<PAGE> 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 June 30, 1996
Commission File Number 0-20003
SIMULA, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Arizona 86-0320129
(State of Incorporation) (I.R.S. Employer Identification No.)
2700 N. Central Ave., Suite 1000, Phoenix, Arizona 85004
(Address of principal executive office) (Zip Code)
</TABLE>
(602) 631-4005
(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:
<TABLE>
<CAPTION>
Outstanding at
Class June 30, 1996
----- --------------
<S> <C>
Common Stock, $.01 par value 8,966,442
</TABLE>
<PAGE> 2
SIMULA, INC.
INDEX
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Item 1 - Interim Consolidated Financial Statements
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995............................. 2
Consolidated Statements of Operations
Three Months and Six Months Ended June 30, 1996 and 1995... 3
Consolidated Statement of Shareholders' Equity
Six Months Ended June 30, 1996 ............................ 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995.................... 5
Notes to Interim Consolidated Financial Statements ............. 6
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial Condition.............. 8
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders ............ 11
Item 6 - Exhibits ....................................................... 11
SIGNATURE................................................................ 12
</TABLE>
1
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1 - INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SIMULA, INC.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 375,404 $ 3,175,172
Contract and trade receivables - net 28,872,320 25,221,504
Income taxes receivable 2,281,000
Inventories 13,607,759 8,104,194
Prepaid expenses and other 1,330,161 762,836
------------ ------------
Total current assets 46,466,644 37,263,706
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS - NET 18,445,477 15,778,819
DEFERRED COSTS 405,689 6,385,328
INTANGIBLES - NET 13,715,077 13,870,005
OTHER ASSETS 1,426,525 1,441,278
------------ ------------
TOTAL ASSETS $ 80,459,412 $ 74,739,136
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Revolving line of credit $ 6,700,000
Trade accounts payable 8,505,490 $ 7,884,141
Other accrued liabilities 4,417,381 2,607,849
Advances on contracts 1,463,051 3,920,533
Deferred income taxes 8,000 8,000
Current portion of long-term debt 4,891,402 1,367,187
------------ ------------
Total current liabilities 25,985,324 15,787,710
LONG-TERM DEBT - Less current portion 9,424,615 11,261,365
DEFERRED INCOME TAXES 158,000 158,000
------------ ------------
TOTAL LIABILITIES 35,567,939 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 8,966,442 (1996) and
8,970,627 (1995) shares 89,664 89,706
Additional paid-in capital 38,696,635 37,981,759
Retained earnings 6,105,174 9,740,434
Treasury stock, at cost - 82,500 shares (1995) (279,838)
------------ ------------
Total shareholders' equity 44,891,473 47,532,061
------------ ------------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 80,459,412 $ 74,739,136
============ ============
</TABLE>
See notes to interim consolidated financial statements.
2
<PAGE> 4
SIMULA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE $ 19,615,830 $ 15,221,128 $ 36,358,342 $ 28,801,970
COST OF REVENUE 15,478,516 9,632,276 27,794,969 18,587,083
------------ ------------ ------------ ------------
GROSS MARGIN 4,137,314 5,588,852 8,563,373 10,214,887
ADMINISTRATIVE EXPENSES 4,186,174 3,598,702 8,076,618 6,656,088
------------ ------------ ------------ ------------
OPERATING (LOSS) INCOME (48,860) 1,990,150 486,755 3,558,799
INTEREST EXPENSE 459,568 415,255 791,251 970,427
------------ ------------ ------------ ------------
(LOSS) INCOME BEFORE TAXES (508,428) 1,574,895 (304,496) 2,588,372
INCOME TAX (BENEFIT) EXPENSE (203,000) 637,900 (121,000) 1,035,300
------------ ------------ ------------ ------------
(LOSS) EARNINGS BEFORE CUMULATIVE
EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE (305,428) 936,995 (183,496) 1,553,072
CUMULATIVE EFFECT ON PRIOR YEARS (TO
DECEMBER 31, 1995) OF CHANGING ACCOUNTING
FOR PRE-CONTRACT COSTS - Net of related income tax
benefit of $2,160,000 3,239,948
------------ ------------ ------------ ------------
NET (LOSS) EARNINGS $ (305,428) $ 936,995 $ (3,423,444) $ 1,553,072
============ ============ ============ ============
Per share amounts:
Earnings (loss) before cumulative effect of a change in
accounting principle (0.03) 0.11 (0.02) 0.20
Cumulative effect on prior years (to December 31, 1995)
of changing accounting for pre-contract costs (0.36)
------------ ------------ ------------ ------------
Net (loss) earnings $ (0.03) $ 0.11 $ (0.38) $ 0.20
============ ============ ============ ============
Weighted average shares outstanding 8,939,346 8,841,128 8,916,287 7,748,819
============ ============ ============ ============
</TABLE>
See notes to interim consolidated financial statements.
