-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N8wqecRA5Yz5N6g+o/sqiW1X71JGLpuTi3ixxble0owbhYM+0hDUuH/sbUqu/r0A KY5wfLYQuwWAKokj7iiSjg== 0000950153-96-000304.txt : 19960517 0000950153-96-000304.hdr.sgml : 19960517 ACCESSION NUMBER: 0000950153-96-000304 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SIMULA INC CENTRAL INDEX KEY: 0000885080 STANDARD INDUSTRIAL CLASSIFICATION: PUBLIC BUILDING AND RELATED FURNITURE [2531] IRS NUMBER: 860320129 STATE OF INCORPORATION: AZ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-12410 FILM NUMBER: 96565903 BUSINESS ADDRESS: STREET 1: 401 WEST BASELINE STE 204 CITY: TEMPE STATE: AZ ZIP: 85283 BUSINESS PHONE: 6027528918 MAIL ADDRESS: STREET 2: 401 WEST BASELINE ROAD STE 204 CITY: TEMPE STATE: AZ ZIP: 85283 10-Q 1 QUARTERLY REPORT FOR THE QUARTER ENDED 3/31/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended March 31, 1996 Commission File Number 0-20003 SIMULA, INC. (Exact name of registrant as specified in its charter) Arizona 86-0320129 (State of Incorporation) (I.R.S. Employer Identification No.) 401 W. Baseline, Suite 204, Tempe, Arizona 85283 (Address of principal executive office) (Zip Code) (602) 752-8918 (Registrant's telephone number, including area code) 829206 10 1 (CUSIP Number) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for past 90 days. (1) YES X NO ----- ----- (2) YES X NO ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Outstanding at Class March 31, 1996 ----- -------------- Common Stock, $.01 par value 8,896,127
2 SIMULA, INC. INDEX PART I - FINANCIAL INFORMATION
PAGE ---- Item 1 - Financial Statements Consolidated Balance Sheets March 31, 1996 and December 31, 1995 ....................... 2 Consolidated Statements of Earnings Three Months Ended March 31, 1996 and 1995.................. 3 Consolidated Statement of Shareholders' Equity Three Months Ended March 31, 1996 .......................... 4 Consolidated Statements of Cash Flows Three Months Ended March 31, 1996 and 1995.................. 5 Notes to Financial Statements.................................... 6 Item 2 - Management's Discussion and Analysis of Results of Operations and Financial Condition...............7-9 PART II - OTHER INFORMATION Item 6 - Exhibits ....................................................... 9 SIGNATURE ................................................................ 10
1 3 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS SIMULA, INC. CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------------------------- ASSETS March 31, 1996 December 31, 1995 -------------- ----------------- CURRENT ASSETS: Cash and cash equivalents $ 205,876 $ 3,175,172 Contract and trade receivables - net (Note 2) 26,284,214 25,221,504 Inventories 10,360,068 8,104,194 Prepaid expenses and other 769,979 762,836 ------------ ------------ Total current assets 37,620,137 37,263,706 PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS - NET 17,278,765 15,778,819 DEFERRED COSTS 7,521,993 6,385,328 PATENTS AND LICENSES 570,900 518,644 INTANGIBLES - NET 13,087,372 13,351,361 OTHER ASSETS 1,602,142 1,441,278 ------------ ------------ TOTAL ASSETS $ 77,681,309 $ 74,739,136 ============ ============ LIABILITIES & SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Revolving line of credit $ 3,000,000 Trade accounts payable 7,496,280 $ 7,884,141 Other accrued liabilities 3,529,580 2,607,849 Advances on contracts 2,194,718 3,920,533 Deferred income taxes 8,000 8,000 Current portion of long-term debt 4,019,639 1,367,187 ------------ ------------ Total current liabilities 20,248,217 15,787,710 LONG-TERM DEBT - Less current portion 9,031,852 11,261,365 DEFERRED INCOME TAXES 158,000 158,000 ------------ ------------ TOTAL LIABILITIES 29,438,069 27,207,075 SHAREHOLDERS' EQUITY: Preferred stock, $.05 par value - authorized 50,000,000 shares; no shares issued or outstanding Common stock, $.01 par value - authorized 50,000,000 shares; issued 8,978,627 and 8,970,627 shares 89,786 89,706 Additional paid-in capital 38,007,679 37,981,759 Retained earnings 10,425,613 9,740,434 Treasury stock, at cost - 82,500 shares (279,838) (279,838) ------------ ------------ Total shareholders' equity 48,243,240 47,532,061 ------------ ------------ TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 77,681,309 $ 74,739,136 ============ ============
See notes to consolidated financial statements. 2 4 SIMULA, INC. CONSOLIDATED STATEMENTS OF EARNINGS
- -------------------------------------------------------------------------------------------------------- THREE MONTHS ENDED MARCH 31, 1996 MARCH 31, 1995 -------------- ------------------ REVENUE $16,742,512 $13,580,842 COST OF REVENUE 11,378,206 8,954,807 ----------- ----------- GROSS MARGIN 5,364,306 4,626,035 ADMINISTRATIVE EXPENSES 3,890,444 3,057,386 ----------- ----------- OPERATING INCOME 1,473,862 1,568,649 INTEREST EXPENSE 331,683 555,172 ----------- ----------- INCOME BEFORE TAXES 1,142,179 1,013,477 INCOME TAXES (Note 3) 457,000 397,400 ----------- ----------- NET EARNINGS $ 685,179 $ 616,077 =========== =========== NET EARNINGS PER COMMON AND EQUIVALENT SHARE $ 0.08 $ 0.09 =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING 9,109,955 6,650,024 =========== ===========
See notes to consolidated financial statements. 3 5 SIMULA, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 1996
