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Exhibit 99.1
[EVANS & SUTHERLAND LOGO]
600 Komas Drive | NEWS RELEASE | |
Salt Lake City, UT 84108 USA | For Immediate Release |
Evans & Sutherland Reports Fourth Quarter and Year-End Results
SALT LAKE CITY, UTAH, March 18, 2004—Evans & Sutherland Computer Corporation (NASDAQ: ESCC) today reported financial results for the fourth quarter and year ended December 31, 2003.
Sales for the 2003 fiscal year were $84.8 million, down 30.8% from sales of $122.6 million in 2002. Net loss for 2003 was $36.0 million, or $3.44 per share, compared to a net loss of $11.7 million, or $1.12 per share, in 2002. For the fourth quarter ended December 31, 2003, sales were $25.4 million, compared to sales of $29.2 million for the fourth quarter of 2002. Net profit for the fourth quarter of 2003 was $1.5 million, or $0.14 per share, compared to a net loss of $6.0 million, or $0.58 per share, in 2002.
Comments from James R. Oyler, President and Chief Executive Officer
"The fourth quarter was profitable, as we had previously forecast. We have been expecting for some time that 2003 would be a transition year for the company, leading to a return to profitability. This transition has occurred in a difficult market environment and has required numerous changes in the company.
"During the year we reduced the size of the company twice, and also wrote down inventory held for older products when customer demand for those products declined. We also incurred further costs to complete a number of older military contracts. All of these factors contributed to a sizeable loss in the first three quarters.
"After the end of the calendar year, we discovered that errors had been made in revenue, cost, and profit recognition in our UK subsidiary during the first three quarters. The errors arose from incorrect estimates of percentage completion on contracts in that unit. Correcting the completion status of the UK contracts resulted in a restatement of our unaudited results for the first three quarters, with a cumulative reduction of $8.9 million of revenue and $5.7 million of earnings for those quarters. Based on the revised completion estimates we have made, most of this revenue, cost, and gross margin will now be recognized in 2004. Additional details are included in the company's SEC Form 10K filed concurrently with this release.
"We are implementing control systems and procedures in our UK unit to prevent such estimating errors in the future. Similar control systems and procedures were installed for US operations in 2003 and have proven effective, and we are confident that all operations will now have adequate controls to prevent a recurrence in the future.
"As we enter 2004, we believe both our products and our internal systems are now operating successfully. In addition to the new products introduced in 2003, we plan important additional product introductions in 2004. Both our cash position and our backlog increased during 2003, and we anticipate modest market improvement in the current year. Based on the pattern of our backlog and orders, we expect a loss in Q1 but a profit for the full year."
About Evans & Sutherland
Evans & Sutherland produces professional hardware and software to create highly realistic visual images for simulation, training, engineering, and other applications throughout the world. E&S visual systems are used in both military and commercial systems, as well as planetariums and interactive theaters. Visit the E&S Web site at http://www.es.com.
Statements in this press release which are not historical, including statements regarding E&S'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. Such statements include statements that systems to prevent estimating errors in the US have been successful and that these systems will be installed in the UK in 2004, that we are confident that all operations will now have adequate controls to prevent such errors in the future, that we believe both products and internal systems are operating successfully, that we plan important product introductions in 2004, that the company anticipates market improvement for the current year, a loss in Q1, but a profit for the full year 2004. It is important to note that E&S's actual results could differ materially from those in any such forward-looking statements. Various factors could cause actual results to differ materially, such as the risk factors listed from time to time in E&S's SEC reports.
E&S is a registered trademark of Evans & Sutherland Computer Corporation.
