As Filed With the Securities and Exchange Commission on November 12, 1998
Registration Statement No. __________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------------------
EVANS & SUTHERLAND COMPUTER CORPORATION
(Exact name of registrant as specified in its charter)
Utah 87-0278175
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 Komas Drive
Salt Lake City, Utah 84108
(801) 588-1000
(Address, including zip code, and
telephone number, including area code,
of principal executive offices)
--------------------------------------------
John T. Lemley
Chief Financial Officer
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
(801) 588-1000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
--------------------------------------------
Copies to:
William C. Gibbs
Dawn M. Call
Snell & Wilmer L.L.P.
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
(801) 237-1900
--------------------------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
[ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. |X|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------- ------------------------- ------------------------- ------------------------- -------------------------
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered(2) Offering Price Aggregate Registration
Registered(1) Per Unit(3) Offering Price(3) Fee
- --------------------------- ------------------------- ------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Common Stock, $.20 par 1,279,870 $ 18.6875 $ 23,917,571 $ 4,784
value Shares
=========================== ========================= ========================= ========================= =========================
</TABLE>
(1) This registration statement covers the resale by the selling
shareholder of up to an aggregate of 1,279,870 shares of common stock,
$.20 par value, of Evans & Sutherland Computer Corporation (the
"Company"), 901,408 shares of which may be acquired by such selling
shareholder upon conversion of shares of Class B-1 Preferred Stock, and
378,462 shares which may be acquired by such selling shareholder upon
the exercise of presently outstanding warrants to purchase shares of
Class B-1 Preferred Stock and the conversion of such stock into common
stock.
(2) In the event of a stock split, stock dividend, or similar transaction
involving common stock of the Company, to prevent dilution, the number
of shares of common stock of the Company registered shall be
automatically increased to cover the additional shares of common stock
in accordance with Rule 416(a) under the Securities Act of 1933
("Securities Act").
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the closing price of the common stock
on November 5, 1998, as reported on the Nasdaq National Market.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
PROSPECTUS
600 Komas Drive
Salt Lake City, Utah 84108
(801) 588-1000
EVANS & SUTHERLAND
1,279,870 SHARES COMMON STOCK
With this prospectus, the selling shareholder identified in this
prospectus or in the accompanying prospectus supplement is offering up to
1,279,870 shares of our common stock.
The selling shareholder may sell these shares through public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices
or at privately negotiated prices. The selling shareholder will receive all of
the net proceeds from the sale of the shares offered with this prospectus. The
selling shareholder will pay all underwriting discounts and selling commissions,
if any, applicable to the sale of those shares. The Company will not receive any
proceeds from the sale of the shares.
Before purchasing any of the shares, you should consider very
carefully the information presented under the caption "Risk
Factors" on page 3 of this prospectus.
The Company's common stock is traded on the Nasdaq National Market under
the symbol "ESCC."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The Date of this Prospectus is November 12, 1998
<PAGE>
================================================================================
1,279,870 Shares of
Common Stock
EVANS & SUTHERLAND
COMPUTER CORPORATION
_______________
PROSPECTUS
---------------
================================================================================
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current only as of its date.
---------------
TABLE OF CONTENTS
Page
ABOUT THIS PROSPECTUS........................................2
WHERE YOU CAN FIND MORE INFORMATION..........................2
RISK FACTORS.................................................3
THE COMPANY..................................................6
USE OF PROCEEDS..............................................6
SELLING SHAREHOLDER..........................................6
PLAN OF DISTRIBUTION.........................................7
EXPERTS......................................................8
LEGAL MATTERS................................................8
================================================================================
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we have filed with
the Securities and Exchange Commission ("SEC") to register 1,279,870 shares of
our common stock, par value $.20 (the "Shares"). This prospectus does not
include all of the information contained in the registration statement and the
exhibits to the registration statement. For further information about the
Company and the Shares, you should read the registration statement and the
exhibits to the registration statement. Statements contained in this prospectus
concerning documents we have filed with the SEC as exhibits to the registration
statement or otherwise are not necessarily complete and, in each instance, you
should refer to the actual filed document.
We have not authorized anyone to provide you with any information that
is different from the information contained in this prospectus. The selling
shareholder is offering to sell and seeking offers to buy, the Shares only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of the sale of any Shares.