- -------------------------------------------------------------------------------------------------------------------------------- Class A ------------------------- Additional Total Issued Common Stock Paid-in Retained Treasury Shareholders' Shares Amount Capital Earnings Stock Equity --------- ------------ ----------- ----------- ---------- ------------- BALANCE, JANUARY 1, 1996 8,970,627 $89,706 $37,981,759 $ 9,740,434 $(279,838) $47,532,061 Issuance of common shares for options 8,000 80 25,920 26,000 Net earnings 685,179 685,179 --------- ------- ----------- ----------- --------- ----------- BALANCE, MARCH 31, 1996 8,978,627 $89,786 $38,007,679 $10,425,613 $(279,838) $48,243,240 ========= ======= =========== =========== ========= ===========
See notes to consolidated financial statements. 4 6 SIMULA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
- ------------------------------------------------------------------------------------------------------------------------ THREE MONTHS ENDED --------------------------------- MARCH 31, 1996 MARCH 31, 1995 -------------- -------------- OPERATING ACTIVITIES: Net Earnings $ 685,179 $ 616,077 Adjustment to reconcile net earnings to net cash used by operating activities: Depreciation and amortization 902,188 652,407 Changes in assets and liabilities: Contract and trade receivables (2,788,525) (1,786,831) Inventories (2,255,874) 245,761 Prepaid expenses and other (7,143) (11,325) Deferred costs (1,419,474) (1,273,386) Other assets (160,864) (163,941) Trade accounts payable (387,861) (213,691) Other accrued liabilities 921,731 (495,776) ----------- ----------- Net cash used by operating activities (4,510,643) (2,430,705) ----------- ----------- INVESTING ACTIVITIES: Purchase of property and equipment (1,850,314) (552,280) Costs incurred to obtain patents and licenses (57,278) ----------- ----------- Net cash used in investing activities (1,907,592) (552,280) ----------- ----------- FINANCING ACTIVITIES: Net borrowings under line of credit 3,000,000 Net borrowings under short term debt 325,000 Borrowings under other debt arrangements 758,470 2,406,998 Principal payments under other debt arrangements (335,531) (440,028) Issuance of stock under option agreements 26,000 9,507 Prepaid offering costs (369,669) ----------- ----------- Net cash provided in financing activities 3,448,939 1,931,808 ----------- ----------- NET DECREASE IN CASH (2,969,296) (1,051,177) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,175,172 1,051,177 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 205,876 $ 0 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: TAXES PAID $ 45,000 $ 622,500 =========== =========== INTEREST PAID $ 175,000 $ 426,151 =========== ===========
See notes to financial statements. 5 7 SIMULA, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION: The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of Management, all adjustments and reclassifications considered necessary for a fair and comparable presentation have been included and are of a normal recurring nature. Operating results for the three months ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ending December 31, 1996. The Company announced a 3 for 2 split of its common stock to shareholders of record as of September 15, 1995; which shares were issued on September 28, 1995. As a result, all shares and related references have been restated for all prior periods and transactions. NOTE 2 - CONTRACT RECEIVABLES: Amounts receivable from the United States Government or receivable under United States Government related subcontracts are generally billed in the following month or when the contract and all options thereunder are completed. Amounts due on other commercial contracts are generally billed as shipments are made. Intercompany receivables have been eliminated. NOTE 3 - INCOME TAXES: The tax provision for the three month periods ended March 31, 1996 and 1995 is proportionate to the Federal and State combined rate of approximately 40%. NOTE 4 - SHAREHOLDERS' EQUITY: The Company completed a secondary offering of common stock which closed and funded the second quarter of 1995. As a result of this offering, 2,328,750 shares were sold by the Company at $12 per share. The net proceeds from the offering totaled $25,567,822. 6 8 SIMULA, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION. GENERAL: Simula, Inc. and subsidiaries (collectively, the "Company") designs and manufactures occupant safety systems and devices engineered to safeguard human life in a wide range of air, ground, and sea transportation vehicles. Utilizing substantial proprietary technology in energy-absorbing seating, inflatable restraints, and composite materials which the Company has developed over many years, the Company focuses on reducing injury and increasing survivability in vehicle crashes. Utilizing its proprietary safety technology, customer relationships, and manufacturing capacity and expertise, recently enhanced through acquisitions, the Company has developed and is introducing crashworthy seating systems for commercial airliners, a side-impact inflatable restraint system for automobiles, a bulkhead airbag system for commercial airliners, and two cockpit inflatable restraint systems for military aircraft. Through recent acquisitions, the Company has become the largest North