3
<PAGE> 5
SIMULA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A
--------------------------- Additional Total
Issued Common Stock Paid-in Retained Treasury Shareholders'
Shares Amount Capital Earnings Stock Equity
---------- ------------ ------------ ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
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 78,315 783 782,073 782,856
Retirement of treasury stock (82,500) (825) (67,197) (211,816) 279,838 0
Net loss (3,423,444) (3,423,444)
---------- ------------ ------------ ---------- --------- ------------
BALANCE, JUNE 30, 1996 8,966,442 $ 89,664 $ 38,696,635 $6,105,174 0 $ 44,891,473
========== ============ ============ ========== ========= ============
</TABLE>
See notes to interim consolidated financial statements.
4
<PAGE> 6
SIMULA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
------------------------------
JUNE 30, 1996 JUNE 30, 1995
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) earnings $ (3,423,444) $ 1,553,072
Adjustment to reconcile net earnings to net cash used by operating activities:
Depreciation and amortization 1,375,119 1,227,819
Cumulative effect of change in accounting 3,239,948
Changes in assets and liabilities:
Contract and trade receivables (6,108,298) (6,871,545)
Income tax receivable (121,000)
Inventories (4,944,680) (533,615)
Prepaid expenses and other (567,325) (426,401)
Deferred costs (727,784)
Other assets 14,753 (275,072)
Trade accounts payable 621,349 (2,356,748)
Other accrued liabilities 1,809,532 1,156,684
------------ ------------
Net cash used by operating activities (8,104,046) (7,253,590)
------------ ------------
INVESTING ACTIVITIES:
Capital expenditures (3,481,464) (1,419,194)
Intangibles (384,579) (867,951)
------------ ------------
Net cash used in investing activities (3,866,043) (2,287,145)
------------ ------------
FINANCING ACTIVITIES:
Net borrowings under revolving line of credit 6,700,000 0
Borrowings under long-term equipment lines of credit 2,444,200 2,627,473
Principal payments (756,735) (8,246,890)
Issuance of stock under option agreements 782,856 11,685
Issuance of stock in secondary offering 25,615,949
------------ ------------
Net cash provided in financing activities 9,170,321 20,008,217
------------ ------------
NET (DECREASE) INCREASE IN CASH (2,799,768) 10,467,482
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,175,172 1,051,177
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 375,404 $ 11,518,659
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
TAXES PAID $ 277,700 $ 852,500
============ ============
INTEREST PAID $ 437,081 $ 1,078,599
============ ============
</TABLE>
See notes to interim consolidated financial statements.
5
<PAGE> 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 and six months ended June 30, 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 - ACCOUNTING CHANGE:
During the second quarter of 1996, the Company adopted a new method of
accounting for pre-contract costs. Pre-contract costs represent amounts
applicable to products and technologies which represent adaptations of existing
capabilities to the particular requirements of the Company's customers. These
costs were previously deferred and recovered over the revenue streams from these
customers. The Company will now expense these costs as they are incurred. Due to
current industry trends and anticipated accounting changes, the new policy is
considered preferable to the previous policy. Both policies are currently in
accordance with generally accepted accounting principles.
