Simula Inc. Reports Third-Quarter 2000 Financial Results
2 November 2000
Simula Inc. Reports Third-Quarter 2000 Financial Results
PHOENIX--Nov. 2, 2000--Simula, Inc. today reported growth in revenues and operating results of continuing operations for the third quarter ended Sept. 30, 2000.Operating income and revenue from ongoing businesses rose in the third quarter compared with 1999, but net income and earnings per share fell -- in part because of higher interest expense, employee severance costs and investment in the automotive business.
For the three months ended Sept. 30, 2000 the Company reported net income available to common shareholders of $2.3 million, or $0.20 per diluted share, on revenues of $24.2 million, compared to net income available to common shareholders of $940,000, or $0.09 per diluted share, on revenues of $33.2 million in the same period a year ago.
Third quarter 2000 income from operations was $3.3 million compared to $3.4 million in the third quarter of 1999 and reflects a one-time severance expense of $1.9 million. Third-quarter 1999 results included revenues of $9.9 million, and operating income of approximately $400,000, attributable to Airline Interiors, Inc., all of whose assets were sold in February 2000.
Excluding Airline Interiors, in the third quarter of 1999 the Company would have reported revenues of $23.3 million and operating income of $3.0 million. In addition to the severance costs associated with recent changes in management, third quarter income from operations was impacted by higher than anticipated investment in the automotive business, and less than expected contribution from the Company's Atlanta-based airline soft goods business.
Third-quarter net income available to common shareholders reflects after-tax earnings of $1.3 million, or $0.11 per diluted share, pursuant to the renegotiation of indebtedness associated with the sale of the Company's rail and mass transit seating business, a discontinued operation, as well as an extraordinary after-tax gain on early extinguishment of debt of approximately $726,000, or $0.06 per diluted share.
Net income available to common shareholders before earnings from discontinued operations and the extraordinary gain was approximately $342,000, or $0.03 per diluted share, compared to $1.0 million, or $0.09 per diluted share, in the third quarter of 1999. Net income available for common shareholders in the third quarter was impacted by significantly higher interest expense than in the same period last year.
For the nine months ended Sept. 30, 2000 the Company reported net income available to common shareholders of $2.8 million, or $0.25 per diluted share, on revenues of $72.7 million, compared to net income available to common shareholders of $2.0 million, or $0.20 per diluted share, on revenues of $99.1 million in the first nine months of 1999.
Income from operations for the nine months ended Sept. 30, 2000 was $8.7 million compared to $8.8 million in the comparable period a year ago. Nine-month 1999 results included revenues of $33.0 million, and an operating loss of approximately $400,000, attributable to Airline Interiors, Inc. Excluding Airline Interiors, in the first nine months of 1999 the Company would have reported revenues of $66.1 million and operating income of $9.2 million.
Brad Forst, president and CEO of Simula, noted that third-quarter results are consistent with the considerable progress the Company has made in implementing a strategy of strengthening the balance sheet while capitalizing on the military and commercial potential of core technologies.
"The previously announced post-closing payment pursuant to the sale of Airline Interiors, renegotiation of indebtedness associated with the sale of Coach & Car, extension of a $5 million term note and settlement with Autoliv, Inc. have positively addressed our liquidity constraints," said Forst. "Interest expense is still unacceptably high, but we were pleased to have reduced it somewhat through the recent acquisition of approximately $3.4 million par value of the Company's outstanding 8% Senior Subordinated Convertible Notes.
"As announced last May," continued Forst, "we were successful in licensing rights for the commercial development of one of our existing technologies (a patented impact-resistant transparent polymer) for high-end prescription eyewear that we expect to see on the market by next spring. In addition, we have more recently reported two significant awards from the U.S. military: an order, not to exceed $43 million, for the military version of our patented Thin-Pack Parachute (TPP) and related systems; and a $20.4 million body armor contract for Small Arms Protective Inserts (SAPIs) that clearly establishes Simula as one of the country's leading providers of armor."
Simula, Inc., headquartered in Phoenix, Arizona, is a diversified technology company that designs and manufactures occupant safety systems and devices engineered to safeguard human life in a wide range of air, ground, and sea transportation vehicles.
The company operates in two principal markets that are aligned with its core technologies: aerospace and defense systems, and automotive safety systems.
SIMULA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Sept. 30,
2000 1999
Revenue $ 24,195,456 $ 33,169,131
Cost of revenue 13,805,694 23,468,135
Gross margin 10,389,762 9,700,996
Administrative expenses 5,198,836 6,278,521
Executive severance expenses 1,930,081 --
Operating income 3,260,845 3,422,475
Interest expense (2,800,092) (1,699,744)
Income before taxes and
discontinued operations 460,753 1,722,731
Income tax expense (119,000) (689,000)
Net income before discontinued
operations and extraordinary gain 341,753 1,033,731
Earnings from discontinued
operations -- net 1,300,000 --
Extraodinary gain from early
extinguishment of debt -- net 725,750 --
Net Income 2,367,503 1,033,731
Dividends on preferred stock (28,733) (93,834)
Net income available to
common shareholder $ 2,338,770 $ 939,897
Earnings per common share -- basic:
Net income before discontinued
operations and extraordinary gain $ 0.03 $ 0.09
Earnings from discontinued
operations 0.11 --
Extraordinary gain on early
extinguishment of debt 0.06 --
Earnings per common share -- basic $ 0.20 $ 0.09
Earnings per common share -- diluted:
Net income before discontinued
operations and extraordinary gain $ 0.03 $ 0.09
Earnings from discontinued operations 0.11 --
Extraordinary gain on early
extinguishment of debt 0.06 --
Earnings per common share -- diluted $ 0.20 $ 0.09
Weighted average shares -- basic 11,418,199 10,301,721
Weighted average shares -- diluted 11,464,671 11,647,949
Nine Months Ended
Sept. 30,
2000 1999
Revenue $ 72,701,163 $ 99,123,530
Cost of revenue 46,822,562 72,043,888
Gross margin 25,878,601 27,079,642
Administrative expenses 15,286,638 18,272,771
Executive severance expenses 1,930,081 --
Operating income 8,661,882 8,806,871
Interest expense (7,366,261) (5,084,142)
Income before taxes and
discontinued operations 1,295,621 3,722,729
Income tax expense (454,000) (1,489,000)
Net income before discontinued
operations and extraordinary gain 841,621 2,233,729
Earnings from discontinued
operations -- net 1,300,000 --
Extraodinary gain from early
extinguishment of debt -- net 725,750 --
Net Income 2,867,371 2,233,729
Dividends on preferred stock (95,416) (205,039)
Net income available to
common shareholder $ 2,771,955 $ 2,028,690
Earnings per common share -- basic:
Net income before discontinued
operations and extraordinary gain $ 0.07 $ 0.20
Earnings from discontinued operations 0.12 --
Extraordinary gain on early
extinguishment of debt 0.06 -- --
Earnings per common share -- basic $ 0.25 $ 0.20
Earnings per common share -- diluted:
Net income before discontinued
operations and extraordinary gain $ 0.07 $ 0.20
Earnings from discontinued operations 0.11 --
Extraordinary gain on early
extinguishment of debt 0.06 --
Earnings per common share -- diluted $ 0.25 $ 0.20
Weighted average shares -- basic 11,230,598 10,090,510
Weighted average shares -- diluted 11,365,257 11,055,451