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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 27, 1997
REGISTRATION NO. 333-17043
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIMULA, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Arizona 3728 86-0320129
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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2700 North Central Avenue, Suite 1000
Phoenix, Arizona 85004
(602) 631-4005
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
Bradley P. Forst, Esq.
Vice President and General Counsel
2700 North Central Avenue, Suite 1000
Phoenix, Arizona 85004
(602) 631-4005
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED PROPOSED
OF SECURITIES TO BE AMOUNT TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED PRICE PER SHARE(1) OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share................... 1,931,140 shares $14.50 $28,001,530 $9,654.93
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MARCH 27, 1997
PROSPECTUS
1,931,140 SHARES
[GRAPHIC]
SIMULA, INC.
COMMON STOCK
This Prospectus relates to the offer and sale of up to 1,931,140 shares
of Common Stock, par value $.01 per share ("Common Stock") of Simula, Inc.
("Simula" or the "Company") which may be sold from time to time by certain
selling shareholders (the "Selling Shareholders"). See "Selling Shareholders."
Of the 1,931,140 shares of Common Stock registered hereby, 1,430,000 shares may
be sold from time to time pursuant to this Prospectus by holders of the
Company's Series C 10% Senior Subordinated Convertible Notes (the "Notes")
following such holders' conversion of their Notes into Common Stock, and 501,140
shares may be sold from time to time by certain other specified Selling
Shareholders.
The Company's Common Stock is traded on the New York Stock Exchange
("NYSE") under the symbol "SMU." On March 26, 1997, the closing price of the
Common Stock on the NYSE was $15.75.
The Company will not receive any proceeds from the issuance or sale of
any shares of Common Stock sold pursuant to this Prospectus. The Company will
pay certain of the expenses associated with this offering, however, the Selling
Shareholders will bear the cost of all brokerage commissions and discounts, if
any, incurred in connection with the sale of their shares pursuant to this
Prospectus. The Common Stock offered hereby may be sold from time to time in
market transactions at the prices then prevailing for the Company's Common Stock
on the NYSE, or through privately negotiated transactions. Any such transactions
may occur directly or through underwriters, dealers or agents. See "Plan of
Distribution."
INVESTORS SHOULD CAREFULLY CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS," BEGINNING ON PAGE 5.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1997
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ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
and information statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: New York Regional Office, Seven World Trade Center, 13th Floor,
New York, New York 10048, and Chicago Regional Office, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 upon payment of the prescribed fees. The Commission also maintains a Web
site that contains reports, proxy and information statements and other materials
that are filed through the Commission's Electronic Data Gathering Analysis and
Retrieval system. This Web site can be accessed at http://www.sec.gov. The
Common Stock is listed on the NYSE. The foregoing information concerning the
Company may be inspected at the NYSE at 20 Broad Street, New York, New York
10005.
The Company will distribute to holders of the shares of Common Stock
being offered hereby, annual reports containing audited financial statements and
quarterly reports containing unaudited summary financial information for each of
the first three fiscal quarters of each fiscal year.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act of 1933. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete, and each such statement is qualified in its entirety by reference to
the copy of such document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference: (1) the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1996; and (2) the Company's Registration
Statement on Form 8-A under the Exchange Act with respect to the Common Stock,
including any amendment or reports filed for the purpose of updating such
description.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
hereof and prior to the termination of the offering of the Common Stock
registered hereby shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date of filing such documents. Any
statements contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statements. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon a written request of such person, a copy of any or
all of the foregoing documents incorporated by reference into this Prospectus
(other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies should
be delivered to the Simula, Inc. Investor Relations Department, 2700 North
Central Avenue, Suite 1000, Phoenix, Arizona 85004, telephone number
(602) 631-4005.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the
more detailed information and financial statements appearing elsewhere in and
incorporated by reference into this Prospectus
THE COMPANY
The Company is a market-focused developer of technologies and advanced
products and solutions to safety-related problems. A recognized world leader in
energy absorption and related safety technologies, 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. Through
strategic acquisitions and successful application of its various proprietary
technologies in energy-absorbing seating systems, inflatable restraints, and
high-strength, lightweight advanced composite materials in a variety of
industries, the Company, in recent years, has expanded its market focus and is
introducing new products for commercial and military applications. The Company's
current principal products are energy-absorbing seating systems for commercial
airliners, rail, and mass-transit seating systems, crashworthy seating systems
for military aircraft composite materials including armor and a side-impact
inflatable restraint system for automobiles. The Company plans to enter full
scale production for the roll-out of new products in 1997, including its
bulkhead airbag system for commercial aircraft, and two cockpit inflatable
restraint systems for military aircraft.
Energy-Absorbing and Other Seating Systems. For over 20 years, the
Company has been a leading provider of energy-absorbing, or "crashworthy,"
seating systems. Seating systems incorporating this crashworthy technology
absorb shock upon impact that would otherwise be absorbed by an occupant of the
vehicle. This is accomplished through engineering and utilization of the
Company's proprietary data bases regarding the properties of materials, failure
characteristics, and human body dynamics.
Management believes that the Company is the world's largest supplier
of energy-absorbing military helicopter and other military aircraft seats. The
Company's principal competitors in the crashworthy military seating market are
Martin Baker (U.K.) and Israel Aircraft Industries, Ltd. (Israel). The Company
does not have financial or market share data concerning these two competitors.
However, based on internal market surveys and data, the Company believes that it
is the supplier for a majority of the world's energy-absorbing seating system
programs under domestic and foreign military contracts.
As an outgrowth of this core business, in late 1995 the Company
commenced the manufacture and sale of commercial airline seating systems that
comply with stringent FAA safety standards mandating that passenger seats be
designed to absorb 16 times the force of gravity upon impact ("16g Seats").
Management believes that the Company achieved a 2.5% share of the worldwide
commercial seating market in 1996, its first full year of production. The
Company has 10 principal competitors in the commercial airline seating market,
with BE Aerospace Inc. having approximately 50% of the market. Based on internal
data, Management believes that the Company also is the leading North American
provider of seating systems for rail and other mass transit vehicles, with an
approximate 70% to 80% market share. The Company has four principal competitors
in the North American rail and mass transit seating market, comprising in the
aggregate 20% to 30% of the market.
As a prominent provider of aircraft interior services, the Company
repairs and refurbishes commercial airline seats, overhauls and modifies seat
assemblies, and designs and integrates telephone and entertainment systems into
aircraft seats for several major airlines.
