Simula, Inc. Reports Second Quarter Earnings
PHOENIX--Aug. 2, 2001--Simula, Inc. (AMEX: SMU) today reported revenues for the three months ended June 30, 2001 were $26.0 million compared to revenues of $24.0 million for the comparable period in 2000, an increase of 8%.Net income was $0.6 million or $0.05 per basic and diluted common share compared to $0.3 million or $0.02 per basic and diluted common share in 2000. The second quarter included a $0.6 million charge related to the write down of assets held for sale to their estimated net realizable value. Excluding this charge, second quarter earnings would have been $1.0 million or $0.08 per basic and diluted common share.
Revenues for the six months ended June 30, 2001 were $51.5 million compared to $48.5 million for the comparable period in 2000, an increase of 6%. Net income was $0.9 million or $0.07 per basic and diluted common share compared to $0.4 million or $0.04 per basic and diluted common share in 2000. Net income for the six months, excluding $0.5 million in restructuring charges incurred in the first quarter and the write down in assets held for sale discussed above, was $1.6 million or $0.13 per basic and $0.12 per diluted common share.
As part of its on-going restructuring started in the 4th quarter 2000, during the period ended June 30, 2001, the Company decided to sell certain non-core assets in the Company's Commercial Segment. These assets have been classified as Net Assets Held for Sale on the Company's balance sheet and, as referenced above, a charge of $0.6 million has been recorded to reflect the write down to estimated net realizable value.
In addition, the Company said that default interest expense on its senior secured notes and refinancing costs and fees incurred had a per share effect of approximately $.02 in the three and six month periods ended June 30, 2001.
"We are happy to report another quarter of solid operating results. We continue to address significant issues as we rebuild the Company. We think it is noteworthy that Simula shows growth in earnings and revenues despite contrary market trends affecting technology and small cap companies," said Brad Forst, President and CEO.
"Second quarter operating income increased 26% when compared to one year ago and, excluding the net asset write down charge, increased 48%. Operating income for the six month period increased 22% when compared to one year ago and, excluding first quarter restructuring and the current net asset write down charge, increased 42%. I believe that this is a strong indication that the restructuring efforts taken in the first quarter are paying off."
Second quarter results were also favorably influenced by $1.0 million in additional gross margin recognized upon receipt of a contract to provide helicopter cockpit air bags systems ("CABS") to the U.S. Army. The favorable impact on gross margin represents the recognition of cost reimbursement for product development costs incurred in prior periods. This major contract was disclosed by the Company on June 27, 2001.
The Company also cited continued strong demand for the Company's automotive safety products from BMW, Simula's largest automotive industry customer, and the positive effects of cost containment measures initiated earlier this year.
Debt Restructuring
The Company said it continues to negotiate a number of options to address the level and cost of its debt. "Management focus is balanced between improving operations and restructuring the balance sheet," said Forst. "Addressing our debt is a systematic process we are approaching deliberately over time with a defined plan. We have examined global refinancing, partial refinancing, equity infusion, asset sales, and combinations of these approaches to find an optimum path. I continue to believe we will report progress on this plan in the third quarter."
Management
On July 26, 2001, the Company announced that its Chief Financial Officer would leave that position. The Company is conducting a search and considering a number of candidates. "We are building our new management team for future growth and the strategic repositioning of our Company," said Forst.
Guidance
Finally, the Company reconfirmed guidance given in the first quarter with respect to forecasted revenues and earnings for 2001, net of restructuring, net asset write down, and refinancing charges incurred for the year.
Conference Call/Webcast
The Company will conduct a conference call and webcast with the investment community during the week of August 6, 2001. A subsequent press release will provide details.
About Simula
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.
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 find a replacement lender and the likelihood of a material reduction in the Company's level and cost of debt. 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. Other factors relevant to the restructuring of the Company's debt include the completion of diligence and negotiations of favorable terms and conditions for such restructuring. 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 Six Months Ended
June 30, June 30,
-------------------------- ---------------------------
2001 2000 2001 2000
------------- ------------- ------------- -------------
Revenue $ 25,956,898 $ 23,946,849 $ 51,492,665 $ 48,505,707
Cost of
revenue 16,204,171 16,071,566 32,587,769 33,016,868
------------- ------------- ------------- -------------
Gross margin 9,752,727 7,875,283 18,904,896 15,488,839
Administrative
expenses 5,560,735 5,033,692 11,222,489 10,087,802
Restructuring
charge -- -- 479,000 --
Write down of
net assets
held for sale 600,000 -- 600,000 --
------------- ------------- ------------- -------------
Operating income 3,591,992 2,841,591 6,603,407 5,401,037
Interest expense (2,651,567) (2,302,531) (5,168,521) (4,566,169)
------------- ------------- ------------- -------------
Income before
taxes and
discontinued
operations 940,425 539,060 1,434,886 834,868
Income tax
expense (363,000) (231,000) (535,000) (335,000)
------------- ------------- ------------- -------------
Net income 577,425 308,060 899,886 499,868
Preferred stock
dividends -- 33,025 -- 66,683
------------- ------------- ------------- -------------
Net earnings
available for
common
shareholders $ 577,425 $ 275,035 $ 899,886 $ 433,185
============= ============= ============= =============
Income (loss)
per common
share -
basic $ 0.05 $ 0.02 $ 0.07 $ 0.04
Income (loss)
per common
share -
diluted $ 0.05 $ 0.02 $ 0.07 $ 0.04
Weighted
average
shares
- basic 12,200,717 11,169,767 12,195,363 11,136,797
Weighted
average
shares
- diluted 12,685,300 11,169,767 12,637,451 11,141,396