American-based supplier of seating systems for rail and other mass transit vehicles and a prominent supplier of repair and refurbishing services for commercial airliner seating, including the installation of entertainment and communication systems. The Company is a holding company for wholly owned subsidiaries, principally including Simula Government Products, Inc., an entity conducting the Company's government business, and Intaero, Inc., an entity conducting the Company's primary commercial businesses through its operating subsidiaries: Airline Interiors, Inc., Coach & Car Equipment Corporation and Artcraft Industries Corp. The Company derives a substantial portion of its revenue from contracts that are accounted for under the percentage of completion method of accounting. Under this method, revenue is recorded as production progresses so that revenue less costs incurred to date yield the percentage of gross margin estimated for each contract. Overall gross margin percentages can increase or decrease based upon changes in estimated gross margin percentages over the lives of individual contracts. RESULTS OF OPERATIONS Revenue of the Company for the three months ended March 31, 1996 increased $ 3.2 million or 23% over the same period in 1995. This increase is primarily attributable to sales of commercial airline seats by Airline Interiors (which product was introduced in the fourth quarter of 1995) and increased volume at Simula Government Products, Inc. and Coach & Car Equipment Corporation. Gross margins for the three months ended March 31, 1996 increased $ .7 million or 16% over the same period in 1995. This increase is attributable to increased revenue noted above. The gross margin percentage decreased to 32% from 34% for the respective three month periods ending March 31, 1996 and 1995. This decrease is primarily attributable to lower individual gross margins from the mix of contracts being worked on at Artcraft Industries Corp. and Coach & Car Equipment Corporation in the first quarter of 1996. In addition, the gross margin from the initial deliveries of commercial airliner seats is less than the historic margins from airliner seat refurbishment services. Administrative expenses for the three months ended March 31, 1996 increased $ .8 million or 27% over the same period in 1995. This increase is primarily attributable to the increase in sales and marketing activities focusing on the introduction of the Company's technologies into the commercial, regulatory, and research communities. Administrative expenses for the 1996 period also includes research expenditures related to the development of sensor and composite seat technologies. Operating income of the Company for the three months ended March 31, 1996 decreased $ .1 million or 6% over the same period in 1995 due to the lower gross margins on contracts performed in 1996 and increased sales and marketing costs discussed above. Interest expense for the three months ended March 31, 1996 decreased $ .2 million or 40% over the same period in 1995 due to the repayment of debt with the proceeds from the secondary offering of shares after the first quarter of 1995, partially offset by increased borrowings on the Company's credit facilities to fund its growth in working capital and fixed assets in 1996. 7 9 The effective tax rate approximates 40% for both quarterly periods. Net income for the three months ended March 31, 1996 increased $ .1 million or 11% over the same period in 1995. The increase is the result of the increase in gross margin and the reduction in interest expense, partially offset by the increase in administrative expenses noted above. LIQUIDITY AND CAPITAL RESOURCES The Company's liquidity is greatly impacted by the nature of the billing provisions under its government contracts. Generally, in the early period of contracts, cash expenditures and accrued profits are greater than allowed billings while contract completion results in billing previously unbilled costs and profits. Contract receivables increased $1.1 million and advances on contracts decreased $1.7 million for the three months ended March 31, 1996, principally due to the timing of billings and increased volume at Coach & Car and Artcraft Industries Corp. Operating activities required the use of $ 4.5 million of cash during the three months ended March 31, 1996, compared to the use of $ 2.4 million of cash during the respective period in 1995. This resulted primarily from the working capital required for growth in contract activity and receivables noted above and to fund the $1.4 million investment in technologies being adapted to meet our customers' requirements and recorded as deferred costs at March 31, 1996. These technologies include most of the Company's new products including the ITS, 16g seat, and bulkhead airbag system. For the three months ended March 31, 1996 cash used in investing activities was $1.9 million, which was expended primarily for the acquisition of fixed assets. Cash provided by financing activities was $3.4 million for the three months ended March 31, 1996, of which $3 million resulted from borrowings on the revolving credit facility, and the remainder resulted from additional borrowings, net of the normal repayments. On October 20, 1995, the Company executed a loan agreement with First Interstate Bank, N.A. to provide