##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

(Mark One)

|       |  |                                                                                         
|------ |  | ----------------------------------------------------------------------------------------
|(XBOX) |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|      
|      
|      
|      
|       |  | For the quarterly period ended June 30, 2001   or                                       
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|      
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|      
|       |  |                                                                                         
|      
|      
|      
|      
|(BOX)  |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|      
|      
|      
|      
|       |  | For the transition period from  to                                                      
|      
|      
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|      
|       |  |                                                                                         
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|       |  | Commission file number 1-12410                                                          

Simula, Inc.

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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Arizona                                                        |  | 86-0320129                          
|                                                               |  |                                     
|(State or Other Jurisdiction of
Incorporation or Organization) |  | (I.R.S. Employer
Identification No.)
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |  |                                     
|                                                              
|                                                              
|                                                              
|                                                              
|2700 North Central Avenue, Suite 1000, Phoenix, Arizona        |  | 85004                               
|                                                               |  |                                     
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

(602) 631-4005

---







---

Indicate by check mark whether the registrant:



|(1) |  | has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required
to file such reports)
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | Yes   (XBOX)                  No   (BOX)
| | ----------------------------------------



|(2) |  | has been subject to such filing requirements for the past 90 days.
|--- |  | ------------------------------------------------------------------



| | Yes   (XBOX)                  No   (BOX)
| | ----------------------------------------

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the
latest practicable date:

|                             |  |                              |            | 
|---------------------------- |  | ---------------------------- | ---------- | 
|Class                        |  | Outstanding at June 30, 2001
|                             |  |                             
|Common Stock, $.01 par value |  |                              | 12,222,488 | 





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TABLE OF CONTENTS



|                                                                                               |                                                    |  |  |  |  |  |  | 
|---------------------------------------------------------------------------------------------- | -------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                                                                 
|Item 1. Financial Statements.                                                                 
|                                                                                               | CONSOLIDATED BALANCE SHEETS                       
|                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS             
|                                                                                               | CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY    
|                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS             
|                                                                                               | NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
|Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition.
|PART II  OTHER INFORMATION                                                                   
|Item 3. Defaults Upon Senior
Securities                                                       
|Item 4. Submission of Matters to a Vote of Security Holders                                   
|Item 6. Exhibits and Reports                                                                  
|SIGNATURES                                                                                    



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##### Table of Contents



SIMULA, INC.INDEX

PART I FINANCIAL INFORMATION

|                                                                                              |                                                                                         |  |       |      | 
|--------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- |  | ----- | ---- | 
|                                                                                              |                                                                                         |  | PAGE 
|                                                                                              |                                                                                         |  |      
|Item 1 -Financial Statements                                                                  |                                                                                         |  |       |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Balance Sheets
June 30, 2001 and December 31, 2000                         |  |       | 2    | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Operations
Three and Six Months Ended June 30, 2001 and 2000 |  |       | 3    | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statement of Shareholders Equity
Six Months Ended June 30, 2001           |  |       | 4    | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Consolidated Statements of Cash Flows
Six Months Ended June 30, 2001 and 2000           |  |       | 5    | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                              | Notes to Interim Consolidated Financial Statements                                      |  |       | 6-10 | 
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 2 -Managements Discussion and Analysis of
Results of Operations and Financial Condition |                                                                                         |  | 11-16 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|PART II OTHER INFORMATION                                                                    |                                                                                         |  |       |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 3
 Defaults Upon Senior Securities                                                      |                                                                                         |  | 17    |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 4
 Submissions of Matters to a Vote of Security Holders                                 |                                                                                         |  | 17    |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|Item 6 - Exhibits and Reports                                                                 |                                                                                         |  | 17-18 |     
|                                                                                             
|                                                                                             
|                                                                                             
|                                                                                             
|SIGNATURES                                                                                    |                                                                                         |  | 18    |     

1



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##### Table of Contents






PART I FINANCIAL INFORMATION




Item 1. Financial Statements.

SIMULA, INC.
CONSOLIDATED BALANCE SHEETS

|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |            |  
|--------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------ | ---------- | ----------- | ---------- | ------------ | ---------- | ----------- | ---------- | -
|                                                    |                                                                                                 |                                      |            | June 30,    |            | December 31,
|                                                    |                                                                                                 |                                      |            | 2001        |            | 2000        
|                                                    |                                                                                                 |                                      |            |             |            |             
|ASSETS                                              |                                                                                                 |                                      |            |             |            |              |            |            
|                                                   
|                                                   
|                                                   
|                                                   
|CURRENT ASSETS                                      |                                                                                                 |                                      |            |             |            |              |            |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Cash and cash equivalents                                                                       |                                      | $          | 226,145     |            |              | $          | 746,078     |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Contract and trade receivables Net                                                             |                                      |            | 23,286,875  |            |              |            | 24,992,446  |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Inventories                                                                                     |                                      |            | 5,608,588   |            |              |            | 5,927,139   |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Deferred income taxes                                                                           |                                      |            | 2,586,000   |            |              |            | 3,243,000   |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Prepaid expenses and other                                                                      |                                      |            | 845,858     |            |              |            | 739,297     |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Net assets held for sale                                                                        |                                      |            | 1,596,515   |            |              |            |            |           
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|                                                    |                                                                                                 | Total current assets                 |            |             | 34,149,981 |              |            |             | 35,647,960 |  
|                                                   
|                                                   
|                                                   
|                                                   
|PROPERTY, EQUIPMENT and LEASEHOLD IMPROVEMENTS Net |                                                                                                 |                                      | 9,858,434  |             |            |              | 8,345,520  |            
|                                                   
|                                                   
|                                                   
|                                                   
|DEFERRED INCOME TAXES                               |                                                                                                 |                                      | 34,510,000 |             |            |              | 34,340,000 |            
|                                                   
|                                                   
|                                                   
|                                                   
|DEFERRED FINANCING COSTS                            |                                                                                                 |                                      | 2,953,279  |             |            |              | 3,534,759  |            
|                                                   
|                                                   
|                                                   
|                                                   
|INTANGIBLES Net                                    |                                                                                                 |                                      | 3,340,186  |             |            |              | 3,115,689  |            
|                                                   
|                                                   
|                                                   
|                                                   
|OTHER ASSETS                                        |                                                                                                 |                                      | 1,514,691  |             |            |              | 914,474    |            
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|                                                    |                                                                                                 | TOTAL                                |            | $           | 86,326,571 |              |            | $           | 85,898,402 |  
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|LIABILITIES AND SHAREHOLDERS EQUITY                |                                                                                                 |                                      |            |             |            |              |            |            
|                                                   
|                                                   
|                                                   
|                                                   
|CURRENT LIABILITIES                                 |                                                                                                 |                                      |            |             |            |              |            |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Revolving line of credit                                                                        |                                      | $          | 7,775,610   |            |              | $          | 5,329,429   |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Trade accounts payable                                                                          |                                      |            | 5,335,752   |            |              |            | 5,966,003   |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Other accrued liabilities                                                                       |                                      |            | 8,517,831   |            |              |            | 10,688,627  |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Deferred revenue                                                                                |                                      |            | 2,182,833   |            |              |            | 2,327,615   |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Accrued restructuring costs                                                                     |                                      |            | 1,686,255   |            |              |            | 1,911,115   |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Advances on contracts                                                                           |                                      |            | 2,471,370   |            |              |            | 1,098,976   |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Current portion of long-term debt                                                               |                                      |            | 20,331,205  |            |              |            | 19,711,509  |           
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|                                                    |                                                                                                 | Total current liabilities            |            |             | 48,300,856 |              |            |             | 47,033,274 |  
|                                                   
|                                                   
|                                                   
|                                                   
|DEFERRED REVENUE                                    |                                                                                                 |                                      | 1,401,285  |             |            |              | 2,632,271  |            
|                                                   
|                                                   
|                                                   
|                                                   
|DEFERRED LEASE COST                                 |                                                                                                 |                                      | 190,665    |             |            |              | 142,999    |            
|                                                   
|                                                   
|                                                   
|                                                   
|LONG-TERM DEBT Less current portion                |                                                                                                 |                                      | 36,063,097 |             |            |              | 36,750,894 |            
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|                                                    |                                                                                                 | Total liabilities                    |            |             | 85,955,903 |              |            |             | 86,559,438 |  
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|SHAREHOLDERS EQUITY                                |                                                                                                 |                                      |            |             |            |              |            |            
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Preferred stock, $.05 par value authorized 50,000,000 shares                                   |                                      |            |             |            |              |            |             |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Common stock, $.01 par value authorized, 50,000,000 shares;
  issued 12,222,488 and 12,190,011 |                                      |            | 122,225     |            |              |            | 121,900     |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Additional paid-in capital                                                                      |                                      |            | 62,215,438  |            |              |            | 62,149,281  |           
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Accumulated deficit                                                                             |                                      |            | (61,582,496 | )          |              |            | (62,482,382 | )         
|                                                   
|                                                   
|                                                   
|                                                   
|                                                    | Accumulated other comprehensive income                                                          |                                      |            | (384,499    | )          |              |            | (449,835    | )         
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|                                                    |                                                                                                 | Total
shareholders equity (deficit) |            |             | 370,668    |              |            |             | (661,036   | )
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           
|                                                    |                                                                                                 | TOTAL                                |            | $           | 86,326,571 |              |            | $           | 85,898,402 |  
|                                                    |                                                                                                 |                                      |            |             |            |              |            |             |           

See notes to consolidated financial statements.