Armor and Other Composite Materials. The Company develops and
manufactures a variety of composite materials which are integrated into its
products and the products of third parties. The Company's principal composite
products include high-strength, ultra-lightweight armor systems for use in
targeted applications, such as surrounding crew seats in aircraft (V-22 Osprey,
Apache, Blackhawk, and CH-53 Sea Stallion), protecting vital components of
aircraft (C-17 cockpits and tank power units), and providing additional floor
protection (multi-wheeled and transport vehicles). Other new products utilizing
the Company's composite technology include portable transparent armor products
for use in commercial vehicles, such as police cars and executive vehicles.
Inflatable Restraint Systems. The Company has developed proprietary and
patented structures and systems that are used as inflatable restraints. The
first product for automobiles, the inflatable tubular structure ("ITS"), is
being introduced in BMW models to be delivered in 1997 to provide head and neck
protection in side-impact collisions. The Company has a variety of other
inflatable restraint applications and configurations for automobiles. The
Company has also developed and certified the first airbag systems for commercial
and military aircraft, which will be introduced in 1997. In addition to
providing inflatable restraint products directly to automobile and aircraft
manufacturers, the Company licenses its proprietary inflatable restraint
technology and products to first tier component suppliers.
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Introductory Stage Technologies. The Company has several technologies
and products in various phases of development that it believes will provide it
with new products over the next several years. These products include additional
applications of the Company's inflatable restraint technology, light-weight
transparent armor, advanced sensors with multi-axial sensing ability, a
vacuum-packed sealed parachute, and new polymers that may be used for
high-performance windows, lenses, visors, and a number of other applications.
The Company has experienced substantial growth since fiscal 1992
resulting from the broader application of its technology, its strategic
acquisitions, and its development of new products. The Company's revenue
increased from $18.8 million in 1992 to $65.8 million in 1996. During this time
period, the percentage of the Company's revenue derived from government
contracts declined from 100% in 1990 to approximately 49% in 1996, with the
balance from commercial customers. The Company's principal customers include
America West Airlines, BMW, Boeing, Continental Airlines, Matsushita, McDonnell
Douglas, Sikorsky Aircraft, Southwest Airlines, metropolitan transit authorities
in major North American cities, and various branches of the United States armed
forces and agencies.
The Company incurred a loss before the cumulative effect of change in
accounting principle of $6.8 million for the year ended December 31, 1996,
principally as a result of expensing pre-contract costs and incurring plant
start-up costs and corporate and sales infrastructure expenses necessary to
support the production and shipment of its 16g Seat, ITS, and bulkhead airbag
products. The Company's contracts for its ITS and bulkhead airbag products
provide for deliveries of commercial quantities beginning in 1997. Because of
limited revenues from these products in 1996, the costs associated with these
products negatively impacted 1996 results and may result in a loss for the
Company's quarter ended March 31, 1997. The Company cannot presently estimate
the amount of such potential quarterly loss at this time. See "Risk Factors."
The Company's strategy is to maintain its leading position in creating
and applying proprietary technologies and advanced solutions to safety related
problems and to develop its products for commercial sale to a wide range of
transportation customers. The key elements in executing this strategy are to (i)
develop and utilize technology to enhance current products and create new
products, (ii) focus on new product markets and regulatory requirements, (iii)
expand manufacturing capabilities and maximize internal synergies, and (iv)
pursue acquisitions and strategic alliances that complement existing businesses
or provide manufacturing or distribution opportunities.
Prospective purchasers of the Common Stock offered hereby should
carefully consider certain risk factors as detailed in this Prospectus and
contained in all documents incorporated by reference into this Prospectus.
Included among such factors are the Company's: Recent and Anticipated Losses,
Entry Into New Markets, Production Risks and Manufacturing Experience,
Investment In and Dependence On Proprietary Technology, Need For Additional
Capital, Quarterly Operating Results and Cyclicality, Possible Volatility of
Stock Price, and Management of Growth. See "Risk Factors."
The Company maintains its principal executive offices at 2700 North
Central Avenue, Suite 1000, Phoenix, Arizona 85004, and its telephone number is
(602) 631-4005. Unless the context indicates otherwise, all references to the
"Company" or "Simula" refer to Simula, Inc. and its subsidiaries.
THE OFFERING
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<S> <C>
Common Stock offered hereby.............................................. 1,931,140 shares
Common Stock outstanding as of January 27, 1997.......................... 8,999,948 shares
Common Stock to be outstanding after completion of the offering.......... 10,931,088 shares
New York Stock Exchange trading symbol................................... "SMU"
</TABLE>
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RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should
carefully consider the following factors in addition to the other information in
this Prospectus and all documents incorporated by reference herein. This
Prospectus and in all documents incorporated herein by reference contain
certain forward-looking statements and information. Projected operating results
and capital needs will be affected by a wide variety of factors which could
adversely impact revenues, profitability and cash flow, 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.
RECENT AND ANTICIPATED LOSSES
In order to prepare for the production of the 16g Seat in commercial
quantities and the commercial introduction of the ITS and bulkhead airbag, the
Company has incurred significant pre-contract costs, which have been charged to
expenses in 1996. In prior years, such costs were capitalized. In order to
support the introduction and production of these products, the Company has
incurred plant start-up costs and has also significantly increased expenses
applicable to its corporate and sales infrastructure, which expenses were
necessary to develop markets and support the production of these products that
are anticipated to produce revenue in 1997. In addition, the Company has
accelerated research and development expenses applicable to potential new
products related to these technologies. The incurrence of these costs and the
effects of a change in accounting principle in the second quarter of 1996
resulted in a loss before cumulative effect of a change in accounting principle
of $6.8 million for the year ended December 31, 1996, and may result in a net
loss in the first quarter of 1997. The Company cannot estimate the amount of
this loss at this time.
ENTRY INTO NEW MARKETS
The Company plans to increase production in 1997 for its crashworthy
seating systems for commercial aircraft and a side-impact inflatable restraint
system for automobiles and, enter full scale production for new product
roll-outs in 1997 for a bulkhead airbag system for commercial aircraft, and two
cockpit inflatable restraint systems for military aircraft. There can be no
assurance that the Company will be successful in the introduction of its new
products. Such success will depend on a variety of factors, including
successful product testing and acceptance by its potential customers,
particularly airlines and automobile manufacturers; the success of the
Company's sales and marketing efforts in markets not previously addressed by
the Company; successful and rapid expansion of the Company's manufacturing
capacity, including the expansion or establishment of additional manufacturing
facilities, particularly for inflatable restraints and aircraft seating
systems; the ability of the Company's products to provide their intended
benefits; and increasing government safety regulations and consumer safety
concerns, particularly for energy-absorbing seating systems and for inflatable
restraints. If the Company is unable to manufacture and market its new products
successfully, its business, results of operations, and financial condition will
be materially and adversely affected.