In this prospectus, the "Company," "E&S," "we," "us," and "our" refer
to Evans & Sutherland Computer Corporation.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at 450 Fifth Street, Mail Stop 1-2, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from our web site at "http://www.es.com" or at the SEC's website at
"http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below, and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act"):
(1) Annual Report on Form 10-K for the fiscal year ended December
31, 1997, as amended through the date hereof;
(2) Proxy Statement dated April 20, 1998;
(3) Joint Proxy and Registration Statement on Form S-4, filed May
15, 1998 (Reg. No. 333-51041);
(4) Quarterly Report on Form 10-Q for the quarter ended March 27,
1998;
(5) Quarterly Report on Form 10-Q for the quarter ended June 26,
1998;
(6) Quarterly Report on Form 10-Q for the quarter ended
September 25, 1998;
(7) Current Report on Form 8-K dated July 13, 1998; and
(8) Description of the Company's capital stock contained in
its registration statement on Form 8-A, including all
amendments or reports filed for the purpose of updating such
description.
You may request a copy of these filings, at no cost, by writing or
telephoning John T. Lemley, Chief Financial Officer, at Evans & Sutherland
Computer Corporation, 600 Komas Drive, Salt Lake City, Utah 84108, telephone
(801) 588-1000.
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<PAGE>
RISK FACTORS
Before making an investment decision, you should carefully consider the
risk factors described below. If any of the following risks actually occurs, it
could materially adversely affect our business, financial condition, and results
of operations. The risks and uncertainties described below are not the only ones
we are facing. We may have other risks and uncertainties of which we are not yet
aware or which we currently believe are immaterial that may also impair our
business operations. As a prospective investor, you should consult independent
advisors as to the technical, tax, business and legal considerations regarding
an investment in the Shares.
Overview
The high-tech nature of our business subjects us to both national and
worldwide economic and political influences such as recession, political
instability, and rapid changes in technology. Our operating results depend on
our ability to rapidly develop, manufacture, and market innovative products that
meet customer needs. Inherent in this process is a number of risks that we must
manage to achieve favorable operating results. The process of developing new
high technology products is complex, expensive, and uncertain, requiring
innovative designs and features that anticipate customer needs, competing
solutions, and technological trends. The products, once developed, must be
manufactured and distributed in sufficient volumes and quality at acceptable
costs and competitive prices. Furthermore, portions of our manufacturing
operations depend on the ability of suppliers to deliver high quality components
and subassemblies in time to meet critical manufacturing and distribution
schedules. Constraints in these supply lines and insufficient quality could
adversely affect our operating results until we can develop alternate sources of
supply.
Competitive Environment
The computer industry is highly competitive, with rapid technological
advances and constantly improving price/performance. As most market areas in
which we operate continue to grow, we are experiencing increased competition,
and we expect this trend to continue. In recent years, domestic and worldwide
political, economic, and technological developments have strongly affected these
markets, requiring adaptation by market participants. Since 1994, we have
followed a three-point growth strategy, consisting of growing existing
businesses, developing new businesses internally, and selectively acquiring
businesses. This strategy has broadened our business portfolio, created
opportunities for increased efficiency and market competitiveness, improved
access to new markets, and reduced exposure to airline industry and defense
budget reductions. In addition, we continue to undertake cost reduction efforts
throughout all business units while monitoring and adjusting employment levels
to be consistent with changing business requirements.
Our executive management team and Board of Directors continue to review
and monitor our strategic plans in connection with our three-point growth
strategy. These plans include assessing business combinations and joint ventures
with companies engaged in similar or closely related businesses, building market
share in core businesses, and divesting less well-positioned and non-core
businesses to remain competitive.
Period to Period Fluctuations
Our operating results may fluctuate for a number of reasons. The
largest share of our revenues and earnings is from our core simulation-related
businesses, which typically have long delivery cycles and contract lengths. In
fact, well over half of each quarter's revenues result from orders received in
previous quarters. Because we budget our operating expenses, many of which are
relatively fixed in the short term, in light of expected revenue, even a small
revenue shortfall may cause a period's results to be below expectations. Such a
revenue shortfall could arise from any number of factors, including delays in
the availability of products, delays from chip suppliers, discontinuance of key
components from suppliers, other supply constraints, transit interruptions,
overall economic conditions, or natural disasters. The timing of customer
acceptance of certain large-scale commercial or government contracts may also
have a significant effect on periodic operating results. United States and
international government defense budgets may require us to delay or even cancel
production due to lack of available funding.