The $3.2 million cumulative effect of the change on prior years (after reduction
for income taxes of $2.2 million) is included in operations of the six months
ended June 30, 1996. The effect of the change on the three months ended June 30,
1996 was to decrease net earnings by $1.3 million ($.14 per share); the effect
of the change on the six months ended June 30, 1996 was to decrease earnings
before cumulative effect of a change in accounting principle $1.8 million ($.21
per share) and net earnings by $5.0 million ($.57 per share). The pro forma
amounts reflect the effect of retroactive application on pre-contract costs, net
of amortization, and the related income tax benefits.
The effect of the change on the first quarter of 1996 was as follows:
<TABLE>
<CAPTION>
Three Months
Ended
March 31, 1996
--------------
<S> <C>
Net income as originally reported $ 685,179
Effect of change in accounting for pre-contract costs (563,247)
-------------
Income before cumulative effect of a change in accounting principle 121,932
Cumulative effect on prior years (to December 31, 1995) of
changing accounting for pre-contract costs (3,239,948)
-------------
Net loss as restated $ (3,118,016)
=============
Per share amounts:
Net income as originally reported $ .08
Effect of change in accounting for pre-contract costs (.07)
-------------
Income before cumulative effect of a change in accounting principle .01
Cumulative effect on prior years (to December 31, 1995) of
changing accounting for pre-contract costs (.36)
-------------
Net loss as restated $ (.35)
-------------
</TABLE>
6
<PAGE> 8
SIMULA, INC.
Pro forma amounts assuming the change in accounting had been applied
retroactively are as follows:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1995 June 30, 1995
------------- -------------
<S> <C> <C>
Net earnings $517,652 $1,116,402
Net earnings per share $.06 $.14
</TABLE>
NOTE 3 - 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 4 - INCOME TAXES:
The tax provision for the three and six month periods ended June 30, 1996 and
1995 is proportionate to the Federal and State combined rate of approximately
40%.
NOTE 5 - SHAREHOLDERS' EQUITY:
During the second quarter of 1996, the Company retired 82,500 shares of treasury
stock which had been acquired for a cost of $279,838.
Weighted average shares used to compute per share amounts for the three and six
month periods ended June 30, 1996 do not include common stock equivalents
because their effect would be anti-dilutive.
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.
7
<PAGE> 9
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, developed on its own and enhanced through
recent 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
primary 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
During the second quarter of 1996, the Company adopted a new method of
accounting for pre-contract costs as more fully described in Note 2 of the Notes
to Interim Consolidated Financial Statements. Beginning in 1996, the Company now
expenses these pre-contract costs as incurred rather than deferring these costs
to be amortized over the revenue streams from the Company's customers. The
effect of this change on the three months ended June 30, 1996 was to increase
cost of revenue by $2,122,961 for pre-contract costs expensed in the second
quarter. This resulted in the reduction of second quarter net income of
$1,273,961 ($.14 per share) net of the related income tax benefit of $849,000.
This change requires restatement of first quarter earnings for costs capitalized
in the first quarter under the previous accounting method and the cumulative
catch-up adjustment for the effect of costs capitalized as of December 31, 1995.
The effect of the change on the six months ended June 30, 1996 was to increase
cost of revenue by $3,061,208 resulting in a reduction in net earnings before
the cumulative effect of a change in accounting principle of $1,837,208 ($.21
per share) net of the related income tax benefit of $1,224,000.
Three and Six Months Ended June 30, 1996 Compared to 1995
Revenue for the three months ended June 30, 1996 increased 29% to $19.6 million
from $15.2 million for the comparable period in 1995. Revenues for the six
months ended June 30, 1996 increased 26% to $36.4 million from $28.8 million.
These increases were primarily attributable to increased contract activity at
Simula Government Products principally resulting from an armor contract
completed during the second quarter as well as increased sales of the Company's
16g commercial airliner passenger seat ("16g seat").
8
<PAGE> 10
SIMULA, INC.
