<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 The Quarter Ended March 31, 1997
Commission File Number 1-12410
SIMULA, INC.
(Exact name of registrant as specified in its charter)
Arizona 86-0320129
(State of Incorporation) (I.R.S. Employer Identification No.)
2700 N. Central Ave., Phoenix, Arizona 85004
(Address of principal executive office) (Zip Code)
(602) 631-4005
(Registrant's telephone number,
including area code)
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, 1997
----- --------------
Common Stock, $.01 par value 9,016,956
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SIMULA, INC.
INDEX
PART I - FINANCIAL INFORMATION
PAGE
----
Item 1 - Financial Statements
Consolidated Balance Sheets
March 31, 1997 and December 31, 1996............................2
Consolidated Statements of Operations
Three Months Ended March 31, 1997 and 1996......................3
Consolidated Statement of Shareholders' Equity
Three Months Ended March 31, 1997 ..............................4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996......................5
Notes to Interim Consolidated Financial Statements ..................6
Item 2 - Management's Discussion and Analysis of
Results of Operations and Financial Condition..............7 - 10
PART II - OTHER INFORMATION
Item 5 - Other - Recent Events ..............................................11
Item 6 - Exhibits and Reports...........................................12 - 13
SIGNATURE....................................................................14
1
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SIMULA, INC.
CONSOLIDATED BALANCE SHEETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,266,244 $ 1,298,741
Contract and trade receivables - Net 26,145,850 25,164,350
Inventories 17,997,765 15,644,157
Income taxes receivable 910,133 1,089,564
Deferred income taxes 3,763,000 3,763,000
Prepaid expenses and other 1,077,613 1,050,215
------------ ------------
Total current assets 51,160,605 48,010,027
PROPERTY, EQUIPMENT AND LEASEHOLD
IMPROVEMENTS - Net 25,151,481 23,356,025
DEFERRED INCOME TAXES 2,161,000 1,782,000
DEFERRED FINANCING COSTS 830,442 928,728
INTANGIBLES - Net 10,770,789 10,964,139
OTHER ASSETS 1,765,243 1,647,537
------------ ------------
TOTAL $ 91,839,560 $ 86,688,456
============ ============
LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Revolving line of credit $ 12,925,000 $ 6,900,000
Trade accounts payable 8,726,620 9,200,214
Other accrued liabilities 3,909,789 4,019,534
Advances on contracts 657,479 148,194
Current portion of long-term debt 4,501,600 4,536,508
------------ ------------
Total current liabilities 30,720,488 24,804,450
LONG-TERM DEBT - Less current portion 24,299,119 24,696,509
------------ ------------
Total liabilities 55,019,607 49,500,959
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 9,016,956 and 8,992,598 shares 90,170 89,926
Additional paid-in capital 39,283,281 39,031,453
Retained deficit (2,532,433) (1,966,296)
Currency translation adjustment (21,065) 32,414
------------ ------------
Total shareholders' equity 36,819,953 37,187,497
------------ ------------
TOTAL $ 91,839,560 $ 86,688,456
============ ============
</TABLE>
See notes to interim consolidated financial statements.
2
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SIMULA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
MARCH 31, 1997 MARCH 31, 1996
--------------- ---------------
<S> <C> <C>
REVENUE $ 17,825,823 $ 16,742,512
COST OF REVENUE 12,764,105 12,316,453
--------------- ---------------
GROSS MARGIN 5,061,718 4,426,059
ADMINISTRATIVE EXPENSES 5,055,215 3,890,444
--------------- ---------------
OPERATING INCOME 6,503 535,615
INTEREST EXPENSE 951,640 331,683
--------------- ---------------
(LOSS) INCOME BEFORE TAXES (945,137) 203,932
INCOME TAX BENEFIT (EXPENSE) 379,000 (82,000)
--------------- ---------------
(LOSS) EARNINGS BEFORE CUMULATIVE EFFECT
OF A CHANGE IN ACCOUNTING PRINCIPLE (566,137) 121,932
CUMULATIVE EFFECT ON PRIOR YEARS (TO
DECEMBER 31, 1995) OF CHANGING ACCOUNTING
FOR PRE-CONTRACT COSTS 3,239,948
--------------- ---------------
NET LOSS $ (566,137) $ (3,118,016)
=============== ===============
Per share amounts:
(Loss) earnings before cumulative effect of a change in
accounting principle $ (.06) $ .01
Cumulative effect on prior years (to December 31, 1995)
of changing accounting for pre-contract costs (.36)
--------------- ---------------
Net loss $ (.06) $ (.35)
=============== ===============
Weighted average shares outstanding 8,996,495 8,893,229
=============== ===============
</TABLE>
See notes to interim consolidated financial statements
3
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SIMULA, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Class A Common Stock Additional Currency Total
---------------------------- Paid-in Retained Translation Shareholders'
Shares Amount Capital Deficit Adjustment Equity
----------- -------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 8,992,598 $89,926 $39,031,453 $(1,966,296) $ 32,414 $37,187,497
Issuance of common shares 24,358 244 251,828 252,072
Currency translation adjustment (53,479) (53,479)
Net loss (566,137) (566,137)
----------- ------ ----------- ----------- -------- ------------
BALANCE, MARCH 31, 1997 9,016,956 $90,170 $39,283,281 $(2,532,433) $(21,065) $36,819,953
=========== ======== =========== =========== ========= ===========
</TABLE>
See notes to interim consolidated financial statements.
