-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, TH5Xas4Lx9fIVlaid7+xv9sr/x+X/cz3ew6bEQPvoDamh3HYdcF7y69oufE+j5nW /iSZ734tjJDH2sQ5t2N5iw== 0000927356-95-000214.txt : 19950814 0000927356-95-000214.hdr.sgml : 19950814 ACCESSION NUMBER: 0000927356-95-000214 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950811 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVANS & SUTHERLAND COMPUTER CORP CENTRAL INDEX KEY: 0000276283 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 870278175 STATE OF INCORPORATION: UT FISCAL YEAR END: 1228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-08771 FILM NUMBER: 95561630 BUSINESS ADDRESS: STREET 1: 600 KOMAS DR CITY: SALT LAKE CITY STATE: UT ZIP: 84108 BUSINESS PHONE: 8015825847 MAIL ADDRESS: STREET 1: 600 KOMAS DR CITY: SALT LAKE CITY STATE: UT ZIP: 84108 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 1995 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Transition Period from ________to_________ COMMISSION FILE NUMBER 0-8771 ------------------------------------ EVANS & SUTHERLAND COMPUTER CORPORATION (Exact name of registrant as specified in its charter) UTAH 87-0278175 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 600 KOMAS DRIVE, SALT LAKE CITY, UTAH 84108 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (801) 582-5847 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --------------------------- ---- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding Shares at August 2, 1995 - --------------------------------------- ------------------------------------ COMMON STOCK, $0.20 PAR VALUE 8,670,667 FORM 10-Q EVANS & SUTHERLAND COMPUTER CORPORATION QUARTER ENDED JUNE 30, 1995
Page No. TABLE OF CONTENTS 2 PART I - FINANCIAL INFORMATION GENERAL STATEMENT 3 ITEM 1. FINANCIAL STATEMENTS Consolidated Statements of Earnings - Three Months & Six Months Ended June 30, 1995 and July 1, 1994 4 Consolidated Balance Sheets - June 30, 1995 and December 30, 1994 5-6 Consolidated Condensed Statements of Cash Flows - Six Months Ended June 30, 1995 and July 1, 1994 7 Notes to Financial Statements 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9-12 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURE PAGE 13
-2- EVANS & SUTHERLAND COMPUTER CORPORATION PART I - FINANCIAL INFORMATION GENERAL STATEMENT: The following Consolidated Statements of Earnings, Consolidated Balance Sheets, and Consolidated Condensed Statements of Cash Flows have been prepared from the accounting records of Evans & Sutherland Computer Corporation without audit (except where presented data is specifically identified as audited) in accordance with Securities and Exchange Commission regulations. The financial statements were prepared in conformity with generally accepted accounting principles applied on a basis consistent with prior periods. All adjustments reflected in the statements are of a normal recurring nature and are necessary for a fair presentation of results for the interim periods presented. It is management's opinion that the information presented herein reflects a fair presentation of the results of the interim period(s) in all material respects. -3- EVANS & SUTHERLAND COMPUTER CORPORATION CONSOLIDATED STATEMENTS OF EARNINGS Three Months and Six Months Ended June 30, 1995 and July 1, 1994 (In thousands except per share amounts)
Three Months Ended Six Months Ended (Unaudited) (Unaudited) ----------------------- ------------------------ June 30, July 1, June 30, July 1, 1995 1994 1995 1994 ---------- ---------- ---------- ----------- Net sales $ 25,081 $ 22,839 $ 44,367 $ 49,699 Cost of sales 18,378 11,354 26,900 23,631 ---------- ---------- ---------- ---------- Gross profit 6,703 11,485 17,467 26,068 Expenses: Marketing, general and administrative 7,260 8,580 15,198 16,916 Research and development 4,711 6,814 10,919 14,700 ---------- ---------- ---------- ---------- Total expenses 11,971 15,394 26,117 31,616 Gain from sale of business unit 20,188 - 20,188 - ---------- ---------- ---------- ---------- Operating earnings (loss) 14,920 (3,909) 11,538 (5,548) Other income 4,282 1,365 8,621 2,869 ---------- ---------- ---------- ---------- Earnings (loss) before income and extraordinary gain 19,202 (2,544) (20,159) (2,679) Income tax expense (benefit) 8,108 (966) 8,467 (1,019) ---------- ---------- ---------- ---------- Earnings (loss) before extraordinary gain 11,094 (1,578) 11,692 (1,660) Extraordinary gain from repurchase of convertible debentures, net of income taxes 200 369 200 459 Net earnings (loss) $ 11,294 $ (1,209) $ 11,892 $ (1,201) ---------- ---------- ---------- ---------- Earnings (loss) per common and common equivalent share: Before extraordinary gain $ 1.29 $ (0.18) $ 1.36 $ (0.19) Extraordinary gain from repurchase of convertible debentures: 0.02 0.04 0.02 0.05 ---------- ---------- ---------- ---------- Total earnings per share $ 1.31 $ (0.14) $ 1.38 $ (0.14) ---------- ---------- ---------- ---------- Weighted average number of shares used for per share earnings computation: 8,632 8,526 8,597 8,500
