Monday November 3 7:00 AM EST
Company Press Release
Simula To Report Third Quarter Loss
Loss Due to Airline Seat Production Inefficiencies and Delay on Government Contracts
PHOENIX, Nov. 3 /PRNewswire/ -- Simula, Inc. (NYSE:SMU) said today it will report a third quarter loss because
of the cost of inefficiencies in filling a record backlog of commercial airliner seats, and reduced revenues
resulting from delayed throughput on higher margin production contracts for its government business. Total
revenue for the third quarter will show a strong increase over second quarter revenues, however, the reduced
throughput on government programs will result in third quarter revenue being slightly below the company's
expectations. The company will report complete third quarter results on November 14, 1997.
''Simula's number one priority for its Airline Interiors subsidiary has been for it to make deliveries of its 16G
commercial airliner seats to its new and expanding customer base. This commitment has resulted in unavoidable
production inefficiencies and increased costs,'' said Don Townsend, President of Simula.
Production bottlenecks caused by parts shortages, overtime costs, learning costs related to adding a second
production shift and other production-related expenses for the company's tourist class seats have resulted in a
reduction of gross margins for commercial airliner seats. In addition, the initial production costs of the
larger-than-expected volume for the company's new first-class seat were higher than anticipated.
The unanticipated delay in commencement of production on certain government programs, and the resulting
reduced throughput has negatively impacted gross margins. In addition, available production resources were
shifted in the third quarter from production contracts to development contracts which typically have low gross
margins and research and development activities which are expensed.
''As has been disclosed by other companies in the aerospace industry, Simula is in the midst of a significant
production rate build-up. The acceptance of our seating systems continues to far exceed our expectations. The
confidence expressed in our products by all of our customers, including recently announced British Airways,
has been very gratifying. We anticipate significant improvements in margins will begin to be realized in the
remainder of 1997 as we aggressively work to streamline plant operations and increase production efficiencies,''
said Don Townsend.
''In addition, the delay of throughput for our government contracts is substantially behind us, and future
volumes look strong. Simula's record backlog for all of its divisions, and the anticipated increase in incremental
production of the ITS provide a solid base for the company's growth. We continue to be extremely satisfied with
the production ramp up of the ITS which continues on schedule and with anticipated margins. We also continue
to be very pleased with the performance of the ITS as exemplified by BMW's announcement on October 30, 1997
of very successful results from independent tests performed last week by the Insurance Institute for Highway
Safety,'' said Townsend.
Simula, Inc., based in Phoenix, Arizona, is an acknowledged world leader in transportation safety and energy
absorption technology. Its principal product lines are high technology energy absorbing aircraft seating
systems; lightweight and efficient advanced composite structures; protective systems including airbags,
inflatable restraints and ballistic armor; and rail and mass transit seating systems.
This press release contains forward-looking statements that involve risks and uncertainties that may cause the
company's actual experience to differ materially from that anticipated. Estimates are based on reliable information
and past experience. However, operating results are affected by a wide variety of factors, many of which are
beyond the control of the company. The factors include the level of orders which are received and can be
shipped in a quarter; whether and when order options are exercised; customer order patterns and seasonality;
contract mix among the company's three business segments and shifting production and delivery schedules;
manufacturing capacity and yield, costs of labor, raw materials, supplies and equipment; reliability of vendor
base; amount of resources committed to research and development from time to time; technological changes;
competition and competitive pressures on pricing; and economic conditions in the United States and worldwide.
SOURCE Simula, Inc. |