4
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SIMULA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (566,137) $(3,118,016)
Adjustment to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 924,731 660,650
Deferred income taxes (379,000)
Currency translation adjustment (53,479)
Cumulative effect of change in accounting 5,399,948
Changes in net assets and liabilities:
Contract and trade receivables, net of advances (472,215) (2,788,525)
Inventories (2,353,608) (2,495,563)
Income taxes receivable 179,431 (2,078,000)
Prepaid expenses and other (27,398) (7,143)
Other assets (117,706) (160,864)
Trade accounts payable (473,594) (387,861)
Other accrued liabilities (109,745) 464,731
----------- -----------
Net cash used by operating activities (3,448,720) (4,510,643)
----------- -----------
INVESTING ACTIVITIES:
Purchase of property and equipment (2,400,583) (1,850,314)
Costs incurred to obtain intangibles (27,968) (57,278)
----------- -----------
Net cash used in investing activities (2,428,551) (1,907,592)
----------- -----------
FINANCING ACTIVITIES:
Net borrowings under line of credit 6,025,000 3,000,000
Borrowings under other debt arrangements 758,470
Principal payments under other debt arrangements (432,298) (335,531)
Issuance of common shares 252,072 26,000
----------- -----------
Net cash provided by financing activities 5,844,774 3,448,939
----------- -----------
NET DECREASE IN CASH (32,497) (2,969,296)
CASH, BEGINNING OF PERIOD 1,298,741 3,175,172
----------- -----------
CASH, END OF PERIOD $ 1,266,244 $ 205,876
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Taxes paid $ 60,000 $ 45,000
=========== ===========
Interest paid $ 940,432 $ 175,000
=========== ===========
</TABLE>
See notes to interim consolidated financial statements.
5
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SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED 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, 1997 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1997.
NOTE 2 - ACCOUNTING CHANGE:
During 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. Beginning January 1, 1996, the Company
expenses these costs as they are incurred.
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 - INVENTORIES:
At March 31, 1997 and December 31, 1996, inventories consisted of the
following.
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------------- --------------------
<S> <C> <C>
Raw materials $ 5,984,992 $ 4,959,810
Work in process 10,973,291 9,822,859
Finished goods 1,039,482 861,488
-------------------- --------------------
Total inventories $17,997,765 $15,644,157
==================== ====================
</TABLE>
NOTE 5 - SHAREHOLDERS' EQUITY:
Weighted average shares used to compute per share amounts for the three
month periods ended March 31, 1997 and 1996 do not include common stock
equivalents because their effect would be anti-dilutive. In addition,
fully diluted earnings per share reflecting the effect of the Series C
10% Senior Subordinated Convertible Notes is not presented because the
effect would also be anti-dilutive.
NOTE 6 - SUBSEQUENT EVENT - ISSUANCE OF 8% SENIOR SUBORDINATED CONVERTIBLE
NOTES:
Subsequent to March 31, 1997, the Company completed the public offering
of $34.5 million of its 8% Senior Subordinated Convertible Notes (the
"8% Notes"). The 8% Notes are due May 1, 2004 and bear interest at 8%
per annum, payable semi-annually. The 8% Notes are convertible into
shares of the Company's common stock at a price of $17.55 per share of
common stock. The 8% Notes may be redeemed at the Company's option in
whole or in part on a pro rata basis, on and after May 1, 1999, at
certain specified redemption prices plus accrued interest payable to
the redemption date. However, on or after May 1, 1999 and prior to
April 30, 2000, the 8% Notes will not be redeemable unless the closing
price of the Company's common stock has equaled or exceeded $23.625 for
20 trading days within a period of 30 consecutive trading days. The
indenture relating to the 8% Notes contains certain covenants including
limitations on the incurrence of additional indebtedness, the sale of
assets, liens securing indebtedness other than senior indebtedness,
payment restrictions affecting subsidiaries, transactions with
affiliates, future senior subordinated indebtedness and mergers and
consolidations. In accordance with the indenture, the Company may incur
indebtedness pursuant to senior credit facilities up to $50 million and
other indebtedness based upon a specified ratio of cash flow, as
defined, to interest expense.