-2-



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##### Table of Contents



SIMULA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

|                                               |  |                             |            |                           |  |      |            |      |  |   |            |   |  |   |            |  
|---------------------------------------------- |  | --------------------------- | ---------- | ------------------------- |  | ---- | ---------- | ---- |  | - | ---------- | - |  | - | ---------- | -
|                                               |  | Three Months Ended June 30, |            | Six Months Ended June 30,
|                                               |  |                             |            |                          
|                                               |  | 2001                        |            | 2000                      |  | 2001 |            | 2000
|                                               |  |                             |            |                           |  |      |            |     
|Revenue                                        |  | $                           | 25,956,898 |                           |  | $    | 23,946,849 |      |  | $ | 51,492,665 |   |  | $ | 48,505,707 |  
|                                              
|                                              
|                                              
|                                              
|Cost of revenue                                |  |                             | 16,204,171 |                           |  |      | 16,071,566 |      |  |   | 32,587,769 |   |  |   | 33,016,868 |  
|                                               |  |                             |            |                           |  |      |            |      |  |   |            |   |  |   |            |  
|Gross margin                                   |  |                             | 9,752,727  |                           |  |      | 7,875,283  |      |  |   | 18,904,896 |   |  |   | 15,488,839 |  
|                                              
|                                              
|                                              
|                                              
|Administrative expenses                        |  |                             | 5,560,735  |                           |  |      | 5,033,692  |      |  |   | 11,222,489 |   |  |   | 10,087,802 |  
|                                              
|                                              
|                                              
|                                              
|Restructuring charge                           |  |                             |           |                           |  |      |           |      |  |   | 479,000    |   |  |   |           |  
|                                              
|                                              
|                                              
|                                              
|Write down net assets held for sale            |  |                             | 600,000    |                           |  |      |           |      |  |   | 600,000    |   |  |   |           |  
|                                               |  |                             |            |                           |  |      |            |      |  |   |            |   |  |   |            |  
|Operating income                               |  |                             | 3,591,992  |                           |  |      | 2,841,591  |      |  |   | 6,603,407  |   |  |   | 5,401,037  |  
|                                              
|                                              
|                                              
|                                              
|Interest expense                               |  |                             | (2,651,567 | )                         |  |      | (2,302,531 | )    |  |   | (5,168,521 | ) |  |   | (4,566,169 | )
|                                               |  |                             |            |                           |  |      |            |      |  |   |            |   |  |   |            |  
|Income before taxes                            |  |                             | 940,425    |                           |  |      | 539,060    |      |  |   | 1,434,886  |   |  |   | 834,868    |  
|                                              
|                                              
|                                              
|                                              
|Income tax expense                             |  |                             | (363,000   | )                         |  |      | (231,000   | )    |  |   | (535,000   | ) |  |   | (335,000   | )
|                                               |  |                             |            |                           |  |      |            |      |  |   |            |   |  |   |            |  
|Net income                                     |  |                             | 577,425    |                           |  |      | 308,060    |      |  |   | 899,886    |   |  |   | 499,868    |  
|                                              
|                                              
|                                              
|                                              
|Preferred stock dividends                      |  |                             |           |                           |  |      | 33,025     |      |  |   |           |   |  |   | 66,683     |  
|                                               |  |                             |            |                           |  |      |            |      |  |   |            |   |  |   |            |  
|Net earnings available for common shareholders |  | $                           | 577,425    |                           |  | $    | 275,035    |      |  | $ | 899,886    |   |  | $ | 433,185    |  
|                                               |  |                             |            |                           |  |      |            |      |  |   |            |   |  |   |            |  
|Income per common share basic                 |  | $                           | 0.05       |                           |  | $    | 0.02       |      |  | $ | 0.07       |   |  | $ | 0.04       |  
|                                              
|                                              
|                                              
|                                              
|Income per common share assuming dilution     |  | $                           | 0.05       |                           |  | $    | 0.02       |      |  | $ | 0.07       |   |  | $ | 0.04       |  

See notes to consolidated financial statements.

-3-



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##### Table of Contents



SIMULA, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY
SIX MONTHS ENDED JUNE 30, 2001

|                                |  |              |            |            |  |             |         |               |  |               |            |               |  |        |             |   |  |             |          |   |  |   |          |   |  |   |         | 
|------------------------------- |  | ------------ | ---------- | ---------- |  | ----------- | ------- | ------------- |  | ------------- | ---------- | ------------- |  | ------ | ----------- | - |  | ----------- | -------- | - |  | - | -------- | - |  | - | ------- | 
|                                |  |              |            |            |  |             |         |               |  |               |            |               |  |        |             |   |  | Accumulated |          |   |  |   |          |   |  |  
|                                |  | Common Stock |            | Additional |  |             |         |               |  | Other         |            | Total         |  |        |             |  
|                                |  |              |            | Paid-in    |  | Accumulated |         | Comprehensive |  | Shareholders' |            | Comprehensive
|                                |  | Shares       |            | Amount     |  | Capital     |         | Deficit       |  | Income        |            | Equity        |  | Income
|                                |  |              |            |            |  |             |         |               |  |               |            |               |  |       
|BALANCE, January 1, 2001        |  |              | 12,190,011 |            |  | $           | 121,900 |               |  | $             | 62,149,281 |               |  | $      | (62,482,382 | ) |  | $           | (449,835 | ) |  | $ | (661,036 | ) |  |   |         | 
|                               
|                               
|                               
|                               
|Net income                      |  |              |            |            |  |             |         |               |  |               |            |               |  |        | 899,886     |   |  |             |          |   |  |   | 899,886  |   |  | $ | 899,886 | 
|                               
|                               
|                               
|                               
|Repurchase stock options        |  |              |            |            |  |             |         |               |  |               | (19,000    | )             |  |        |             |   |  |             |          |   |  |   | (19,000  | ) |  |   |         | 
|                               
|                               
|                               
|                               
|Issuance of common stock        |  |              | 32,477     |            |  |             | 325     |               |  |               | 85,157     |               |  |        |             |   |  |             |          |   |  |   | 85,482   |   |  |   |         | 
|                               
|                               
|                               
|                               
|Currency translation adjustment |  |              |            |            |  |             |         |               |  |               |            |               |  |        |             |   |  |             | 65,336   |   |  |   | 65,336   |   |  |   | 65,336  | 
|                                |  |              |            |            |  |             |         |               |  |               |            |               |  |        |             |   |  |             |          |   |  |   |          |   |  |   |         | 
|BALANCE, June 30, 2001          |  |              | 12,222,488 |            |  | $           | 122,225 |               |  | $             | 62,215,438 |               |  | $      | (61,582,496 | ) |  | $           | (384,499 | ) |  | $ | 370,668  |   |  | $ | 965,222 | 
|                                |  |              |            |            |  |             |         |               |  |               |            |               |  |        |             |   |  |             |          |   |  |   |          |   |  |   |         | 

See notes to consolidated financial statements.

