Simula, Inc. Reports 1999 Financial Results
29 March 2000
Simula, Inc. Reports 1999 Financial Results; Company Reports $18 Million Fourth-Quarter Charge
PHOENIX--March 29, 2000--Simula, Inc. today announced financial results for the fourth quarter and year ended Dec. 31, 1999.Revenues for the three months ended Dec. 31, 1999 were $32.3 million compared to $28.7 million for the comparable period in 1998. The net loss for the quarter was $20.6 million, or $1.94 per share, compared to a net loss of $21.0 million, or $2.12 per share, in the three months ended Dec. 31, 1998.
The net loss reflects a restructuring charge of $18.3 million (pre-tax) occasioned by the previously announced sale of substantially all the assets of Airline Interiors (a subsidiary engaged in the manufacture of 16g commercial airliner seats), a loss from discontinued operations of $2.6 million, and an income tax benefit of $9.9 million.
Revenues for the year ended Dec. 31, 1999 were $131.4 million compared to $100.6 million in the prior year. The net loss for the year was $18.6 million, or $1.82 per share, compared to a net loss of $27.7 million, or $2.80 per share, in 1998.
Donald W. Townsend, president and CEO of Simula, noted that the core businesses that were retained were profitable and cash-flow positive in 1999. "Subsequent to the major recapitalization announced in January -- including the sale of an operating unit and new financing -- our continuing operations will focus on our core businesses in automotive safety and government and defense," said Townsend. "We have addressed our liquidity issues, which will allow us to focus on these historically profitable operations."
Based upon the current economic environment and existing backlog, the company anticipates solid results in 2000 from both Automotive Safety Systems and Government and Defense units. "Our current business model calls for earnings in 2000 of $2.5 to $3.0 million on revenues that are expected to exceed $100 million, with EBITDA (earnings before interest, taxes, depreciation, and amortization) of approximately $17 million," said Townsend.
"Looking out two years, to 2002, we are currently forecasting revenues, earnings, and EBITDA, respectively, of approximately $130 million, $6 million, and $20 million. Moreover, if our core businesses continue to grow as anticipated, it is, we believe, reasonable to expect that in 2004 revenues, earnings, and EBITDA could exceed, respectively, $200 million, $20 million, and $35 million.
"These projections are based on our belief that, given the progress we have made in addressing some longstanding cash flow and liquidity issues, the company is now positioned for consistent top- and bottom-line growth. Actual revenues and earnings will, of course, depend on a variety of factors," continued Townsend, "not least among them the anticipated ramp-up in orders for the company's ITS(R) products, the outlook for which remains extremely positive.
"Government and defense is likewise doing very well, and we expect to see incremental business from our proprietary technologies in armor and polymer products. Artcraft Atlanta -- which was not part of our exit from the 16g commercial airliner seating business -- remains solidly profitable with excellent management and a seasoned employee base.
"One should not underestimate the challenges the company still faces in de-leveraging its balance sheet," concluded Townsend. "Nor, however, should one underestimate the extent to which the recent recapitalization will enable the company to concentrate on its core competencies, and thereby facilitate further improvement of Simula's capital structure.
"From an operations standpoint, the performance of the businesses we have retained has improved measurably in recent months. We will continue to work at achieving greater operating efficiencies while implementing a program to reduce costs, particularly fixed expenses, to ensure positive and growing free cash flow."
The company has been advised that research by a major investment banking firm will be initiated in the second quarter of 2000.
Simula, Inc. is a leader in developing and commercializing protective systems and energy absorption technologies that safeguard human lives. Products include advanced occupant seating and restraint systems for military and automotive applications. Additional information on Simula may be found at www.simula.com.
Safe Harbor statement under the Private Securities Litigation Reform Act of 1995: Projected operating results will be affected by a wide variety of factors which could adversely impact revenues, profitability and cash flows. The company's liquidity and available working capital will be dependent upon cash flow from operations, availability of funds under its credit agreement, and extensions or refinancings of certain indebtedness or, potentially, proceeds from asset sales or licensing. Other factors pertinent to the company's ability to meet its current and five-year financial projections include its leveraged status and the level and cost of debt; retention of key members of management; reduction of fixed expenses; ability to maintain margins or grow volumes in its automotive segment; success in building strategic alliances with large prime contractors and first tier suppliers to OEMs; competition and competitive pressures on pricing, including pressures from first tier supplier partners; customer order patterns and seasonality; the cyclical nature of the automobile industry and other markets addressed by the company's products; the level and makeup of military expenditures; the costs of legal proceedings; contract mix and shifting production and delivery schedules among the company's two business segments; amount of resources committed to independent research and development from time to time; proof of concept and production validation of certain of the company's new technologies and proposed products; technological changes; the level of orders which are received and can be shipped and invoiced in a quarter; manufacturing capacity and yield; costs of labor, raw materials, supplies, and equipment; reliability of vendor base; and economic conditions in the United States and Worldwide markets. As used throughout this release, the words "estimate," "anticipate," "expect," "should," "intend," "project," "target," or other expressions that indicate future events identify forward-looking statements which are made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Actual results and trends may differ materially. Risks include those described herein and in the company's registration statements and periodic reports filed with the U.S. Securities and Exchange Commission.
(Financial Statements Follow)
Simula, Inc.
Consolidated Statements of Operations
Three Months Ended Twelve Months Ended
December 31 December 31
1999 1998 1999 1998
Revenue $ 32,268,896 $ 28,682,677 $ 131,392,426 $ 100,644,678
Cost of
revenue 30,940,241 31,843,231 102,984,129 85,723,846
Gross
margin 1,328,655 (3,160,554) 28,408,297 14,920,832
Administrative
expenses 8,456,953 6,194,931 26,729,724 20,420,763
Restructuring
Charge 18,326,819 -- 18,326,819 --
Operating
income (25,455,117) (9,355,485) (16,648,246) (5,499,931)
Interest
expense (2,161,963) (1,532,145) (7,246,105) (5,099,194)
Earnings
(loss) before
taxes and
discontinued
operations (27,617,080) (10,887,630) (23,894,351) (10,599,125)
Income tax
benefit 9,852,000 3,902,000 8,363,000 3,786,000
Earnings
(loss) from
continuing
operations (17,765,080) (6,985,630) (15,531,351) (6,813,125)
Discontinued operations:
Loss from
discontinued
operations,
net of
tax -- (163,000) -- (2,319,388)
Estimated
loss on
disposal,
net of
tax (2,609,410) (13,896,000) (2,609,410) (18,576,000)
Extraordinary
loss on
early
extinguishment
of debt, net
of tax (151,295) -- (151,295) --
Net earnings
(loss) (20,525,785) (21,044,630) (18,292,056) (27,708,513)
Dividends
on preferred
stock 74,497 -- 279,536 --
Net earnings
(loss)
available
for common
share-
holders $(20,600,282) $(21,044,630) $(18,571,592) $(27,708,513)
Earnings
(loss) per
common share --
Basic:
Earnings
(loss) from
continuing
operations $ (1.68) $ (0.70) $ (1.55) $ (0.69)
Discontinued
operations
Loss from
discontinued
operations,
net of tax $ -- $ (0.02) $ -- $ (0.23)
Estimated loss
on disposal,
net of tax $ (0.25) $ (1.40) $ (0.26) $ (1.88)
Earnings (loss)
from early
extinguishment
of debt,
net of tax $ (0.01) $ -- $ (0.01) $ --
Net earnings
(loss) $ (1.94) $ (2.12) $ (1.82) $ (2.80)
Weighted average
shares --
basic 10,649,753 9,915,391 10,230,720 9,880,283