Our gross margins are heavily influenced by mix considerations. These
mix considerations include the mix of lower-margin prime contracts versus
sub-contracts, the mix of new products and markets versus established products
and markets, the mix of high-end products versus low-end products, as well as
the mix of configurations within these product categories. Future margins may
not duplicate historical margins or growth rates.
Our stock price, like that of other technology companies, is subject to
significant volatility. If revenues or earnings in any quarter fail to meet the
investment community's expectations, there could be an immediate material and
adverse impact on our stock price. Broader market trends unrelated to our
performance may also affect the stock price.
3
<PAGE>
Research and Development
We make a significant investment in long-term research and development.
Developing new products and software is expensive and the investment in product
development often involves a long payback cycle. While we have every reason to
believe these investments will ultimately be rewarded with revenue-generating
products, customer acceptance ultimately dictates the success of development and
marketing efforts. We plan to continue significant investments in research and
development and related product opportunities from which significant revenue is
not anticipated for a number of years. We expect total spending for research and
development in 1998 to increase over spending in 1997 in absolute dollars, but
not to increase as a percentage of sales.
Product Development and Introduction
Our continued success depends on our ability to develop technologically
complex and innovative products. Product transitions are a recurring part of our
business. A number of risks are inherent in this process. During fiscal year
1998, for example, we are heavily committed to meeting delivery schedules for
our Harmony and iNTegrator products. While we expect to meet these schedules, we
have customer contracts that include liquidated damages if our delivery
schedules are not met.
The development of new technology and products is increasingly complex
and uncertain, which increases the risk of delays. The introduction of a new
product requires close collaboration and continued technological advancement
involving multiple hardware and software design and manufacturing teams within
the Company as well as teams at outside suppliers of key components, such as
chipsets. The failure of any one of these elements could cause our new products
to fail to meet specifications or to miss the aggressive timetables that we
establish. As the variety and complexity of our product families increase, the
process of planning production and inventory levels also becomes increasingly
complex. In addition, the extent to which a new product gains rapid acceptance
is strongly affected by the availability of key applications optimized for the
new systems. There is no assurance that acceptance of our new systems will not
be affected by delays in this process.
Product life-cycles place a premium on our ability to manage the
transition from current products to new products. We may announce a new product
while its predecessor is in the final stages of development. Our results could
be adversely affected by such factors as development delays, late release of
products to manufacturing, quality or yield problems experienced by production
or suppliers, variations in product costs, delays in customer purchases of
existing products in anticipation of the introduction of new products, and
excess inventories of older products and components.
United States Government Contracts
In 1997, 29% of our sales were to agencies of the United States
government, either directly or through prime contractors or subcontractors, for
which there is intense competition. Accordingly, a significant portion of our
sales is subject to the inherent risks related to government contracts,
including uncertainty of economic conditions, changes in government policies and
requirements that may reflect rapidly changing military and political
developments, and the availability of funds. These risks also include
technological uncertainties and obsolescence, and dependence on annual
Congressional appropriation and allotment of funds. In the past, some of our
programs have been delayed, curtailed, or terminated. Although we cannot predict
such uncertainties, in our opinion there are no spending reductions or funding
limitations pending that would impact our contracts.
Other characteristics of the industry include the complexity of
designs, the difficulty of forecasting costs and schedules when bidding on
developmental and highly sophisticated technical work, and the rapidity with
which product lines become obsolete due to technological advances and other
factors characteristic of the industry. Earnings may vary materially on some
contracts depending upon the types of government long-term contracts undertaken,
the costs incurred in their performance, and the achievement of other
performance objectives. Due to the intense competition for available United
States government business, maintaining or expanding government business
increasingly requires us to commit additional working capital for long-term
programs and additional investments in Company-funded research and development.
As a United States government contractor or sub-contractor, our
contracts and operations are subject to government oversight. The government may
investigate and make inquiries of our business practices and conduct audits of
our contract performance and cost accounting. These investigations may lead to
claims against the Company. Under United States government procurement
regulations and practices, an indictment of a government contractor could result
in that contractor being fined and/or suspended for a period of time from
eligibility for bidding on, or for award of, new government contracts; a
conviction could result in debarment for a specified period of time.
4
<PAGE>
International Business
Our international business accounted for 59% of our 1997 sales.