-4-



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##### Table of Contents



SIMULA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |            |             |  
|--------------------------------------------------------- | ------------------------------------------------------------------------------------------- | ----------------------------------------------- | --------------------------------------------------- | ---------- | ---------------- | ---------- | ---------- | ---------- | ---------- | ----------- | -
|                                                          |                                                                                             |                                                 |                                                     |            | Six Months Ended
|                                                          |                                                                                             |                                                 |                                                     |            | June 30,        
|                                                          |                                                                                             |                                                 |                                                     |            |                 
|                                                          |                                                                                             |                                                 |                                                     |            | 2001             |            | 2000      
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |           
|Cash flows used for operating activities:                 |                                                                                             |                                                 |                                                     |            |                  |            |            |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Net income                                                                                  |                                                 | $                                                   | 899,886    |                  |            | $          | 499,868    |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Adjustments to reconcile net income to net cash provided by (used in) operating activities: |                                                 |                                                     |            |                  |            |            |            |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Depreciation and amortization                   |                                                     |            | 2,203,382        |            |            |            | 2,382,491  |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Deferred income taxes                           |                                                     |            | 487,000          |            |            |            | 335,000    |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Capitalized interest                            |                                                     |            | 234,718          |            |            |            | 228,945    |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Restructuring charge                            |                                                     |            | 479,000          |            |            |            |           |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Write down net assets held for sale             |                                                     |            | 600,000          |            |            |            |           |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Currency translation adjustment                 |                                                     |            | 65,336           |            |            |            | (218,989   | )          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Changes in net assets and liabilities:                                                      |                                                 |                                                     |            |                  |            |            |            |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Contract and trade receivables net of advances |                                                     |            | 1,818,113        |            |            |            | 545,138    |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Inventories                                     |                                                     |            | (689,316         | )          |            |            | (1,054,002 | )          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Prepaid expenses and other                      |                                                     |            | (117,596         | )          |            |            | (100,590   | )          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Other assets                                    |                                                     |            | (633,169         | )          |            |            | (12,854    | )          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Net assets held for sale                        |                                                     |            |                 |            |            |            | 677,582    |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Trade accounts payable                          |                                                     |            | (319,844         | )          |            |            | (748,128   | )          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Deferred revenue                                |                                                     |            | (1,280,436       | )          |            |            |           |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Deferred lease costs                            |                                                     |            | (47,666          | )          |            |            |           |            
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Restructuring reserve                           |                                                     |            | (653,423         | )          |            |            | (2,875,639 | )          
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          |                                                                                             | Other accrued liabilities                       |                                                     |            | (2,054,396       | )          |            |            | (1,884,506 | )          
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|                                                          |                                                                                             |                                                 | Net cash provided by (used in) operating activities |            |                  | 991,589    |            |            |            | (2,225,684  | )
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|Cash flows (used in) provided by investing activities:    |                                                                                             |                                                 |                                                     |            |                  |            |            |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Purchase of property and equipment                                                          |                                                 |                                                     | (2,842,263 | )                |            |            | (139,566   | )         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Costs incurred to obtain intangibles                                                        |                                                 |                                                     | (472,251   | )                |            |            | (175,715   | )         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Proceeds from sale                                                                          |                                                 |                                                     |           |                  |            |            | 11,358,660 |           
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|                                                          |                                                                                             |                                                 | Net cash (used in) provided by investing activities |            |                  | (3,314,514 | )          |            |            | 11,043,379  |  
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|Cash flows provided by (used in) in financing activities: |                                                                                             |                                                 |                                                     |            |                  |            |            |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Net borrowings (repayments) under line of credit                                            |                                                 |                                                     | 2,446,181  |                  |            |            | (6,827,778 | )         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Principal payments under other debt arrangements                                            |                                                 |                                                     | (709,671   | )                |            |            | (6,508,336 | )         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Dividends paid                                                                              |                                                 |                                                     |           |                  |            |            | (62,080    | )         
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Repurchase stock options                                                                    |                                                 |                                                     | (19,000    | )                |            |            |           |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Issuance of common shares                                                                   |                                                 |                                                     | 85,482     |                  |            |            | 208,848    |           
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|                                                          |                                                                                             |                                                 | Net cash provided by (used in) financing activities |            |                  | 1,802,992  |            |            |            | (13,189,346 | )
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|Net decrease in cash and cash equivalents                 |                                                                                             |                                                 | (519,933                                            | )          |                  |            | (4,371,651 | )         
|                                                         
|                                                         
|                                                         
|                                                         
|Cash and cash equivalents at beginning of period          |                                                                                             |                                                 | 746,078                                             |            |                  |            | 5,223,236  |           
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|Cash and cash equivalents at end of period                |                                                                                             | $                                               | 226,145                                             |            |                  | $          | 851,585    |           
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:         |                                                                                             |                                                 |                                                     |            |                  |            |            |           
|                                                         
|                                                         
|                                                         
|                                                         
|                                                          | Interest paid                                                                               |                                                 | $                                                   | 3,811,992  |                  |            | $          | 3,794,364  |           
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           
|                                                          | Taxes paid                                                                                  |                                                 | $                                                   | 44,200     |                  |            | $          | 7,400      |           
|                                                          |                                                                                             |                                                 |                                                     |            |                  |            |            |            |           

See notes to consolidated financial statements.

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##### Table of Contents






SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Basis of Presentation:

The consolidated financial statements include the accounts of Simula, Inc.
and its subsidiaries (collectively we and our). All of the subsidiaries
are wholly owned. All intercompany transactions are eliminated in
consolidation.

We have prepared the accompanying interim consolidated financial
statements in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of Management, all adjustments and reclassifications considered
necessary for a fair and comparable presentation have been included and are of
a normal recurring nature. Operating results for the six months ended June 30,
2001 are not necessarily indicative of the results that may be expected for the
year ending December 31, 2001.

The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. The financial
statements do not include any adjustments relating to recoverability and
classification of recorded asset amounts and classification of liabilities that
might be necessary should we be unable to continue as a going concern. Our
continuation as a going concern depends upon our ability to obtain refinancing
of certain debt. Because our ability to achieve debt refinancing cannot be
assured, and due to the continuing non-compliance with our Senior
Secured Notes and
its potential impacts on liquidity discussed below, substantial doubt about our
ability to continue as a going concern exists. The financial statements do not
include any adjustments that might be necessary if we are unable to continue as
a going concern.

We incurred losses of $4.9 million in 2000, $22.8 million in 1999 and
$27.7 million in 1998. These losses were primarily related to unprofitable
businesses and charges and write-offs related to the disposition of those
businesses as well as charges and write-offs related to our recent
restructuring activities described below.

In the fourth quarter 2000, the Board of Directors changed executive
management and named a new Chief Executive Officer. A new Chief Operating
Officer was named in the first quarter of 2001 and a Chief Development Officer
was named in the second quarter of 2001. New management led an evaluation of
its business plan and current operations. As a result of this evaluation, we
adopted a restructuring plan which included narrowing the focus of our
operations, consolidating certain of our operating units, reducing our
workforce, monetizing our technology portfolio, rationalizing
internal research and development costs, and restructuring our balance sheet by
refinancing our debt structure to achieve overall interest savings and reducing
our debt. During the first quarter of 2001, we completed our new business model, executed
our reduction in workforce, began the consolidation of two of our business
units and continued our efforts in restructuring our existing debt through debt
refinancing. In conjunction with these restructuring activities, we recorded
additional restructuring charges totaling $479,000 in the quarter ending March
31, 2001 and a $600,000 charge to write down net assets held for sale to
estimated net realizable value in the quarter ending June 30, 2001.

The loss for the year 2000 was primarily due to charges recorded in the
fourth quarter related to nonrecurring write-downs of long-lived assets and the
accrual of one-time charges. This loss resulted from decisions by new
management to adjust the accounts where necessary to reflect the operative business model. As a result of this loss,
we were in technical default of certain non-monetary financial covenants with our Senior
Secured Notes at December 31, 2000. We have attempted to negotiate waivers of
the non-monetary financial defaults with the holder of the Senior Secured Notes
but were unsuccessful in reaching agreement on the appropriate amount of
compensation to be paid to the lender for the waivers. As a result, at June
30, 2001, we remain in default of that agreement. Although the senior lender
has asserted its right to receive default interest payments, we have not
received a notice of default or notification of acceleration of the maturity of
this debt, all of which are potential remedies available to this lender.
Acceleration of these notes would have a material adverse effect on our
liquidity. Due to the absence of appropriate waivers from the lender, the
Senior Secured Notes in the amount of $19.2 million, with a face value of $20.7
million, has been classified as a current liability.

