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Exhibit 20
FOR IMMEDIATE RELEASE
Contact: Randall Taylor Mark Trinske / Bob Sarvis
Vice President Investor Relations
Simula, Inc. Trinske Communications, Ltd.
(602) 631-4005 (303) 665-7760
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, Ariz. - August 5, 1998 - Simula, Inc. (NYSE: SMU) 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.
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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.
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SIMULA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
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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
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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
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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
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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
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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)
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Net (loss) earnings $ (6,109,434) $ 18,301 $ (6,104,733) $ (547,836)
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(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)
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Net (loss) earnings $ (0.62) $ -- $ (0.62) $ (0.06)
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(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)
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Net (loss) earnings $ (0.60) $ -- $ (0.60)
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