International business involves additional risks, such as exposure to currency
fluctuations and changes in foreign economic and political environments, such as
those currently affecting Asian markets. International transactions frequently
involve increased financial and legal risks arising from stringent contractual
terms and conditions and widely differing legal systems, customs, and standards
in foreign countries. In addition, international sales often include sales to
various foreign government armed forces, with many of the same inherent risks
associated with United States government sales identified above. We expect that
international sales will continue to be a significant portion of our overall
business in the foreseeable future.
Commercial Airline Business
Our commercial simulation (airline) business has strengthened since our
decision in 1994 to pursue a new strategy of supplying complete systems instead
of just components. However, there are risks related to the commercial
simulation market which may adversely affect our business. The following risks
are characteristic of the commercial simulation market: uncertainty of economic
conditions, dependence upon the strength of the commercial airline industry, air
pilot training requirements, competition, timely performance by subcontractors
on contracts in which E&S is the prime contractor, and changes in technology.
New Business
As we develop and grow our new businesses, there are uncertainties and
risks associated with each business unit. These risks include: (a) developing
strong partner relationships with manufacturers of computer chips and personal
computers, as well as intense competitive pressures for the desktop graphics
business; (b) acceptance of new technology and increasing market size and demand
in a developing new market for the digital theater business; and (c) the
technical feasibility and uncertain market acceptance in a developing new market
for the digital studio business. Risks also include technological uncertainties
and obsolescence, uncertainty of economic conditions, commitment of working
capital, market acceptance, and other risks inherent in new businesses.
Private Finance Initiative
A private finance initiative is designed to increase the involvement of
the private sector in the provision of services which have traditionally been
provided by the public sector. Private finance initiatives require the private
sector to use its own capital to invest in assets which then are used to provide
a long term service, such as simulation training, to a public sector customer.
The number of programs being developed as private finance initiatives is
increasing worldwide. We are currently involved in proposals to international
military customers where we would be an equity partner of the private finance
initiative's prime contractor and program manager. Private finance initiatives
programs, however, are subject to inherent risks, including the commitment of
working capital and fixed assets, long cycles in which to receive a return on
investment, and termination or default of contracts. These risks also include
technological uncertainties and obsolescence, uncertainty of economic
conditions, changes in United States and international government policies and
requirements that may reflect rapidly changing military and political
developments, and the availability of funds.
Year 2000
The Year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips that store the year portion of the
date as just two digits (e.g. 98 for 1998). Systems using this two-digit
approach will not be able to determine whether "00" represents the year 2000 or
1900. The problem, if not corrected, will make those systems fail altogether or,
even worse, allow them to generate incorrect calculations causing a disruption
of normal operations.
Although we have created a company-wide Year 2000 team to identify and
resolve Year 2000 issues associated either with our internal systems or our
products and services, we have no assurance that we will address all potential
problems. There can also be no assurance that there will not be a delay in, or
increased costs associated with, the implementation of Year 2000 modifications,
or that our suppliers will adequately prepare for the Year 2000 issue. It is
possible that any such delays, increased costs, or supplier failures could have
a material adverse impact on our operations and financial results, by, for
example, impacting our ability to deliver products or services to our customers.
For third-party products which we distribute with our products, we have
sought information from the product manufacturers regarding the products' Year
2000 readiness status. We direct customers who use the third-party products to
the product manufacturer for detailed Year 2000 status information. On our Year
2000 web site at www.es.com/investor/y2k_corp.html, we provide information
regarding which of our products are Year 2000 ready and other general
5
<PAGE>
information related to our Year 2000 efforts. We have no assurance that the
third-party products will be Year 2000 ready or that a lack of readiness by such
third-parties will not materially adversely impact our operations and financial
results.
Anti-Takeover Effect of State Law
We are subject to the Utah Control Shares Acquisition Act which
provides that any person who acquires 20% or more of the outstanding voting
shares of a publicly held Utah corporation will not have voting rights with
respect to the acquired shares unless a majority of the disinterested
shareholders of the corporation votes to grant such rights. This could deprive
shareholders of opportunities to realize takeover premiums for their shares or
other advantages that large accumulations of stock would provide.
Forward-Looking Statements and Associated Risks
This prospectus, including all documents incorporated herein by
reference, includes certain "forward-looking statements" within the meaning of
that term in Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Exchange Act, including, among others,
those statements preceded by, followed by or including the words "believes,"
"expects," "anticipates" or similar expressions.
