SALT LAKE CITY, 8 Feb. 2006. Evans & Sutherland Computer Corp. today announced that it has entered into a definitive agreement to sell its simulation business to Rockwell Collins, Inc. for $71.5 million.
Under its agreement with Rockwell Collins, E&S will sell substantially all of the assets and certain liabilities of its military and commercial simulation businesses and related service operations, including facilities in Salt Lake City, Orlando, and the United Kingdom.
As part of the transaction, E&S will also grant Rockwell Collins exclusive rights to the E&S laser projector for simulation markets. In addition, more than 200 E&S employees will join Rockwell Collins, which is a provider of aviation electronics and communications for military and commercial customers worldwide.
The aggregate purchase price to be paid by Rockwell Collins is $71.5 million in cash, of which $10 million will be deposited in escrow to fund any potential post-closing adjustments or claims. The transaction is subject to approval by E&S shareholders and other customary closing conditions, including regulatory approvals, with an expected closing in the second calendar quarter of 2006.
Following the sale of its simulation assets, E&S will continue to focus on its digital theater and laser projector businesses with headquarters in Salt Lake City.
In a second announcement, E&S said it has agreed to acquire Spitz, Inc., a leading supplier of planetarium systems, for $3.4 million.
In this separate transaction, E&S will acquire the stock of Spitz, Inc. from its parent, Transnational Industries, Inc. The purchase price will be paid in a combination of cash and shares of E&S common stock. The closing of the transaction is expected to occur in the first calendar quarter of 2006 and is subject to approval by the shareholders of Transnational.
"We believe that, by refocusing our business strategy and strengthening our balance sheet, these transactions will enhance Evans & Sutherland's future prospects," said James R. Oyler, president and CEO of Evans & Sutherland.
"Worldwide defense and aerospace markets have clearly evolved in a direction that favors larger companies with extensive product portfolios and integration capabilities. At the same time, E&S will continue to pursue its traditional excellence in delivering very high-quality computer images, which we have done since 1968. Under our new structure, we believe we will be the world leader in digital theaters, planetariums, and projection domes. In addition, we are just beginning deliveries of our unique, state-of-the-art laser projector which delivers ultra-high resolution digital images.
"Spitz is a well-known supplier of high-quality planetarium systems and architectural domes, and has established a worldwide reputation since 1945. The acquisition of Spitz significantly expands our planetarium business and will result in our combined companies providing the only full-range source of supply for all digital theater, planetarium, and dome requirements," Oyler said.
E&S intends to use the proceeds from the Rockwell Collins transaction to retire its outstanding convertible subordinated debentures, to reduce the company's funding obligations under its pension and retirement plans, and for working capital. Following completion of the transaction, depending on its cash requirements and market conditions at the time, E&S plans to consider using a portion of the proceeds from the Rockwell Collins transaction for a possible share buy-back or special dividend.
Evans & Sutherland produces professional hardware and software to create highly realistic visual images for military and commercial simulation, training, engineering, digital theater, and other applications throughout the world. The company has recently introduced its laser projector for ultra-high resolution projection requirements in simulation, digital theaters, and other high-end projection applications. Headquartered in Salt Lake City, Utah, the company employs approximately 275 professionals worldwide. For more information, see www.es.com.
Rockwell Collins is a worldwide leader in the design, production, and support of communication and aviation electronics for commercial and government customers. The company's 17,000 employees in 27 countries deliver industry-leading communication, navigation, surveillance, display, flight control, in-flight entertainment, information management, and maintenance, training and simulation solutions. For more information, see www.rockwellcollins.com.
Spitz, Inc. specializes in planetarium theaters, projection domes, architectural domes and custom immersive theater attractions. Spitz is the world's leading projection dome supplier with over 1,200 installations worldwide. Located near Philadelphia, Pa., Spitz has approximately 60 employees. For more information, see www.spitzinc.com.
