Evans & Sutherland Computer
Corporation (E&S) (OTCPK: ESCC)
today reported financial results in its Form 10-K filing for the year ended December 31, 2012.
Sales for 2012 were $24.9 million, compared to sales of $28.3 million for 2011. The net loss for 2012 was $2.3 million or $0.21 per share, compared to a net loss of $2.1 million or $0.19 per share for 2011. The total comprehensive loss for the year was $2.8 million compared to $10.6 million for 2011. Revenue backlog as of December 31, 2012 was $15.5 million compared to backlog of $17.4 million as of December 31, 2011.
Comments from David H. Bateman, President and Chief Executive Officer:
“Lower sales in 2012 resulted in a larger operating loss for the year as compared to 2011. The net losses for the two years were comparable due to a $0.7 million loss on the condemnation of property in 2011. The lower sales were the result of a decrease in the volume of orders and deliveries of all of our products. The larger total comprehensive loss is primarily attributable to increases in the net pension obligation. The major cause of the increases in the pension obligation was low market interest rates used in measuring the obligation. The drop in interest rate was steeper in 2011 than in 2012, hence the much larger total comprehensive loss in 2011.
“For the past several years we have employed various strategies for growth and costs reduction in an effort to reverse a long history of operating losses. While this effort has significantly reduced our operating losses, we now believe that the business, as currently capitalized, is not capable of overcoming the enormous burden of our defined benefit pension plan (the “Pension Plan”). The unfunded accounting liability for the benefits payable under the Pension Plan is $28.3 million as of December 31, 2012. Additionally, the Company has a total stockholders’ deficit of $24.6 million and total assets of $24.2 million as of December 31 2012. The $28.3 million unfunded liability is for benefits which were earned for service of Company employees prior to when plan benefits were frozen in 2002 and during a period when the Company was much larger, with as many as 1,400 employees. The Pension Plan is currently responsible for the retirement benefits of over 1,100 participants, of whom only 24 are current employees. We believe we have exhausted all efforts to overcome this burden. Because we believe that the business has the potential for long term profitability without the burden of the Pension Plan, we have applied to the Pension Benefit Guarantee Corporation (“PBGC”) for a distress termination of the Pension Plan. Legal counsel engaged to assist with this effort has advised that the facts and circumstances of our application provide basis for approval of the plan termination, and that PBGC settlements for resulting termination liabilities are usually in amounts that are feasible for the sponsor company to pay and remain as a going concern.