These forward-looking statements are based largely on our current
expectations and are subject to a number of risks and uncertainties. Our actual
results could differ materially from these forward-looking statements. In
addition to the other risks described elsewhere in this "Risk Factors"
discussion, important factors to consider in evaluating such forward-looking
statements include risk of product demand, market acceptance, economic
conditions, competitive products and pricing, difficulties in product
development, commercialization and technology. In light of these risks and
uncertainties, many of which are described in greater detail elsewhere in this
"Risk Factors" discussion, there can be no assurance that the events
contemplated by the forward-looking statements contained in this prospectus
will, in fact, occur.
THE COMPANY
E&S develops and manufactures hardware and software for visual systems
that produce vivid and highly realistic three-dimensional (3-D) graphics and
synthetic environments. Our product offerings include a full range of
high-performance visual systems for simulation, training and virtual reality
applications, as well as graphic accelerator products for personal computer
workstations. We are organized into six business units. Each business unit
develops and markets its products to a worldwide customer base. These business
units can be grouped into two areas: core businesses and new businesses. The
core businesses are the simulation-related units where we have an established
market presence with significant market share and which represent the majority
of the Company's revenues and earnings. The new businesses are in high-growth
markets where we have superior technology which can be directed to new
applications. E&S was founded in 1968 and is headquartered in Salt Lake City,
Utah. E&S also has offices located in Milpitas, California; Boston,
Massachusetts; Dallas, Texas; Orlando, Florida; Beijing, China; Dubai, United
Arab Emirates; Horsham, England; and Munich, Germany.
USE OF PROCEEDS
Other than the price the selling shareholder will pay to exercise its
warrants, we will not receive any of the proceeds from any sale of Shares
offered with this prospectus. We will pay the costs of this offering, which are
estimated to be $36,784. The selling shareholder is not obligated to exercise
its warrants, and there can be no assurance that it will choose to exercise all
or any of such warrants. Our gross proceeds if all of the warrants are exercised
for cash would be $12,595,688. However, we are unable to predict the exact
amount of cash we will receive upon exercise of the warrants because the
warrants have a cashless exercise provision which allows the holder to pay for
the warrant by reducing the number of shares received upon exercise. We will use
any proceeds we receive from the exercise of warrants to augment our working
capital for general corporate purposes.
SELLING SHAREHOLDER
The following table sets forth certain information as of November 12,
1998, with respect to the selling shareholder. On July 22, 1998, we issued to
Intel Corporation 901,408 shares of the Company's Class B-1 Preferred Stock and
a warrant to purchase 378,462 shares of the Class B-1 Preferred Stock at a price
per share of $33.28125. All of the shares of Class B-1 Preferred Stock may be
converted into shares of common stock at any time, initially on a one-for-one
basis. Once the selling shareholder converts the Class B-1 Preferred Stock into
Shares, it may offer or sell to the general public any or all of the Shares with
this prospectus. Beneficial ownership after this offering will depend on the
number of Shares actually sold by the selling shareholder. To our knowledge, the
6
<PAGE>
selling shareholder has sole voting and investment power with respect to these
securities. We have entered into an agreement with Intel Corporation to
accelerate the development of high-end graphics and video subsystems for
workstations.
<TABLE>
<CAPTION>
Name of Selling Shares of Common Stock Shares of Common Shares of Common Stock
Shareholder Beneficially Owned Prior Stock Being Registered Beneficially Owned After
to the Offering for Resale the Offering(2)
- -------------------------- ------------------------------- --------------------------- ----------------------------------
Number % of Class(1) Number Number Percent(3)
------------ -------------- --------------------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Intel Corporation 1,282,128 11.46% 1,279,870 2,258 *
</TABLE>
* Represents less than 1% of the total issued and outstanding shares of
common stock.
(1) Includes all common stock beneficially owned by the selling
shareholder as a percentage of the 9,910,236 shares of common stock outstanding
on November 12, 1998, together with all other securities which the selling
shareholder may convert into common stock.
(2) Assumes that the selling shareholder disposes of all of the Shares
covered by this prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants, conversion rights or additional
securities, if any.
(3) Includes all common stock beneficially owned by selling shareholder
as a percentage of the 11,190,106 shares of common stock outstanding after the
offering and conversion of securities into common stock.
