Evans & Sutherland Reports Second Quarter 2008 Results

SALT LAKE CITY - (Business Wire) Evans & Sutherland Computer Corporation (E&S) (NASDAQ: ESCC) today reported financial results in its Form 10-Q filing for the second quarter ended June 27, 2008.

Sales for the second quarter were $9.8 million, compared to sales of $6.5 million for the second quarter 2007. Net loss from continuing operations for the quarter was $1.4 million or $0.12 per share compared to a net loss from continuing operations for the second quarter 2007 of $2.3 million or $0.21 per share. Backlog as of June 27, 2008 was $28.0 million compared to backlog of $28.5 million as of December 31, 2007.

Comments from David H. Bateman, President and Chief Executive Officer: “The second quarter of 2008 continued the positive progress for E&S. We had three significant events in the second quarter.

“In mid-June we attended the InfoComm display show in Las Vegas where we featured our laser projector. This is the largest show focused on the display industry. Over 1,600 attendees visited our exhibit, expressing very positive comments and a high degree of interest in both our technology and expected release dates for our next generation laser products applicable to the broader display market. This reception from potential customers reinforced our confidence in the future of our laser projection technology in a much larger market.

“In late June we participated in the bi-annual International Planetarium Society (IPS) convention in Chicago. IPS is the largest planetarium industry show. We used this show to introduce our new Digistar 4 product. We also featured our laser projector as well as the new NanoSeam dome and SciDome HD product targeted at the educational market. We received an extremely high level of interest and we expect the Digistar 4 to continue the success we have experienced with the Digistar 3 that has sold 200 systems. Since the show we have already received an order for a Digistar 4 Laser system.

“In early June, we reached a settlement with Rockwell Collins in a dispute regarding payments associated with development of our laser projector for the simulation market. We received a payment of $1.0 million and the relevant agreements between E&S and Rockwell Collins were terminated. This settlement releases E&S from the obligation to sell our laser projection technology in the simulation market exclusively through Rockwell Collins, thereby opening up wider opportunities for E&S in this important area.

“Results for the second quarter were improved over the second quarter in 2007. Progress continued in all areas of the business with increased sales, orders, and margins. Expenses were negatively affected by legal fees associated with the Rockwell settlement as well as increased expense attributable to settlement charges under the defined benefit plan which was frozen in 2002. We believe there will be additional such charges in the next two quarters at a reduced level from those recorded in the second quarter.

“For the second half of 2008, we expect continuing profit growth from our digital theater and dome products, with orders and revenue remaining strong and operating efficiencies improving further. In advanced display product development, we will continue to improve our current products as well as significantly advance the development of new laser based products for both current and new markets. These steps will bring us closer to realizing the benefits of our considerable investment in laser display technology and products.

“With the continuing positive trends we are experiencing in all areas of our business, we expect further improvements in financial performance in the second half of 2008 and beyond.”

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 ability of the Company to successfully integrate the Spitz business; the ability to complete production models of its laser projectors without further delays or higher costs; 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.

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS INFORMATION
(In thousands, except share and per share data)
Unaudited
		Three Months Ended								Six Months Ended
		June 27, 2008				June 29, 2007				June 27, 2008				June 29, 2007
Sales		$	9,843			$	6,547			$	18,017			$	10,904
Cost of sales			5,845				4,606				10,868				7,605
Gross profit			3,998				1,941				7,149				3,299
Expenses:
Selling, general and administrative			2,808				2,332				4,879				4,401
Research and development			2,527				2,478				4,826				4,803
Operating expenses			5,335				4,810				9,705				9,204
Operating loss			(1,337	)			(2,869	)			(2,556	)			(5,905	)
Other income (expense), net			(14	)			181				(40	)			270
Loss from continuing operations before income taxes			(1,351	)			(2,688	)			(2,596	)			(5,635	)
Income tax benefit			-				363				93				775
Net loss from continuing operations			(1,351	)			(2,325	)			(2,503	)			(4,860	)
Income (loss) from discontinued operations, net of tax			(56	)			15				(82	)			28
Gain (loss) on sale of discontinued operations, net of tax			(1	)			1,637				(1	)			1,240
Net income (loss) from discontinued operations			(57	)			1,652				(83	)			1,268
Net loss		$	(1,408	)		$	(673	)		$	(2,586	)		$	(3,592	)
Net loss per common share - basic and diluted:
Net loss from continuing operations		$	(0.12	)		$	(0.21	)		$	(0.23	)		$	(0.44	)
Net income (loss) from discontinued operations		$	(0.01	)		$	0.15			$	(0.01	)		$	0.11
Net loss		$	(0.13	)		$	(0.06	)		$	(0.23	)		$	(0.32	)
Weighted average common shares outstanding - basic and diluted:			11,089				11,089				11,089				11,089
CONDENSED CONSOLIDATED BALANCE SHEETS INFORMATION
(In thousands)
Unaudited
		June 27, 2008				December 31, 2007
Assets
Cash and restricted cash		$	8,245			$	12,588
Net receivables, billed and unbilled			9,347				5,900
Inventories			9,820				7,360
Other current assets			1,368				1,652
Net property, plant and equipment			11,635				12,010
Prepaid pension and retirement			4,994				5,568
Intangibles and other assets			1,366				1,531
Total assets		$	46,775			$	46,609
Liabilities and stockholders' equity
Accounts payable and accrued expenses		$	6,465			$	6,636
Customer advances and deposits			13,144				10,094
Pension and retirement obligations			10,272				10,117
Debt obligations			2,798				2,844
Other liabilities			1,809				1,785
Stockholders' equity			12,287				15,133
Total liabilities and stockholders' equity		$	46,775			$	46,609
BACKLOG
(In thousands)
Unaudited
		June 27, 2008				December 31, 2007
		$	28,000			$	28,509

Evans & Sutherland
David H. Bateman, President and CEO, 801-588-1674
dbateman@es.com