COLUMBIA, Md., May 7 /PRNewswire/ -- GSE Systems, Inc. (Nasdaq-NNM: GSES),
a leading global provider of integrated enterprise software and information
solutions to the energy, process and manufacturing industries, today
announced financial results for its first quarter ending March 31, 1997.
GSE Systems experienced a net loss of $1,989,000 versus net income of
$1.1 million in the first quarter of 1996. This first quarter loss amounted
to $0.39 per share compared to a net income per share of $0.22 last year (both
per share calculations based on approximately 5.1 million weighted shares).
For the quarter, revenues amounted to $19.3 million versus $22.3 million in
the comparable period last year. Included in this year's first quarter was a
one time severance charge of $1,349,000 before tax for a restructuring plan
that was approved at the end of the first quarter and will be implemented in
the second quarter. Had this restructuring not occurred, the loss would
have been $0.21 per share.
"We had a difficult first quarter as both revenues and net income were
below plan and the prior year," said Mike Cromwell, Vice Chairman. "The
recent shrinkage of the nuclear simulation market was earlier than anticipated
and had a major impact on our business. The nuclear simulator sales and gross
margin were down approximately 47% compared to the first quarter of 1996. In
addition, revenues for the rest of the business were up only 23% on a quarter
to quarter basis and the contribution to profit from the non nuclear business
was down primarily due to increased sales and marketing costs. That said,
we've very recently received several significant orders from customers, and
continue to believe our overall business strategy is sound.
"We have already taken several actions geared toward cost controls and
targeted investments in our growth markets," continued Cromwell. "In
addition to the continuing benefit of the consolidation of our facilities in
Maryland, we're taking further actions in the second quarter to implement
the restructuring and focus on our growth markets. Though the short-term
impact has extended beyond the first quarter, we anticipate that the Company
will see improving results as the year progresses.
"Looking forward, we are optimistic about GSE's future, particularly in
respect to the ongoing integration of our simulation, control system,
supervisory control systems and client server solutions where we believe we
have a strategic competitive advantage in the chemical, food & beverages,
pharmaceutical and oil & gas pipeline vertical markets. Our growth markets
continue to be very interested in our Windows NT product paths. We released
our Windows NT SCADA product last year and will be releasing our Windows NT
DCS product this summer. The successful integration of our simulation
technology with our control technology, in particular, is having a
significant positive impact on our ability to add new customers. This is
especially true for both our SimSuite Pro and SimSuite Pipeline products
which were released last year. We are also seeing strong indications
of demand on the part of our existing control customers for our client/server
solutions capability."
The Company's products are used in over 700 applications, representing
over 250 customers in 30 countries, in the following industries: specialty
chemical, food & beverage, petroleum refining, oil & gas, pharmaceutical,
fossil and nuclear power generation, metals, electrical distribution
and water treatment. GSE Systems is headquartered in Columbia, Maryland
with offices in Augusta, GA, Baton Rouge, LA, Houston, TX, Phoenix, AZ,
Pittsburgh, PA, Salt Lake City, UT and Shelby, NC, and its global
operations include offices in Belgium, Japan, Korea, Singapore, Sweden,
and Taiwan.
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.
To receive additional information on GSE Systems, Inc., via fax at no
charge, dial 1-800-PRO-INFO and enter ticker symbol GSES.
GSE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(Unaudited)
Three months Three months
ended ended
March 31, March 31,
1997 1996
Contract revenue $ 19,327 $ 22,303
Cost of revenue 13,763 14,699
Gross profit 5,564 7,604
Operating expenses:
Selling, general and administrative 6,249 5,464
Depreciation and amortization 568 479
Employee severance and termination costs 1,349 --
Total operating expenses 8,166 5,943
Operating income (2,602) 1,661
Interest expense 187 139
Other expense (income) 210 (174)
Income before income taxes (2,999) 1,696
Provision for income taxes (1,010) 605
Net income $ (1,989) $ 1,091
Earnings per common share $ (O.39) $ 0.22
Weighted average common shares outstanding 5,065,700 5,078,700
GSE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
ASSETS
March 31, December 31,
1997 1996
(unaudited)
Current assets:
Cash and cash equivalents $1,207 $2,450
Contract receivables 25,658 27,457
Inventories 3,095 3,538
Prepaid expenses and other current assets 2,796 2,701
Deferred income taxes 2,141 1,454
Total current assets 34,897 37,600
Property and equipment, net 5,391 5,318
Software development costs, net 6,025 5,176
Goodwill and other intangible assets, net 2,011 2,059
Deferred income taxes 276 569
Other assets 266 284
Total assets $48,866 $51,006
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Lines of credit $6,637 $2,582
Accounts payable 6,819 8,604
Accrued expenses 3,824 4,430
Notes payable to related parties 17 --
Obligations under capital lease 161 186
Accrued severance costs 1,349 --
Billings in excess of revenues earned 3,989 5,358
Accrued contract reserve 40 233
Accrued warranty reserve 709 1,408
Other current liabilities 91 281
Income taxes payable (140) 651
Total current liabilities 23,496 23,733
Notes payable to related parties 181 202
Obligations under capital lease 431 420
Billings in excess of revenues earned 794 803
Accrued contract and warranty reserves 1,104 687
Other liabilities 446 468
Total liabilities 26,452 26,313
Stockholders' equity:
Common stock $.01 par value, 8,000,000 shares
authorized, 5,065,688 shares issued and
outstanding 50 50
Additional paid-in capital 21,378 21,378
Retained earnings (deficit) - at formation (5,112) (5,112)
Retained earnings - since formation 6,475 8,464
Cumulative translation adjustment (377) (87)
Total stockholders' equity 22,414 24,693
Total liabilities & stockholders' equity $48,866 $51,006
SOURCE GSE Systems, Inc.
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CONTACT:
Michael J. Cromwell, III, Vice Chairman of
GSE Systems, 410-312-3600 or http://www.gses.com; or Julie Creed,
analysts, 312-266-7800, or Doug DeLieto, general, or Marty
Gitlin, media, 212-661-8030, all of The Financial Relations Board
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