PLAN OF DISTRIBUTION
Any or all of the Shares may be sold from time to time by the selling
shareholder, its pledgees, donees, transferees, distributees or
successors-in-interest. The selling shareholder may sell all or a portion of the
Shares from time to time while the registration statement of which this
prospectus is a part remains effective. The Company has agreed that it will use
its best efforts to keep the registration statement effective for three years
(or a shorter period if all the Shares have been sold or disposed of prior to
such time). The aggregate proceeds to the selling shareholder from the sale of
Shares offered by it hereby will be the prices at which such Shares are sold,
less any commissions.
The selling shareholder may sell Shares on the Nasdaq National Market,
in privately negotiated transactions or otherwise, at fixed prices that may by
changed, at market prices prevailing at the time of sale, at prices related to
such market prices or at negotiated prices. Shares may be sold by one or more of
the following methods, without limitation: (a) block trades in which the broker
or dealer so engaged will attempt to sell the Shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction,
(b) purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus, (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers, (d)
privately negotiated transactions, and (e) a combination of any such methods of
sale. In effecting sales, brokers and dealers engaged by the selling shareholder
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from the selling shareholder (or, if any such
broker-dealer acts as agent for the purchaser of such Shares, from such
purchaser) in amounts to be negotiated which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with
the selling shareholder to sell a specified number of Shares at a stipulated
price per Share, and, to the extent such broker-dealer is unable to do so acting
as agent for the selling shareholder, to purchase as principal any unsold Shares
at the price required to fulfill the broker-dealer commitment to the selling
shareholder. Broker-dealers who acquire Shares as principal may thereafter
resell such Shares from time to time in transactions (which may involve block
transactions and sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market or
otherwise at prices and on terms then prevailing at the time of sale, at prices
then related to the then-current market price or in negotiated transactions and,
in connection with such resales, may pay to or receive from the purchasers of
such Shares commissions as described above. The selling shareholder may also
sell Shares in accordance with Rule 144 under the Securities Act, rather than
pursuant to this prospectus.
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<PAGE>
In connection with distributions of Shares or otherwise, the selling
shareholder may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of the Company's common
stock in the course of hedging the positions they assume with the selling
shareholder. The selling shareholder may also sell the Company's common stock
short and deliver Shares to close out such short positions. The selling
shareholder may also enter into option or other transactions with broker-dealers
or other financial institutions which require the delivery to such
broker-dealers or other financial institutions of Shares offered hereby, which
Shares such broker-dealers or other financial institutions may resell pursuant
to this prospectus. The selling shareholder may also pledge Shares to a
broker-dealer or other financial institution, and, upon default, such
broker-dealer or other financial institution may effect sales of the pledged
Shares pursuant to this prospectus.
The selling shareholder and any brokers and dealers through whom sales
of the Shares are made may be deemed to be "underwriters" within the meaning of
the Securities Act, and the commissions or discounts and other compensation paid
to such persons may be regarded as underwriters' compensation. The Company will
pay all expenses of registration (including the fees and expenses of the selling
shareholder's counsel) incurred in connection with this offering, but the
selling shareholder will pay all underwriting discounts, brokerage commissions
and other similar expenses incurred by the selling shareholder. The Company has
agreed to indemnify the selling shareholder against certain losses, claims,
damages and liabilities, including those arising under the Securities Act.
At the time a particular offer of the Shares is made, to the extent
required, the Company will distribute a supplement to this prospectus which will
identify and set forth the aggregate amount of Shares being offered and the
terms of the offering.
The selling shareholder may sell the Shares at any price. Sales of the
Shares at less than market prices may depress the market price of the Company's
common stock. Moreover, generally the selling shareholder is not restricted as
to the number of Shares which may be sold at any one time, and it is possible
that a significant number of Shares could be sold at the same time. However, to
the extent the selling shareholder is an affiliate of the Company, the selling
shareholder would be subject to the volume limitations of Rule 144 under the
Securities Act.
The selling shareholder and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of the Shares by the
selling shareholder and any other such person. Furthermore, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the Shares to engage in market-making activities with respect to the
particular Shares being distributed for a period of up to five business days
prior to the commencement of such distribution. All of the foregoing may affect
the marketability of the Shares and the ability of any person or entity to
engage in market-making activities with respect to the Shares.
