Stocks & Investing
Stocks and Investing
Stocks and Investing
Tue, August 10, 2010
Mon, August 9, 2010 Evans & Sutherland Reports Second Quarter 2010 Results
SALT LAKE CITY--([ BUSINESS WIRE ])--Evans & Sutherland ComputerCorporation (E&S) (OTCPK: ESCC) today reported financial results in its Form 10-Q filing for the second quarter ended July 2, 2010.
"Orders for the quarter were less than the first quarter, but strong enough to position us for an improved second half of 2010. Bidding activity for new projects continues to be strong and reflects an overall improvement in the markets we pursue."
Sales for the second quarter were $7.3 million, compared to sales of $6.1 million for the second quarter 2009. Net loss for the quarter was $2.6 million or $0.23 per share compared to a net loss for the second quarter 2009 of $2.3 million or $0.21 per share. The net loss for the most recent quarter included a significant charge for a loss on inventory impairment in the amount of $1.5 million. The inventory impairment was primarily the result of obsolete and excess quantities, over and above quantities required for deliveries and support related to our current laser projector now used solely with our digital theater products. In addition, the conclusion of low margin ESLP projects had a significant impact on our gross margins for the second quarter of 2010. Backlog as of July 2, 2010 was $17.6 million compared to backlog of $13.3 million as of December 31, 2009. Operating expenses for the second quarter totaled $2.9 million compared to $4.6 million for the second quarter of 2009, due the implementation of our cost cutting plan at the end of the first quarter of 2010.
Comments from David H. Bateman, President and Chief Executive Officer: aThe second quarter of 2010 reflected an increase in revenue and a decrease in gross profit compared to the same period last year. Without the loss on inventory impairment and the revenue from the conclusion of low margin ESLP projects, our gross margins for the quarter would be near normal at 34%. These items are isolated transactions related to our change in product development strategy and had very little effect on 2010 cash flow. The gross profit contribution excluding the effect of these isolated transactions combined with the benefit of reduced operating expenses from our cost cutting efforts reflect measurable improvement in the second quarter of 2010 as compared to prior periods.
aOrders for the quarter were less than the first quarter, but strong enough to position us for an improved second half of 2010. Bidding activity for new projects continues to be strong and reflects an overall improvement in the markets we pursue.
aWith the increase in order backlog, strong bidding activity, increased deliveries in the remainder of the year, and the actions we are continuing to take to reduce corporate overheads and other expenses wherever practicable, we expect significant improvement in the results of operations for the remainder of 2010. We remain positive for the success of the business.a
Statements in this press release which are not historical, including statements regarding E&Sa™ or managementa™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 aanticipate,a aestimate,a aexpect,a aproject,a aintend,a ashould,a aplan,a agoal,a abelieve,a aconfidenta 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 Companya™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 Companya™s reports filed with the Securities and Exchange Commission.
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION | ||||||||||||||||||||||||
| (In thousands, except share and per share data) | ||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||
| July 2, 2010 | June 26, 2009 | July 2, 2010 | June 26, 2009 | |||||||||||||||||||||
| Sales | $ | 7,273 | $ | 6,074 | $ | 11,673 | $ | 11,932 | ||||||||||||||||
| Cost of sales | 5,307 | 3,589 | 7,943 | 7,647 | ||||||||||||||||||||
| Loss on inventory impairment | 1,458 | 147 | 1,573 | 1,292 | ||||||||||||||||||||
| Gross profit | 508 | 2,338 | 2,157 | 2,993 | ||||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Selling, general and administrative excluding pension expense | 1,590 | 1,810 | 3,284 | 3,632 | ||||||||||||||||||||
| Research and development | 855 | 1,980 | 2,664 | 3,797 | ||||||||||||||||||||
| Pension expense - general and administrative | 448 | 840 | 896 | 1,680 | ||||||||||||||||||||
| Operating expenses | 2,893 | 4,630 | 6,844 | 9,109 | ||||||||||||||||||||
| Operating loss | (2,385 | ) | (2,292 | ) | (4,687 | ) | (6,116 | ) | ||||||||||||||||
| Other expense | (161 | ) | (58 | ) | (406 | ) | (109 | ) | ||||||||||||||||
| Loss before income taxes | (2,546 | ) | (2,350 | ) | (5,093 | ) | (6,225 | ) | ||||||||||||||||
| Income tax expense | (46 | ) | 1 | (49 | ) | (57 | ) | |||||||||||||||||
| Net loss | $ | (2,592 | ) | $ | (2,349 | ) | $ | (5,142 | ) | $ | (6,282 | ) | ||||||||||||
| Net loss per common share - basic and diluted | $ | (0.23 | ) | $ | (0.21 | ) | $ | (0.46 | ) | $ | (0.57 | ) | ||||||||||||
| Weighted average common shares outstanding - basic and diluted | 11,089 | 11,089 | 11,089 | 11,089 | ||||||||||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| Unaudited | ||||||||||||||||
| July 2, 2010 | December 31, 2009 | |||||||||||||||
| Assets | ||||||||||||||||
| Cash and restricted cash | $ | 3,021 | $ | 4,197 | ||||||||||||
| Net receivables, billed and unbilled | 4,504 | 6,097 | ||||||||||||||
| Inventories, net | 5,191 | 7,159 | ||||||||||||||
| Prepaid expenses and deposits | 1,363 | 1,346 | ||||||||||||||
| Marketable securities | 2,827 | 3,248 | ||||||||||||||
| Property, plant and equipment, net | 10,024 | 10,608 | ||||||||||||||
| Intangibles and other assets | 1,984 | 1,963 | ||||||||||||||
| Total assets | $ | 28,914 | $ | 34,618 | ||||||||||||
| Liabilities and stockholders' deficit | ||||||||||||||||
| Accounts payable and accrued expenses | $ | 4,154 | $ | 5,057 | ||||||||||||
| Customer advances and deposits | 6,926 | 7,150 | ||||||||||||||
| Pension and retirement obligations | 21,749 | 21,165 | ||||||||||||||
| Debt obligations | 5,770 | 5,784 | ||||||||||||||
| Other liabilities | 1,442 | 1,432 | ||||||||||||||
| Stockholders' deficit | (11,127 | ) | (5,970 | ) | ||||||||||||
| Total liabilities and stockholders' deficit | $ | 28,914 | $ | 34,618 | ||||||||||||
| BACKLOG | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| Unaudited | ||||||||||||||||
| July 2, 2010 | December 31, 2009 | |||||||||||||||
| $ | 17,630 | $ | 13,339 | |||||||||||||
E&S is a registered trademark of Evans & Sutherland Computer Corporation.
