SALT LAKE CITY--(BUSINESS WIRE)--Evans & Sutherland Computer Corporation (E&S) (OTCPK: ESCC) today reported financial results in its Form 10-Q filing for the second quarter and six months ended July 3, 2015.
Sales for the second quarter were $10.3 million, compared to sales of $5.7 million for the second quarter 2014. Net loss for the quarter was $2.7 million or $0.24 per share compared to a net loss for the second quarter 2014 of $0.9 million or $0.08 per share. Sales for the six months ended July 3, 2015 were $18.3 million, compared to sales of $12.4 million for the comparable period of 2014. Net loss for the six months ended July 3, 2015 was $2.6 million or $0.23 per share compared to a net loss of $1.4 million or $0.13 per share for the comparable period of 2014. Backlog as of July 3, 2015 was $26.7 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 an agreement with the Pension Benefit Guaranty Corporation (PBGC) to terminate its pension plan and settle the underlying pension liabilities. This is a major milestone and completes a process that began over two years ago. The Company’s goal in seeking a distress termination of the pension plan is to ensure that pension benefits of all pension plan participants are paid up to the 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 the settlement agreement has achieved that goal.
The first half of 2015 reported improved sales volume and $6.4 million of gross profit as compared to the first six months ended June 27, 2014, which reported gross profit of $4.1 million. The stronger sales and improved gross profit in 2015 was attributable to stronger sales bookings over the past year. The sales backlog remained healthy despite decreasing in the first half of 2015 which supports a continuing encouraging outlook for the remainder of 2015. Operating expenses except for a $3.6 million charge for the settlement of the pension liabilities were comparable for the periods presented. 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 periods presented. With the healthy backlog and strong sales prospects, we anticipate that sales and overall results for the remainder of 2015 will exceed the results from 2014.
We continue to expect variable but reasonable consistent future sales and gross profits from our current product lines at annual levels sufficient to cover or exceed operating expenses. We had a net loss for the three and six months ended July 3, 2015 due to the pension settlement charge of $3.6 million. However, the pension settlement contributed largely to total comprehensive income which amounted to $29.1 million and $29.4 million for the three and six months ended July 3, 2015 respectively. This nearly eliminated our stockholders deficit, which was reduced from $30.7 million as of December 31, 2014 to $1.2 million as of July 3, 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 | Six Months Ended | |||||||||||||||
| July 3, 2015 | June 27, 2014 | July 3, 2015 | June 27, 2014 | |||||||||||||
| Sales | $ | 10,289 | $ | 5,712 | $ | 18,291 | $ | 12,384 | ||||||||
| Cost of sales | (6,896 | ) | (3,770 | ) | (11,907 | ) | (8,298 | ) | ||||||||
| Gross profit | 3,393 | 1,942 | 6,384 | 4,086 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | (1,755 | ) | (1,826 | ) | (3,597 | ) | (3,574 | ) | ||||||||
| Research and development | (544 | ) | (511 | ) | (1,139 | ) | (1,071 | ) | ||||||||
| Pension | (49 | ) | (209 | ) | (424 | ) | (418 | ) | ||||||||
| Pension settlement | (3,620 | ) | - | (3,620 | ) | - | ||||||||||
| Total operating expenses | (5,968 | ) | (2,546 | ) | (8,780 | ) | (5,063 | ) | ||||||||
| Operating income (loss) | (2,575 | ) | (604 | ) | (2,396 | ) | (977 | ) | ||||||||
| Other expense, net | (148 | ) | (206 | ) | (173 | ) | (375 | ) | ||||||||
| Loss before income tax benefit (provision) | (2,723 | ) | (810 | ) | (2,569 | ) | (1,352 | ) | ||||||||
| Income tax benefit (provision) | 23 | (58 | ) | (28 | ) | (67 | ) | |||||||||
| Net loss | $ | (2,700 | ) | $ | (868 | ) | $ | (2,597 | ) | $ | (1,419 | ) | ||||
| Net loss per common share - basic and diluted | $ | (0.24 | ) | $ | (0.08 | ) | $ | (0.23 | ) | $ | (0.13 | ) | ||||
| Comprehensive income (loss), net of tax | ||||||||||||||||
| Net loss | $ | (2,700 | ) | $ | (868 | ) | $ | (2,597 | ) | $ | (1,419 | ) | ||||
| Other comprehensive income (loss): | ||||||||||||||||
| Reclassification of pension expense to net loss | $ | - | $ | 101 | $ | 195 | $ | 204 | ||||||||
| Pension settlement | 31,776 | - | 31,776 | - | ||||||||||||
| Other comprehensive income | 31,776 | 101 | 31,971 | 204 | ||||||||||||
| Total comprehensive income (loss) | $ | 29,076 | $ | (767 | ) | $ | 29,374 | $ | (1,215 | ) | ||||||
| CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| July 3, 2015 | December 31, 2014 | |||||||||||||||
| Assets | ||||||||||||||||
| Cash and restricted cash | $ | 2,720 | $ | 7,749 | ||||||||||||
| Net receivables, billed and unbilled | 11,129 | 6,285 | ||||||||||||||
| Inventories, net | 5,079 | 4,163 | ||||||||||||||
| Prepaid expenses and deposits | 1,570 | 635 | ||||||||||||||
| Property, plant and equipment, net | 4,707 | 4,803 | ||||||||||||||
| Intangibles and other assets | 1,800 | 1,821 | ||||||||||||||
| Total assets | $ | 27,005 | $ | 25,456 | ||||||||||||
| Liabilities and stockholders' deficit | ||||||||||||||||
| Accounts payable and accrued expenses | $ | 3,134 | $ | 1,852 | ||||||||||||
| Customer advances and deposits | 10,115 | 9,257 | ||||||||||||||
| Pension and retirement obligations | 4,719 | 40,611 | ||||||||||||||
| Pension settlement obligation | 6,158 | - | ||||||||||||||
| Debt obligations | 2,253 | 2,362 | ||||||||||||||
| Other liabilities | 1,865 | 2,077 | ||||||||||||||
| Stockholders' deficit | (1,239 | ) | (30,703 | ) | ||||||||||||
| Total liabilities and stockholders' deficit | $ | 27,005 | $ | 25,456 | ||||||||||||
| BACKLOG | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| Unaudited | ||||||||||||||||
| July 3, 2015 | December 31, 2014 | |||||||||||||||
| $ | 26,707 | $ | 28,173 | |||||||||||||
E&S is a registered trademark of Evans & Sutherland Computer Corporation.