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##### Table of Contents



SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

At June 30, 2001 as a result of capital expenditures incurred in the
relocation of one of our operating units, we were not in compliance with our
fixed charges coverage ratio covenant relating to our revolving line of credit
(RLC). This covenant has been waived by our RLC lender.

With regard to refinancing our debt structure, including but not limited
to our Senior Secured Notes, we have retained an investment banker. We
continue to consider financing alternatives. In the event that we are
successful in obtaining replacement financing, the terms of the new financing
would allow us to reclassify this debt as long-term. Although we believe we
will be successful in obtaining adequate replacement financing, our ability to
achieve this cannot be assured.

Note 2 New Accounting
Pronouncements:

In July 2001, the
Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 is effective immediately and
SFAS 142 will be effective January 2002. The new standards are
not expected to have a significant impact on our financial statements.

Note 3 Inventories:

At June 30, 2001 and December 31, 2000, inventories consisted of the
following:

|                |                   |   |           |           |              |   |           |           | 
|--------------- | ----------------- | - | --------- | --------- | ------------ | - | --------- | --------- | 
|                |                   |   | June 30,  |           | December 31,
|                |                   |   | 2001      |           | 2000        
|                |                   |   |           |           |             
|Raw materials   |                   | $ | 3,656,057 |           |              | $ | 4,102,441 |          
|               
|               
|               
|               
|Work in process |                   |   | 1,546,917 |           |              |   | 1,551,463 |          
|               
|               
|               
|               
|Finished goods  |                   |   | 405,614   |           |              |   | 273,235   |          
|                |                   |   |           |           |              |   |           |          
|                | Total inventories |   | $         | 5,608,588 |              |   | $         | 5,927,139 | 
|                |                   |   |           |           |              |   |           |          

Note 4  Restructuring and Other Charges

We committed ourselves to a
plan of restructuring which includes narrowing the focus of our operations,
consolidating certain of our operating units, reducing our workforce,
monetizing our technology portfolio, rationalizing internal research
and development costs, restructuring our balance sheet by refinancing our debt
structure to achieve overall interest savings and a program of debt reduction
through improved earnings and strategic disposition of assets. As a result,
during the first quarter of 2001, we recorded restructuring costs of $0.5
million consisting of $0.4 million in employee severance and $0.1 million
related to remaining facility lease liability and the write down of fixed
assets. The headcount reductions occurred in mid March 2001 and
substantially all has been paid at June 30, 2001. The
facility lease liability is expected to be extinguished prior to 2001 fiscal
year end. During the second quarter of 2001, we recorded an additional charge
of $0.6 million to write down net assets held for sale to their estimated net
realizable value.

In December 1999, we recorded
an $18.3 million restructuring charge related to the divestiture of our
commercial airline seat manufacturing operation. At December 31, 2000, $1.9
million in accrued restructuring costs remained outstanding. These costs
consist primarily of equipment and facility lease obligations and outstanding
purchase order commitments which were non-cancelable. During the six months ended June 30, 2001, approximately $0.3 million
consisting primarily of lease costs were paid and approximately
$1.7 million related to the 1999 and 2001 restructuring
activities remained outstanding.

Note 5  Income Taxes:

Statement of
Financial Accounting Standards No. 109 requires the recording of
a deferred tax asset valuation allowance if the weight of available
evidence indicates that some or all of the deferred tax asset will
not be realized. Such evidence includes the historical operating
performance of the company including its ability to continue as a
going concern and tax planning strategies.

We increased our
deferred tax valuation allowance $0.7 million in 2000, $0.1 million
in 1999 and $0.3 million in 1998 because certain tax credits and
operating loss carry forwards, primarily related to states in which
we no longer have operations, are unlikely to be utilized. At
December 31, 2000, the Company had approximately $88.0 million
of net operating loss carry forwards which expire through
2020.

We have incurred
losses for each of the past five years. These losses were primarily
related to certain unprofitable businesses and charges and write-offs
related to the disposition of those businesses. In addition, our
operating plan, which has been adopted by the Board of Directors,
supports our ability to generate sufficient taxable income to utilize
the available net operating losses prior to their expiration. This
plan is based on programs and contracts currently in hand. In
addition, should we be required to sell assets or liquidate certain
business operations, management believes estimated gains would
be sufficient to utilize our existing deferred tax
assets.

Accordingly, although
realization of the net deferred tax assets are not assured,
management believes that it is more likely than not that all of the
net deferred tax assets will be realized. The amount of net deferred
tax assets considered realizable, however, could be reduced in the
near term based on changing conditions.

Note 6  Segment Reporting

We are a holding company for wholly owned subsidiaries which operate in
two primary business segments. Our Commercial Products segment includes
operations encompassing inflatable restraints and related technology for
automobiles, airline seating soft goods and polymer materials. Our Aerospace
and Defense segment includes operations that design and manufacture crash
resistant components, energy absorbing devices, ballistic armor and

-7-



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##### Table of Contents



SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

composites principally in connection with branches of the United States
armed forces procurement. Our remaining segment, entitled Other, represents
general corporate operations.

For the three-month period ended June 30, 2001 and 2000 inter-segment
sales were insignificant and total intercompany sales of $221,190 and $388,453,
respectively, have been eliminated.

|                        |                                |                           |         |            |            |               |           |            |            |       |          |   |   |   |           |            |            | 
|----------------------- | ------------------------------ | ------------------------- | ------- | ---------- | ---------- | ------------- | --------- | ---------- | ---------- | ----- | -------- | - | - | - | --------- | ---------- | ---------- | 
|                        |                                |                           |         | 2001      
|                        |                                |                           |         |           
|                        |                                |                           |         | Commercial |            | Aerospace and |           |            |            |       |          |   |   |  
|                        |                                |                           |         | Products   |            | Defense       |           | Other      |            | Total
|                        |                                |                           |         |            |            |               |           |            |            |      
|Revenue:                |                                |                           |         |            |            |               |           |            |            |       |          |   |   |   |           |           
|                       
|                       
|                       
|                       
|                        | Contract revenue               |                           |         |            |            |               | $         | 15,649,067 |            |       |          |   |   |   | $         | 15,649,067 |           
|                       
|                       
|                       
|                       
|                        | Product sales:                 |                           |         |            |            |               |           |            |            |       |          |   |   |   |           |            |           
|                       
|                       
|                       
|                       
|                        |                                | Automotive
safety systems |         | $          | 8,095,735  |               |           |            |            |       |          |   |   |   |           |            | 8,095,735  | 
|                       
|                       
|                       
|                       
|                        |                                | Other                     |         |            | 1,882,126  |               |           |            |            |       |          |   |   |   |           |            | 1,882,126  | 
|                       
|                       
|                       
|                       
|                        | Technology sales and royalties |                           |         | 286,951    |            |               |           | 43,019     |            |       |          |   |   |   |           | 329,970    |           
|                        |                                |                           |         |            |            |               |           |            |            |       |          |   |   |   |           |            |           
|                        |                                | Total revenue             |         | $          | 10,264,812 |               |           | $          | 15,692,086 |       |          | $ |  |   |           | $          | 25,956,898 | 
|                        |                                |                           |         |            |            |               |           |            |            |       |          |   |   |   |           |           
|Operating (loss) income |                                | $                         | 772,266 |            |            | $             | 3,639,319 |            |            | $     | (819,593 | ) |   | $ | 3,591,992 |           

|                        |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |            |            | 
|----------------------- | ------------------------------ | ------------------------- | --------- | ---------- | ---------- | ------------- | --------- | ---------- | ---------- | ----- | -------- | - | - | - | --------- | ---------- | ---------- | 
|                        |                                |                           |           | 2000      
|                        |                                |                           |           |           
|                        |                                |                           |           | Commercial |            | Aerospace and |           |            |            |       |          |   |   |  
|                        |                                |                           |           | Products   |            | Defense       |           | Other      |            | Total
|                        |                                |                           |           |            |            |               |           |            |            |      
|Revenue:                |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |           
|                       
|                       
|                       
|                       
|                        | Contract revenue               |                           |           |            |            |               | $         | 13,606,890 |            |       |          |   |   |   | $         | 13,606,890 |           
|                       
|                       
|                       
|                       
|                        | Product sales:                 |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |            |           
|                       
|                       
|                       
|                       
|                        |                                | Automotive
safety systems |           |            | 8,171,386  |               |           |            |            |       |          |   |   |   |           |            | 8,171,386  | 
|                       
|                       
|                       
|                       
|                        |                                | Other                     |           |            | 1,622,497  |               |           |            |            |       |          |   |   |   |           |            | 1,622,497  | 
|                       
|                       
|                       
|                       
|                        | Technology sales and royalties |                           |           | 268,557    |            |               |           | 277,519    |            |       |          |   |   |   |           | 546,076    |           
|                        |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |            |           
|                        |                                | Total revenue             |           | $          | 10,062,440 |               |           | $          | 13,884,409 |       |          | $ |  |   |           | $          | 23,946,849 | 
|                        |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |           
|Operating (loss) income |                                | $                         | 2,207,778 |            |            | $             | 1,106,509 |            |            | $     | (472,696 | ) |   | $ | 2,841,591 |           

