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Evans & Sutherland Reports Profitable 2013 Results

Evans & Sutherland Computer Corporation (E&S) (OTCPK: ESCC) today reported financial results in its Form 10-K filing for the year ended December 31, 2013.

Sales for 2013 were $29.6 million, compared to sales of $24.9 million for 2012. The net income for 2013 was $1.2 million or $0.11 per share, compared to a net loss of $2.3 million or $0.21 per share for 2012. The total comprehensive income for the year was $11.2 million compared to a comprehensive loss of $2.8 million for 2012. Revenue backlog as of December 31, 2013 was $17.2 million compared to backlog of $15.5 million as of December 31, 2012.

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

“Stronger sales for all of our products in 2013 resulted in a larger operating profit for the year as compared to an operating loss for 2012. The net income for 2013 marks the first annual profit reported in several years. The total comprehensive income is primarily attributable to a $10 million decrease in the accounting measurement of our pension and retirement obligations, which was caused by an increase in the discount rate used to measure the pension obligation along with investment gains in pension plan assets.

“We have made significant progress toward the settlement of our Pension Plan liabilities through the distress termination application process. Recent correspondence with the Pension Benefit Guaranty Corporation indicates that the application process will result in a settlement of the Pension Plan liabilities on terms that will enable the Company to continue to operate as a going concern. However, the Company is uncertain of the timing or the ultimate outcome as of the date of our 10-K filing.

“Customer interest in all of our products remains strong and 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 INCOME (LOSS) INFORMATION
(In thousands, except share and per share data)
(Unaudited)    
Years Ended
December 31, 2013 December 31, 2012
 
Sales $ 29,583 $ 24,908
Cost of sales   18,212     16,002  
Gross profit   11,371     8,906  
 
Operating expenses:
Selling, general and administrative 6,024 5,765
Research and development 2,382 2,595
Pension   965     2,115  
Total operating expenses   9,371     10,475  
Operating income (loss) 2,000 (1,569 )
Other expense, net   (730 )   (779 )
Income (loss) before income tax provision 1,270 (2,348 )
Income tax benefit (provision)   (97 )   69  
Net income (loss) $ 1,173   $ (2,279 )
 
Net income (loss) per common share - basic and diluted $ 0.11   $ (0.21 )
 
Comprehensive income (loss), net of tax
Net income (loss) $ 1,173 $ (2,279 )
Other comprehensive income (loss):
Reclassification of realized gains from sales of marketable
securities to net income (loss) (27 ) $ (7 )
Unrealized gain on marketable securities 20 194
Reclassification of pension expense to net income (loss) 728 -
Decrease (increase) to minimum pension liability   9,334     (720 )
Other comprehensive income (loss)   10,055     (533 )
Total comprehensive income (loss) $ 11,228   $ (2,812 )
 
 
                     
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(In thousands)
(Unaudited)
December 31, 2013 December 31, 2012
Assets
Cash and restricted cash $ 4,396 $ 2,816
Marketable securities 229 712
Net receivables, billed and unbilled 7,943 6,446
Inventories, net 3,025 3,125
Prepaid expenses and deposits 568 453
Property, plant and equipment, net 7,405 7,735
Intangibles and other assets   2,136     2,963  
Total assets $ 25,702   $ 24,250  
 
Liabilities and stockholders' deficit
Accounts payable and accrued expenses $ 2,616 $ 2,471
Customer advances and deposits 5,515 5,711
Pension and retirement obligations 24,098 33,886
Debt obligations 5,357 5,315
Other liabilities 1,514 1,511
Stockholders' deficit   (13,398 )   (24,644 )
Total liabilities and stockholders' deficit $ 25,702   $ 24,250  
                     
BACKLOG
(In thousands)
Unaudited
December 31, 2013 December 31, 2012
 
$ 17,165   $ 15,511  

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

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