###
Contacts:
Contact:
Thomas Atchison
Chief Financial Officer
Evans & Sutherland
600 Komas Drive, Salt Lake City, UT 84108
801-588-1125
tatchiso@es.com
Media
Joan Mitchell
Public Relations Manager
801-588-1453
jmitchel@es.com
SUMMARY STATEMENTS OF CONSOLIDATED OPERATIONS
(In thousands, except per share data)
Unaudited
| Three Months Ended | Twelve Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2003 | December 31, 2002 | December 31, 2003 | December 31, 2002 | |||||||||||
Sales | $ | 25,424 | $ | 29,202 | $ | 84,776 | $ | 122,578 | |||||||
Cost of sales | 14,958 | 17,721 | 53,252 | 78,052 | |||||||||||
Inventory impairment | 1,392 | 14,566 | 1,392 | ||||||||||||
Gross profit | 10,466 | 10,089 | 16,958 | 43,134 | |||||||||||
Expenses: | |||||||||||||||
Selling, general and administrative | 6,369 | 7,212 | 27,039 | 27,131 | |||||||||||
Research and development | 3,930 | 6,391 | 21,730 | 25,970 | |||||||||||
Restructuring charge | (498 | ) | 2,571 | 3,416 | 4,492 | ||||||||||
Impairment loss | — | 311 | 1,151 | 311 | |||||||||||
Operating expenses | 9,801 | 16,485 | 53,336 | 57,904 | |||||||||||
Gain on sale of assets held for sale | — | 1,212 | 1,406 | 1,212 | |||||||||||
Gain on curtailment of pension plan | — | — | — | 3,575 | |||||||||||
Gain on sale of business unit | — | — | — | 253 | |||||||||||
Operating profit (loss) | 665 | (5,184 | ) | (34,972 | ) | (9,730 | ) | ||||||||
Other expense, net | 153 | (795 | ) | (1,987 | ) | (2,454 | ) | ||||||||
Income (loss) before income taxes | 818 | (5,979 | ) | (36,959 | ) | (12,184 | ) | ||||||||
Income tax expense (benefit) | (634 | ) | 70 | (971 | ) | (463 | ) | ||||||||
Net income (loss) | $ | 1,452 | $ | (6,049 | ) | $ | (35,988 | ) | $ | (11,721 | ) | ||||
Basic and diluted net income (loss) per share | $ | 0.14 | $ | (0.58 | ) | $ | (3.44 | ) | $ | (1.12 | ) | ||||
Number of shares used in net income (loss) per share calculation | 10,481 | 10,444 | 10,471 | 10,422 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
| Dec. 31, 2003 | Dec. 31, 2002 | ||||||
---|---|---|---|---|---|---|---|---|
Assets | ||||||||
Cash and cash equivalents | $ | 10,479 | $ | 10,335 | ||||
Receivables, billed and unbilled | 33,220 | 44,564 | ||||||
Inventories | 15,973 | 31,373 | ||||||
Other assets | 9,595 | 13,017 | ||||||
Net property, plant and equipment | 24,115 | 28,287 | ||||||
Total assets | $ | 93,382 | $ | 127,576 | ||||
Liabilities and Stockholders' Equity | ||||||||
Accounts payable and accruals | $ | 20,972 | $ | 22,764 | ||||
Other liabilities | 56,844 | 51,449 | ||||||
Stockholders' equity | 15,566 | 53,363 | ||||||
Total liabilities and stockholders' equity | $ | 93,382 | $ | 127,576 | ||||
BACKLOG
(In thousands)
Unaudited
| Dec. 31, 2003 | Dec. 31, 2002 | ||||
---|---|---|---|---|---|---|
$ | 64,684 | $ | 59,672 | |||
SUMMARY RESTATEMENT OF FIRST THREE QUARTERS 2003
(In thousands, except per share data)
Unaudited
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar. 28, | Mar. 28, | June 27, | June 27, | Sep. 26, | Sep. 26, | |||||||||||||||
| Restated | As Previously Reported | Restated | As Previously Reported | Restated | As Previously Reported | |||||||||||||||