-8-



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##### Table of Contents



SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the six month period ended June 30, 2001 and 2000 inter-segment sales
were insignificant and total intercompany sales of $420,620 and $1,164,377,
respectively, have been eliminated.

|                        |                                |                           |           |            |            |               |           |            |            |       |            |   |   |   |           |            |            | 
|----------------------- | ------------------------------ | ------------------------- | --------- | ---------- | ---------- | ------------- | --------- | ---------- | ---------- | ----- | ---------- | - | - | - | --------- | ---------- | ---------- | 
|                        |                                |                           |           | 2001      
|                        |                                |                           |           |           
|                        |                                |                           |           | Commercial |            | Aerospace and |           |            |            |       |            |   |   |  
|                        |                                |                           |           | Products   |            | Defense       |           | Other      |            | Total
|                        |                                |                           |           |            |            |               |           |            |            |      
|Revenue:                |                                |                           |           |            |            |               |           |            |            |       |            |   |   |   |           |           
|                       
|                       
|                       
|                       
|                        | Contract revenue               |                           |           |            |            |               | $         | 29,215,489 |            |       |            |   |   |   | $         | 29,215,489 |           
|                       
|                       
|                       
|                       
|                        | Product sales:                 |                           |           |            |            |               |           |            |            |       |            |   |   |   |           |            |           
|                       
|                       
|                       
|                       
|                        |                                | Automotive
safety systems |           | $          | 18,288,978 |               |           |            |            |       |            |   |   |   |           |            | 18,288,978 | 
|                       
|                       
|                       
|                       
|                        |                                | Other                     |           |            | 3,323,900  |               |           |            |            |       |            |   |   |   |           |            | 3,323,900  | 
|                       
|                       
|                       
|                       
|                        | Technology sales and royalties |                           |           | 569,279    |            |               |           | 95,019     |            |       |            |   |   |   |           | 664,298    |           
|                        |                                |                           |           |            |            |               |           |            |            |       |            |   |   |   |           |            |           
|                        |                                | Total revenue             |           | $          | 22,182,157 |               |           | $          | 29,310,508 |       |            | $ |  |   |           | $          | 51,492,665 | 
|                        |                                |                           |           |            |            |               |           |            |            |       |            |   |   |   |           |           
|Operating (loss) income |                                | $                         | 3,010,999 |            |            | $             | 5,191,247 |            |            | $     | (1,598,839 | ) |   | $ | 6,603,407 |           

|                        |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |            |            | 
|----------------------- | ------------------------------ | ------------------------- | --------- | ---------- | ---------- | ------------- | --------- | ---------- | ---------- | ----- | -------- | - | - | - | --------- | ---------- | ---------- | 
|                        |                                |                           |           | 2000      
|                        |                                |                           |           |           
|                        |                                |                           |           | Commercial |            | Aerospace and |           |            |            |       |          |   |   |  
|                        |                                |                           |           | Products   |            | Defense       |           | Other      |            | Total
|                        |                                |                           |           |            |            |               |           |            |            |      
|Revenue:                |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |           
|                       
|                       
|                       
|                       
|                        | Contract revenue               |                           |           |            |            |               | $         | 24,501,075 |            |       |          |   |   |   | $         | 24,501,075 |           
|                       
|                       
|                       
|                       
|                        | Product sales:                 |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |            |           
|                       
|                       
|                       
|                       
|                        |                                | Airline
seat systems      |           | $          | 4,275,278  |               |           |            |            |       |          |   |   |   |           |            | 4,275,278  | 
|                       
|                       
|                       
|                       
|                        |                                | Automotive
safety systems |           |            | 15,992,371 |               |           |            |            |       |          |   |   |   |           |            | 15,992,371 | 
|                       
|                       
|                       
|                       
|                        |                                | Other                     |           |            | 2,858,263  |               |           |            |            |       |          |   |   |   |           |            | 2,858,263  | 
|                       
|                       
|                       
|                       
|                        | Technology sales and royalties |                           |           | 538,777    |            |               |           | 339,943    |            |       |          |   |   |   |           | 878,720    |           
|                        |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |            |           
|                        |                                | Total revenue             |           | $          | 23,664,689 |               |           | $          | 24,841,018 |       |          | $ |  |   |           | $          | 48,505,707 | 
|                        |                                |                           |           |            |            |               |           |            |            |       |          |   |   |   |           |           
|Operating (loss) income |                                | $                         | 4,052,472 |            |            | $             | 2,158,523 |            |            | $     | (809,958 | ) |   | $ | 5,401,037 |           

-9-



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##### Table of Contents



SIMULA, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

Note 7 Earnings per share:

The following is a reconciliation of the numerators and denominators of
basic and diluted per share computations. For the six-month period ended June
30, 2001 and 2000, the effect of 1,774,074 shares and 1,965,812 shares,
respectively, to be issued upon conversion of the 8% Notes was not used in
determining dilutive earnings per share because the result would be
anti-dilutive.

|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|--------------------------------------------- |  | --------------------------- | ---------- | ------------------------- |  | ---- | ---------- | ---- |  | - | ---------- |  |  | - | ---------- | 
|                                              |  | Three Months Ended June 30, |            | Six Months Ended June 30,
|                                              |  |                             |            |                          
|                                              |  | 2001                        |            | 2000                      |  | 2001 |            | 2000
|                                              |  |                             |            |                           |  |      |            |     
|Net Earnings                                  |  | $                           | 577,425    |                           |  | $    | 308,060    |      |  | $ | 899,886    |  |  | $ | 499,868    | 
|                                             
|                                             
|                                             
|                                             
|Dividends on preferred stock                  |  |                             |           |                           |  |      | 33,025     |      |  |   |            |  |  |   | 66,683     | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|Net earnings available to common stockholders |  | $                           | 577,425    |                           |  | $    | 275,035    |      |  | $ | 899,886    |  |  | $ | 433,185    | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|                                             
|                                             
|                                             
|                                             
|Basic weighted average shares outstanding     |  |                             | 12,200,717 |                           |  |      | 11,169,767 |      |  |   | 12,195,363 |  |  |   | 11,136,797 | 
|                                             
|                                             
|                                             
|                                             
|Effect of dilutive securities                 |  |                             | 484,583    |                           |  |      |            |      |  |   | 442,586    |  |  |   | 4,598      | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|Diluted weighted average shares outstanding   |  |                             | 12,685,300 |                           |  |      | 11,169,767 |      |  |   | 12,637,949 |  |  |   | 11,141,395 | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|                                             
|                                             
|                                             
|                                             
|Basic per share amounts                       |  | $                           | 0.05       |                           |  | $    | 0.02       |      |  | $ | 0.07       |  |  | $ | 0.04       | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 
|                                             
|                                             
|                                             
|                                             
|Diluted per share amounts                     |  | $                           | 0.05       |                           |  | $    | 0.02       |      |  | $ | 0.07       |  |  | $ | 0.04       | 
|                                              |  |                             |            |                           |  |      |            |      |  |   |            |  |  |   |            | 

-10-



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##### Table of Contents






Simula, Inc.

Item 2. Managements Discussion and Analysis of Results of Operations and Financial Condition.

General

The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of the results of
operations of Simula, Inc. You should read this discussion in conjunction with
the Financial Statements and Notes included elsewhere in this report. Special
Note: Certain statements set forth below constitute forward looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995, referred to as the Reform Act. See Special Note Regarding Forward
Looking Information and Risks and Uncertainties in the Business.