-4- EVANS & SUTHERLAND COMPUTER CORPORATION CONSOLIDATED BALANCE SHEETS June 30, 1995 and December 30, 1994 (U.S. Dollars in Thousands)
June 30, December 30, 1995 1994 Assets (Unaudited) (Audited) ------ ----------------- ----------------- Current assets: Cash and cash equivalents $ 40,255 $ 25,213 Short-term investments 52,077 26,597 Receivables: Trade accounts, less allowance for doubtful receivables of $58 in 1995 and $144 in 1994 22,027 20,724 Income taxes 2,344 1,633 Interest 868 1,142 Employees and other 252 150 -------------- ------------- Total receivables 25,491 23,649 Inventories, net (note 1) 20,007 26,192 Costs and estimated earnings in excess of billings on uncompleted contracts, net 12,579 18,549 Deferred income tax 10,489 6,561 Prepaid expenses and deposits 1,172 1,425 -------------- ------------- Total current assets 162,070 128,186 -------------- ------------- Property, plant, and equipment, at cost 103,943 104,466 Less accumulated depreciation and amortization 63,251 62,802 -------------- ------------- Net property, plant, and equipment 40,692 41,664 Long-term investments: Marketable equity securities available-for-sale, at fair value 3,734 7,277 Other 35 35 -------------- ------------- Total long-term investments 3,769 7,312 Other assets, at cost, less accumulated amortization 1,699 1,578 -------------- ------------- Total assets $ 208,230 $ 178,740 ============== =============
-5- EVANS & SUTHERLAND COMPUTER CORPORATION CONSOLIDATED BALANCE SHEETS June 30, 1995 and December 30, 1994 (U.S. Dollars in Thousands)
June 30, December 30, 1995 1994 Liabilities and Stockholders' Equity (Unaudited) (Audited) -------------------------------------- ---------------- -------------- Current liabilities: Notes payable to banks $ 5,990 $ 1,817 Accounts payable 1,781 2,401 Accrued expenses 19,276 15,556 Customer deposits 10,099 9,182 Income taxes payable 13,690 - ------------- ------------ Total current liabilities 50,836 28,956 Convertible subordinated debentures 18,875 20,375 Deferred income taxes 1,189 2,291 Stockholders' equity: Common stock, $.20 par value; authorized 30,000,000 shares; issued and outstanding 8,641,826 shares at June 30, 1995 and 8,552,106 shares at December 30, 1994 1,728 1,710 Additional paid-in capital 4,067 2,850 Retained earnings 131,143 119,251 Net unrealized gain on securities available-for-sale. 995 2,847 Cumulative translation adjustment (303) 460 Common stock in treasury (300) - ------------- ------------ Total stockholders' equity 137,330 127,118 ------------- ------------ Total liabilities and stockholders' equity $208,230 $178,740 ============= ============
-6- EVANS & SUTHERLAND COMPUTER CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 1995 and July 1, 1994 (U.S. Dollars in Thousands)
Six Months Ended (Unaudited) --------------------------- June 30, July 1, 1995 1994 ---------- ----------- Net cash provided by operating activities $ 33,931 $ 2,344 Cash flows from investing activities: Capital expenditures (4,368) (1,985) Proceeds from sale of marketable equity securities 7,930 2,777 Net sales (purchases) of short-term investments (25,480) 2,082 Other - (389) ---------- ----------- Net cash provided by (used in) investing activities (21,918) 2,485 Cash flows from financing activities: Payments for repurchase of convertible debentures (1,159) (3,831) Net sales of short-term investments 934 4,056 Net borrowings (payments) under line of credit agreement 3,812 (2,765) Other - (26) ---------- ----------- Net cash provided by (used in) financing activities 3,587 (2,566) Effect of foreign exchange rate changes on cash (558) (298) ---------- ----------- Net increase in cash and cash equivalents 15,042 1,965 Cash and cash equivalents at beginning of year 25,213 3,250 ---------- ----------- Cash and cash equivalents at end of period $ 40,255 $ 5,215 ========== =========== Supplemental disclosures of cash flow information Cash paid during the period for: Interest $ 626 $ 1,287 Income taxes $ 86 $ 316
-7- EVANS & SUTHERLAND COMPUTER CORPORATION NOTES TO FINANCIAL STATEMENTS (Dollars in Thousands) (1) Inventories are summarized as follows:
June 30, December 30, 1995 1994 (Unaudited) (Audited) ----------- ----------- Raw materials and supplies $ 8,018 $ 10,498 Work-in-process 10,305 13,491 Finished Goods 1,684 2,203 ---------- ----------- $ 20,007 $ 26,192 ========== ===========
-8- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (U.S. Dollars in Thousands) The following table summarizes changes in operations for the periods indicated and presents the percentage of increase (decrease) by listed items compared to the indicated prior period:
(Unaudited) (Unaudited) Quarters Six Months Ended June 30, 1995 Ended June 30, 1995 And July 1, 1994 And July 1, 1994 ------------------------- ---------------------------- Net sales $ 2,242 9.8% $(5,332) (10.7%) Cost of sales 7,024 61.9% 3,269 13.8% ---------- ---------- Gross profit (4,782) (41.6%) (8,601) (33.0%) Expenses: Marketing, general and administrative (1,320) (15.4%) (1,718) (10.2%) Research and development (2,103) (30.9%) (3,781) (25.7%) ---------- ---------- Total expenses (3,423) (22.2%) (5,499) (17.4%) Gain from sale of business unit 20,188 100.0% 20,188 100.0% ---------- ---------- Operating earnings 18,829 481.7% 17,086 308.0% Other income (expense), net 2,917 213.7% 5,752 200.5% ---------- ---------- Earnings before income taxes and extraordinary gain 21,746 854.8% 22,838 852.5% Income tax expense 9,074 939.3% 9,485 931.7% ---------- ---------- Earnings before extraordinary gain 12,672 803.0% 13,353 803.9% Extraordinary gain from repurchase of convertible debentures, net of income taxes (169) (45.8%) (260) (56.5%) ---------- ---------- Net earnings $12,503 1,034.2% $13,093 1,090.2% ========== ==========
-9- RESULTS OF OPERATIONS - --------------------- SALES - ----- The following table summarizes sales for the first six months of 1995 and 1994 and also for the second quarters of 1995 and 1994
NET SALES (U.S. Dollars in Thousands) ____________________________________________________________________________ Quarter Ended Six Months Ended ------------- ---------------- June 30, July 1, increase June 30, July 1, increase 1995 1994 (decrease) 1995 1994 (decrease) -------- ------- ---------- -------- ------- ---------- Commercial Simulation $ 1,324 $ 1,997 (34%) $ 1,727 $ 2,637 (35%) Government Simulation 18,473 14,543 27% 33,065 32,923 0% Education & Entertainment 2,362 605 290% 3,115 927 236% Graphics Systems a) b) 2,922 5,694 (49%) 6,460 13,212 (51%) ----- ------ ------ ------ $25,081 $22,839 10% $44,367 $49,699 (11%) ====== ====== ====== ======
a) Includes $2,331 of Tripos, Inc. (Tripos) sales in the quarter ended 7/1/94 and $5,955 in Tripos sales in the six months ended 7/1/94. (Tripos spun- off to shareholders June 1, 1994.) b) Includes $78 of Design Systems (CDRS) sales in the quarter ended 6/30/95 compared with $1,386 of CDRS sales in the quarter ended 7/1/94; and includes $800 in CDRS sales in the six months ended 6/30/95 and $3,040 in CDRS sales for the six months ended 7/1/94. (CDRS sold to Parametric Technology Corporation April 12, 1995.) The above table shows an increase of sales of 10% for the quarter ended June 30, 1995 compared with the same period last year, and a decrease of sales of 11% for the six month period ended June 30, 1995 compared with the same period last year. Excluding Tripos and CDRS sales, the quarter, in comparison, would have reflected a 31% increase in sales and for the six month comparison a 7% increase in sales would have been reflected. Without Tripos and CDRS, the Graphics Systems sector would show a 44% increase for the quarter rather than 49% decrease and a 34% increase versus a 51% decrease for the six month period. The Company is continuing to work and strengthen its relationships with its OEM partners (DEC, Sun Microsystems, Hewlett Packard, and IBM). The Government Simulation business experienced a strong second quarter with sales 27% higher compared to the same quarter in 1994 . Sales are higher than planned and there is continued strong order activity, particularly in the international markets. Commercial Simulation is still in the rebuilding phase, however, this sector met the Company's expectations for the quarter and for the six month period. With a recent order from Airbus Industrie, the Company believes that its new marketing strategy for the civil pilot training business is achieving some success. Education and Entertainment experienced strong sales growth for the quarter and the six month period with increases of $1,757,000 and $2,188,000 respectively. The market's response to DIGISTAR II, the new generation of digital planetarium systems, has been very good. Recent installations in Salt Lake City and London have been completed. The Company has orders for thirteen systems and sales are expected to meet anticipated levels for the rest of the year. -10- COST OF SALES - ------------- Cost of sales, as a percentage of sales, was 73% for the second quarter ended June 30, 1995 compared with 50% for the same period in 1994. For the six month period ended June 30, 1995, the cost of sales percentage is 61% as compared with 48% for the six month period ended July 1, 1994. The increased percentage is due to a one-time charge against cost of sales of $1,550,000 related to a possible contract dispute in the Government Simulation business and a $2,000,000 charge related to writedown of inventory. In addition, during the second quarter of 1995, the Company