Gross margins for the three months ended June 30, 1996 decreased 26% to $4.1
million from $5.6 million for the comparable period in 1995. The gross margin
percentage for the three months ended June 30, 1996 decreased to 21% from 37%
for the comparable period in 1995. Gross margins for the six months ended June
30, 1996 decreased 16% to $8.6 million from $10.2 million for the comparable
period in 1995. The gross margin percentage for the six months ended June 30,
1996 decreased to 24% from 35% for the comparable period in 1995. As noted
above, cost of revenue for the three and six month periods ended June 30, 1996
includes $2.1 million and $3.1 million for pre-contract costs. These costs
primarily relate to adaptations of the existing capabilities of the Inflatable
Tubular Structure ("ITS") and bulkhead airbag products which are not yet in
production and the 16g seat which is in the initial phase of production. The
inclusion of these costs is substantially offset by increased margins
attributable to the increased revenue at Simula Government Products. Excluding
the effect of expensing pre-contract costs, the gross margin percentage for the
three and six months ended June 30, 1996 would have been 32%. The lower gross
margin percentage is primarily attributable to lower individual gross margin
percentages from the mix of contracts in process or completed during the period
at Artcraft, Coach & Car and Simula Government Products.
Administrative expenses for the three months ended June 30, 1996 increased 16%
to $4.2 million from $3.6 million for the comparable period in 1995.
Administrative expenses for the six months ended June 30, 1996 increased 21% to
$8.1 million from $6.7 million for the comparable period in 1996. These
increases are primarily attributable to increased sales and marketing activities
related to the commercial introduction of the Company's technologies,
principally the 16g seat. Administrative expenses also include research and
development costs related to the development of sensors. In addition, general
administrative expenses incident to the management of the Company increased as a
result of increased activity.
Operating (loss) income for the three months ended June 30, 1996 decreased $2.0
million to a loss of $48,860. Operating income for the six months ended June 30,
1996 decreased $3.1 million to $486,755. The reduction in operating income
resulted primarily from the reduction in gross margins attributable to the
expensing of pre-contract costs and increased administrative expenses noted
above.
Interest expense for the three months ended June 30, 1996 increased 11% to
$459,568 from $415,255 for the comparable period due to increased borrowings on
the Company's credit facilities to fund its growth in working capital and fixed
assets. Interest expense in the 1995 period is lower due to the repayment of
debt with the proceeds from the secondary offering in April 1995. Interest
expense for the six months ended June 30, 1996 decreased 18% to $791,251 from
$970,427 for the comparable period in 1995 due to the higher level of debt
outstanding in 1995 prior to the secondary offering in April 1995.
The effective income tax rate approximates 40% for both quarterly periods.
The change in accounting for precontract costs resulted in a charge to second
quarter earnings of $1,273,961 or $.14 per share. After giving effect to this
$.14 per share charge, the net loss for the second quarter of 1996 was $.03 per
share or $305,428. Net income for the second quarter of 1995 was $936,995 or
$.11 per share.
Generally accepted accounting principles require restatement of the first
quarter of 1996 for the change in accounting for precontract costs to include
the cumulative effect to December 31, 1995 of $3,239,948 or $.36 per share and
the expensing of precontract costs capitalized in the first quarter of $563,247
or $.07 per share. As a result of the required restatement, the Company reported
a loss before the cumulative effect of a change in accounting principle of
$183,496 or $.02 per share and a net loss of $3.4 million or $.38 per share for
the six months ended June 30, 1996. Net income for the six months ended June 30,
1995 was $1.6 million or $.20 per share.
9
<PAGE> 11
SIMULA, INC.
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 $3.6 million and advances on
contracts decreased $2.5 million for the six months ended June 30, 1996,
principally due to the timing of billings and increased volume at Simula
Government Products, Coach & Car and Artcraft.
Operating activities required the use of $ 8.1 million of cash during the six
months ended June 30, 1996, compared to the use of $7.3 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 $4.9 million investment in inventories primarily at Simula Government
Products for upcoming contracts and Airline Interiors for the 16g seat. For the
six months ended June 30, 1996 cash used in investing activities was $3.9
million, which was expended primarily for the purchase of manufacturing
equipment for the ITS and computer and test equipment at Simula Government
Products. Cash provided by financing activities was $9.2 million for the six
months ended June 30, 1996, of which $6.7 million resulted from borrowings on
the revolving credit facility primarily for working capital needs. The Company
also borrowed $2.4 million under other borrowing arrangements primarily for the
financing of fixed assets.