Sales | $ | 22,578 | $ | 22,693 | $ | 16,010 | $ | 22,196 | $ | 20,765 | $ | 23,410 | |||||||||
Cost of sales | 14,998 | 13,870 | 9,924 | 13,558 | 13,372 | 14,134 | |||||||||||||||
Inventory impairment | 14,566 | 14,566 | — | — | — | — | |||||||||||||||
Gross profit | (6,986 | ) | (5,743 | ) | 6,086 | 8,638 | 7,393 | 9,276 | |||||||||||||
Expenses: | |||||||||||||||||||||
Selling, general and administrative | 7,257 | 7,257 | 6,906 | 6,906 | 6,507 | 6,507 | |||||||||||||||
Research and development | 7,030 | 7,030 | 5,093 | 5,093 | 5,677 | 5,677 | |||||||||||||||
Restructuring charge | 1,279 | 1,279 | — | — | 2,635 | 2,635 | |||||||||||||||
Impairment loss | 1,151 | 1,151 | — | — | — | — | |||||||||||||||
Operating expenses | 16,717 | 16,717 | 11,999 | 11,999 | 14,819 | 14,819 | |||||||||||||||
Gain on sale of assets held for sale | — | — | 1,406 | 1,406 | — | — | |||||||||||||||
Operating loss | (23,703 | ) | (22,460 | ) | (4,507 | ) | (1,955 | ) | (7,426 | ) | (5,543 | ) | |||||||||
Other expense, net | (840 | ) | (840 | ) | (498 | ) | (498 | ) | (802 | ) | (802 | ) | |||||||||
Loss before income taxes | (24,543 | ) | (23,300 | ) | (5,005 | ) | (2,453 | ) | (8,228 | ) | (6,345 | ) | |||||||||
Income tax expense (benefit) | (268 | ) | (268 | ) | 119 | 119 | (188 | ) | (188 | ) | |||||||||||
Net loss | $ | (24,275 | ) | $ | (23,032 | ) | $ | (5,124 | ) | $ | (2,572 | ) | $ | (8,040 | ) | $ | (6,157 | ) | |||
Basic and diluted net loss per share | $ | (2.32 | ) | $ | (2.20 | ) | $ | (0.49 | ) | $ | (0.25 | ) | $ | (0.77 | ) | $ | (0.59 | ) | |||
Number of shares used in net loss per share calculation | 10,459 | 10,459 | 10,469 | 10,469 | 10,476 | 10,476 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Unaudited
| Mar. 28, 2003 | Mar. 28, 2003 | June 27, 2003 | June 27, 2003 | Sep. 26, 2003 | Sep. 26, 2003 | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Restated | As Previously Reported | Restated | As Previously Reported | Restated | As Previosly Reported | ||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 11,682 | $ | 11,682 | $ | 10,479 | $ | 10,479 | $ | 10,933 | $ | 10,933 | ||||||||
Receivables, billed and unbilled | 42,195 | 40,850 | 35,026 | 33,681 | 28,992 | 33,835 | ||||||||||||||
Inventories | 18,004 | 18,004 | 18,657 | 18,657 | 17,825 | 17,825 | ||||||||||||||
Other assets | 12,464 | 12,464 | 8,738 | 8,738 | 8,988 | 8,988 | ||||||||||||||
Net property, plant and equipment | 26,084 | 26,084 | 25,199 | 25,199 | 24,241 | 24,241 | ||||||||||||||
Total assets | $ | 110,429 | $ | 109,084 | $ | 98,099 | $ | 96,754 | $ | 90,979 | $ | 95,822 | ||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Accounts payable and accruals | $ | 24,474 | $ | 24,474 | $ | 21,539 | $ | 21,539 | $ | 23,498 | $ | 23,498 | ||||||||
Other liabilities | 56,788 | 54,200 | 52,405 | 47,265 | 51,097 | 50,262 | ||||||||||||||
Stockholders' equity | 29,167 | 30,410 | 24,155 | 27,950 | 16,384 | 22,062 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 110,429 | $ | 109,084 | $ | 98,099 | $ | 96,754 | $ | 90,979 | $ | 95,822 | ||||||||
Evans & Sutherland Reports Fourth Quarter and Year-End Results