SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
| (Mark One) | ||
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Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2002 or | |
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Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to | |
| Commission file number 1-12410 |
Simula, Inc.
| Arizona | 86-0320129 | |
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| (State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) |
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| 2625 S. Plaza Drive, Suite 100, Tempe, Arizona | 85282 | |
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| (Address of Principal Executive Offices) | (Zip Code) |
(602) 631-4005
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) | |
| Yes X No | ||
| (2) | has been subject to such filing requirements for the past 90 days. | |
| 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:
| Class | Outstanding at June 30, 2002 | |||
| Common Stock, $.01 par value | 12,938,888 | |||
SIMULA, INC.
TABLE OF CONTENTS
| Page | ||||
PART I – FINANCIAL INFORMATION |
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Item 1 – Interim Consolidated Financial Statements |
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Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001 |
2 | |||
Consolidated Statements of Operations for the Three and Six Month Periods Ended June 30, 2002 and 2001 |
3 | |||
Consolidated Statement of Shareholders’ Deficit for the Six Month Period Ended June 30, 2002 |
4 | |||
Consolidated Statements of Cash Flows for the Six Month Periods Ended June 30, 2002 and 2001 |
5 | |||
Notes to Interim Consolidated Financial Statements |
6–10 | |||
Item 2 – Management’s Discussion and Analysis of Results of Operations and Financial Condition |
11–15 | |||
Item 3 – Quantitative and Qualitative Disclosure about Market Risk |
15 | |||
PART II — OTHER INFORMATION |
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Item 4 – Submissions of Matters to a Vote of Security Holders |
16 | |||
Item 6 – Exhibits and Reports |
17 | |||
SIGNATURES |
18 | |||
SIMULA, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2002 and December 31, 2001
| 2002 | 2001 | |||||||||
| (unaudited) | ||||||||||
ASSETS |
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CURRENT ASSETS |
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Cash and cash equivalents |
$ | 459,951 | $ | 362,319 | ||||||
Contract and trade receivables – Net |
28,109,752 | 26,441,295 | ||||||||
Inventories |
7,116,906 | 7,384,222 | ||||||||
Deferred income taxes |
1,898,655 | 2,596,000 | ||||||||
Prepaid expenses and other |
793,608 | 915,547 | ||||||||
Total current assets |
38,378,872 | 37,699,383 | ||||||||
PROPERTY, EQUIPMENT, and LEASEHOLD IMPROVEMENTS – Net |
10,998,005 | 10,545,449 | ||||||||
DEFERRED INCOME TAXES |
35,188,519 | 34,985,000 | ||||||||
DEFERRED FINANCING COSTS |
3,130,555 | 4,059,630 | ||||||||
INTANGIBLES – Net |
3,376,728 | 3,333,896 | ||||||||
OTHER ASSETS |
2,015,351 | 2,029,933 | ||||||||
TOTAL |
$ | 93,088,030 | $ | 92,653,291 | ||||||
LIABILITIES AND SHAREHOLDERS’ DEFICIT |
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CURRENT LIABILITIES |
||||||||||
Revolving line of credit |
$ | 11,631,734 | $ | 11,488,639 | ||||||
Trade accounts payable |
6,757,641 | 6,972,576 | ||||||||
Other accrued liabilities |
7,994,554 | 8,394,234 | ||||||||
Deferred revenue |
1,162,670 | 1,540,247 | ||||||||
Accrued restructuring costs |
979,056 | 1,313,931 | ||||||||
Advances on contracts |
3,197,606 | 2,049,645 | ||||||||
Current portion of long-term debt |
417,011 | 993,682 | ||||||||
Total current liabilities |
32,140,272 | 32,752,954 | ||||||||
DEFERRED REVENUE |
785,669 | 1,367,002 | ||||||||
DEFERRED LEASE COST |
611,160 | 400,914 | ||||||||
LONG-TERM DEBT – Less current portion |
61,418,768 | 60,772,414 | ||||||||
Total liabilities |
94,955,869 | 95,293,284 | ||||||||
SHAREHOLDERS’ DEFICIT |
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Preferred stock, $.05 par value– authorized 50,000,000 shares; none outstanding |
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Common stock, $.01 par value– authorized 50,000,000 shares; issued 12,938,888 in 2002 and 12,892,858 in 2001 |
129,389 | 128,929 | ||||||||
Additional paid-in-capital |
62,588,070 | 62,412,546 | ||||||||
Accumulated deficit |
(62,494,503 | ) | (63,377,118 | ) | ||||||
Accumulated other comprehensive income |
(2,090,795 | ) | (1,804,350 | ) | ||||||
Total shareholders’ deficit |
(1,867,839 | ) | (2,639,993 | ) | ||||||
TOTAL |
$ | 93,088,030 | $ | 92,653,291 | ||||||
See notes to consolidated financial statements.