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. The outstanding
balances of the revolving credit facility and equipment facility at June 30,
1996 were $6.7 million and $3.1 million, respectively. As of August 12, 1996,
the outstanding balance of the revolving credit facility is $7.7 million.
The Company is currently involved in negotiations with a variety of capital
sources and believes it will be able to obtain the capital needed to address
future operating and capital requirements. 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.
Included in current portion of long-term debt is a mortgage of $2.6 million on
one of the Company's facilities. The Company is currently involved in
negotiations with various lenders to refinance the mortgage and believes it will
be able to refinance the mortgage on a long-term basis prior to its maturity in
March of 1997.
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.
10
<PAGE> 12
SIMULA, INC.
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 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 the remainder of 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting of Stockholders was held on June 20, 1996. Proxies
were solicited pursuant to Section 14 of the Securities Exchange Act of 1934.
The Company's definitive proxy was filed with the Commission on May 13, 1996.
Excluding Broker Non-Votes, the total number of shares eligible to constitute a
quorum was 6,416,683. Accordingly, under Arizona law, 3,208,342 shares
constituted a quorum; 8,100,016 shares were voted at the meeting.
At the meeting, all of the directors were re-elected. In addition, other matters
voted on at the meeting and the number of shares voting with respect to each
were as follows: Amendment and Restatement of the Company's Articles of
Incorporation to conform to recent changes to Arizona law, 99.9% For, 0.1%
Abstain, 0% Against; adoption of the Employee Stock Purchase Plan, 97.9% For,
0.4% Abstain, 1.7% Against; and, Amendment of the 1994 Stock Option Plan, 86.4%
For, 0.8 % Abstain,12.7% Against.
ITEM 6. EXHIBITS.
Exhibit No. 11 - Earnings per Share.
Exhibit No. 27 - Financial Data Schedule.
11
<PAGE> 13
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 June
30, 1996 to be signed on its behalf by the undersigned thereunto duly
authorized.
SIMULA, INC.
DATE: August 13, 1996 /s/ Donald W. Townsend
--------------------- ------------------------------------
DONALD W. TOWNSEND
President
Chief Operating Officer
/s/ Sean K. Nolen
------------------------------------
SEAN K. NOLEN
Chief Financial Officer
12
<PAGE> 1
EXHIBIT 11
SIMULA, INC.
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ---------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
Income:
<S> <C> <C> <C> <C>
Net (Loss) Earnings $ (305,428) $ 936,995 $(3,423,444) $ 1,553,072
=========== =========== =========== ===========
Number of shares:
Weighted average shares outstanding 8,939,346 8,516,820 8,916,287 7,457,964
Incremental shares for outstanding stock options 294,233 261,233
Incremental shares for outstanding stock 30,075 29,622
warrants
----------- ----------- ----------- -----------
8,939,346 8,841,128 8,916,287 7,748,819
=========== =========== =========== ===========
(Loss) Earnings per share $ (.03) $ .11 $ (.38) $ .20
=========== =========== =========== ===========
</TABLE>
During 1995, the Company's common shares were split 3 for 2. All shares and
related references have been restated for all periods presented.
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 375,404
<SECURITIES> 0
<RECEIVABLES> 28,872,320
<ALLOWANCES> 0
<INVENTORY> 13,607,759
<CURRENT-ASSETS> 46,466,644
<PP&E> 18,445,477
<DEPRECIATION> 0
<TOTAL-ASSETS> 80,459,412
<CURRENT-LIABILITIES> 25,985,324
<BONDS> 9,424,615
0
0
<COMMON> 89,664
<OTHER-SE> 44,801,809
<TOTAL-LIABILITY-AND-EQUITY> 80,459,412
<SALES> 19,615,830
<TOTAL-REVENUES> 19,615,830
<CGS> 15,478,516
<TOTAL-COSTS> 15,478,516
<OTHER-EXPENSES> 4,186,174
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 459,568
<INCOME-PRETAX> (508,428)
<INCOME-TAX> (203,000)
<INCOME-CONTINUING> (305,428)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (305,428)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> 0
</TABLE>