PRODUCTION RISKS AND MANUFACTURING EXPERIENCE
The Company does not have experience in high-volume manufacturing and
must build capacity to meet anticipated demand for certain of its new products.
The Company is currently attempting to add to its production capabilities
through new plant and equipment. The Company has received initial purchase
orders for its new products, and has invested substantial resources to the
manufacture of such new products prior to the receipt of volume orders for any
of them. From January 1, 1995 to December 31, 1996, the Company invested
approximately $14.4 million in the purchase of plant and equipment. The
Company believes that it has sufficient capacity at December 31, 1996 to
meet its estimated 1997 delivery requirements. Although the Company has
completed this necessary investment in manufacturing equipment and capacity, the
Company could also incur significant start-up costs, expenses, and delays in
connection with its attempts to manufacture commercial quantities of its new
products. There can be no assurance that the anticipated level of demand will
occur or that the Company will not experience either overcapacity or
undercapacity in its new production facilities. Further, there can be no
assurance that the Company will be successful in overcoming the technological,
engineering, and management challenges associated with the production of
commercial quantities of its new products, at any given volume, at acceptable
costs, or on a timely or profitable basis. Operating results could be adversely
affected if the expansion of the Company's manufacturing capacity is delayed or
inefficiently implemented. No assurance can be given that the Company will not
experience manufacturing inefficiencies or delivery problems in the future in
the event of fluctuations in demand. When and if the Company receives volume
orders for its products, it may determine to license or outsource the
manufacturing of
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certain of the components. There can be no assurance that the Company will be
able to identify manufacturers that will meet its requirements as to quality,
reliability, timeliness, and cost-effectiveness. Any such failure will limit the
Company's ability to satisfy customer orders and would have a material adverse
effect on the Company's business, results of operations, and financial
condition.
The Company believes that its products and components have passed, and
will continue to pass, certain product performance and reliability testing by
its customers; however, there can be no assurance that its products will
continue to pass such testing in the future, particularly as the Company moves
toward higher production volumes. If such problems occur, the Company could
experience increased costs, delays, reductions or cancellations of orders and
shipments, and warranty issues, any of which could adversely affect the
Company's business, results of operations, and financial condition.
INVESTMENT IN AND DEPENDENCE ON PROPRIETARY TECHNOLOGY
The Company's future success and competitive position depend to a
significant extent upon its proprietary technology. The Company must make
significant investments to continue to develop and refine its technologies.
Technological advances, the introduction of new products, and new design and
manufacturing techniques could adversely affect the Company's operations unless
the Company is able to adapt to the resulting change in conditions. As a result,
the Company will be required to expend substantial funds for and commit
significant resources to the conduct of continuing research and development
activities, the engagement of additional engineering and other technical
personnel, the purchase of advanced design, production, and test equipment, and
the enhancement of design and manufacturing processes and techniques. The
Company's future operating results will depend to a significant extent on its
ability to continue to provide design and manufacturing services for new
products that compare favorably on the basis of time to introduction, cost, and
performance with the design and manufacturing capabilities of aircraft and
automobile suppliers. The success of new design and manufacturing services
depends on various factors, including utilization of advances in technology,
innovative development of new solutions for customer products, efficient and
cost-effective services, timely completion and delivery of new product
solutions, and market acceptance of customers' end products. Because of the
complexity of the Company's products, the Company may experience delays from
time to time in completing the design and manufacture of new product solutions.
In addition, there can be no assurance that any new product solutions will
receive or maintain customer or market acceptance. If the Company were unable to
design and manufacture solutions for new products of its customers on a timely
and cost-effective basis, its future operating results would be adversely
affected.
The Company relies in part on patent, trade secret, and copyright law
to protect its intellectual property. There can be no assurance that any patent
owned by the Company will not be invalidated or challenged, that the rights
granted thereunder will provide competitive advantages to the Company, or that
any of the Company's pending or future patent applications will be issued with
the scope of the claims sought by the Company, if at all. Furthermore, there can
be no assurance that others will not develop technologies that are similar or
superior to the Company's technology, duplicate the Company's technology, or
design around the patents owned by the Company. In addition, effective patent
and other intellectual property protection may be unavailable or limited in
certain foreign countries. There can be no assurance that the steps taken by the
Company will prevent misappropriation of its technology. Litigation may be
necessary in the future to enforce the Company's patents and other intellectual
property rights, to protect the Company's trade secrets, and to determine the
validity and scope of the proprietary rights of others. Similarly, there can be
no assurance that the Company's technologies will not be subject to claims that
they infringe the rights of others, which would require the Company to defend
such claims. Patent and trade secret litigation could result in substantial
costs and diversion of resources, which could have a material adverse effect on
the Company's operating results and financial condition.
DEPENDENCE ON INDUSTRY RELATIONSHIPS
A number of the Company's products are components in its customers'
final products. In particular, the Company's automobile and aircraft inflatable
restraint systems are intended for use as components in automobiles or aircraft.
Accordingly, to gain market acceptance, the Company must demonstrate that its
products will provide advantages to the manufacturers of final products,
including increasing the safety of their products, providing such manufacturers
with competitive advantages or assisting such manufacturers in complying with
existing or new
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government regulations affecting their products. There can be no assurance that
the Company's products will be able to achieve any of these advantages for the
products of its customers. Furthermore, even if the Company is able to
demonstrate such advantages, there can be no assurance that such manufacturers
will elect to incorporate the Company's products into their final products, or
if they do, that the Company's products will be able to meet such customers'
manufacturing requirements. Additionally, there can be no assurance that the
Company's relationships with its manufacturer customers will ultimately lead to
volume orders for the Company's products. The failure of manufacturers to
incorporate the Company's products into their final products would have a
material adverse effect on the Company's business, results of operations, and
financial condition. The Company also depends on its relationships with first
tier component suppliers to which it licenses its proprietary technology to
facilitate the marketing and distribution of its products, particularly its
inflatable restraint products.
SUBSTANTIAL RELIANCE UPON MAJOR CUSTOMERS
The Company's business has relied to a great extent on relatively few
major customers, although the mix of major customers has varied from year to
year depending on the status of then current contracts. During fiscal 1996 , all
branches of the United States armed forces accounted for 27% of the Company's
revenue. No other customer accounted for more than 10% of the Company's revenue
in 1996. Although the Company has long-established relationships with a number
of its customers, the Company does not have long-term supply contracts with any
customers. The Company's customers also generally do not commit to long-term
production schedules and, as a result, customer orders generally can be canceled
and volume levels changed or delayed. The timely replacement of canceled,
delayed, or reduced orders cannot be assured. The loss or reduction in sales to
a major customer may have a more material adverse effect on the Company's
operations and financial condition than would be the case if the Company's
revenue were less concentrated by customer.