substantially concluded and booked a military contract with margins that are lower than typical margins in that business. If one-time charges, CDRS, Tripos, and the low margin military sales are removed from the equation, cost of sales for the second quarter of 1995 is 52% as compared with 55% for the second quarter 1994. EXPENSES - -------- Total expenses for the second quarter of 1995 decreased $3,423,000 or 22% below the corresponding 1994 period. Marketing, General, and Administrative: Marketing, general, and --------------------------------------- administrative expense decreased $1,320,000 or 15% in the second quarter 1995 as compared to the same quarter of 1994. As a percent of sales, the rates for the second quarter 1995 and 1994 are respectively 29% and 38%. Excluding expenses generated by Tripos, expenses have increased 8%. This increase refects additional expenses used to strengthen the Commercial Simulation and Education & Entertainment businesses. Research and Development: Company-funded research and development costs ------------------------- decreased $2,103,000 in the second quarter 1995 as compared to the same period of 1994. Excluding research and development costs of Tripos and CDRS, the reduction would be $1,321,000. This decrease is a result of the Company's restructuring efforts that took place in January of this year. GAIN ON SALE OF BUSINESS UNIT (CDRS) - ------------------------------------ On April 12, 1995, the Company completed the sale of its CDRS business to Parametric Technology Corporation (PTC), a Massachusetts Corporation. The sale was effected pursuant to an Asset Purchase Agreement dated March 1, 1995 by and among the Company, PTC, and PTC Acquisition Corporation, a wholly owned subsidiary of PTC. The aggregate purchase price of the sale was approximately $34,100,000 in cash. At the current time, several purchase price adjustments are still being negotiated which may affect the final purchase price. Costs and expenses associated with the sale of the CDRS business include a $5.3 million writedown of inventory directly related to the sale of CDRS. OTHER INCOME (EXPENSE), NET - --------------------------- Other income increased $2,917,000 in the second quarter of 1995 compared to the second quarter 1994. $2,252,000 of this increase is due principally to the sale of VLSI stock held for investment. Interest income for the second quarter was $747,000 higher in 1995 than the respective quarter of 1994 due to an increase in short-term investments and higher interest rates applicable to such investments. Interest expense was $84,000 lower in 1995 than 1994 due to lower interest on the Company's Convertible Debentures. -11- INCOME TAXES - ------------ A tax rate of 42% was utilized for income tax transactions in 1995 as compared to 38% for 1994. A higher rate is justified upon greater taxable income and reduced tax benefits such as Research and Development credits as a percentage of total tax. LIQUIDITY & CAPITAL COMMITMENTS - ------------------------------- Funds to support the Company's operations come mainly from: net cash provided by operating activities and sales of marketable securities. The Company also has cash equivalents and temporary cash investments which can be used as needed for operating funds. Cash and cash equivalents and short-term investments increased $37,774,000 to $92,332,000 during the second quarter of 1995 principally due to the sale of the CDRS business unit to PTC. Marketable equity securities declined $2,434,000 to $3,734,000 as a result of the Company's sales of certain shares held for investment. There were no material capital commitments as the fiscal year 1995 began, and no major commitments were extended during the second quarter of 1995. The Company believes that, through internal cash generation plus the cash investments and marketable securities identified above, it has sufficient resources to cover its cash needs during fiscal year 1995. PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K - ------- -------------------------------- (b) On April 12, 1995 a Form 8-K was filed regarding the sale of the Company's Design Software business to Parametric Technology Corporation. -12- EVANS & SUTHERLAND COMPUTER CORPORATION SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EVANS & SUTHERLAND COMPUTER CORPORATION --------------------------------------- Registrant Date AUGUST 10, 1995 /s/ --------------- -------------------------------------------------- GARY E. MEREDITH, VICE PRESIDENT, SECRETARY, AND CHIEF FINANCIAL OFFICER -13- EX-27 2 FINANCIAL DATA SERVICES
5 1,000 6-MOS DEC-29-1995 JUN-30-1995 92,332 3,734 22,085 58 20,007 162,070 103,943 63,251 208,230 50,836 18,875 1,728 0 0 135,602 208,230 25,081 25,081 18,378 11,971 103 0 432 20159 8,467 11,692 0 200 0 11,892 1.38 1.38
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