Evans & Sutherland Reports 2012 Results
Evans & Sutherland Reports 2012 Results
SALT LAKE CITY--(BUSINESS WIRE)-- Evans & Sutherland ComputerCorporation (E&S) (OTCPK: ESCC) today reported financial results in its Form 10-K filing for the year ended December 31, 2012.
Sales for 2012 were $24.9 million, compared to sales of $28.3 million for 2011. The net loss for 2012 was $2.3 million or $0.21 per share, compared to a net loss of $2.1 million or $0.19 per share for 2011. The total comprehensive loss for the year was $2.8 million compared to $10.6 million for 2011. Revenue backlog as of December 31, 2012 was $15.5 million compared to backlog of $17.4 million as of December 31, 2011.
Comments from David H. Bateman, President and Chief Executive Officer:
"Lower sales in 2012 resulted in a larger operating loss for the year as compared to 2011. The net losses for the two years were comparable due to a $0.7 million loss on the condemnation of property in 2011. The lower sales were the result of a decrease in the volume of orders and deliveries of all of our products. The larger total comprehensive loss is primarily attributable to increases in the net pension obligation. The major cause of the increases in the pension obligation was low market interest rates used in measuring the obligation. The drop in interest rate was steeper in 2011 than in 2012, hence the much larger total comprehensive loss in 2011.
"For the past several years we have employed various strategies for growth and costs reduction in an effort to reverse a long history of operating losses. While this effort has significantly reduced our operating losses, we now believe that the business, as currently capitalized, is not capable of overcoming the enormous burden of our defined benefit pension plan (the "Pension Plan"). The unfunded accounting liability for the benefits payable under the Pension Plan is $28.3 million as of December 31, 2012. Additionally, the Company has a total stockholders' deficit of $24.6 million and total assets of $24.2 million as of December 31 2012. The $28.3 million unfunded liability is for benefits which were earned for service of Company employees prior to when plan benefits were frozen in 2002 and during a period when the Company was much larger, with as many as 1,400 employees. The Pension Plan is currently responsible for the retirement benefits of over 1,100 participants, of whom only 24 are current employees. We believe we have exhausted all efforts to overcome this burden. Because we believe that the business has the potential for long term profitability without the burden of the Pension Plan, we have applied to the Pension Benefit Guarantee Corporation ("PBGC") for a distress termination of the Pension Plan. Legal counsel engaged to assist with this effort has advised that the facts and circumstances of our application provide basis for approval of the plan termination, and that PBGC settlements for resulting termination liabilities are usually in amounts that are feasible for the sponsor company to pay and remain as a going concern.
"The Company's goal in seeking a distress termination is to ensure that the pension benefits of all Pension Plan participants are paid and that the Company continues to operate as a going concern while avoiding the costly damage and disruption to the business which would result from bankruptcy reorganization.
"We intend to continue to aggressively pursue opportunities in the digital theater and other markets served by our products, as well as development and improvement of new and innovative products. We expect variable but consistent future sales and gross profits from our current product line at annual levels sufficient to cover or exceed operating expenses, not including the expense of the Pension Plan. With relief from the burden of the Pension Plan, we believe an improved financial position may present opportunities for better results through the availability of credit and stronger qualification for customer projects.
"Our outlook for the business remains positive."
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) | ||||||||||
Years Ended | ||||||||||
December 31, 2012 | December 31, 2011 | |||||||||
Sales | $ | 24,908 | $ | 28,325 | ||||||
Cost of sales | 16,002 | 18,410 | ||||||||
Gross profit | 8,906 | 9,915 | ||||||||
Operating expenses: | ||||||||||
Selling, general and administrative (excluding pension) | 5,765 | 5,425 | ||||||||
Research and development | 2,595 | 2,684 | ||||||||
Pension | 2,115 | 2,543 | ||||||||
Total operating expenses | 10,475 | 10,652 | ||||||||
Operating income (loss) | (1,569 | ) | (737 | ) | ||||||
Other expense, net | (779 | ) | (601 | ) | ||||||
Loss on condemnation of property | - | (667 | ) | |||||||
Income (loss) before income tax provision | (2,348 | ) | (2,005 | ) | ||||||
Income tax provision | 69 | (100 | ) | |||||||
Net income (loss) | $ | (2,279 | ) | $ | (2,105 | ) | ||||
Net income (loss) per common share - basic and diluted | $ | (0.21 | ) | $ | (0.19 | ) | ||||
Comprehensive Loss | ||||||||||
Net loss | $ | (2,279 | ) | $ | (2,105 | ) | ||||
Unrealized gain (loss) on marketable securities | 187 | (201 | ) | |||||||
Additional minimum pension liability | (720 | ) | (8,245 | ) | ||||||
Comprehensive loss | $ | (2,812 | ) | $ | (10,551 | ) | ||||
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION | ||||||||||
(In thousands) | ||||||||||
(Unaudited) | ||||||||||
December 31, 2012 | December 31, 2011 | |||||||||
Assets | ||||||||||
Cash and restricted cash | $ | 2,816 | $ | 4,994 | ||||||
Marketable securities | 712 | 1,666 | ||||||||
Net receivables, billed and unbilled | 6,446 | 5,496 | ||||||||
Inventories, net | 3,125 | 3,624 | ||||||||
Prepaid expenses and deposits | 453 | 720 | ||||||||
Property, plant and equipment, net | 7,735 | 8,303 | ||||||||
Intangibles and other assets | 2,963 | 2,687 | ||||||||
Total assets | $ | 24,250 | $ | 27,490 | ||||||
Liabilities and stockholders' deficit | ||||||||||
Accounts payable and accrued expenses | $ | 2,471 | $ | 3,239 | ||||||
Customer advances and deposits | 5,711 | 6,272 | ||||||||
Pension and retirement obligations | 33,886 | 33,073 | ||||||||
Debt obligations | 5,315 | 5,291 | ||||||||
Other liabilities | 1,511 | 1,480 | ||||||||
Stockholders' deficit | (24,644 | ) | (21,865 | ) | ||||||
Total liabilities and stockholders' deficit | $ | 24,250 | $ | 27,490 | ||||||
BACKLOG | ||||||||||
(In thousands) | ||||||||||
Unaudited | ||||||||||
December 31, 2012 | December 31, 2011 | |||||||||
$ | 15,511 | $ | 17,449 | |||||||
E&S is a registered trademark of Evans & Sutherland Computer Corporation.
Evans & Sutherland Computer Corporation
David H. Bateman, 801-588-1674
President and CEO
dbateman@es.com
KEYWORDS: United States North America Utah
INDUSTRY KEYWORDS:
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