The Company believes that the United States Army and other branches of
the United States armed forces as well as prime defense contractors, to which
the Company has supplied products for approximately 20 years, will continue to
be major customers, although the percentage of the Company's revenue
attributable to them can be expected to decrease as a result of the Company's
expanding commercial operations. For the year ended December 31, 1996,
approximately 23%, 4% and 9% of the Company's revenue was attributable to the
Company's contracts with the United States Army, other branches of the United
States armed forces, and prime defense contractors, respectively. Reliance upon
defense contracts involves certain inherent risks, including dependence on
Congressional appropriations, changes in governmental policies that reflect
military and political developments, and other factors characteristic of the
defense industry. The Company believes that the impact of reductions in military
expenditures have been and may continue to be less significant on the Company
than on many other military suppliers because completed and currently announced
reductions in military expenditures have tended to relate more to strategic
programs than to the types of tactical programs that the Company's products
address. There can be no assurance, however, that reductions in military
expenditures or the type of reductions instituted will not adversely affect the
Company's business, operating results, and financial condition.
EFFECT OF GOVERNMENT CONTRACT PROVISIONS
As a contractor and subcontractor to the United States government, the
Company is subject to various laws and regulations that are more restrictive
than those applicable to non-government contractors. Sales of many of the
Company's products are governed by rules favoring the government's contractual
position. As a consequence, such contracts may be subject to protest or
challenge by unsuccessful bidders or to termination, reduction, or modification
in the event of changes in government requirements, reductions of federal
spending, or other factors. The Company's government-related revenue has
resulted almost exclusively from firm, fixed-price contracts. Fixed-price
contracts involve certain inherent risks to the Company, including
underestimating costs, problems with new technologies, and economic and other
changes that may occur over the contract period. The accuracy and
appropriateness of certain costs and expenses used to substantiate direct and
indirect costs of the Company for the United States government under both
cost-plus and fixed-price contracts are subject to extensive regulation and
audit by the Defense Contract Audit Agency ("DCAA"), an arm of the United States
Department of Defense. The DCAA has the right to challenge the Company's cost
estimates or allocations with respect to any such contract. If a DCAA audit
establishes overcharges or discrepancies in costs or accounting, it can seek the
repayment of such overcharges or seek other reconciliations. DCCA audits are
routine in the defense contracting industry, and the Company has been subject to
such audits from time to time. Since the inception of the Company's operations,
no DCAA audit has resulted in an adverse determination against the Company. In
September 1993, however, the Company agreed to pay $445,000 over a 12-month
period to resolve an overcharge dispute, without any admission
7
<PAGE> 9
of liability. The investigation and settlement resulted in the review of
virtually all of the Company's government contracts entered into between April
1987 and June 1990. The settlement agreement concluded any other potential
defective pricing claims on all of the Company's contracts with the United
States Department of Defense negotiated during that period.
NEED FOR ADDITIONAL CAPITAL
To meet the anticipated demand in 1998, the Company must continue to
make significant investments in research and development, equipment, and
facilities, including capital expenditures to construct and equip the
facilities. The Company's operating results may be adversely affected if its
revenue does not increase sufficiently to offset the increase in fixed costs and
operating expenses relating to these capital expenditures. The continued
expansion of the Company's business may require it, from time to time, to seek
debt or equity financing. Such capital expenditures may be required to maintain
or expand the Company's engineering, design, and production facilities and
equipment as well as to otherwise finance the growth of its business. The
Company cannot predict the timing or amount of any such capital requirements.
The Company anticipates that such financing may include bank financing or the
issuance of debt or equity securities. The ability of the Company to obtain bank
financing or raise additional debt or equity capital will depend on its
financial condition and results of operations. In addition, there can be no
assurance that additional financing will be available to the Company if and when
required and under terms acceptable to the Company.
ACQUISITIONS
The Company's acquisition strategy depends in large part on its
continued ability to successfully acquire, integrate, and operate additional
companies that have complementary businesses that can utilize or enhance the
Company's technologies or that can provide benefits in terms of manufacturing,
distribution, or availability of component parts. The Company has completed
three major acquisitions since August 1993. There can be no assurance that the
Company will be able to identify additional suitable acquisition candidates,
that it will be able to consummate or finance any such acquisitions, or that it
will be able to integrate any such acquisitions successfully into its
operations.
QUARTERLY OPERATING RESULTS; CYCLICALITY
Since the beginning of 1993 the Company has experienced significant
growth in its revenue as a result of internal growth and its acquisitions. As a
growth company, the Company's quarterly results may be especially variable and
historic results are not a reliable basis on which to predict future operating
results. Further, during the second quarter of 1996, the Company adopted a new
method of accounting for pre-contract costs under which various costs are
expensed as incurred rather than being deferred. The effect of changing this
accounting principle resulted in a restatement and reduction of earnings per
share previously reported for the first quarter of 1996. The Company's change in
accounting method in 1996 will make year to year and quarter to quarter
comparisons of earnings difficult.
The continued success of the Company will be impacted by the cyclical
nature of the airline, rail, and automobile industries as well as other markets
served by the Company's products; the level and makeup of military expenditures;
technological changes; competition and competitive pressures on pricing; new
government regulations; and economic conditions in the United States and
worldwide markets served by the Company and its customers. The Company's
products are incorporated into a variety of transportation vehicles. A slowdown
in demand for such new transportation vehicles or modification services to
existing transportation vehicles as a result of economic or other conditions in
the United States or in the worldwide markets served by the Company and its
customers or other broad-based factors could adversely affect the Company's
operating results and financial condition. Conversely, an increase in demand for
new transportation vehicles or modification services could strain the Company's
capacity, its manufacturing efficiency, and delivery schedules.
8
<PAGE> 10
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Stock has been and in the
future may be subject to wide fluctuations in response to quarterly variations
in operating results of the Company or its competitors, actual or anticipated
announcements of technical innovations or new products by the Company or its
competitors, contracts with key customers, new agreement negotiations, changes
in analysts' estimates of the Company's financial performance, general industry
conditions, military expenditures, worldwide economic and financial conditions,
and other events or factors. In addition, the stock market has experienced
extreme price and volume fluctuations, which have particularly affected the
market price of many technology companies and which often have been unrelated to
the operating performance of such companies. These broad market fluctuations and
other factors may adversely affect the market price of the Company's Common
Stock.
