SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15 (d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2003
GSE Systems, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-26494 52-1868008
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(State or other jurisdiction (Commission (I.R.S. employer
of incorporation) file number) identification no.)
9189 Red Branch Road, Columbia, MD 21045
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(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (410) 772-3500
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(Former name or former address, if changed since last report)
Item 5. Other Events
http://www.gses.com
AT THE COMPANY AT THE FINANCIAL RELATIONS BOARD
Gill R. Grady Marilynn Meek Susan Garland
Senior Vice President (general info) (analyst info)
410-772-3500 212-445-8451 212-445-8458
FOR IMMEDIATE RELEASE
GSE Systems Announces Second Quarter Results
Columbia, Maryland, August 14, 2003-- GSE Systems, Inc. (GSE) (AMEX:GVP), a
leading global provider of real-time simulation and process control solutions to
the energy and process industries, reported a net loss of ($1.13) million or
($.20) per diluted share for the quarter ended June 30, 2003. This compares to a
net income of $123,000 or $.01 per diluted share for the same period in 2002.
Revenue for the three months ended June 30, 2003 was $9.8 million compared to
$12.1 million for the second quarter of 2002.
The Company's Power Simulation business reported a 5% increase in revenue and a
positive operating income for the quarter, compared to an operating loss of
($441,000) for the same period in 2002. Revenue for the second quarter of 2003
was $5.5 million compared to $5.2 million in the second quarter of 2002. During
the second quarter, the Company closed on simulation contracts in Mexico, Japan,
and the U.S. totaling over $9.5 million. Revenue and earnings from these
projects will ramp up during the third quarter of 2003 and continue over the
next couple of years. The Power Simulation business backlog, which is expected
to remain healthy, was $30 million at the end of the second quarter, the highest
in several years. The Company expects Power Simulation's profitability to
increase in the second half of 2003.
As recently announced, following the second quarter, the Company received an
additional $5.5 million in orders for power plant simulators including an Asian
customer and the Tennessee Valley Authority (TVA), bringing the backlog for this
part of the business to over $32 million.
The Company continued to invest in the development of its Process Simulation and
Plant Security businesses. In the second quarter, the Company invested $100,000
primarily in marketing, sales and product development activities for the nuclear
and chemical plant security market. The Company expects that both businesses
will experience growth in 2004.
The Process Automation business reported revenue of $4.3 million for the second
quarter of 2003, compared to $6.9 million for the same quarter in 2002. The
business reported an operating loss of ($706,000) compared to an operating
income of $733,000 for the second quarter of 2002. These results reflect a
continuing soft economy in the key chemical market, as well as $313,000 in
expenses related to the consolidation of building facilities. This consolidation
has the potential to save the Process Automation business in excess of $2
million over the next five years. The Company expects this business to have an
increase in orders and a return to profitability in the second half of the year.
In July, the Company announced new orders in Process Automation of over $2
million.
GSE President and Chief Operating Officer, Jerry Jen, said: "I am very pleased
with the success of our simulation business and its continued strong
performance. We anticipate profits to increase in this business over the balance
of the year. New orders in the Process Automation business picked up in July and
we expect a stronger third quarter and balance of the year."
The GSE Systems second quarter 2003 conference call is being webcast at CCBN's
www.companyboardroom.com on Friday August 15, at 11:00 am.
Contact Gill Grady at 410.772.3501
* * *
GSE Systems, Inc. is a real-time simulation, process control, and automation
company with three decades of experience, over 500 applications, and 200
customers in more than 30 countries. Our software, hardware and integrated
solutions leverage proven technologies to deliver real-world business advantages
to the process and power industries worldwide including specialty chemical, food
and beverage, petroleum refining, pharmaceutical, and fossil and nuclear power
generation. GSE Systems is headquartered in Columbia, Maryland with offices
throughout the United States. Our global locations include offices in Japan and
Sweden. Information about GSE Systems is available via the Internet at
http://www.gses.com.
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, 2002 as filed with the Securities and
Exchange Commission.
Three months ended Six months ended
June 30, June 30,
__________________________ _______________________
2003 2002 2003 2002
____________ ___________ _________ _________
Contract revenue $ 9,772 $ 12,131 $ 19,035 $ 23,405
Cost of revenue 7,493 8,382 14,398 16,173
____________ ___________ _________ __________
Gross profit 2,279 3,749 4,637 7,232
Operating expenses 3,174 3,529 5,926 6,287
____________ ___________ _________ ___________
Operating income (loss) (895) 220 (1,289) 945
Other Expenses, net (252) (20) (339) (45)
____________ ___________ _________ ___________
Income (loss) before income taxes (1,147) 200 (1,628) 900
Provision (benefit) for income taxes (15) 77 22 345
____________ ___________ _________ ___________
Net income (loss) $(1,132) $ 123 $(1,650) $ 555
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Basic earnings (loss) per common share $ (0.20) $ 0.01 $ (0.30) $ 0.07
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Weighted average shares outstanding - Basic 6,019,138 5,869,138 5,951,182 5,847,030
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Diluted earnings (loss) per common share $ (0.20) $ 0.01 $ (0.30) $ 0.07
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Weighted average shares outstanding - Diluted 6,019,138 6,285,441 5,951,182 6,259,665
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Selected balance sheet data
June 30, 2003 December 31, 2002
_________________ ___________________
Cash and cash equivalents $ 584 $ 1,617
Current assets 15,706 17,202
Total assets 25,661 28,894
Current liabilities $ 16,106 $ 11,166
Long-term liabilities 2,936 9,617
Stockholders' equity 6,619 8,111
Selected segment information
Three months ended Six months ended
June 30, June 30,
__________________________________ __________________________
2003 2002 2003 2002
Revenue: ____________ ___________ ___________ ____________
Process Solutions Business Unit $ 4,279 $ 6,916 $ 8,610 $ 13,617
Power Systems Business Unit 5,493 5,215 10,425 9,788
___________ ___________ ___________ ____________
$ 9,772 $ 12,131 $ 19,035 $ 23,405
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