COLUMBIA, Md., March 26 /PRNewswire-FirstCall/ -- GSE Systems, Inc. (GSE)
(Amex: GVP), a leading global provider of real-time simulation and process
control solutions, reported today a net income of $259,000 or $0.05 per
diluted share for the year ended December 31, 2001, compared to a net loss of
$8.8 million or $1.70 per diluted share in the year 2000. Despite the
challenging economic conditions both in the US and worldwide, operating income
for 2001 was $1.7 million, up from operating losses of $4.7 million the prior
year. The 2001 net income includes the previously announced non-cash write-
down of $4.6 million of the Company's investment in Avantium International
B.V. ("Avantium").
Revenues for 2001 were $50.3 million compared to $55.7 million for the
same period last year. However, revenues from our continuing operations, after
the sale of VirtualPlant and Belgian operations, increased from $48.1 million
in 2000 to $49.8 million in 2001. The fourth quarter results are shown on the
attached schedule.
Our operating performance reflects the improvement in the Company's
Process Automation business, which rebounded nicely during the year. Revenues
for the continuing Process Automation business increased 39% to $24.5 million.
Operating income for the Process Automation business was $2.7 million for the
year versus a loss of $2.2 million in 2000. The Power business operating
income was lower than expected, but slightly above break-even, with revenues
of $25.3 million for the year. The Power business experienced delays in
orders particularly in the fourth quarter of 2001. The Company has received
some of these delayed orders and expects to receive additional ones in the
second quarter of 2002.
As previously announced, Avantium recently concluded a second round of
financing, diluting GSE's position from 19.2% to 6.1%. The per-share price
obtained in the financing required the Company to adjust its carrying value
for the Avantium stock, which resulted in a $4.6 million non-cash, pre-tax
write-down in the fourth quarter of 2001.
Jerry Jen, GSE's President and Chief Operating Officer said, "We are very
pleased with the performance of our Process Automation business, especially
considering a general economic slowdown that affected our customer base. The
organizational restructuring and business process improvements we made in 2000
reaped benefits in 2001, and we are optimistic about our customers' response
to our latest products. Our new and less expensive D/3, Distributed Control
System, will be released in the second quarter of 2002, and we believe this
will enable us to penetrate new market segments.
"Our Power business suffered further delays in receipt of orders than
anticipated. This was true for both domestic and international projects. We
anticipate receiving those delayed projects very soon. Also, we are
experiencing above normal proposal activities for new fossil power plant
simulators. Our Power business is anticipating a strong year in 2002.
"In addition to our core businesses, we are marketing our Plant Access
Security System in the nuclear and chemical industries. The nuclear industry
is responding to changes necessitated by the events of 9-11, and GSE's
security technology is gaining attention in the industry. We have added
resources in this market segment and are developing strong partnerships to
increase both our product offering and our channels to market.
"We are also very pleased with the improvement in our balance sheet. Over
the course of the year, we converted $3.9 million of subordinated debt to
additional equity, and raised $1.3 million from our non-affiliated
shareholders. Overall bank debt was reduced $4.3 million. We believe GSE is
well-positioned with our superior new technologies and market potential for
continuing profitability and growth," said Mr. Jen.
Mr. Jen concluded: "We expect revenues to be in the range of
$50-$52 million, with fully diluted earnings per-share between $0.25 and
$0.28, in 2002. Similar to last year, we expect the first quarter of 2002 to
be near break-even, with continuing improvement throughout the remainder of
the year."
GSE Systems, Inc. develops and delivers business and technology solutions
by applying process control, simulation software, systems and services to the
energy, process and manufacturing industries worldwide. The Company's
products are used in the following industries: specialty chemical, food and
beverage, petroleum refining, pharmaceutical, and fossil and nuclear power
generation. GSE Systems is headquartered in Columbia, Maryland with offices
in Alabama, Georgia, Louisiana, Maryland, North and South Carolina,
Pennsylvania, and Texas, and its global locations include offices in Japan and
Sweden. Information about GSE Systems is available via the Internet's World
Wide Web at http://www.gses.com. The GSE Systems 2001 conference call is being
webcast at http://www.streetevents.com on Wednesday March 27, at 11 am.