up to $15,000,000 of credit. Ten million dollars of the facility is available under a revolving credit arrangement to finance working capital requirements and five million dollars is available under a five-year amortizing term loan for the financing of U.S. based equipment. Three million dollars of the revolving credit facility and $2.5 million of the equipment facility were drawn down as of March 31, 1996. As of March 31, 1996 and May 13, 1996, the Company has sufficient resources for meeting its operating requirements. Sufficient resources through the credit facility also exist to meet the near-term strategic investments and capital requirements. However, the credit facility may require expansion to address future working capital requirements of the Company's current operations. To fully address the potential markets for its technologies and products, the Company will need to obtain additional capital. The target capital will be used to construct additional manufacturing and research facilities, fund research and development of new products directly or by acquisitions, purchase equipment and support working capital requirements attendant to growth in markets and revenues. INFLATION The Company does not believe that it is significantly impacted by inflation. RESEARCH AND DEVELOPMENT The Company's research and development occurs primarily under fixed-price, government-funded contracts as well as Company-sponsored efforts. The revenue received under government-funded contracts is recorded under the percentage of completion method of accounting, and the costs of independent research and development efforts are expensed as incurred. Historically, research and development efforts have fluctuated based upon available government-funded contracts. The Company anticipates that future fluctuations may also occur as a result of efforts to expand its inflatable restraint, commercial airliner seating, and rail seating technologies. SEASONALITY The Company's operations and financial results are affected by the seasonal variations in deliveries by suppliers. Historically, the Company has experienced its highest level of deliveries of materials in the fourth quarter and its lowest 8 10 level of deliveries in the first quarter. Accordingly, the Company has historically recorded its highest revenue in the fourth quarter and lower revenue in the first quarter. FORWARD LOOKING INFORMATION AND RISKS OF THE BUSINESS The Company expects that during fiscal 1996, it will devote significant resources to complete development and roll-out of new products and technologies, and to expand its manufacturing capability for such products, including CABS, BABS, IBAHRS, ITS and 16g airliner seats. The Company expects that in late 1996 and in 1997, it will begin to realize significant revenues from the introduction of these products. The other core businesses of the Company are expected to remain at current revenue levels. The Company's operating results are affected by a wide variety of factors which could adversely impact its revenues and profitability, many of which are beyond the control of the Company. The factors include the Company's ability to design and introduce new products on a timely basis; market acceptance and demand of both the Company's and its customers' products; the level of orders which are received and can be shipped in a quarter; availability and utilization of manufacturing capacity; the availability and cost of raw material, equipment, and other supplies; the cyclical nature of the airline, rail and automobile industries and other markets addressed by the Company's products; the level and makeup of military expenditures; technological changes; competition and competitive pressures on pricing; and economic conditions in the United States and worldwide markets served by the Company. PART II - OTHER INFORMATION ITEM 6. EXHIBITS. Exhibit No. 11 - Earnings per Share. Exhibit No. 27 - Financial Data Schedule 9 11 SIMULA, INC. SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q for the quarter ended March 31, 1996 to be signed on its behalf by the undersigned thereunto duly authorized. SIMULA, INC. /s/ Donald W. Townsend ----------------------------------- DONALD W. TOWNSEND President Chief Operating Officer DATE: May 13, 1996 ---------------------------------- 10 EX-11 2 COMPUTATION OF EARNINGS PER SHARE 1 EXHIBIT 11 SIMULA, INC. COMPUTATION OF EARNINGS PER SHARE
Three Months Ended March 31, ---------------------------- 1996 1995 ---------- ---------- Income: Net Earnings $ 685,179 $ 616,077 ========== ========== Number of shares: Weighted average shares outstanding 8,893,229 6,387,344 Incremental shares for outstanding stock options 216,726 233,553 Incremental shares for outstanding stock warrants 0 29,127 ========== ========== 9,109,955 6,650,024 ========== ========== Earnings per share $ 0.08 $ 0.09 ========== ==========
During 1995, the Company's common shares were split 3 for 2. All shares and related references have been restated for all periods presented. 11 EX-27 3 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 1 205,876 0 26,284,214 0 10,360,068 37,620,137 17,278,765 0 77,681,309 20,248,217 9,031,852 0 0 89,786 0 77,681,309 0 16,742,512 0 11,378,206 3,890,444 0 331,683 1,142,179 457,000 685,179 0 0 0 685,179 .08 0
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