Simula Reports Second Quarter 1998 Financial Results
6 August 1998
Simula Reports Second Quarter 1998 Financial Results
Simula Also Announces Plan to Divest of Its Rail and Mass Transit Operations
to Focus on its High Growth Automotive Safety Systems, Airline Seating and
Government Businesses
PHOENIX, Aug. 5 -- Simula, Inc. announced today
its financial results for the second quarter and six months ended June 30,
1998. Additionally, the company announced that it intends to strategically
focus its efforts and capital on expanding its automobile safety, airline
seating and government businesses, and has adopted a plan to sell its rail
seating operations. The company's rail seating operations are being reported
as discontinued operations.
Revenues for the second quarter of 1998 increased 98% to $25.7 million as
compared to $13.0 million for the same period in 1997. Revenues for the six
months ended June 30, 1998 increased 99% to $48.3 million as compared to
$24.3 million for the same period in 1997. These increases were primarily
attributable to increased sales of the Inflatable Tubular Structure (ITS) for
automobiles and 16G airliner passenger seats.
Income from continuing operations for the second quarter of 1998 was
$502,976 or $.05 per share compared to a loss of ($244,031) or ($.03) per
share for the same period in 1997. Income from continuing operations for the
six months ended June 30, 1998 was $731,655 or $.07 per share compared to a
loss of ($1.1) million or ($.12) per share for the same period in 1997.
Net loss, after the loss from discontinued operations, for the second
quarter of 1998 was ($6.1) million or ($.62) per share compared to net income
of $18,301 or less than $.01 per share for the same period in 1997. Net loss,
after the loss from discontinued operations, for the six months ended June 30,
1998 was ($6.1) million or ($.62) per share compared to a net loss of
($547,836) or ($.06) per share for the same period in 1997.
"We are very pleased with the further improvement in financial performance
in our continuing operations. Growth in revenues and our focus on costs and
expenses have produced the results we anticipated. The relocation of our San
Diego aircraft seating operation in July 1998, growth in revenues from
automotive inflatable restraints and airline seating products, and our ongoing
focus on costs are anticipated to provide further improvement in operating
results." commented Don Townsend, president of Simula, Inc.
Simula also announced it has adopted a plan to sell its rail and mass
transit seating operations. The company has initiated an active marketing
plan and anticipates it will sell these operations as ongoing businesses
within the next twelve months. These companies will continue their marketing,
sales and manufacturing activities as Simula prepares them for sale.
The decision to sell these operations is a major step in the company's
strategic plan to maximize shareholder value by focusing its management and
capital resources on its operations that have the greatest revenue growth and
profit potential. Management believes the sale of the rail seating businesses
will provide the company with a significant amount of cash to reinvest in its
other businesses that have better current and projected growth rates and
financial returns. In addition, the sale will allow senior company management
to focus on its other businesses and should improve the predictability of the
company's earnings.
The net loss from discontinued operations was ($6.6) million or ($.67) per
share during the second quarter of 1998. Included in this amount is a net
loss from operations of the discontinued segment of ($1.9) million or ($.20)
per share primarily resulting from production delays. The remainder of the
loss from discontinued operations of ($4.7) million or ($.47) per share
represents the write down of the remaining net assets of these businesses to
their net realizable value based upon an independent valuation. This
write-down was principally comprised of the write-off of intangible assets and
represents a non-cash charge. Estimated costs of disposal and projected
operating results have been included in determining the net realizable value
of these businesses. Therefore, the company does not anticipate that these
operations will have any significant impact on future earnings during the
period prior to their sale.
"The acquisition and operation of our two rail businesses provided the
manufacturing capacity and business volume that were necessary to support our
entry into the airliner seating business. This strategy enabled us to become
the first successful new entrant into the commercial aircraft seating business
in more than 25 years. Now that our airliner seating business has
successfully moved into its new facility and has established an annual run
rate of nearly $40 million, the strategy has been accomplished. We now have
the opportunity to focus our economic and management resources on businesses
with higher returns." said Don Townsend. "Based on near-term opportunities
for significant new programs in the rail business, this is the best time to
maximize the value of these businesses. We will continue to position these
subsidiaries so they can be positive contributors to their new owners."
Simula, Inc., based in Phoenix, Arizona, USA, is an acknowledged world
leader in transportation safety and energy absorption technology. Its
principal product lines are protective systems including inflatable
restraints, airbags and ballistic armor and high technology energy absorbing
aircraft seating systems. Additional information about the company is located
on the Internet at http://www.simula.com.
This press release contains forward-looking statements that involve risks
and uncertainties that may cause the company's actual experience to differ
materially from that anticipated. Estimates are based on reliable information
and past experience. However, operating results are affected by a wide variety
of factors, many of which are beyond the control of the company. Factors and
risks affecting operating results include those described in the company's
registration statements and periodic reports filed with the U.S. Securities
and Exchange Commission. Additional factors include, but are not limited to,
the ultimate realizable value of assets held for sale, the levels of orders
which are received and can be shipped in a quarter; whether and when order
options are exercised; customer order patterns and seasonality; contract mix
among the company's three business segments and shifting production and
delivery schedules; manufacturing capacity and yield, costs of labor, raw
materials, supplies and equipment; reliability of vendor base; amount of
resources committed to research and development from time to time;
technological changes; competition and competitive pressures on pricing; and
economic conditions in the United States and worldwide.
SIMULA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended June 30, Six Months Ended June 30,
1998 1997 1998 1997
Revenue $ 25,739,419 $ 13,006,130 $ 48,281,597 $ 24,317,606
Cost of revenue 19,067,593 8,284,746 35,683,586 16,164,703
Gross margin 6,671,826 4,721,384 12,598,011 8,152,903
Administrative
expenses 4,690,539 4,114,239 9,087,781 8,207,766
Operating income
(loss) 1,981,287 607,145 3,510,230 (54,863)
Interest expense (1,194,824) (1,210,503) (2,403,650) (2,000,683)
Interest income 52,513 173,327 115,075 173,327
Earnings (loss) before
taxes and discontinued
operations 838,976 (430,031) 1,221,655 (1,882,219)
Income tax (expense)
benefit (336,000) 186,000 (490,000) 768,000
Earnings (loss) from
continuing operations 502,976 (244,031) 731,655 (1,114,219)
Discontinued operations:
(Loss) earnings from
discontinued
operations,
net of tax (1,932,410) 262,332 (2,156,388) 566,383
Estimated loss on
disposal, net of
tax (4,680,000) (4,680,000)
Net (loss)
earnings $(6,109,434) $18,301 $(6,104,733) $(547,836)
(Loss) earnings
per common share - basic:
Earnings (loss)
from continuing
operations $0.05 $(0.03) $0.07 $(0.12)
Discontinued operations:
(Loss) earnings from
discontinued
operations,
net of tax (0.20) 0.03 (0.22) 0.06
Estimated loss on
disposal, net of tax (0.47) (0.47)
Net (loss) earnings $(0.62) $-- $(0.62) $(0.06)
(Loss) earnings
per common share -
assuming dilution:
Earnings (loss) from
continuing
operations $0.05 $(0.03) $0.07
Discontinued operations:
(Loss) earnings from
discontinued
operations,
net of tax (0.19) 0.03 (0.21)
Estimated loss on
disposal, net of tax (0.46) (0.46)
Net (loss) earnings $(0.60) $-- $(0.60)