This news release contains forward-looking statements that involve risks
and uncertainties. The actual future results of GSE Systems may differ
materially due to a number of factors, including but not limited to delays in
introduction of products or enhancements, size and timing of individual
orders, rapid technological changes, market acceptance of new products and
competition. These and other factors are more fully discussed in the
Company's annual report on Form 10-K for the year ended December 31, 2000 as
filed with the Securities and Exchange Commission.
GSE Systems, Inc.
Selected Financial Data
(In thousands, except share and per share data)
CONDENSED STATEMENTS OF OPERATIONS
Three months ended Twelve months ended
December 31, December 31,
2001 2000 2001 2000
Contract revenue $12,185 $13,597 $50,331 $55,715
Cost of revenue 8,843 11,362 36,381 40,822
Gross profit 3,342 2,235 13,950 14,893
Operating expenses 3,033 5,365 12,232 19,548
Operating income (loss) 309 (3,130) 1,718 (4,655)
Other income (expense),
net(A) (4,516) (1,204) (1,812) (1,622)
Loss before taxes (4,207) (4,334) (94) (6,277)
(Benefit from)
provision for
income taxes (1,683) 3,246 (353) 2,537
Net income (loss) $(2,524) $(7,580) $259 $(8,814)
Basic earnings (loss)
per share $(0.49) $(1.46) $ 0.05 $(1.70)
Weighted average
shares outstanding -
Basic 5,227,046 5,193,527 5,217,453 5,181,972
Diluted earnings
(loss) per share $(0.48) $(1.46) $ 0.05 $(1.70)
Weighted average
shares outstanding -
Diluted 5,227,046 5,193,527 5,259,016 5,181,972
(A) - Other income (expense), net for the three months and year ended
December 31, 2001 includes a $4.6 million charge from the write-down
of the Company's investment in Avantium Technologies B.V.
Other income (expense), net for the year ended December 31, 2001
includes a $3.3 million gain on the sale of the Company's
VirtualPlant business technology and assets.
Other income (expense), net for the three months and year ended
December 31, 2000 includes a $1.0 million loss on the sale of the
Company's Belgian subsidiary.
Selected balance sheet data
December 31, 2001 December 31, 2000
Cash and cash equivalents $2,040 $1,465
Current assets 19,622 20,368
Total assets 33,674 35,949
Current liabilities $12,604 $14,846
Long-term liabilities 7,218 12,390
Stockholders' equity 13,852 8,713
Selected segment information
Three months ended Twelve months ended
December 31, December 31,
2001 2000 2001 2000
Revenue:
Process Solutions
Business Unit (B) $7,255 $5,309 $24,999 $25,208
Power Systems Business Unit 4,930 8,288 25,332 30,507
$12,185 $13,597 $50,331 $55,715
(B) - The Company sold its Belgian subsidiary in November 2000 and its
VirtualPlant business in March 2001. Whereas the Process segment
revenue for the three months ended December 31, 2001 included no
revenue from these divested businesses, the Process revenue for the
three months ended December 31, 2000 included revenue of $1.0
million. For the year ended December 31, 2001 and 2000, Process
revenue included $507,000 and $7.6 million, respectively, for these
two divested businesses. The Process 2000 revenue also includes
$2.9 million from a software-license sold to Avantium International
B.V.
SOURCE GSE Systems, Inc.
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Related links:
http://http://www.gses.com
CONTACT:
Gill R. Grady, Senior Vice President of GSE
Systems, Inc., +1-410-772-3500, general, Marilynn Meek,
+1-212-445-8451, or analysts, Susan Garland, +1-212-445-8458,
both of FRB Weber Shandwick
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