Evans & Sutherland Reports Third Quarter 2015 Results

SALT LAKE CITY--()--Evans & Sutherland Computer Corporation (E&S) (OTCPK: ESCC) today reported financial results in its Form 10-Q filing for the third quarter and three and nine months ended October 2, 2015.

Sales for the third quarter were $9.4 million, compared to sales of $7.7 million for the third quarter 2014. Net income for the quarter was $0.9 million or $0.08 per share compared to a net income for the third quarter 2014 of $0.6 million or $0.06 per share. Sales for the nine months ended October 2, 2015 were $27.7 million, compared to sales of $20.0 million for the comparable period of 2014. Net loss for the nine months ended October 2, 2015 was $1.7 million or $0.15 per share compared to a net loss of $0.8 million or $0.07 per share for the comparable period of 2014. Backlog as of October 2, 2015 was $29.2 million compared to backlog of $28.2 million as of December 31, 2014.

Comments from David H. Bateman, President and Chief Executive Officer: “The third quarter of 2015 reported improved sales volume and $921 of net income compared to the third quarter of 2014, which reported a net income of $639. Although sales volume improved, the gross profit contribution was comparable to the third quarter of 2014 due to unfavorable margins on some large unrelated projects in 2015. Reduced operating expenses, primarily pension related, contributed to the higher net income in the third quarter of 2015 compared to 2014. The first nine months of 2015 reported improved sales volume and $9,710 of gross profit as compared to the first nine months of 2014, which reported gross profit of $7,371. The stronger sales and improved gross profit in 2015 was attributable to stronger sales bookings over the prior year. The sales backlog remained healthy at the end of the third quarter of 2015 which supports an encouraging outlook for the remainder of 2015 and into 2016. Operating expenses, except for a $3,620 charge for the settlement of the pension liabilities, were lower for the periods presented primarily due to decreased pension expense in the period. The charge for the settlement of the pension liabilities is not a recurring expense item. Absent this charge, results would have been profitable for both the three- and nine-month periods ended October 2, 2015. Also, we were profitable in each of the first three quarters of 2015 before the non-recurring pension related charges. With the healthy backlog and sales prospects, we anticipate sales at levels that should continue to yield profitable results for the remainder of 2015.

"We continue to expect variable but reasonably consistent future sales and gross profits from our current product line at annual levels sufficient to cover or exceed operating expenses. Although we reported net income for the third quarter, we had a net loss for the first nine months of 2015 due to the pension settlement charge of $3,620. However, the pension settlement contributed largely to total comprehensive income which amounted to $30,295 for the first nine months of 2015. This nearly eliminated our stockholders deficit, which was reduced from $30,703 as of December 31, 2014 to $308 as of October 2, 2015. With the settlement of the Pension Plan liabilities, we expect an improved financial position that may present opportunities for better results through the availability of credit and stronger qualification for customer projects. We remain positive for the success of the business.”

Statements in this press release which are not historical, including statements regarding E&S’ or management’s intentions, hopes, beliefs, expectations, representations, projections, plans, or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The Company assumes no obligation except as required by law to update the forward-looking statements contained in this press release as a result of new information or future events or developments. You can identify these statements by the fact that they use words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “should,” “plan,” “goal,” “believe,” “confident” and other words and terms of similar meaning in connection with any discussion of future operating or financial performance together with the negative of such expressions. Among the factors that could cause actual results to differ materially are the following: the Company’s ability to successfully market both new and existing products domestically and internationally; difficulties or delays in manufacturing; results of the Board's evaluation of alternatives available to enhance value for shareholders; and market and general economic conditions. A further list and description of these risks, uncertainties and other matters can be found in the Company’s reports filed with the Securities and Exchange Commission.

                               
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS INFORMATION
(In thousands, except share and per share data)
(Unaudited)                  
 
  Three Months Ended Nine Months Ended
October 2, 2015 September 26, 2014 October 2, 2015 September 26, 2014
 
Sales $ 9,375 $ 7,656 $ 27,666 $ 20,040
Cost of sales   (6,049 )   (4,371 )   (17,956 )   (12,669 )
Gross profit   3,326     3,285     9,710     7,371  
 
Operating expenses:
Selling, general and administrative (1,535 ) (1,637 ) (5,132 ) (5,211 )
Research and development (563 ) (537 ) (1,702 ) (1,608 )
Pension (49 ) (359 ) (473 ) (777 )
Pension settlement   -     -     (3,620 )   -  
Total operating expenses   (2,147 )   (2,533 )   (10,927 )   (7,596 )
Operating income (loss) 1,179 752 (1,217 ) (225 )
Other expense, net   (231 )   (192 )   (404 )   (567 )
Loss before income tax benefit (provision) 948 560 (1,621 ) (792 )
Income tax benefit (provision)   (27 )   79     (55 )   12  
Net income (loss) $ 921   $ 639   $ (1,676 ) $ (780 )
 
Net income (loss) per common share - basic and diluted $ 0.08   $ 0.06   $ (0.15 ) $ (0.07 )
 
Comprehensive income (loss), net of tax
Net income (loss) $ 921   $ 639   $ (1,676 ) $ (780 )
Other comprehensive income (loss):
Reclassification of pension expense to net income (loss) $ - $ 101 $ 195 $ 305
Pension settlement   -     -     31,776     -  
Other comprehensive income   -     101     31,971     305  
Total comprehensive income (loss) $ 921   $ 740   $ 30,295   $ (475 )
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(In thousands)
(Unaudited)
           
October 2, 2015 December 31, 2014
Assets
Cash and restricted cash $ 4,260 $ 7,749
Net receivables, billed and unbilled 9,643 6,285
Inventories, net 5,023 4,163
Prepaid expenses and deposits 773 635
Property, plant and equipment, net 4,689 4,803
Intangibles and other assets   1,728     1,821  
Total assets $ 26,116   $ 25,456  
 
Liabilities and stockholders' deficit
Accounts payable and accrued expenses $ 2,677 $ 1,852
Customer advances and deposits 8,982 9,257
Pension and retirement obligations 4,642 40,611
Pension settlement obligation 6,158 -
Debt obligations 2,206 2,362
Other liabilities 1,759 2,077
Stockholders' deficit   (308 )   (30,703 )
Total liabilities and stockholders' deficit $ 26,116   $ 25,456  
                     
BACKLOG
(In thousands)
Unaudited
 

October 2, 2015

December 31, 2014
$ 29,152   $ 28,173  
 

E&S is a registered trademark of Evans & Sutherland Computer Corporation.

Contacts

Evans & Sutherland
David H. Bateman, 801-588-1674
President and CEO
dbateman@es.com

Contacts

Evans & Sutherland
David H. Bateman, 801-588-1674
President and CEO
dbateman@es.com