GSE Systems Announces Third Quarter Results.BALTIMORE Baltimore, city (1990 pop. 736,014), N central Md., surrounded by but politically independent of Baltimore co., on the Patapsco River estuary, an arm of Chesapeake Bay; inc. 1745. -- GSE GSE general somatic efferent system. Systems, Inc. (GSE) (AMEX AMEX See: American Stock Exchange :GVP GVP Genesys Voice Platform GVP General Voters Party (Fiji) GVP Gasoline Vapor Pressure GVP Global Vision for Peace GVP Global Visualization Process ), a global provider of real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. simulation and training solutions to the power, process, manufacturing and Government sectors, reported third quarter 2005 results today. Total contract revenue for the three and nine months ended September September: see month. 30, 2005 was $4.6 million and $17.6 million, respectively. This compares to $7.3 million and $22.5 million for the comparable periods in 2004, respectively. The Company's net loss was $1.0 million or $.12 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in the third quarter 2005, and the net loss for the nine months ended September 30, 2005 was $2.6 million or $.29 per diluted share. This compares with net loss of $137,000 or $.02 per diluted share in the third quarter 2004 and net income of $203,000 or $.02 per diluted share for the nine months ended September 30, 2004. The Company's revenue and profitability continue to be impacted by low order volume in 2005; new orders logged to date in 2005 total $12.1 million. Several orders that the Company expected to receive in the third quarter have been delayed and are expected to be received in the fourth quarter. While reducing costs significantly, the Company continued to invest in broadening its simulation base in the nuclear and fossil power market, in the process industries and with the US Government. The Company's third quarter 2005 results were impacted by the following significant items: --The Company made adjustments to the estimated costs to complete certain of its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. contracts which resulted in a net reduction of the project-to-date revenue and gross profit recognized on the projects. --The Company wrote off the remaining book value of its Columbia, Maryland Columbia is a census-designated place and planned community in Howard County, Maryland, United States. It is a suburb of Baltimore, and, to a lesser degree, Washington, DC. It began with the idea that a city could enhance its residents' quality of life. facility leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. , and relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. this office to its Baltimore facility in early October October: see month. 2005. The Company is currently in negotiations with the Columbia Columbia, cities, United States Columbia (kəlŭm`bēə). 1 City (1990 pop. 75,883), Howard co., central Md., between Washington, D.C., and Baltimore. facility landlord to assign the Company's lease to a third party. --The Company entered into an agreement with Atlantis Atlantis (ətlăntĭs, ăt–), in Greek legend, large island in the western sea (the Atlantic Ocean). Plato, in his dialogues the Timaeus and the Critias, Systems Corporation, a leading training integrator (1) In electronics, a device that combines an input with a variable, such as time, and provides an analog output; for example, a watt-hour meter. (2) See systems integrator. specializing in the military and commercial aviation markets worldwide, to jointly market, win and execute contracts in the U.S. Government and Military markets. Under the terms of the agreement, GSE will license its proprietary simulation technology to Atlantis. In conjunction with this agreement, GSE will be able to substantially reduce its business development costs in the military sector. --On September 30, 2005, GP Strategies Corporation completed the spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. of its 57% interest in GSE through a special dividend to the GP Strategies' stockholders who received 0.283075 share of GSE commons stock for each share of GP Strategies common stock or Class B stock held on the record date of September 19, 2005. Following the spin-off, GP Strategies ceased to have any ownership interest in GSE. The Company incurred significant legal fees in the third quarter 2005 in conjunction with the GP Strategies spin-off. --The Company incurred severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expense due to the termination of several operating personnel at the end of the third quarter. The above items negatively impacted the third quarter results by over $800,000. These items were offset by a $577,000 favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. change in the fair value of certain liabilities related to its outstanding convertible note and warrants. Mr. John Moran John Moran is an American composer, author and choreographer. He was born in Lincoln, Nebraska, in 1965. John Moran has generally been considered the protege of composer Philip Glass. , Chief Executive Officer for GSE, said "We are obviously disappointed with the revenue level we were able to produce. However, the