long-term, eliminating the current debt that is the focus of the auditor's concern. Audit opinions subsequent to the refinancing should not include the "going concern" emphasis. The Company expects to complete the new financing in the second or third quarter, he added.
"This whole issue would never have arisen if we had been able to negotiate reasonable arrangements for the waiver of non-compliance with this lender's financial covenants," Mr. Forst said. "However, management and the Board of Directors concluded that acceding to the lender's excessive demands was not in the best interest of our shareholders, despite the short-term perception problems created by the auditors' opinion. Replacing this lender should make this problem moot," he added.
Simula designs and makes systems and devices that save human lives. Its core markets are aerospace and defense systems, and automotive safety systems. Simula's core technologies include inflatable restraints, energy absorbing seating systems, advanced polymer materials, transparent and opaque armor products, personnel protective equipment and parachutes, and crash sensors. More information is available at http://www.simula.com
NOTE: Simula has scheduled an investor's conference call to take place April 17, 2001, at 9 a.m. EDT (6 a.m. MST/PDT). Call 212/271-4760, or access the call at www.redchip.com.
Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: This news release contains forward-looking statements that involve risks and uncertainties that may cause the Company's actual experience to differ materially from that which is anticipated. These forward-looking statements include statements about expected revenues, cost reductions, net income and operating income in 2001; the ability to obtain replacement financing on terms acceptable to the Company, or at all; the likelihood of a material reduction in the Company's level and cost of debt; and the Company's ability to license certain technologies. Other factors pertinent to the Company's ability to meet its current financial projections include its leveraged status and the level and cost of debt and the nature of debt covenants; the reduction of fixed expenses; the ability to maintain margins or grow volumes in its automotive segment; the likelihood of success in building strategic alliances with large prime contractors and first tier suppliers to OEMs; the competition and competitive pressures on pricing including from first tier supplier partners; and the amount of resources committed to independent research and development from time to time. Actual results may differ materially from those projected. Additional risks include those described herein and in the Company's registration statements and periodic reports filed with the U.S. Securities and Exchange Commission.
SIMULA, INC.
CONSOLIDATED STATEMENTS OF
OPERATIONS
----------------------------------------------------------------------
Three Months Ended Twelve Months Ended
December 31, December 31,
-------------------------- ---------------------------
2000 1999 2000 1999
------------ ------------ ------------ -------------
Revenue $ 24,594,308 $ 32,268,896 $ 97,295,471 $131,392,426
Cost of
revenue 18,402,266 30,940,241 65,224,828 102,984,129
------------ ------------ ------------ ------------
Gross margin 6,192,042 1,328,655 32,070,643 28,408,297
Administrative
expenses 9,536,465 8,406,533 24,823,103 26,679,304
Restructuring
charge 375,000 18,377,239 375,000 18,377,239
Write off of
long lived
assets 4,167,386 4,167,386
Executive
Severance
expense 292,538 2,222,619
------------ ------------ ------------ ------------
Operating
income
(loss) (8,179,347) (25,455,117) 482,535 (16,648,246)
Interest
expense (2,608,603) (2,161,963) (9,974,864) (7,246,105)
------------ ------------ ------------ ------------
(Loss) before
taxes,
discontinued
operations
and
extraordinary
item (10,787,950) (27,617,080) (9,492,329) (23,894,351)
Income tax
benefit 3,038,000 9,926,000 2,584,000 8,437,000
------------ ------------ ------------ ------------
Loss from
continuing
operations (7,749,950) (17,691,080) (6,908,329) (15,457,351)
Discontinued
operations:
Estimated
loss on
disposal,
net of tax (421,000) (7,238,109) 879,000 (7,238,109)
Extraordinary
Gain (loss)
on early
retirement
of debt 383,183 (151,295) 1,108,933 (151,295)
------------ ------------ ------------ ------------
Net loss (7,787,767) (25,080,484) (4,920,396) (22,846,755)
------------ ------------ ------------ ------------
Dividends on
preferred
stock 987,386 74,497 1,082,802 279,536
------------ ------------ ------------ ------------
Net loss
available
for common
shareholders $ (8,775,153) $(25,154,981) $ (6,003,198) $(23,126,291)
============ ============ ============ ============
(Loss) earnings
per common
share -- basic
and diluted:
(Loss) earnings
before
discontinued
operations
and
extraordinary
loss $(0.72) $(1.67) $(0.70) $(1.54)
Estimated
loss on
disposal (0.03) $(0.68) 0.08 (0.71)
Extraordinary
income (loss)
on early
extinguishment
of debt 0.03 $(0.01) 0.10 (0.01)
------------ ------------ ------------ ------------
Net loss $(0.72) $(2.36) $(0.52) $(2.26)
============ ============ ============ ============
See notes to consolidated financial statements