2
SIMULA, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operation
| Three Month Period Ended | Six Month Period Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2002 | 2001 | 2002 | 2001 | |||||||||||||
REVENUE |
$ | 30,181,492 | $ | 25,956,898 | $ | 59,283,780 | $ | 51,492,665 | ||||||||
COST OF REVENUE |
20,645,901 | 16,204,171 | 40,137,498 | 32,587,769 | ||||||||||||
GROSS MARGIN |
9,535,591 | 9,752,727 | 19,146,282 | 18,904,896 | ||||||||||||
ADMINISTRATIVE EXPENSES |
4,652,772 | 5,560,735 | 9,591,077 | 11,222,489 | ||||||||||||
RESEARCH AND DEVELOPMENT |
1,396,239 | 0 | 2,916,972 | 0 | ||||||||||||
WRITE-DOWN NET ASSETS HELD FOR
SALE |
0 | 600,000 | 0 | 600,000 | ||||||||||||
RESTRUCTURING CHARGES |
0 | 0 | 0 | 479,000 | ||||||||||||
OPERATING INCOME |
3,486,580 | 3,591,992 | 6,638,233 | 6,603,407 | ||||||||||||
INTEREST EXPENSE |
(2,577,324 | ) | (2,651,567 | ) | (5,135,618 | ) | (5,168,521 | ) | ||||||||
INCOME BEFORE TAXES |
909,256 | 940,425 | 1,502,615 | 1,434,886 | ||||||||||||
INCOME TAX EXPENSE |
(400,000 | ) | (363,000 | ) | (620,000 | ) | (535,000 | ) | ||||||||
NET INCOME |
$ | 509,256 | $ | 577,425 | $ | 882,615 | $ | 899,886 | ||||||||
INCOME PER COMMON SHARE — Basic |
$ | 0.04 | $ | 0.05 | $ | 0.07 | $ | 0.07 | ||||||||
INCOME PER COMMON SHARE — Diluted |
$ | 0.04 | $ | 0.05 | $ | 0.07 | $ | 0.07 | ||||||||
See notes to consolidated financial statements.
3
SIMULA, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Shareholders’ Deficit
Six Month Period Ended June 30, 2002
| Accumulated | ||||||||||||||||||||||||||||
| Common Stock | Additional | Other | Total | |||||||||||||||||||||||||
| Paid-in | Accumulated | Comprehensive | Shareholders' | Comprehensive | ||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Income | Deficit | Income | ||||||||||||||||||||||
BALANCE, JANUARY 1, 2002 |
12,892,858 | $ | 128,929 | $ | 62,412,546 | $ | (63,377,118 | ) | $ | (1,804,350 | ) | $ | (2,639,993 | ) | ||||||||||||||
Net Income |
882,615 | 882,615 | $ | 882,615 | ||||||||||||||||||||||||
Issuance of stock |
46,030 | 460 | 175,524 | 175,984 | ||||||||||||||||||||||||
Loss on cash flow hedge |
(143,388 | ) | (143,388 | ) | (143,388 | ) | ||||||||||||||||||||||
Foreign currency
translation adjustment |
(143,057 | ) | (143,057 | ) | (143,057 | ) | ||||||||||||||||||||||
| — | — | — | ||||||||||||||||||||||||||
BALANCE, JUNE 30, 2002 |
12,938,888 | $ | 129,389 | $ | 62,588,070 | $ | (62,494,503 | ) | $ | (2,090,795 | ) | $ | (1,867,839 | ) | $ | 596,170 | ||||||||||||
See notes to consolidated financial statements.
4
SIMULA, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Cash Flows
Six Month Periods Ended June 30, 2002 and 2001
| 2002 | 2001 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income |
$ | 882,615 | $ | 899,886 | ||||||||
Adjustment to reconcile net income to net cash provided by
operating activities: |
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Depreciation and amortization |
2,121,917 | 2,203,382 | ||||||||||
Deferred income taxes |
574,481 | 487,000 | ||||||||||
Capitalized interest |
749,860 | 234,718 | ||||||||||
Non-cash equity compensation |
74,779 | — | ||||||||||
Restructuring charge |
— | 479,000 | ||||||||||
Write down net assets held for sale |
— | 600,000 | ||||||||||
Currency translation adjustment |
(143,057 | ) | 65,336 | |||||||||
Bad debt expense |
356,400 | — | ||||||||||
Changes in net assets and liabilities: |
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Contract and trade receivables – net of advances |
(876,896 | ) | 1,818,113 | |||||||||
Inventories |
267,316 | (689,316 | ) | |||||||||
Prepaid expenses and other |
213,604 | (117,596 | ) | |||||||||
Other assets |
14,582 | (633,169 | ) | |||||||||
Trade accounts payable |
(214,935 | ) | (319,844 | ) | ||||||||
Deferred revenue |
(958,910 | ) | (1,280,436 | ) | ||||||||
Deferred lease costs |
210,246 | (47,666 | ) | |||||||||
Restructuring reserve |
(334,875 | ) | (653,423 | ) | ||||||||
Other accrued liabilities |
(715,388 | ) | (2,054,396 | ) | ||||||||
Net cash provided by operating activities |
2,221,739 | 991,589 | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of property and equipment |
(1,430,772 | ) | (2,842,263 | ) | ||||||||
Costs incurred to obtain intangibles |
(257,458 | ) | (472,251 | ) | ||||||||
Net cash used in investing activities |
(1,688,230 | ) | (3,314,514 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
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Net borrowings under line of credit |
143,095 | 2,446,181 | ||||||||||
Principal payments under other debt arrangements |
(680,177 | ) | (709,671 | ) | ||||||||
Repurchase stock options |
— | (19,000 | ) | |||||||||
Issuance of common shares |
101,205 | 85,482 | ||||||||||
Net cash (used in) provided by financing activities |
(435,877 | ) | 1,802,992 | |||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
97,632 | (519,933 | ) | |||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
362,319 | 746,078 | ||||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 459,951 | $ | 226,145 | ||||||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Interest Paid |
$ | 3,785,769 | $ | 3,811,992 | ||||||||
Taxes Paid |
$ | 135,000 | $ | 44,200 | ||||||||
See notes to consolidated financial statements.
5