6
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SIMULA, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION.
GENERAL
The following discussion and analysis provides information that the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition for the three months
ended March 31, 1997 compared to the same period of the prior year. This
discussion should be read in conjunction with the Interim Consolidated Financial
Statements and the Notes thereto included elsewhere in this Form 10-Q. This Form
10-Q contains certain forward-looking statements and information. The cautionary
statements should be read as being applicable to all related forward-looking
statements wherever they appear.
OVERVIEW
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 its substantial proprietary technology in
energy-absorbing seating, inflatable restraints, and composite materials, the
Company focuses on reducing injury and increasing survivability in vehicle
crashes.
The Company's historic core business has been as a government
contractor. Additionally, 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 successful new entrant in the manufacture of new
commercial airliner seating. Utilizing its proprietary safety technology,
customer relationships, and manufacturing capacity expertise, recently enhanced
through acquisitions, the Company has introduced crashworthy seating systems for
a variety of aircraft, various inflatable restraint systems for automobiles, a
bulkhead airbag system for commercial airliners, and two cockpit inflatable
restraint systems for military aircraft.
In 1993, management made a strategic decision to enter the commercial
aircraft seating market to bring its proprietary energy-absorbing technologies
to a new industry and take advantage of positive industry trends. To implement
its decision the Company completed three acquisitions that allowed it to develop
the necessary infrastructure to support future growth. In August 1993, the
Company acquired Airline Interiors, Inc. (the "Airline Acquisition"), which was
primarily involved with the refurbishment, reupholstery, reconditioning and
reconfiguring of existing passenger seats. The Airline Acquisition provided
certain FAA certifications, enhanced the Company's management team and customer
base, and provided substantial assembly capacity. During 1994, the Company
acquired Coach and Car Equipment Corporation ("Coach and Car") and Artcraft
Industries Corp. ("Artcraft"). The acquisitions of Coach and Car and Artcraft
are collectively referred to as the 1994 Acquisitions. Coach and Car and
Artcraft's existing operations included providing a majority of all
manufacturing and refurbishment of rail and mass transit seating systems in
North America. The 1994 Acquisitions also provided the Company with substantial
large-scale manufacturing capacity and synergies, which will be utilized in the
production of its 16g seat (the "16g Seat") for airliners.
Simula's revenue has historically been derived from three sources:
sales of Company manufactured products; contract research and development for
third parties; and technology sales and royalties. A substantial portion of its
current revenue is 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 yields 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.
The Company is a holding company for wholly owned subsidiaries,
including Simula Government Products, Inc., the principal entity conducting the
Company's "Government and Defense" business, and Simula Transportation Equipment
Corporation ("SimTec" - formerly known as Intaero), an entity conducting the
Company's commercial seating businesses. In addition, the Company maintains
general corporate operations and subsidiaries engaged in technology development
including Simula Automotive Safety Devices, Inc. ("Simula ASD") which was
established in 1995 and conducts substantially all of the Company's operations
encompassing inflatable restraints for automobiles including the Inflatable
Tubular Structure (the "ITS"). Through 1996, Simula ASD did not have significant
revenue.
7
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SIMULA, INC.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1997 Compared to 1996
As a result of increased sales of the 16g Seat and the initial
deliveries of the ITS, revenue for the three months ended March 31, 1997
increased 6% to $17.8 million from $16.7 million for the comparable period in
1996.
Gross margin for the three months ended March 31, 1997 increased 14% to
$5.1 million from $4.4 million for the comparable period in 1996. The increase
in gross margin was primarily due to the increased revenue noted above. As a
percent of sales, gross margin for the three months ended March 31, 1997
increased to 28% from 26% for the comparable period in 1996. The increase in
gross margin percentage was due to the increased volume of 16g Seat sales and
the initial deliveries of the ITS. Revenue from these products is now available
to cover certain fixed manufacturing costs.