Overview

We are a recognized world leader in innovative safety technology.
Twenty-five years ago we pioneered crashworthy helicopter seating which
provided a unique solution to life-threatening situations for military pilots.
Since that time we have created numerous other life-saving products and
technologies that protect humans.

We operate in two business segments. Our Commercial Products Segment
includes technology development, products and safety systems for automobiles
and trucks, high impact transparent polymer products, and a non-core business
in airline seat soft goods. Our Aerospace and Defense Segment includes
technology development and manufacturing operations for military aircraft
seating, armor, parachutes and crew safety systems sold principally to U.S. and
foreign armed forces. Both of our segments also engage in technology
licensing.

Strategy

A key part of our strategy has been to develop state-of-the-art safety
solutions for aerospace and defense applications and to migrate that technology
to commercial markets. These defense-related development programs have
frequently been funded by the U.S. government under circumstances where we
retain commercial and patent rights. We have also employed the strategy in
reverse. Commercialization of products has allowed us to expand markets and
lower our costs, which may make us more competitive in our military markets.

An example of this strategy is the development and migration of products
we developed to protect against head injuries. The project began in an effort
to create inflatable protection systems for helicopter pilots to further
augment the crashworthy seating that we were providing to the military. One
result was our Cockpit Air Bag System (CABS), which is a system that deploys
inflatable cushions around a military helicopter occupants upper body in
violent crash situations. Research and development funding from the U.S. Army
was instrumental in developing key unique aspects of the system that differed
from any system found in automobiles. In turn, this capability supported an
innovation in automotive side-impact head protection, called the Inflatable
Tubular Structure (ITS). The development of ITS® solved a long-standing
safety issue in the automotive industry and forged an entirely new market. As
part of the cycle, we are now marketing a form of the ITS for use in military
helicopters.

Our continuing efforts to improve existing products and develop new safety
concepts have spawned a wide array of technologies. Our efforts to add
ballistic protection to our helicopter seating led us into the areas of
high-technology materials. Through the knowledge gained in successfully
armoring our seats, we created new armor materials and techniques. We then
incorporated this knowledge into the development of lightweight armor for vests
for personnel and land vehicles for the military.