COMPETITION
The markets served by the Company's aircraft and rail seating and
inflatable restraint systems are intensely competitive. Most of the Company's
competitors have greater marketing capabilities and financial resources than the
Company. Although most of the Company's technology is proprietary, many
businesses are actively engaged in the research and development of new products
and in the manufacture and sale of products that may compete with the Company's
inflatable restraint systems, structures, and materials capabilities. The
Company's present or future products could be rendered obsolete by technological
advances by one or more of its competitors or by future entrants into its
markets. Competition for commercial contracts relates primarily to technical
know-how, cost, and marketing efforts. Competition for government contracts
relates primarily to the award of contracts for the development of proposed
products rather than for the supply of products that have been developed under
contracts. Numerous suppliers compete for government defense contracts as prime
contractors or subcontractors. The demand for aircraft seating, which is one of
the Company's target markets, currently exceeds supply; however, the Company's
competitors may seek to cover such undercapacity. As a result, there is no
assurance that such undercapacity in those markets will continue to exist in the
future. A substantial increase in the capacity of all manufacturers in those
markets may have an adverse impact on the Company's results of operations and
financial condition.
MANAGEMENT OF GROWTH
The Company currently is experiencing a period of significant growth.
The Company's ability to manage its growth effectively will require it to
enhance its operational, financial, and management information systems. In
addition, the Company must also effectively oversee operations of geographically
dispersed subsidiaries in diverse lines of business. The Company is increasing
staffing and other expenses as well as its expenditures on manufacturing plants,
capital equipment and leasehold improvements in order to meet the anticipated
demand of its customers for its new products. However, the Company's customers
generally do not commit to firm production schedules for other than a relatively
short time in advance. The Company's profitability would be adversely affected
if the Company increased its expenditures in anticipation of future orders that
do not materialize. Its customers may also require, from time to time, rapid
increases in design and production services, which place an excessive short-term
burden on the Company's resources. The failure of the Company to manage its
growth effectively could have a material adverse effect on the Company's
business, operating results, and financial condition.
PRODUCT LIABILITY
The Company will face increasing exposure to product liability claims
as it increases its presence in commercial markets. Product liability claims may
be particularly significant in connection with the Company's commercial aircraft
and automobile products. The Company maintains product liability insurance,
including general product liability, special aircraft product liability, and
product recall insurance. In connection with its government business, product
liability defense is available to some extent under the so-called "government
contractor defense." In addition, the Company's product liability insurance also
provides protection with respect to exposure, if any, under government contracts
and products. The Company believes its insurance is adequate at the present
time.
9
<PAGE> 11
GOVERNMENT SAFETY REGULATIONS
The Company regularly monitors regulations adopted or being considered
by the Federal Aviation Administration ("FAA") relating to airlines,
particularly those relating to seating and restraints, and by the National
Highway Traffic Safety Administration ("NHTSA"), particularly those relating to
airbags and other safety features in automobiles, rail, and other mass transit
vehicles. Administratively promulgated regulations are typically subject to
industry resistance, comment periods, and significant delays in implementation.
To the extent that proposed regulations are withdrawn or that new or existing
regulations are subsequently amended, rescinded, or deadlines for compliance
extended, the demand for improved safety systems, such as those provided by the
Company, could be adversely impacted.
ENVIRONMENTAL REGULATIONS
The Company is subject to a variety of federal, state, and local
government regulations related to the storage, use, discharge, and disposal of
toxic, volatile, or otherwise hazardous chemicals used in its manufacturing
processes. There can be no assurance that changes in environmental regulations
will not impose the need for additional capital equipment or other requirements.
Any failure by the Company to obtain required permits for, control the use of,
or adequately restrict the discharge of, hazardous substances under present or
future regulations could subject the Company to substantial liability or could
cause manufacturing operations to be suspended. Such liability or suspension of
manufacturing operations could have a material adverse effect on the Company's
operating results and financial condition.
INTERNATIONAL TRADE AND CURRENCY EXCHANGE
Approximately 24% of the Company's revenue in fiscal 1996 was derived
from international customers, all of which is billed and recorded in United
States Dollars. The Company has acquired manufacturing facilities outside the
United States in anticipation of an increased volume of business overseas,
particularly with respect to its inflatable restraint systems for automobiles.
Therefore, the Company may purchase an increasing portion of its raw materials
and equipment from foreign suppliers and incur labor costs in foreign locations.
The foreign sale of products and the purchase of raw materials and equipment
from foreign suppliers may be adversely affected by political and economic
conditions abroad. Protectionist trade legislation in either the United States
or foreign countries, such as a change in current tariff structures, export
compliance laws, or other trade policies, could adversely affect the Company's
ability to sell its products in foreign markets and purchase materials or
equipment from foreign suppliers.
DEPENDENCE ON MANAGEMENT AND OTHER KEY PERSONNEL
The Company's success depends upon the retention of key personnel,
particularly Stanley P. Desjardins, its founder and Chairman, and Donald W.
Townsend, its President. The Company has entered into five-year employment
contracts with Messrs. Desjardins and Townsend through the year 2001. The loss
of Messrs. Desjardins or Townsend or other existing key personnel or the failure
to recruit and retain necessary additional personnel would adversely affect the
Company's business prospects. Additionally, the covenants of one of the
Company's credit facilities requires that the Company continue to employ Messrs.
Desjardins and Townsend. There can be no assurance that the Company will be able
to retain its current personnel or attract and retain necessary additional
personnel.
CONTROL BY MANAGEMENT
Following the completion of this offering, the directors and executive
officers of the Company will own an aggregate of 3,406,134 shares of Common
Stock, or approximately 31% of the outstanding Common Stock of the Company, of
which Stanley P. Desjardins will own 3,060,412 shares. Through the ownership of
such Common Stock, the ability to elect or otherwise designate members of the
Board of Directors, as a practical matter, will continue to reside with the
current management of the Company. The directors and executive officers have the
right to acquire additional shares upon exercise of options granted under the
Company's stock option plans, and the executive officers may acquire additional
shares under the Company's Employee Stock Purchase Plan.