Administrative expenses for the three months ended March 31, 1997
increased 30% to $5.1 million from $3.9 million for the comparable period in
1996. This increase was attributable to the expansion of the corporate and sales
infrastructure related to the commercial introduction of the Company's
technologies, principally the 16g Seat and certain commercial helicopter seat
programs, and increased Government and Defense and new technology bid and
proposal costs.
Interest expense for the three months ended March 31, 1997 increased
187% to approximately $952,000 from approximately $332,000 for the comparable
period in 1996. This increase was due to increased borrowings on the Company's
bank credit facilities and the issuance of $14.3 million of the Series C 10%
Senior Subordinated Convertible Notes in September 1996. These borrowings were
made to fund its growth in working capital and fixed assets necessary to support
the anticipated growth in revenues for 1997.
The effective income tax rate for the three month periods ended March
31, 1997 and 1996 approximated the statutory rate of 40%.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is greatly impacted by the nature of the
billing provisions under its 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 and trade receivables, net of advances on contracts,
increased approximately $472,000 for the three months ended March 31, 1997,
principally due to certain rail programs initiated in the first quarter of 1997.
Operating activities required the use of $3.4 million of cash during
the three months ended March 31, 1997, compared to the use of $4.5 million of
cash during the same period in 1996. Cash used by operating activities in 1997
was primarily used to fund an increase in inventories of $2.4 million and the
increase in contract and trade receivables noted above. The increase in
inventories was primarily related to the 16g Seat and represents the buildup
necessary to support anticipated future deliveries. This buildup includes
increases in purchased components to be used in the assembly process, raw
materials to be used in the manufacture of 16g Seat components by Coach and Car
and composite seat backs produced by the Company's subsidiary, Viatech.
Investing activities required the use of $2.4 million of cash during
the three months ended March 31, 1997 primarily for the purchase of
manufacturing equipment for the ITS to be located at the Company's operation in
the United Kingdom. In addition, the Company acquired tooling fixtures for
future rail programs and certain enhancements to its 16g Seat machining cell at
Coach and Car.
8
<PAGE> 10
SIMULA, INC.
Financing activities provided $5.8 million of cash during the three
months ended March 31, 1997, of which $6.0 million resulted from borrowings on
the revolving credit facility primarily for the working capital needs and
equipment purchases noted above.
Subsequent to March 31, 1997, the Company completed the public offering
of $34.5 million of its 8% Senior Subordinated Convertible Notes (the "8%
Notes"). The 8% Notes are due May 1, 2004 and bear interest at 8% per annum,
payable semi-annually. The 8% Notes are convertible into shares of the Company's
common stock at a price of $17.55 per share of common stock. The 8% Notes may be
redeemed at the Company's option in whole or in part on a pro rata basis, on and
after May 1, 1999, at certain specified redemption prices plus accrued interest
payable to the redemption date. However, on or after May 1, 1999 and prior to
April 30, 2000, the 8% Notes will not be redeemable unless the closing price of
the Company's common stock has equaled or exceeded $23.625 for 20 trading days
within a period of 30 consecutive trading days. The indenture relating to the 8%
Notes contains certain covenants including limitations on the incurrence of
additional indebtedness, the sale of assets, liens securing indebtedness other
than senior indebtedness, payment restrictions affecting subsidiaries,
transactions with affiliates, future senior subordinated indebtedness and
mergers and consolidations. In accordance with the indenture, the Company may
incur indebtedness pursuant to senior credit facilities up to $50 million and
other indebtedness based upon a specified ratio of cash flow, as defined, to
interest expense.
Included in current portion of long-term debt is a mortgage of $2.6
million on one of the Company's facilities that is due in March 1998. The
Company is currently pursuing various alternatives for this property and
believes it will be able to repay or refinance the mortgage on a long-term basis
prior to its maturity.
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 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
During fiscal 1997, the Company will enter large scale production of
the ITS and 16g Seat and expects to complete roll-out of other new products. The
Company expects that in late 1997 and in 1998, 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 and profit
levels.
9
<PAGE> 11
SIMULA, INC.
Projected operating results and capital needs will be affected by a
wide variety of factors which could adversely impact revenues, profitability and
cash flows, 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; success in building strategic alliances with large prime contractors
and first tier suppliers; the level of orders which are received and can be
shipped and invoiced in a quarter; customer order patterns and seasonality;
levels of accounts receivable; changes in product mix; product performance and
reliability; product obsolescence; availability and utilization of manufacturing
capacity; fluctuations in manufacturing yield; the availability and cost of raw
materials, 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. The Company's
products are incorporated into a variety of transportation vehicles. A slowdown
in demand for new transportation vehicles or modifications services to
transportation vehicles as a result of economic or other conditions in the
United States or worldwide markets served by the Company and its customers or
other broad-based factors could adversely affect the Company's operating results
or financial condition.