As with our inflatable restraint systems, we have transferred our
materials to commercial applications. Our armor designs are being used in
life-protecting vests for law enforcement officials and we are investigating
many other uses. A transparent polymer developed in the Simula labs for
armored windows possesses such unique qualities that it is currently licensed
for use in ophthalmic lenses and sports eyewear and sunglasses. This polymers
unique qualities and characteristics of high optics, light weight,
-11-Table of ContentsSimula, Inc.and impact resistance are driving a search by Simula and our strategic
partners for a wide range of applications.We maintain visibility in our markets by our role as a leading innovator
in safety technology. Simula conducts one of the nations foremost training
schools, the International Center for Safety Education, where crash
investigators and vehicle designers come to be trained in the biomechanics of
crash situations, and methods of minimizing the risk of injury. Our personnel
hold key positions in leading industry organizations that are advocates for
safety regulation, including The Society of Automotive Engineers, Automotive
Occupants Restraint Council, SAFE Association, the American Helicopter Society,
and the National Defense Industry Association.As a result of our commitment to safety, we are in a position to
understand our customers needs and are able to achieve innovative solutions in
our laboratories and test facilities. Simulas success is largely due to our
commitment to this strategy; the vast majority of our revenue today comes from
products created through our innovation.Business ChangesWe are currently in the midst of a restructuring. This restructuring was
occasioned by a change in management beginning with the appointment of a new
President and Chief Executive Officer in October 2000, and a new Chief
Operating Officer and Chief Development Officer in March 2001. Under this new
management team we adopted and, as of March 31, 2001, have completed or
substantially implemented a restructuring plan.Today we are focused on three key areas. The result is two quarters of on
target operating profits. First, we are committed to running our businesses
profitably and efficiently. With one limited exception, we have disposed of
our non-core businesses and have right-sized our remaining operations. After
performing a cross-disciplinary, cross-subsidiary review of all of our business
units, we identified areas of excess spending and eliminated those excesses.Second, we have overhauled how we market and develop products at Simula.
While we recognize the need to fund our innovation, we also realized that the
structure to provide efficient decision-making and visibility was not in place.
We have created a new position, Chief Development Officer, and tasked this
office with creating a process to foster creativity, but more importantly, to
identify market winners as early as possible. This new process, referred to as
Fastrack, is currently functioning with eleven projects in the pipeline. The
first major project to market will be the Distributed Charge Inflator (DCI) a
revolutionary innovation in airbag deployment that we believe represents the
next generation of gas generators for side-impact airbags and other inflatable
products.Third, on the financial front we are committed to strengthening our
balance sheet by addressing the substantial debt resulting from previous
acquisitions and businesses disposed of in restructuring. This is not a simple
task and will not be achieved in a single transaction, but we believe that a
series of disciplined, well-structured transactions during a period of
sustained profitability will enable us to reduce the level and cost of our
debt.Management believes Simula is on course today and will stay that way by
focusing on this corporate strategy comprised of three key areas: running our
existing operations profitably and efficiently; effectively creating and
marketing a new generation of products for our future; and restructuring, and
ultimately reducing, our debt.Liquidity and Capital ResourcesLiquidity-12-Table of ContentsSimula, Inc.We define liquidity as our ability to generate adequate cash to meet our
obligations and fund operations. At June 30, 2001, we had cash and cash
equivalents of $266,145 compared to $746,078 at December 31, 2000. We had
outstanding borrowings under our RLC of $7.8 million on an available base of
$12.7 million at June 30, 2001 as compared to outstanding borrowings of $5.3
million on an available base of $13.7 million at December 31, 2000.For the six months ended June 30, 2001, operations provided approximately
$1.0 million of cash as compared to a usage of $2.2 million for the comparable
period in 2000. The increase in cash provided by operations is due to
increased earnings from operations and less cash required to extinguish
restructuring liabilities.Investing activities used $3.3 million during the six months ended June
30, 2001, principally attributable to leasehold improvements made in
relation to the relocation of our largest manufacturing division and
additional investment in our patent portfolio.Financing activities provided net cash of $1.8 million for the six months
ended June 30, 2001, primarily the result of increased borrowing under
our RLC. For the comparable period in 2000, approximately $13.2 million of
cash was used to pay down debt, of which $11.4 million was provided from the
sale of assets.As reported in our December 31, 2000 Form 10-K report, we were, and
remain, in default of certain non-monetary technical covenants with regard to
our Senior Secured Notes. Although the senior lender has asserted its right to
receive default interest payments, we have not received a notice of default or
notification of acceleration of maturity of this debt, all of which are
potential remedies available to this lender. Default interest was 6% at June
30, 2001 and increases 1% each month until such default is no longer
continuing. Acceleration of these notes would have a materially adverse effect
on our liquidity. Due to the absence of appropriate waivers from the lender,
the Senior Secured Notes in the amount of $19.2 million, with a face value of
$20.7 million, have been classified as a current liability (see Note 1 to the
financial statements.)At June 30, 2001 as a result of capital expenditures incurred in the
relocation of one of our operating units, we were not in compliance with our
fixed charges coverage ratio covenant relating to our RLC. This covenant has
been waived by our RLC lender.We believe that our existing available line of credit and cash generated
from operations will be sufficient to fund our operations and planned
expenditures for the next twelve months, with the exception of a $5.0 million
principal payment due on a Senior Secured Note due October 1, 2001. We are
currently in the process of attempting to refinance Senior Secured Notes, as
well as expanding loan commitments and pursuing alternative methods of
financing to cover all commitments. We cannot provide assurance that
refinancing can be accomplished by October 1, 2001 or that alternative
financing will be available or, if available, that the terms will be acceptable
to us. Furthermore, we may encounter additional funding requirements to fund
expansion or increased working capital needs. We can give no assurances that
those potential additional needs can be met. We have also applied for a U.K.
government grant that would fund additional capital expenditures in the United
Kingdom for our DCI project. Our application is pending. In the event that we
have not arranged for additional financing or alternative funding to meet the
$5.0 million principal obligation and we are required to fund the amount from
existing resources, the impact on liquidity thereafter could significantly
impact the growth and operations of the Company until further liquid resources
could be obtained.Capital ResourcesManagement and the Board of Directors have recognized that the debt levels
for Simula are excessive and should be reduced. This debt level is largely the
result of a previous acquisition strategy as to which we have subsequently
disposed of those acquired businesses. As previously discussed, management is
focusing significant efforts to accomplish that result. There are no
assurances that capital resources will be available to us in the future to
accomplish the desired balance sheet restructuring.-13-Table of ContentsSimula, Inc.Results of OperationsOverviewWe had a solid second quarter 2001. In our Aerospace and Defense segment,
we saw strong and consistent revenue growth particularly in the armor products
line. We also concluded a contract with the U.S. military for our CABS
technology. In our Commercial Products segment, we had sustained revenue
growth.Our second quarter 2001 results were affected by non-recurring items. We
benefited from approximately $1.0 million, representing a reimbursement of our
development costs for the CABS technology. We also incurred non-recurring
expenses, however, of approximately $1.0 million, consisting of a $0.6 million
write down to net realizable value of commercial assets held for sale, $0.2
million in abandoned financing fees, and $0.3 million in default interest.
While our second quarter non-recurring revenues and expenses essentially offset
each other, our cash flow position will benefit from the CABS development
reimbursement payment in the third quarter.Three and Six Months Ended June 30, 2001 Compared to
Three and Six Months Ended June 30, 2000Revenues Our revenue for the three and six months ended June 30, 2001 was
$25.9 million and $51.5 million compared to $23.9 million and $48.5 million for
the same periods in 2000. This increase in revenue is primarily attributable
to our Aerospace and Defense segment, which resulted in increases in revenue of
13% to $15.7 million and 18% to $29.3 million in the three and six month period
in 2001 over comparable period in 2000. Revenues in our Commercial Products
segment increased 2% to $10.3 million in the three month period ended June 30,
2001 and decreased 6% to $22.2 million in the six month period ended June 30,
2001 over comparable periods in 2000. The decrease in Commercial Product
segment sales for the six month period is attributable to the disposal of our
airline seat manufacturing operation in January 2000, which contributed
revenues of $4.3 million in that period. After eliminating the effect of these
sales, Commercial Product segment revenues increased $2.8 million or 14% for
the six month period in 2001. The three month and six month period increases
in our Commercial Products segment, as adjusted, are attributable to increased
ITS sales.Gross Margin Our gross margin for the three and six months ended June 30,
2001 was $9.8 million (38% of revenue) and $18.9 million (37% of revenue)
compared to $7.8 million (33% of revenue) and $15.5 million (32% of revenue)
for the same period in 2000. Gross margin for the three and six months ended
June 30, 2001 in the Aerospace and Defense segment was $6.2 million (40% of
revenue) and $11.0 million (37% of revenue) compared to $4.0 million (29% of
revenue) and $ 7.8 million (31% of revenue) for the same period in 2000. The
Aerospace and Defense segment gross margin benefited from the receipt of the
CABS contract award in June 2001, which allowed for cost recovery of
development costs incurred in previous years. As a result, we were able to
recognize approximately $1.0 million in revenue related to previous development
activities with no associated current period costs. Gross margin for the three
and six months ended June 30, 2001 in the Commercial Products segment was $3.5
million (34% of revenue) and $7.9 million (36% of revenue) compared to $3.8
million (38% of revenue) and $7.6 million (32% of revenue) for the same period
in 2000. Our airline seat manufacturing operation had no impact on gross
margin in the comparative periods for 2000.Administrative Expenses Our administrative expense for the three and six
months ended June 30, 2001 was $5.6 million (22% of revenues) and $11.2 (22% of
revenues) compared to $5.0 million (21% of revenues) and $10 million (21% of
revenues) for the same period in 2000. The Aerospace and
Defense-14-Table of ContentsSimula, Inc.segment administrative expenses for the three and six months ended June 30,
2001 were $2.6 million (17% of revenue) and $5.5 million (19% of revenue)
compared to $2.9 million (21% of revenue) and $5.7 million (23% of revenue) for
the comparable 2000 periods. The decrease in Aerospace and Defense segment
administrative expenses for both periods is attributable to the headcount
reductions implemented during the first quarter of 2001. The Commercial
Products segment administrative expenses for the three and six months ended
June 30, 2001 were $2.1 million (21% of revenue) and $4.3 million (19% of
revenue) compared to $1.7 million (17% of revenue) and $3.6 million (15% of
revenue) for the comparable 2000 periods. The increase in the Commercial
segment administrative expenses is primarily attributable to an increase in
research and development related to the DCI technology. Unallocated corporate
administrative expenses for the three and six months ended were $0.8 million
(3% of revenues) and $1.6 million (3% of revenues) compared to $0.5 million (2%
of revenues) and $0.8 million (2% of revenues) for the comparable period. The
increase in corporate administrative expenses for the three month period is due
to the incurrance of costs related to our debt refinancing efforts and a
reduction in allocated costs to our operating businesses partially offset by
decreased legal expenses. The reduction in allocated costs is attributable to
the disposal and shut down of our commercial airline seat manufacturing
operation in 2000 while decreased legal fees is attributable to settlement of
previously outstanding patent infringement litigation. The increase in
corporate administrative expenses for the six months ended are for the same
reasons as discussed above as well as an increase in pension costs.Interest Expense Our interest expense for the three and six months ended June
30, 2001 was $2.7 million and $5.2 million compared to $2.3 million and $4.6
million for the same period in 2000. The increase is primarily attributable to
default interest being paid on our Senior Secured Notes. Default interest
accrued and paid for the three months ended was $0.3 million and was $0.4
million for the six months ended June 30, 2001.Income Taxes Our effective income tax rate for the three and six months ended
June 30, 2001 was 39% and 37% as compared to 43% and 40% in the comparable 2000
periods. The variation in our tax rate is attributable to rate adjustments
based upon anticipated annual earnings and the ability to utilize state and
federal net operating loss carryforwards and foreign tax credits.Research and DevelopmentHistorically, we have made a significant investment in research and
development. Our research and development expenditures have fluctuated based
on available government-funded contracts and available company funding. We
anticipate that future fluctuations may also occur as a result of our efforts
to expand product lines and enhance our existing technologies.InflationWe do not believe that we are significantly impacted by inflation.SeasonalityWe do not believe that we are significantly impacted by seasonal factors.Forward Looking Information and Risks and Uncertainties in the BusinessA wide variety of factors will affect our projected operating and
financial results and could adversely impact our revenues, profitability and
cash flows. Our liquidity and available working capital will largely depend
upon the terms of any replacement financing of our existing indebtedness, as
well as upon our cash flow from operations and, potentially, upon proceeds from
asset sales or licensing. Improved cash flow from operations will depend on
our ability to continue to implement our cost cutting initiatives.-15-Table of ContentsSimula, Inc.Many of our products are subassemblies in final products. We act as
subcontractor to defense industry prime contractors and as a component supplier
to automotive original equipment manufacturers (OEM) first tier systems
suppliers. Accordingly, to gain and retain market acceptance, we must continue
to demonstrate that our products will provide advantages to the manufacturers
of final products, including increasing product safety and providing such
manufacturers with competitive advantages.Although we have long established relationships with a number of our
Aerospace and Defense customers, we do not have significant long-term supply
contracts with any of these customers. Our customers typically do not commit
to long-term production schedules and, as a result, customer orders generally
are subject to cancellation or delay. Reliance upon defense contracts involves
certain risks, including dependence on Congressional appropriations and changes
in governmental policies that reflect military and political developments.In our Commercial Products segment, we operate in the highly competitive
automotive safety industry. As most of our competitors have greater resources
than we do, our success in this industry is largely dependent on our ability to
innovate. Our ability to compete effectively in this industry also depends on
our ability to remain competitive in pricing, service, and performance. In
addition, automotive OEMs continually exert downward pressure on prices,
forcing us to innovate in order to maintain or increase margins from year to
year.Other factors pertinent to our ability to meet our current and future
financial projections include:
        
        our leveraged status and the level and cost of our debt;
        
        the continued reduction of our fixed expenses;
        
        our ability to continue to provide design and manufacturing services products and new product applications that compare
favorably on the basis of time to introduction, cost, and performance with those of our competitors;
        
        the cyclical nature of the automobile industry and other markets addressed by our products;
        
        the level and makeup of military expenditures;
        
        contract mix and shifting production and delivery schedules among our market segments;
        
        the amount of resources available for independent research and development;
        