10
<PAGE> 12
SHARES ELIGIBLE FOR FUTURE SALE
As of March 25, 1997, the Company had 8,999,948 shares of Common
Stock outstanding, of which 3,669,349 shares are "restricted securities" (the
"Restricted Shares") as that term is defined in Rule 144 under the Securities
Act of 1933, as amended (the "Act"). Such Restricted Shares may be subject to
volume and other resale limitations described below. In general, under Rule 144
as currently in effect, any person (or persons whose shares are aggregated for
purposes of Rule 144) who beneficially owns restricted securities with respect
to which at least two years have elapsed since the later of the date the shares
were acquired from the Company or from an affiliate of the Company, is entitled
to sell, within any three-month period, a number of shares that does not exceed
the greater of (i) 1% of the then outstanding shares of Common Stock of the
Company, or (ii) the average weekly trading volume in Common Stock during the
four calendar weeks preceding such sale. Sales under Rule 144 also are subject
to certain manner-of-sale provisions and notice requirements and to the
availability of current public information about the Company. A person who is
not an affiliate, has not been an affiliate within three months prior the sale,
and who beneficially owns restricted securities with respect to which at least
three years have elapsed since the later of the date the shares were acquired
from the Company or from an affiliate of the Company, is entitled to sell such
shares under Rule 144(k) without regard to any of the volume limitations or
other requirements described above.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
shares of Common Stock pursuant to this Prospectus. Net proceeds received by the
Selling Shareholders in the sale of Common Stock offered hereby will be retained
by such Selling Shareholders. See "Selling Shareholders" and "Plan of
Distribution."
DETERMINATION OF OFFERING PRICE
This prospectus may be used from time to time by the Selling
Shareholders to offer the Common Stock registered hereby for sale. The offering
price of such Common Stock will be determined by the Selling Shareholders and
may be based on market prices prevailing at the time of sale, at prices relating
to such prevailing market prices, or at negotiated prices.
Of the 1,931,140 shares of Common Stock registered hereby, 1,430,000
are being registered to account for the prospective conversion of the Notes into
Common Stock of the Company. The exact number of shares to be issued will depend
on the conversion price fixed by the various noteholders from time to time. The
Notes are convertible by their holders at their election at a price which may be
fixed by each such individual holder at 98% of the average closing prices of the
Company's Common Stock on the New York Stock Exchange for the ten (10) trading
days immediately preceding the date in which such election to the conversion
price is made. Accordingly, the factors involved in determining any specific
conversion price include general market conditions and the prevailing market for
the Company's Common Stock, as well as individual investment considerations and
decisions particular to each individual holder of the Notes.
11
<PAGE> 13
SELLING SHAREHOLDERS
The following table sets forth certain information, as of the date of
this Prospectus, regarding the beneficial ownership of shares of Common Stock by
the Selling Shareholders, and as adjusted to reflect the sale of the 1,931,140
shares of Common Stock offered hereby by Selling Shareholders.
<TABLE>
<CAPTION>
SHARES SHARES AVAILABLE FOR % OWNED AFTER
BENEFICIALLY SALE UNDER THIS COMPLETION OF
NAME AND ADDRESS OF SELLING SHAREHOLDER OWNED PROSPECTUS THIS OFFERING
- --------------------------------------- ----- ---------- -------------
<S> <C> <C> <C>
Stanley P. Desjardins Charitable 97,690 97,690 *(1)
Remainder Annuity Trust(1)
Stanley P. Desjardins Charitable 99,500 99,500 *(1)
Remainder Unitrust(1)
June M. Rudyk Charitable 97,690 97,690 *(1)
Remainder Annuity Trust(1)
June M. Rudyk Charitable 99,500 99,500 *(1)
Remainder Unitrust(1)
Sandra Desjardins Charitable 63,360 63,360 *(1)
Remainder Annuity Trust(1)
Sandra Desjardins Charitable 24,900 24,900 *(1)
Remainder Unitrust(1)
David A. Yungkau, Inc. 18,500 18,500 *
1828 River Heights Lane
Villa Hills, Kentucky 41017
Erinyes & Co.
Davis High Income Fund 50,000 50,000 *
124 East Marcy Street
PO box 1688
Sante Fe, NM 87501
Miller A-1 Trust(2) 10,000 10,000 *
Miller A-2 Trust(2) 10,000 10,000 *
Miller A-4 Trust(2) 15,000 15,000 *
Miller B Trust(2) 25,000 25,000 *
Miller C Trust(2) 25,000 25,000 *
Catherine C. Miller Irrevocable 10,000 10,000 *
E Trust DTD 3/26/91
Morgan Stanley and Co. Incorporated
440 South LaSalle Street
Chicago, Illinois 60605
Lloyd I. Miller and
Kimberly S. Miller Trust(3) 5,000 5,000 *
Lloyd I. Miller GST Trust(3) 10,000 10,000 *
Kimberly S. Miller GST Trust(3) 10,000 10,000 *
Lloyd I. Miller IV Minor(3) 10,000 10,000 *
Alexandra B. Miller Minor(3) 10,000 10,000 *
Miller Keogh Trust(3) 10,000 10,000 *
Lim, Inc. 50,000 50,000 *
440 South LaSalle Street, 16th Floor
Chicago, Illinois 60605
Siegler & Co. 425,000 425,000 4%
2 Pickwick Plaza
Greenwich, Connecticut 06830
Wayne Farris 4,000 4,000 *
P.O. Box 549
Pikeville, Kentucky 40977-0549
Edward T. Kennedy 6,000 6,000 *
5664 Beaver Road
Union, Kentucky 41091
Mathis Dallas & Frohlich Profit Sharing Plan 5,000 5,000 *
FBO Anthony Frohlich(4)
Mathis Dallas & Frohlich Profit Sharing Plan 5,000 5,000 *
FBO Stephen K. Dallas(4)
Jerry L. Bratfish 5,000 5,000 *
5341 Laurel Ridge
Cincinnati, Ohio 45247
Willie Mathis, Jr. 5,000 5,000 *
7992 Dixie Highway
Florence, Kentucky 41042
Anchor Employees 401K 7,000 7,000 *
One Post Office Square, 38th Floor
Boston, Massachusetts 02109
ACA Corporate Account 3,000 3,000 *
One Post Office Square, 38th Floor
Boston, Massachusetts 02109
Shepherd Trading, Ltd.(5) 357,500 357,500 3%
Reliant Trading(6) 357,500 357,500 3%
All Selling Shareholders as a Group 1,931,140 1,931,140 18%
</TABLE>
- -----------------
* Less than 1% of the outstanding Common Stock
(1) The address for all of the listed Trusts is 2700 North Central Avenue,
Suite 1000, Phoenix, Arizona 85004. Stanley P. Desjardins, Chairman of the
Company is the beneficial owner of all of the shares listed in the table
and proposed to be sold from time to time pursuant to this Prospectus. See
"Plan of Distribution." Following completion of this offering, Mr.
Desjardins will continue to beneficially own 3,060,412 shares of the
Company's Common Stock, representing approximately 30% of the shares to
then be outstanding.
(2) The address for all of the listed Trusts is 201 East Fifth Street, P.O.
Box 1198, Cincinnati, Ohio 45201-1198.
