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Evans & Sutherland Reports First Quarter 2014 Results

Evans & Sutherland Computer Corporation (E&S) (OTCPK: ESCC) today reported financial results in its Form 10-Q filing for the first quarter ended March 28, 2014.

Sales for the first quarter of 2014 were $6.7 million, compared to sales of $4.7 million for the first quarter 2013. Net loss for the quarter was $0.6 million or $0.05 per share compared to a net loss for the first quarter 2013 of $1.4 million or $0.12 per share. Sales backlog as of March 28, 2014 was $19.7 million compared to $17.2 million as of December 31, 2013. Operating expenses for the quarter totaled $2.5 million compared to $2.4 million for the first quarter of 2013.

Comments from David H. Bateman, President and Chief Executive Officer: “Although sales volume and the $551 net loss in the first quarter of 2014 showed improvement to the comparable period of 2013, which reported a loss of $1,357, it did not compare favorably to the most recent two consecutive profitable quarters in the last half of 2013. The weaker sales and resulting net loss for the first quarter of 2014 was primarily the result of the timing of work and deliveries on customer projects rather than a negative trend in the overall business. New bookings were strong and the sales backlog improved which creates a more encouraging outlook for the remainder of 2014. Also cash balances improved as a result of progress payments received on new customer orders. With the improved backlog and strong sales prospects, we believe that sales and results for the remainder of 2014 will improve resulting in annual levels comparable to 2013.

“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 excluding the current expense of the Pension Plan. The success of our efforts to settle our pension liabilities for an amount that the business can satisfy remains critical to the long term viability of the Company. We believe an improved financial position that would result from relief of the Pension Plan burden 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 Month Ended
March 28, 2014     March 29, 2013
 
Sales $ 6,672 $ 4,707
Cost of sales   4,528     3,397  
Gross profit   2,144     1,310  
 
Operating expenses:
Selling, general and administrative 1,748 1,565
Research and development 560 670
Pension   209     208  
Total operating expenses   2,517     2,443  
Operating loss (373 ) (1,133 )
Other expense, net   (169 )   (214 )
Loss before income tax provision (542 ) (1,347 )
Income tax provision   (9 )   (10 )
Net loss $ (551 ) $ (1,357 )
 
Net loss per common share - basic and diluted $ (0.05 ) $ (0.12 )
 
Comprehensive loss, net of tax
Net loss $ (551 ) $ (1,357 )
Other comprehensive income (loss):

Reclassification of realized gains from sales of marketable securities to net loss

- (15 )
Unrealized gain on marketable securities - 22
Reclassification of pension expense to net loss   101     182  
Other comprehensive income   101     189  
Total comprehensive loss $ (450 ) $ (1,168 )
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(In thousands)
(Unaudited)
March 28, 2014 December 31, 2013
Assets
Cash and restricted cash $ 5,819 $ 4,396
Marketable securities 119 229
Net receivables, billed and unbilled 6,707 7,943
Inventories, net 2,971 3,025
Prepaid expenses and deposits 588 568
Property, plant and equipment, net 7,349 7,405
Intangibles and other assets   2,046     2,136  
Total assets $ 25,599   $ 25,702  
 
Liabilities and stockholders' deficit
Accounts payable and accrued expenses $ 1,947 $ 2,616
Customer advances and deposits 6,519 5,515
Pension and retirement obligations 24,084 24,098
Debt obligations 5,373 5,357
Other liabilities 1,518 1,514
Stockholders' deficit   (13,842 )   (13,398 )
Total liabilities and stockholders' deficit $ 25,599   $ 25,702  
 
BACKLOG
(In thousands)
Unaudited
March 28, 2014 December 31, 2013
 
$ 19,689   $ 17,165  
 

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

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