Company has taken actions to substantially reduce its costs. The large projects and services contracts we expected in the third quarter are still viable opportunities that the Company hopes to close in the fourth quarter. In addition, as we announced last week, the Company's services revenue is starting to gain traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in the global nuclear power market sector." The Company has scheduled an investor conference call for 10:00am ET on November 10, 2005. In addition to prepared remarks from management, there will be a question and answer session on the call. The dial-in number for the live conference call will be 866-866-1333 or 404-260-1421. A telephone replay of the call will also be available beginning at 12:59pm on November 10, until 11:50pm on December 10. To listen to the replay, dial 866-430-1300 or 404-260-1414 and when prompted enter pin - 4804300#. At system prompt An on-screen symbol that indicates the operating system is ready for a command. See DOS prompt. dial '4' to listen to a previously recorded conference. When prompted, enter confirmation number -20051109252494#. GSE Systems, Inc. provides real-time simulation and training solutions. The company has over three decades of experience, over 250 installations, and 100 customers in more than 25 countries. Our software, hardware and integrated training solutions leverage proven technologies to deliver real-world business advantages to the energy, process, manufacturing and Government sectors worldwide. GSE Systems is headquartered in Baltimore, Maryland "Baltimore" redirects here. For the surrounding county, see Baltimore County, Maryland. For other uses, see Baltimore (disambiguation). Baltimore is an independent city located in the state of Maryland in the United States. . Our global locations include offices in Sweden, Japan and China. Information about GSE Systems is available via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.gses.com. This news release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that involve risks and uncertainties. We use words such as "expects", "intends" and "anticipates" to indicate forward looking statements. 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, and in statements filed with the Securities and Exchange Commission. If any one or more of these expectations and assumptions proves incorrect, actual results will likely differ materially from those contemplated by the forward-looking statements. Even if all of the foregoing assumptions and expectations prove correct, actual results may still differ materially from those expressed in the forward-looking statements as a result of factors we may not anticipate or that may be beyond our control. While we cannot assess the future impact that any of these differences could have on our business, financial condition, results of operations and cash flows or the market price of shares of our common stock, the differences could be significant. We do not undertake to update any forward-looking statements made by us.
GSE SYSTEMS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
CONDENSED STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Contract revenue $ 4,607 $ 7,340 $ 17,617 $ 22,498
Cost of revenue 4,228 5,835 14,543 17,379
----------- ----------- ----------- -----------
Gross profit 379 1,505 3,074 5,119
Operating expenses 1,809 1,760 5,901 4,817
----------- ----------- ----------- -----------
Operating income
(loss) (1,430) (255) (2,827) 302
Other income
(expense), net 413 14 188 (129)
----------- ----------- ----------- -----------
Income (loss) from
continuing operations
before provision
(benefit) for income
taxes (1,017) (241) (2,639) 173
Provision (benefit)
for income taxes 30 (44) 6 30
----------- ----------- ----------- -----------
Income (loss) from
continuing operations (1,047) (197) (2,645) 143
Income on sale of
discontinued
operations - 60 - 60
----------- ----------- ----------- -----------
Net income (loss) $ (1,047) $ (137) $ (2,645) $ 203
=========== =========== =========== ===========
Basic earnings (loss)
per common share:
Continuing
operations $ (0.12) $ (0.02) $ (0.29) $ 0.02
Discontinued
operations - - - -
----------- ----------- ----------- -----------
$ (0.12) $ (0.02) $ (0.29) $ 0.02
=========== =========== =========== ===========
Weighted average
shares outstanding -
Basic 8,999,706 8,949,706 8,998,607 8,949,706
=========== =========== =========== ===========
Diluted earnings
(loss) per common
share
Continuing
operations $ (0.12) $ (0.02) $ (0.29) $ 0.02
Discontinued
operations - - - -
----------- ----------- ----------- -----------
$ (0.12) $ (0.02) $ (0.29) $ 0.02
=========== =========== =========== ===========
Weighted average
shares outstanding -
Diluted 8,999,706 8,949,706 8,998,607 8,993,473
=========== =========== =========== ===========
Selected balance sheet data
(unaudited)
September 30, December 31,
2005 2004
------------- -------------
Cash and cash equivalents $ 804 $ 868
Current assets 9,455 10,439
Total assets 12,822 14,228
Current liabilities $ 7,668 $ 7,781
Long-term liabilities 2,085 502
Stockholders' equity 3,069 5,945
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