(3) The address for all of the listed Trusts is 580 Walnut Street, Cincinnati,
Ohio 45202-3198.
(4) The address for the Mathis, Dallas & Frohlish Profit Sharing Plan is 7992
Dixie Highway, Florence, Kentucky 41042.
(5) The address for Shepherd Trading, Ltd. is 48 Par la ville Road, Suite 464,
Hamilton HM11, Bermuda.
(6) The address for Reliant Trading is 1500 West Market Street, Suite 200,
Mequon, Wisconsin 53092.
12
<PAGE> 14
DESCRIPTION OF COMMON STOCK
The Company is authorized to issue 50,000,000 shares of Common Stock,
par value $.01 per share, of which 8,999,948 shares were issued and outstanding
as of March 25, 1997.
Holders of the Common Stock are entitled to one vote for each share
owned for all matters to be voted on by the Preferred Shareholders. As required
under Arizona law, there is cumulative voting in the election of directors.
Accordingly, each shareholder is entitled to vote the number of shares owned by
him for as many persons as there are directors to be elected, or to cumulate his
votes by giving one candidate as many votes as the number of such directors
multiplied by the number of his shares, or by distributing votes on the same
principle among any number of candidates. Holders of Common Stock are entitled
to receive such dividends as may be declared from time to time by the Board of
Directors out of funds legally available therefor and, in the event of
liquidation, dissolution, or winding up of the Company, to share ratably in all
assets remaining after payment of liabilities. The holders of Common Stock have
no preemptive or conversion rights. The holders of Common Stock are not subject
to further calls or assessments. There are no redemption or sinking fund
provisions applicable to the Common Stock. The rights of the holders of the
Common Stock are subject to any rights that may be fixed for holders of
preferred stock. The Common Stock currently outstanding is, and the Common Stock
offered hereby will, when issued, be validly issued, fully paid, and
nonassessable.
TRANSFER AGENT AND REGISTRAR
The Company's Transfer Agent and Registrar for the Common Stock is
American Stock Transfer & Trust Company, New York, New York.
LISTING
The Common Stock is currently listed and traded on the NYSE under the
symbol "SMU."
PLAN OF DISTRIBUTION
The distribution of the Common Stock offered hereby by the Selling
Shareholders may be effectuated from time to time, so long as the Registration
Statement of which this Prospectus is a part remains effective, in one or more
transactions that may take place on the NYSE, including ordinary brokers'
transactions, in privately-negotiated transactions, or through sales to one or
more broker/dealers for resale of such Common Stock as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions will be paid by the Selling
Shareholders in connection with such sales.
The Company will pay certain of the expenses incident to the offering
and sale of the Common Stock offered hereby to the public. The Company, however,
will not pay for any expenses, commissions or discounts of underwriters, dealers
or agents, which such costs shall be paid by the Selling Shareholders.
EXPERTS
The consolidated financial statements of Simula, Inc. as of December
31, 1995 and 1996 and for each of the three years in the period ended December
31, 1996 incorporated by reference into this Prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports which
have been incorporated by reference herein, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
13
<PAGE> 15
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL. UNDER NO CIRCUMSTANCES SHALL THE DELIVERY OF THIS PROSPECTUS OR ANY
SALE MADE PURSUANT TO THIS PROSPECTUS CREATE ANY IMPLICATION THAT INFORMATION
CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
THIS PROSPECTUS.
---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Additional Information............................ 2
Incorporation of Certain Documents by
Reference....................................... 2
Prospectus Summary................................ 3
Risk Factors...................................... 5
Use of Proceeds................................... 11
Determination of Offering Price .................. 11
Selling Shareholders.............................. 12
Description of Common Stock....................... 13
Plan of Distribution.............................. 13
Experts........................................... 13
</TABLE>
1,931,140 SHARES
[GRAPHIC]
SIMULA, INC.
COMMON STOCK
---------------
PROSPECTUS
---------------
, 1997
<PAGE> 16
SIMULA, INC.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of all expenses in connection with the
issuance and distribution of the securities to be registered. These expenses
will be paid by the Company. The information contained below is subject to
future contingencies. An asterisk to the right of a dollar figure denotes that
the figure is an estimate and the exact amount to be expended for that category
is not yet known.
<TABLE>
<CAPTION>
<S> <C>
Registration Fee................................................................... $ 9,654.93*
Printing and Engraving Costs....................................................... $ 5,000.00*
Other.............................................................................. $ 2,000.00*
----------
Total.................................................................... $16,654.93
==========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
ARTICLE 10 of the Company's Amended and Restated Articles of Incorporation
provides that the personal liability of the directors to the Company and its
shareholders for monetary damages by reason of their conduct as directors shall
be limited or eliminated to the fullest extent permitted by Arizona law. In
A.R.S. Sec. 10-202(B)(1), Arizona corporate law limits or eliminates the
liability of a director of a corporation for money damages for any action taken
or not taken as a director in all instances except: (i) where a director
receives financial benefits to which he is not entitled; (ii) any intentional
infliction of harm on the corporation or its shareholders; (iii) the making of
unlawful distributions; and (iv) intentional violations of criminal law.
Section 12.01 of the Company's Bylaws further provides that the Company shall
indemnify and pay the expenses of directors, officers, employees, trustees or
agents of or for the Company to the fullest extent permitted by Arizona law. In
A.R.S. Sec. 10-850 et seq., Arizona corporate law provides that a corporation
may provide indemnification if: (i) the director's conduct was in good faith;
(ii) the director reasonably believed: (x) in the case of conduct in an
official capacity with the corporation, that the conduct was in its best
interests, or (y) in all other cases, that the conduct was at least not opposed
to its best interests; and (iii) in the case of criminal proceedings, the
director had no reasonable cause to believe the conduct was unlawful.
Directors may not be indemnified in connection with proceedings brought by or
in the right of the Company in which the director was adjudged liable to the
Company or in connection with any other proceeding charging improper personal
benefit to the director, whether or not involving action in the director's
official capacity, in which the director was adjudged liable on the basis that
personal benefit was improperly received by the director. Under Arizona law,
indemnification in connection with a proceeding by or in the right of the
Company is limited to reasonable expenses incurred in connection with the
proceeding.
Arizona law also provides for mandatory and court-ordered indemnification in
certain instances, including on behalf of officers, employees and agents of the
Company who are not also directors.