10
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SIMULA, INC.
PART II - OTHER INFORMATION
ITEM 5. OTHER - RECENT OFFERING OF SENIOR SUBORDINATED CONVERTIBLE NOTES.
Subsequent to March 31, 1997, the Company completed the public offering
of $34.5 million of its 8% Senior Subordinated Convertible Notes (the "8%
Notes"). The 8% Notes are due May 1, 2004 and bear interest at 8% per annum,
payable semi-annually. The 8% Notes are convertible into shares of the Company's
common stock at a price of $17.55 per share of common stock. The 8% Notes may be
redeemed at the Company's option in whole or in part on a pro rata basis, on and
after May 1, 1999, at certain specified redemption prices plus accrued interest
payable to the redemption date. However, on or after May 1, 1999 and prior to
April 30, 2000, the 8% Notes will not be redeemable unless the closing price of
the Company's common stock has equaled or exceeded $23.625 for 20 trading days
within a period of 30 consecutive trading days. The indenture relating to the 8%
Notes contains certain covenants including limitations on the incurrence of
additional indebtedness, the sale of assets, liens securing indebtedness other
than senior indebtedness, payment restrictions affecting subsidiaries,
transactions with affiliates, future senior subordinated indebtedness and
mergers and consolidations. In accordance with the indenture, the Company may
incur indebtedness pursuant to senior credit facilities up to $50 million and
other indebtedness based upon a specified ratio of cash flow, as defined, to
interest expense.
11
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SIMULA, INC.
ITEM 6. EXHIBITS AND REPORTS.
(a) The following Exhibits are included pursuant to Item 601 of Regulation S-K.
<TABLE>
<CAPTION>
NO. DESCRIPTION REFERENCE
--- ----------- ---------
<S> <C>
3.1 Articles of Incorporation of Simula, Inc., as amended and restated........................... (9)
3.2 Bylaws of Simula, Inc., as amended and restated.............................................. (1)
4.2 Indenture dated December 17, 1993 (including cross-reference sheet to Trust Indenture Act),
as amended................................................................................ (3)
4.5 Supplemental Indenture No. 2 dated September 12, 1996, entered into in connection with
the Registrant's issuance of Series C 10% Senior Subordinated Convertible Notes........... (12)
4.6 Form of Supplemental Indenture No.3, effective March 14, 1997, amending the Indenture of
Simula, Inc. dated December 17, 1993...................................................... (11)
4.7 Form of Indenture in connection with the issuance of the 8% Senior Subordinated Convertible
Notes due May 1, 2004..................................................................... (12)
10.8 Employment Agreement between Registrant and Stanley P. Desjardins............................ (1)
10.9 Employment Agreement between Registrant and Donald W. Townsend............................... (1)
10.11 1992 Stock Option Plan....................................................................... (1)
10.12 1992 Restricted Stock Plan................................................................... (1)
10.15 Asset Purchase Agreement dated August 2, 1993 between Simula, Inc. and
Airline Interiors, Inc. .................................................................. (2)
10.16 Asset Purchase Agreement dated June 14, 1994, among Simula, Inc., CCEC Acquisition
Corp. and Coach and Car Equipment Corporation.............................................. (4)
10.18 Asset Purchase Agreement dated September 30, 1994, among Simula, Inc., Artcraft
Acquisition Corp., and Artcraft Industries Corp........................................... (5)
10.21 1994 Stock Option Plan....................................................................... (6)
10.22 Agreements dated January 27, 1995 with Autoliv AB, including license agreement, frame
supply agreement and joint development agreement.......................................... (7)