To comply with certain states' securities laws, if applicable, the
Shares may be sold in any such jurisdictions only through registered or licensed
brokers or dealers. The Shares may not be sold in certain states unless the
seller meets the applicable state notice and filing requirements.
EXPERTS
The financial statements and schedule of Evans & Sutherland Computer
Corporation as of December 31, 1997 and December 27, 1996 and for each of the
years in the three-year period ended December 31, 1997, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of KPMG Peat Marwick, LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
LEGAL MATTERS
For purposes of this offering, Snell & Wilmer L.L.P., Salt Lake City,
Utah, counsel to the Company, is giving its opinion on the validity of the
Shares.
8
<PAGE>
PART II
INFORMATION NOT RQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
The Company estimates that expenses in connection with the transactions
described in this registration statement will be as follows. All expenses
incurred with respect to the transactions will be paid by the Company.
SEC Registration Fee....................................................$ 4,784
Printing Expenses.........................................................1,000
Accounting Fees and Expenses..............................................5,000
Legal Fees and Expenses..................................................25,000
Transfer Agent Fees and Expenses..........................................1,000
Total.........................................................$ 36,784
<PAGE>
ITEM 15. Indemnification of Directors and Officers
Section 15-10a-901, et seq., of the Utah Revised Business Corporations
Act authorizes a court to award, or a corporation's board of directors to grant,
indemnify to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The E&S
Bylaws require E&S to indemnify its directors and officers, including
circumstances in which indemnification is otherwise discretionary under Utah
law. E&S has entered into indemnification agreements with its directors
containing provisions which are in some respects broader than the specific
indemnification provisions contained in Utah law. The indemnification agreements
may require E&S, among other things, to indemnify its directors and officers
against certain liabilities that may arise by reason of their status or service
as directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
director and officer insurance, if available on reasonable terms. E&S's Articles
of Incorporation provide for indemnification of its directors and officers to
the maximum extent permitted by Utah law, and E&S's Bylaws provide for
indemnification of its directors, officers, employees and other agents as
permitted by Utah law.
ITEM 16. Exhibits
Exhibit Number Exhibit
4.1 Series B Preferred Stock and Warrant Purchase Agreement
dated July 20, 1998, between the Company and the
selling shareholder, filed with the Form 10-Q for the
quarter ended September 25, 1998, incorporated herein
by reference
4.2 Warrant to Purchase Series B Preferred Stock dated
July 22, 1998, between the Company and the selling
shareholder, filed with the Form 10-Q for the quarter
ended September 25, 1998, incorporated herein by
reference
4.3 Certificate of Designation, Preferences and Other
Rights of the Class B-1 Preferred Stock of the Company,
filed with the Form 10-Q for the quarter ended
September 25, 1998, incorporated herein by reference
5.1 Opinion of Snell & Wilmer, LLP
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Snell & Wilmer, LLP (included in Exhibit
5.1)
24 Power of Attorney (included on signature page of
registration statement)
II-1
<PAGE>
ITEM 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a twenty percent (20%) change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus,
to each person to whom the prospectus is sent or given, the latest
annual report, to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where interim
financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause
to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
(6) That, insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake City, State of Utah on the 11th day of
November, 1998.