II-1
<PAGE> 17
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In June 1994, the Company sold $6.5 million in aggregate principal amount of
its Series B 9% Senior Subordinated Convertible Notes ("Convertible Notes"). The
Convertible Notes were sold pursuant to exemptions from registration under the
Securities Act of 1933 (" '33 Act"), Section 4(2), and Regulation D
thereunder, and comparable provisions of states' securities laws. The
Convertible Notes were convertible to Common Stock, and 947,562 shares of the
Company's Common Stock were registered and offered pursuant to a Prospectus
dated July 26, 1994 for shares of Common Stock issuable upon the conversion of
the Convertible Notes. In addition, 19,674 shares of the Company's Common Stock
were registered and offered pursuant to a Prospectus dated December 28, 1994 for
remaining shares of Common Stock issuable for accrued interest. As of the date
of this Registration Statement, all Convertible Notes have been converted into
Common Stock.
II-2
<PAGE> 18
In September 1996, the Company sold $14.3 million in aggregate principal
amount of its Series C 10% Senior Subordinated Convertible Notes ("10% Notes").
The 10% Notes were issued pursuant to the Company's Indenture dated December 17,
1993 and Supplemental Indenture dated September 12, 1996. The private placement
was made through HD Brous & Co., Inc., a NASD member firm, and other selected
dealers. The 10% Notes were sold pursuant to exemptions from registration under
the '33 Act, Section 4(2), and Regulation D in reliance on Rule 506 thereunder,
and comparable provisions of states' securities laws. The 10% Notes are
convertible to Common Stock of the Company at a conversion price which may be
fixed by each Noteholder at the equivalent of 98% of the average closing price
of the Company's Common Stock on the NYSE for the 10 day period immediately
preceding notice to the Company of such an election to fix the conversion price.
If not earlier converted, the Notes are redeemable by the Company in whole or in
part on a pro rata basis, at par value plus all accrued interest payable through
the date of redemption, at any time upon 30 days written notice to the
Noteholders in accordance with the following: (i) from September 12, 1996 until
December 15, 1997, the Notes may be redeemed by the Company after the closing
price of the Company's Common Stock as quoted on the NYSE has equaled or
exceeded $25.00 for any 10 consecutive trading days and (ii) after December 15,
1997, the Company may redeem the Notes at any time at par value plus all accrued
interest payable through the date of redemption. Of the 1,931,140 shares of the
Company's Common Stock being registered pursuant to this Registration Statement,
1,430,000 shares are being registered to account for the prospective issuance of
Common Stock in the full amount of principal and interest on the Notes
outstanding at any given time upon notice of the Noteholders of such holders'
election to convert their 10% Notes into Common Stock at 98% of the prices which
they may have fixed for conversion. The exact number of shares to be issued will
depend on the conversion price fixed by the various noteholders from time to
time. As of the date of this Registration Statement, no 10% Notes have been
converted into Common Stock.
Other than the foregoing transactions, the Registrant has not offered or sold
any unregistered securities within the last three years.
II-3
<PAGE> 19
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
a. Exhibits. The following Exhibits are included pursuant to Regulation S-K.
<TABLE>
<CAPTION>
NO. DESCRIPTION REFERENCE
--- ----------- ---------
<S> <C> <C>
3.1 Articles of Incorporation of Simula, Inc., as amended and restated ............... (11)
3.2 Bylaws of Simula, Inc., as amended and restated .................................. (1)
4.1 Specimen of Common Stock Certificate ............................................. (11)
4.2 Indenture dated December 17, 1993 (including cross-reference sheet to Trust
Indenture Act), as amended ....................................................... (3)
4.5 Amended and Restated 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 ............................................ (11)
4.6 Supplemental Indenture No. 3, effective March 14, 1997, amending the Indenture
of Simula, Inc. dated December 17, 1993 .......................................... (12)
5.1 Opinion of Counsel
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)
10.25 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 .................................................................. (11)
10.28 Promissory Note representing $1,000,000 loan from Stanley P. Desjardins
dated August 14, 1996 ............................................................ (11)
10.29 Form of Change of Control Agreements Between the Company and Key Management
Personnel ........................................................................ (12)
11. Earnings Per Share ............................................................... (12)
18. Preference Letter re change in accounting principles ............................. (10)
21. Subsidiaries of Registrant ....................................................... (11)
*23. Consent of Independent Auditors ..................................................
24. Powers of Attorney--Directors .................................................... (12)
25. Statement of Eligibility of Trustee on Form T-1 (without Indenture)
(bound separately ................................................................ (3)
</TABLE>
__________
* Filed herewith.
(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 Report on Form 10-Q for the quarter ended March 31, 1996.
(10) Filed with Report on Form 10-Q for the quarter ended June 30, 1996.
(11) Filed with Registration Statement on Form S-3, No. 333-13499, under the
Securities Act of 1933, dated October 4, 1996.
(12) Filed with Report on Form 10-K for the year ended December 31, 1996.
<PAGE> 20
ITEM 17. UNDERTAKINGS
RULE 415
a. The undersigned registrant hereby undertakes:
a.1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the Registration Statement. Notwithstanding the foregoing, any increase
or decrease in volume of Securities offered (if the total dollar value of
securities offered would not exceed that which was registered) any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
II-5
<PAGE> 21
a.2. That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new Registration Statement relating to the Securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
a.3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
e. Incorporated Annual and Quarterly Reports.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
h. Request for acceleration of effective date.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
II-6
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Phoenix,
State of Arizona on March 27, 1997.
SIMULA, INC.
By /s/ Donald W. Townsend
--------------------------------------
Donald W. Townsend, President
Pursuant to the requirements of the Securities Act of 1933, the
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE AND TITLE DATE
------------------- ----
<S> <C>
/s/ Donald W. Townsend March 27, 1997
- -------------------------------------------------
Donald W. Townsend, President, Chief Operating
Officer, and Director
/s/ Bradley P. Forst March 27, 1997
- -------------------------------------------------
Bradley P. Forst, Vice President, General Counsel,
Secretary and Director
/s/ Sean K. Nolen March 27, 1997
- -------------------------------------------------
Sean K. Nolen, Vice President, Treasurer, Chief
Financial Officer, and Director
*
- -------------------------------------------------
Stanley P. Desjardins, Chairman
*
- -------------------------------------------------
James C. Withers, Director
*
- -------------------------------------------------
Robert D. Olliver, Director
*
- -------------------------------------------------
Scott E. Miller, Director
*By: /s/ Bradley P. Forst March 27, 1997
---------------------------------------------
Bradley P. Forst,
Attorney-in-Fact
</TABLE>
II-7
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2
of Registration Statement No. 333-17043 of Simula, Inc. on Form S-3 of our
report dated March 20, 1997, appearing in the Form 10-K of Simula, Inc. for the
year ended December 31, 1996, and to the reference to us under the heading
"Experts" in the Prospectus which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Phoenix, Arizona
March 27, 1997