10.23 Agreement with Jetstream Aircraft Limited.................................................... (7)
10.24 Amended Loan Agreement with Wells Fargo Bank, N.A. dated December 20, 1996................... (11)
10.25 Asset Purchase Agreement dated November 1, 1995, between Comfab, Inc. and Stanley P.
Desjardins, d/b/a Desjardins Engineering; Services Agreement dated November 1, 1995,
between Simula, Inc. and Comfab, Inc.; Promissory Note of Stanley P. Desjardins, d/b/a
Desjardins Engineering, dated November 1, 1995, for the purchase price of Comfab, Inc. ... (8)
10.26 Simula, Inc. Employee Stock Purchase Plan.................................................... (9)
10.27 Promissory Note representing $650,000 loan from Stanley P. Desjardins dated August 12,
1996...................................................................................... (12)
10.28 Promissory Note representing $1,000,000 loan from Stanley P. Desjardins dated August 14,
1996...................................................................................... (12)
10.29 Form of Change of Control Agreements Between the Company and Key Management
Personnel................................................................................. (11)
*11. Earnings Per Share
18. Preference Letter re: change in accounting principles........................................ (10)
24. Powers of Attorney - Directors............................................................... (11)
*27. Financial Data Schedule
</TABLE>
- ----------
* Filed herewith.
12
<PAGE> 14
SIMULA, INC.
(1) Filed with Registration Statement on Form S-18, No.
33-46152-LA, under the Securities Act of 1933, effective April
13, 1992.
(2) Filed with current Report on Form 8-K, dated August 2, 1993.
(3) Filed with Registration Statement on Form SB-2, No. 33-61028
under the Securities Act of 1933, effective December 10, 1993.
(4) Filed with current Report on Form 8-K, dated June 14, 1994.
(5) Filed with current Report on Form 8-K, dated September 30,
1994.
(6) Filed with Registration Statement on Form SB-2, No. 33-87582,
under the Securities Act of 1933, effective December 28, 1994.
(7) Filed with Registration Statement on Form S-1, No. 33-89186,
under the Securities Act of 1933, effective March 28, 1995, as
amended by Post-Effective Amendment No. 1, effective March 31,
1995.
(8) Filed with Report on Form 10-K for the year ended December 31,
1995.
(9) Filed with Definitive Proxy on May 14, 1996, for the Company's
Annual Meeting of Shareholders held on June 20, 1996.
(10) Filed with Report on Form 10-Q/A for the quarter ended June
30, 1996.
(11) Filed with Report on Form 10-K for the year ended December 31,
1996.
(12) Filed with Registration Statement on Form S-3, No. 333-13499,
under the Securities Act of 1993, effective April 24, 1997.
(b) No reports on Form 8-K have been filed during the reporting period.
13
<PAGE> 15
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, 1997 to be signed on its behalf by the undersigned thereunto duly
authorized.
SIMULA, INC.
DATE: May 15, 1997 /s/ Donald W. Townsend
----------------------------- --------------------------
DONALD W. TOWNSEND
President
Chief Operating Officer
/s/ Sean K. Nolen
--------------------------
SEAN K. NOLEN
Chief Financial Officer
14
<PAGE> 1
EXHIBIT 11
SIMULA, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1997 1996
----------- -----------
<S> <C> <C>
(Loss) earnings before cumulative effect of a change
in accounting principle $ (566,137) $ 121,932
Cumulative effect on prior years (to December 31, 1995)
of changing accounting for pre-contract costs (3,239,948)
----------- -----------
Net loss $ (566,137) $(3,118,016)
=========== ===========
Number of shares:
Weighted average shares outstanding 8,996,495 8,893,229
Incremental shares for outstanding stock options 0 0
Incremental shares for outstanding stock warrants 0 0
----------- -----------
8,996,495 8,893,229
=========== ===========
Per share amounts:
(Loss) earnings before cumulative effect of a change $ (.06) $ .01
in accounting principle
Cumulative effect on prior years (to December 31, 1995)
of changing accounting for pre-contract costs (.36)
----------- -----------
Net loss $ (.06) $ (.35)
=========== ===========
</TABLE>
<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> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 1,266,244
<SECURITIES> 0
<RECEIVABLES> 26,145,850
<ALLOWANCES> 0
<INVENTORY> 17,997,765
<CURRENT-ASSETS> 51,160,605
<PP&E> 25,151,481
<DEPRECIATION> 0
<TOTAL-ASSETS> 91,839,560
<CURRENT-LIABILITIES> 30,720,488
<BONDS> 24,299,119
0
0
<COMMON> 90,170
<OTHER-SE> 36,729,783
<TOTAL-LIABILITY-AND-EQUITY> 91,839,560
<SALES> 17,825,823
<TOTAL-REVENUES> 17,825,823
<CGS> 12,764,105
<TOTAL-COSTS> 12,764,105
<OTHER-EXPENSES> 5,055,215
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 951,640
<INCOME-PRETAX> (945,137)
<INCOME-TAX> 379,000
<INCOME-CONTINUING> (566,137)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (566,137)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> 0
</TABLE>
