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Evans & Sutherland Reports Second Quarter 2014 Results

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 June 27, 2014.

Sales for the second quarter were $5.7 million, compared to sales of $5.2 million for the second quarter 2013. Net loss for the quarter was $0.9 million or $0.08 per share compared to a net loss for the second quarter 2013 of $0.4 million or $0.04 per share. Sales for the six months ended June 27, 2014 were $12.4 million, compared to sales of $9.9 million for the comparable period of 2013. Net loss for the six months ended June 27, 2014 was $1.4 million or $0.13 per share compared to a net loss of $1.8 million or $0.16 per share for the comparable period of 2013. Backlog as of June 27, 2014 was $21.4 million compared to backlog of $17.2 million as of December 31, 2013. Operating expenses for the second quarter totaled $2.5 million compared to $2.0 million for the second quarter of 2013.

Comments from David H. Bateman, President and Chief Executive Officer: “Although sales volume showed improvement, the net loss for the second quarter of 2014 was larger than the comparable period of 2013. The higher net loss was attributable to higher operating expenses in the second quarter of 2014 due largely to a credit from a settlement of a dispute which reduced 2013 expenses in the second quarter of 2013. Also, sales and marketing expenses in 2014 were higher due to a bi-annual tradeshow and the redirection of production and engineering resources to sales and marketing activities. Despite the higher 2014 operating expenses and increased loss in the second quarter, higher sales helped the first half of 2014 show improvement from the comparable period of 2013, with a net loss of $1.4 million for the first half of 2014 compared to $1.8 million for the first half of 2013. Neither of the first two quarters of 2014 compares favorably to the two consecutive profitable quarters in the last half of 2013; however, the weaker sales and resulting net loss in the first half 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 and the sales backlog continued to improve which creates a more encouraging outlook for the remainder of 2014. Also, cash balances continued to improve from progress payments received on new customer orders. With the improved backlog and strong sales prospects we still believe that sales and overall results for 2014 will be comparable to 2013.

“For the longer term 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, excluding the pension expense.”

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
June 27, 2014 June 28, 2013 June 27, 2014 June 28, 2013
 
Sales $ 5,712 $ 5,212 $ 12,384 $ 9,919
Cost of sales   3,770     3,480     8,298     6,877  
Gross profit   1,942     1,732     4,086     3,042  
 
Operating expenses:
Selling, general and administrative 1,826 1,181 3,574 2,746
Research and development 511 674 1,071 1,344
Pension   209     161     418     369  
Total operating expenses   2,546     2,016     5,063     4,459  
Operating loss (604 ) (284 ) (977 ) (1,417 )
Other expense, net   (206 )   (141 )   (375 )   (355 )
Loss before income tax provision (810 ) (425 ) (1,352 ) (1,772 )
Income tax provision   (58 )   -     (67 )   (10 )
Net loss $ (868 ) $ (425 ) $ (1,419 ) $ (1,782 )
 
Net loss per common share - basic and diluted $ (0.08 ) $ (0.04 ) $ (0.13 ) $ (0.16 )
 
Comprehensive loss, net of tax
Net loss $ (868 ) $ (425 ) $ (1,419 ) $ (1,782 )
Other comprehensive income:

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

-

(11 ) - (26 )
Unrealized gain on marketable securities - (7 ) - 15
Reclassification of pension expense to net loss   101     182     204     364  
Other comprehensive income   101     164     204     353  
Total comprehensive loss $ (767 ) $ (261 ) $ (1,215 ) $ (1,429 )
 
 
               
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(In thousands)
(Unaudited)
June 27, 2014 December 31, 2013
Assets
Cash and restricted cash $ 6,464 $ 4,396
Marketable securities - 229
Net receivables, billed and unbilled 4,148 7,943
Inventories, net 3,824 3,025
Prepaid expenses and deposits 668 568
Property, plant and equipment, net 7,258 7,405
Intangibles and other assets   1,870     2,136  
Total assets $ 24,232   $ 25,702  
 
Liabilities and stockholders' deficit
Accounts payable and accrued expenses $ 2,439 $ 2,616
Customer advances and deposits 5,421 5,515
Pension and retirement obligations 24,064 24,098
Debt obligations 5,391 5,357
Other liabilities 1,522 1,514
Stockholders' deficit   (14,605 )   (13,398 )
Total liabilities and stockholders' deficit $ 24,232   $ 25,702  
               
BACKLOG
(In thousands)
Unaudited
June 27, 2014 December 31, 2013
 
$ 21,370   $ 17,165  
 

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

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