EVANS & SUTHERLAND COMPUTER CORPORATION
By:_____/s/__________________________
Mark C. McBride
Vice President, Corporate Controller
and Corporate Secretary
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Mark C. McBride, his attorney-in-fact, to
sign any amendments to this registration statement on Form S-3, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Commission, hereby ratifying and confirming all the said
attorney-in-fact may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed below by the following persons in the
capacity and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
_______/s/_________________________ Chairman of the Board of Directors November 11, 1998
Stewart Carrell
_______/s/________________________ Director and President (Chief Executive November 11, 1998
James R. Oyler Officer)
_______/s/_________________________ Vice President and Chief Financial November 11, 1998
John T. Lemley Officer (Principal Financial Officer)
Vice President, Corporate Controller and
_______/s/__________________________ Corporate Secretary (Principal November 11, 1998
Mark C. McBride Accounting Officer)
_______/s/__________________________ Director November 11, 1998
Gerald S. Casilli
_______/s/_________________________ Director November 11, 1998
Peter O. Crisp
_______/s/_________________________ Director November 11, 1998
Ivan E. Sutherland
______ /s/__________________________ November 11, 1998
Mark C. McBride
Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
4.1 Series B Preferred Stock and Warrant Purchase Agreement
dated July 20, 1998, between the Company and the selling
shareholder, filed with the Form 10-Q for the quarter ended
September 25, 1998, incorporated herein by reference
4.2 Warrant to Purchase Series B Preferred Stock dated July 22,
1998, between the Company and the selling shareholder, filed
with the Form 10-Q for the quarter ended September 25, 1998,
incorporated herein by reference
4.3 Certificate of Designation, Preferences and Other Rights of
the Class B-1 Preferred Stock of the Company, filed with the
Form 10-Q for the quarter ended September 25, 1998,
incorporated herein by reference
5.1 Opinion of Snell & Wilmer, LLP
23.1 Consent of KPMG Peat Marwick LLP
23.2 Consent of Snell & Wilmer, LLP (included in Exhibit 5.1)
24 Power of Attorney (included on signature page of
registration statement)
EXHIBIT 5.1
OPINION OF SNELL & WILMER, LLP
November 10, 1998
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Evans & Sutherland Computer Corporation, a
Utah corporation (the "Company"), and in such capacity have examined the
Company's Registration Statement on Form S-3 (the Form S-3, including the
amendments thereto being referred to collectively herein as the "Registration
Statement"), to be filed by the Company with the Securities and Exchange
Commission ("Commission") on November 12, 1998 under the Securities Act of 1933,
as amended ("Act"). The Registration Statement relates to the proposed
registration for resale by a selling shareholder ("Selling Shareholder") of up
to an aggregate of 1,279,870 shares of common stock, $.20 par value per share of
the Company, 901,408 shares which may be acquired by such Selling Shareholder
upon conversion of shares of Class B-1 Preferred Stock, and 378,462 shares which
may be acquired by such Selling Shareholder upon the exercise of presently
outstanding warrants to purchase shares of Class B-1 Preferred Stock and
conversion of such shares.
As counsel for the Company and for purposes of this opinion, we have
made those examinations and investigations of legal and factual matters we
deemed advisable and have examined originals or copies, certified or otherwise
identified to our satisfaction as true copies of the originals, of those
corporate records, certificates, documents and other instruments which, in our
judgment, we considered necessary or appropriate to enable us to render the
opinion expressed below, including the Company's Articles of Incorporation, as
amended to date, the Company's Bylaws, as amended to date, and the minutes of
meetings of the Company's Board of Directors and other corporate proceedings
relating to the authorization and issuance of the Selling Shareholder's shares.
We have assumed the genuineness and authorization of all signatures and the
conformity to the originals of all copies submitted to us or inspected by us as
certified, conformed or photostatic copies. Also, we have assumed the proper
exercise and payment for the warrants underlying the shares being registered in
the Registration Statement. Further, we have assumed the due execution and
delivery of certificates representing the Selling Shareholder's shares.
<PAGE>
Evans & Sutherland Computer Corporation
November 10, 1998
Page 2
73883.01
Based upon the foregoing, and assuming payment of the exercise price,
satisfaction of the other conditions of the Selling Shareholder's warrants and
conversion of all of the Class B-1 Preferred Stock, and relying solely thereon,
we are of the opinion the shares that will be issued upon exercise of the
outstanding warrants and conversion of all of the Class B-1 Preferred Stock,
will be duly authorized and will be legally and validly issued, fully paid and
nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the Prospectus included in the Registration Statement. In giving
this consent we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission thereunder.
Very truly yours,
Snell & Wilmer, L.L.P.
/s/
EXHIBIT 23.1
CONSENT OF KPMG PEAT MARWICK LLP
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors and Stockholders
Evans & Sutherland Computer Corporation:
We consent to incorporation by reference in the Registration Statement on Form
S-3 of Evans & Sutherland Computer Corporation of our report dated February 11,
1998, relating to the consolidated balance sheets of Evans & Sutherland Computer
Corporation and subsidiaries as of December 31, 1997 and December 27, 1996, and
the related consolidated statements of operations, stockholders' equity, and
cash flows for each of the years in the three-year period ended December 31,
1997, and related schedule, which report appears in the December 31, 1997 Annual
Report oN Form 10-K of Evans & Sutherland Computer Corporation.
KPMG Peat Marwick LLP
/s/
Salt Lake City, Utah
November 9, 1998
