Evans & Sutherland Reports 2015 Results

SALT LAKE CITY--(BUSINESS WIRE)-- Evans & Sutherland Computer Corporation (E&S) (OTCPK: ESCC) today reported financial results in its Form 10-K filing for the year ended December 31, 2015.

Sales were $35.3 million, compared to sales of $26.5 million for 2014. The net loss for 2015 was $1.3 million or $0.11 per share, compared to a net loss of $1.3 million or $0.12 per share for 2014. Revenue backlog as of December 31, 2015 was $26.3 million compared to backlog of $28.2 million as of December 31, 2014.

Comments from David H. Bateman, President and Chief Executive Officer:

“On April 21, 2015, the Company executed agreements ('Pension Settlement Agreements') to terminate its Pension Plan and to settle the underlying pension liabilities. As a result of the Pension Plan termination, the plan’s trust assets and benefit obligations have been transferred to the Pension Benefit Guaranty Corporation ('PBGC') thereby eliminating an underfunded pension plan liability on the Company’s balance sheet which had a carrying value of approximately $36 million. In return, the Company issued to the PBGC shares of its common stock held in treasury valued at $71 thousand and agreed to pay the PBGC a series of cash installments over twelve years totaling $10.5 million (the 'Pension Settlement Obligation'). The Pension Settlement Obligation is secured by all of the Company’s assets subject to subordination agreements with the Company’s senior lenders. This is a major milestone and completes a process that began over two years ago. It relieves the Company from the burden of a variable obligation to fund the Pension Plan benefits, which it clearly was unable to fulfill, and replaces it with a manageable fixed payment obligation. The Company’s goal in seeking a distress termination of the Pension Plan was to ensure that the pension benefits of all Pension Plan participants are paid up to federally guaranteed limits 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 believe that the Pension Settlement Agreements have achieved that goal.

"The year ended December 31, 2015, produced significantly improved sales and gross profit compared to 2014. The stronger sales and improved gross profit in 2015 were attributable to strong sales bookings in 2014 and 2015. The sales backlog remained healthy at the end of 2015 which supports an encouraging outlook for 2016. Operating expenses, except for a $3.6 million charge for the settlement of the pension liabilities, were lower in 2015 as compared to 2014 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 2015. The 2015 results illustrate the profit potential of our business without the burden of the Pension Plan. With the healthy backlog and sales prospects, we anticipate sales at levels that should continue to yield profitable results in 2016.

"We 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 and meet our obligations including the new Pension Settlement Obligation. Although we reported a net loss for 2015 due to the pension settlement charge of $3.6 million, the pension settlement contributed $31.8 million to comprehensive income bringing 2015 total comprehensive income to $29.9 million, which reduced of our stockholders deficit to $0.6 million as of December 31, 2015 compared to $30.7 million as of December 31, 2014. With the settlement of the Pension Plan liabilities, we expect our improved financial position to present opportunities for better results through the availability of credit and stronger qualification for customer projects.”

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.

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

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) INFORMATION
(In thousands, except share and per share data)
(Unaudited)
								Years Ended
								December 31, 2015				December 31, 2014
Sales								$	35,298			$	26,466
Cost of sales									(22,956	)			(16,989	)
Gross profit									12,342				9,477
Operating expenses:
Selling, general and administrative									(6,633	)			(6,873	)
Research and development									(2,262	)			(2,187	)
Pension									(522	)			(1,147	)
Pension settlement									(3,620	)			-
Total operating expenses									(13,037	)			(10,207	)
Operating loss									(695	)			(730	)
Other expense, net									(592	)			(552	)
Loss before income tax provision									(1,287	)			(1,282	)
Income tax provision									12				(23	)
Net loss								$	(1,275	)		$	(1,305	)
Net loss per common share - basic and diluted								$	(0.11	)		$	(0.12	)
Comprehensive income (loss), net of tax:
Net loss								$	(1,275	)		$	(1,305	)
Reclassification of pension expense to net loss									-				406
Pension settlement									31,776				-
Increase in minimum pension liability									(555	)			(16,422	)
Other comprehensive income (loss)									31,221				(16,016	)
Total comprehensive income (loss)								$	29,946			$	(17,321	)
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(In thousands)
(Unaudited)
								December 31, 2015				December 31, 2014
Assets
Cash and restricted cash								$	4,335			$	7,749
Net receivables, billed and unbilled									7,520				6,285
Inventories, net									4,072				4,163
Prepaid expenses and deposits									1,038				635
Property, plant and equipment, net									4,735				4,803
Intangibles and other assets									1,744				1,821
Total assets								$	23,444			$	25,456
Liabilities and stockholders' deficit
Accounts payable and accrued expenses								$	2,093			$	1,852
Customer advances and deposits									7,227				9,257
Pension and retirement obligations									5,319				40,611
Pension settlement obligation									5,624				-
Debt obligations									2,174				2,362
Other liabilities									1,653				2,077
Stockholders' deficit									(646	)			(30,703	)
Total liabilities and stockholders' deficit								$	23,444			$	25,456
BACKLOG
(In thousands)
Unaudited
								December 31, 2015				December 31, 2014
								$	26,298			$	28,173

View source version on businesswire.com: http://www.businesswire.com/news/home/20160316006522/en/

Evans & Sutherland
David H. Bateman, 801-588-1674
President and CEO
[email protected]

Source: Evans & Sutherland Computer Corporation

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