        proof of concept and production validation of certain of our new technologies and proposed products, as well as our
financial ability to establish manufacturing capacity for such products;
        
        technological changes.As used throughout this report, the words estimate, anticipate,
expect, should, intend, project, target, or other expressions that
indicate future events identify forward looking statements which are made
pursuant to safe harbor provisions of the Private Securities Litigation Reform
Act of 1995. Actual results and trends may differ materially. Risks include
those described herein and in our registration statements and periodic reports
filed with the U.S. Securities and Exchange Commission.-16-Table of ContentsSimula, Inc.
PART II  OTHER INFORMATION
Item 3. Defaults Upon Senior
SecuritiesAs disclosed in
Note 1 to the Interim Consolidated Financial Statements in
Part I
above, we are not in compliance with certain non-monetary covenants
under the Securities Purchase Agreement with Levine Leichtman Capital
Partners II, L.P. dated as of December 31, 1999
(SPA). These defaults primarily resulted from our
shortfall in EBITDA (earnings before interest, taxes, depreciation and
amortization) occasioned, in part, by the nonrecurring write-downs
and one-time charges previously reported for the year ended
December 31, 2000. We are not in default of any payment
obligation under the SPA.
Item 4. Submission of Matters
to a Vote of Security HoldersWe held our Annual
Meeting of Shareholders on June 7, 2001. All four
candidates nominated by the Board of Directors were elected as
follows:

|                      |  |                |  |                |  |            
|--------------------- |  | -------------- |  | -------------- |  | -----------
|Nominees              |  | Votes in Favor |  | Votes Withheld |  | Term Ending
|Peter W. Schutz       |  | 11,200,519     |  | 705,386        |  | 2003       
|Lon A. Offenbacher    |  | 11,200,519     |  | 705,386        |  | 2004       
|Stanley P. Desjardins |  | 11,200,519     |  | 705,386        |  | 2004       
|Jack A. Henry         |  | 11,200,519     |  | 705,386        |  | 2004       

The term of office of
the following directors continued after the Annual Meeting:



|                     |  |            
|-------------------- |  | -----------
|Continuing Directors |  | Term Ending
|James C. Wither      |  | 2002       
|Bradley P. Forst     |  | 2002       
|S. Thomas Emerson    |  | 2002       
|John M. Leinonen     |  | 2003       
|Robert D. Olliver    |  | 2003       

Shareholders also
voted as follows to amend the 1999 Incentive Stock Option Plan to
authorize an additional 450,000 shares of Simulas Common Stock
for issuance under the Plan:



|               |  |               |  |           
|-------------- |  | ------------- |  | ----------
|Votes in Favor |  | Votes Opposed |  | Abstaining
|10,255,931     |  | 1,577,747     |  | 72,227    




Item 6. Exhibits and Reports



|a) |  | The following Exhibits are included pursuant to Item 601 of Regulation
S-K.
|-- |  | ---------------------------------------------------------------------------

|       |  |                                                                                               |  |           |     |  
|------ |  | --------------------------------------------------------------------------------------------- |  | --------- | --- | -
|No.    |  | Description                                                                                   |  | Reference
|       |  |                                                                                               |  |          
|3.1    |  | Articles of Incorporation of Simula, Inc., as amended and restated                            |  |           | (2  | )
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|3.2    |  | Bylaws of Simula, Inc., as amended and restated                                               |  |           | (1  | )
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|       |  |                                                                                               |  |           |     |  
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|4.7    |  | Indenture dated April 1, 1997, in connection with the Companys
issuance of                   |  |           |     |  
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|       |  | the 8% Senior Subordinated Convertible Notes due May 1,
2004.                                 |  |           | (8  | )
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|       |  |                                                                                               |  |           |     |  
|10.11  |  | 1992 Stock Option Plan, as amended effective September 15, 1998.                              |  |           | (6  | )
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|       |  |                                                                                               |  |           |     |  
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|10.12  |  | 1992 Restricted Stock Plan                                                                    |  |           | (1  | )
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|       |  |                                                                                               |  |           |     |  
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|10.21  |  | 1994 Stock Option Plan, as amended effective September 15, 1998.                              |  |           | (6  | )
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|       |  |                                                                                               |  |           |     |  
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|10.26  |  | Simula, Inc. Employee Stock Purchase Plan                                                     |  |           | (2  | )
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|       |  |                                                                                               |  |           |     |  
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|10.29  |  | Form of Change of Control Agreements, as amended and restated,
between the                    |  |           |     |  
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|       |  | Company and Bradley P. Forst                                                                  |  |           | (5  | )
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|       |  |                                                                                               |  |           |     |  
|10.30  |  | Form of Employment Agreements between the Company and Bradley P. Forst                        |  |           | (4  | )
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|       |  |                                                                                               |  |           |     |  
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|10.37  |  | Simula, Inc. 1999 Incentive Stock Option Plan                                                 |  |           | (7  | )
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|       |  |                                                                                               |  |           |     |  
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|10.41  |  | Financing Agreement with The CIT Group/Business Credit, Inc. dated                            |  |           |     |  
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|       |  | December 30, 1999.                                                                            |  |           | (8  | )
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|       |  |                                                                                               |  |           |     |  
|10.42A |  | Securities Purchase Agreement with Levine Leichtman Capital Partners
II, L.P.                 |  |           |     |  
|      
|      
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|      
|       |  | dated December 31, 1999.                                                                      |  |           | (9  | )
|      
|      
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|       |  |                                                                                               |  |           |     |  
|10.42B |  | Second Amendment to Securities Purchase Agreement with Levine
Leichtman                       |  |           |     |  
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|       |  | Capital Partners II, L.P. dated August 17, 2000.                                              |  |           | (10 | )
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|       |  |                                                                                               |  |           |     |  
|10.43  |  | Employment Agreement between the Company and Joseph W. Coltman dated                          |  |           |     |  
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|       |  | February 1, 2000.                                                                             |  |           | (8  | )
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|       |  |                                                                                               |  |           |     |  
|10.44  |  | Change of Control Agreement between the Company and Joseph W. Coltman
dated February 1, 2000. |  |           | (8  | )
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|      
|       |  |                                                                                               |  |           |     |  
|18.    |  | Preference Letter re: change in accounting principles                                         |  |           | (3  | )
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|       |  |                                                                                               |  |           |     |  
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|21.    |  | Subsidiaries of the Company                                                                   |  |           | (8  | )



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|    |  |                                                                                                                                   
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------
|(1) |  | Filed with Registration Statement on Form S-18, No. 33-46152-LA, under the
Securities Act of 1933, effective April 13, 1992.      
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|(2) |  | Filed with Definitive Proxy on May 15, 1996, for the Companys Annual
Meeting of Shareholders held on June 20, 1996.              
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|(3) |  | Filed with report on Form 10-Q for the quarter ended June 30, 1996.                                                               
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|(4) |  | Filed with report on Form 10-K for the year ended December 31, 1997.                                                              
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|(5) |  | Filed with report on Form 10-Q for the quarter ended March 31, 1998.                                                              
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|(6) |  | Filed with report on Form 10-Q for the quarter ended September 30, 1998.                                                          
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|(7) |  | Filed as Appendix A with Definitive proxy on May 14, 1999, for the
Companys Annual Meeting of Shareholders held on June 17, 1999.
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|(8) |  | Filed with report on Form 10-K for the year ended December 31, 1999.                                                              

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##### Table of Contents



|(9)  |  | Filed with Schedule 13D, under the Securities Exchange Act of 1934, on
January 10, 2000 effective December 31, 1999 by Levine Leichtman Capital
Partners II, L.P.          
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
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|    
|(10) |  | Filed with Amendment to Schedule 13D, under the Securities Exchange Act
of 1934, on August 25, 2000 effective August 17, 2000 by Levine Leichtman
Capital Partners II, L.P.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-Q for the quarter ended June
30, 2001 to be signed on its behalf by the undersigned thereunto duly
authorized.



| | SIMULA, INC.
| | ------------



| | DATE: August 14, 2001
| | ---------------------



| | /s/ Bradley P. Forst
BRADLEY P. FORST
President
Chief Executive Officer
| | -----------------------------------------------------------------------



| | 
| | 



| | /s/ J. Michael Miller
J. MICHAEL MILLER
Executive Vice President
Chief Operating Officer
Acting Chief Financial Officer
| | -----------------------------------------------------------------------------------------------------------------------

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