Date: Feb 09, 2006 Author: Jenifer K. Nii Source: Deseret News (
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Citing post-9/11 market changes, Evans & Sutherland Computer Corp. said Wednesday it has agreed to sell its flagship computer simulation business to Iowa-based Rockwell Collins Inc. in a deal worth $71.5 million.
Citing post-9/11 market changes, Evans & Sutherland Computer Corp. said Wednesday it has agreed to sell its flagship computer simulation business to Iowa-based Rockwell Collins Inc. in a deal worth $71.5 million.
Following the sale, the Salt Lake-based company will focus its energies on its digital theater and laser projector businesses, saying it has industry dominance on one end and room to grow on the other.
The transaction — a cash purchase, with $10 million of the $71.5 million to be put into escrow to pay for closing costs and other expenses — is expected to close during the second quarter of 2006. It includes Evans & Sutherland's military and commercial simulation assets (and certain liabilities), including simulation facilities in Salt Lake City, Orlando and the United Kingdom.
Evans & Sutherland will use the money to pay debt, fund its pension and retirement plans and for working capital, the company said. It also will consider using a portion of the proceeds for a possible share buyback or special dividend.
Rockwell Collins, which is based in Cedar Rapids, Iowa, specializes in communication and aviation electronics — navigation, surveillance, display, flight control, in-flight entertainment, information management, maintenance and training. The company said it will use the acquisition to beef up its simulation division.
About two-thirds of Evans & Sutherland's 300 workers — including about 100 in Utah — will join Rockwell Collins, Evans & Sutherland President James R. Oyler said Wednesday. Evans & Sutherland will keep the remaining 100 employees. No job losses are expected to result from the transaction, Oyler said.
"There are no reductions out of this," Oyler said. "Everybody has a job. They either go to Rockwell Collins, or they stay with us. Nobody is left out."
Evans & Sutherland will retain ownership of its planetarium and other laser projector market offerings and will keep its headquarters in Salt Lake City, Oyler said.
"The reason for the transaction is that the market, and the industry that we operate in, has changed fundamentally over the last few years," Oyler said. "It had already started changing, but it accelerated after 9/11 with the changes in the airline industry.
"While we have recovered from that, the industry is now dominated by a small number of large companies — an environment that favors the larger, more diversified companies. The effect of a change in revenue, for example, doesn't affect them the way that it does us."
In a separate deal, also announced Wednesday, Evans & Sutherland said it will buy the stock of Philadelphia-based Spitz Inc. from its parent, Transnational Industries Inc., for about $3.4 million. Spitz specializes in planetarium theaters, projection domes, architectural domes and custom immersive theater attractions, and Oyler said the deal will help Evans & Sutherland bulk up its digital theater division.
"We now have two pieces (of the business) left: the planetarium business and the laser projector business," Oyler said. "With the acquisition announced today, we are clearly the world leader in that end of the business. And in the other, we see potential for high growth. And we feel that that combination is a better mix for the future of the company than the mix we have now."
Evans & Sutherland will pay for Spitz with a combination of cash and stock. The closing of that transaction is expected before quarter's end and is subject to approval by the shareholders of Transnational.
The company's new direction feels, Oyler said, "a bit like your first child going off to college." However, he maintained it is faithful to the founding principles at Evans & Sutherland.
"When the company was formed by David Evans and Ivan Sutherland, it was not actually formed (as many believe) as a simulation company," Oyler said. "It was formed as a company to create high-quality, computer-generated imagery. And that's exactly what we're doing.
"That's what the Evans & Sutherland of today is focused on — whether it's the image of the universe at the planetarium or a high-quality, laser-projected image. It is about that standard of quality, and I believe we're quite true to that founding principle."
Stock of Evans & Sutherland rose 68 cents, or 13.9 percent, to close at $5.56 per share Wednesday on Nasdaq. In the past year, it has ranged in price from $4.38 to $7.50.
Rockwell Collins gained 66 cents to close at $50.62 on the New York Stock Exchange.
E-mail: jnii@desnews.com
