<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): APRIL 12, 1995
PARAMETRIC TECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 0-18059 04-2866152
(State or other jurisdiction (Commission (IRS Employer
of Incorporation) File number) Identification No.)
128 TECHNOLOGY DRIVE
WALTHAM, MASSACHUSETTS 02154
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 398-5000
NO CHANGE SINCE LAST REPORT
(Former name or former address, if changed since last report)
Total number of sequentially numbered pages: 25
Exhibit Index appears on page 9
1
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial statements of business acquired
-----------------------------------------
See Exhibits 99.1 and 99.2, filed herewith.
(b) Pro forma combined financial information
----------------------------------------
The following unaudited pro forma combined financial statements give
effect to the acquisition of substantially all of the assets and specified
liabilities of the Conceptual Design and Rendering System ("CDRS") software
business operated by the Design Software Division of Evans & Sutherland Computer
Corporation and are based on the historical consolidated financial statements of
Parametric Technology Corporation ("the Company") and the historical financial
statements of CDRS. The unaudited pro forma combined balance sheet was prepared
as if the acquisition had occurred on April 1, 1995, combining the Company's
financial information as of April 1, 1995 and CDRS financial information as of
March 31, 1995. The unaudited pro forma combined statements of income for the
year ended September 30, 1994 and the six months ended April 1, 1995 were
prepared as if the acquisition had occurred on October 1, 1993. To prepare the
unaudited pro forma combined statement of income, the Company's statement of
income for the fiscal year ended September 30, 1994 has been presented with the
statement of operations of CDRS for the fiscal year ended December 30, 1994. To
prepare the unaudited pro forma combined statement of income, the Company's
statement of income for the six months ended April 1, 1995 has been presented
with the statement of operations of CDRS for the six months ended March 31,
1995. This method of combined reporting is utilized solely for presentation of
unaudited pro forma combined financial statements. Actual statements of income
and operations of the Company and CDRS will be combined from the effective date
of the acquisition, with no retroactive restatement.
The unaudited pro forma combined financial statements are not intended
to reflect the results of operations or the financial position which would have
actually resulted had the acquisition been effected on the dates indicated
above. Moreover, the unaudited pro forma combined financial statements are not
intended to be indicative of the results of operations or the financial position
which may be attained in the future.
The unaudited pro forma combined financial statements are based upon
assumptions deemed appropriate by the management of the Company and should be
read in conjunction with the Company's Annual Report on Form 10-K for the year
ended September 30, 1994 and Quarterly Report on Form 10-Q for the quarter ended
April 1, 1995, incorporated herein by reference, and the financial statements of
CDRS contained elsewhere in this Form 8-K/A.
2
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Parametric CDRS Pro Forma Pro Forma
ASSETS April 1, 1995 March 31, 1995 Adjustments Combined
------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 118,252 $ (34,100) A $ 84,152
Short-term investments 160,322 160,322
Accounts receivable 62,235 $ 1,015 63,250
Allowance for doubtful accounts (2,175) (2,175)
Other current assets 9,528 222 500 B 10,250
--------- -------- --------- ---------
Total current assets 348,162 1,237 (33,600) 315,799
Property and equipment, net 13,515 1,247 (847) C 13,915
Capitalized computer software costs, net 1,424 3,400 D 4,824
Other assets 2,921 18,570 E 21,491
--------- -------- --------- ---------
Total assets $ 366,022 $ 2,484 $ (12,477) $ 356,029
========= ======== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 12,957 $ 359 $ 500 F $ 13,816
Accrued compensation 14,461 181 14,642
Deferred revenue 33,366 792 34,158
Income taxes 1,774 1,774
--------- -------- --------- ---------
Total current liabilities 62,558 1,332 500 64,390
Deferred income taxes 676 69 745
Stockholders' equity:
Preferred stock, $.01 par value; 5,000 shares
authorized; none issued -- --
Common stock, $.01 par value; 75,000 shares
authorized; 57,793 issued 578 578
Additional paid-in capital 113,869 113,869
Parent's equity 1,083 (1,083) G 0
Cumulative translation adjustments 2,943 2,943
Valuation allowance for investments 85 85
Retained earnings 185,313 (11,894) H 173,419
--------- -------- --------- ---------
Total stockholders' equity 302,788 1,083 (12,977) 290,894
--------- -------- --------- ---------
Total liabilities and stockholders' equity $ 366,022 $ 2,484 $ (12,477) $ 356,029
========= ======== ========= =========
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
combined financial statements.
3
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Parametric CDRS
Year Ended Year Ended Pro Forma Pro Forma
September 30, 1994 December 30, 1994 Adjustments Combined
------------------ ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue:
License $ 191,045 $ 5,762 $ 196,807
Service 53,211 1,831 55,042
--------- ------- ---------
Total revenue 244,256 7,593 251,849
--------- ------- ---------
Cost of revenue:
License 878 82 $ 1,133 I 2,093
Service 17,997 616 18,613
--------- ------- -------- ---------
Total cost of revenue 18,875 698 1,133 20,706
--------- ------- -------- ---------
Gross profit 225,381 6,895 (1,133) 231,143
--------- ------- -------- ---------
Operating expenses:
Sales and marketing 95,810 3,988 343 J 100,141
Research and development 15,422 1,865 140 J 17,427
General and administrative 11,974 923 1,155 J 14,052
--------- ------- -------- ---------
Total operating expenses 123,206 6,776 1,638 131,620
--------- ------- -------- ---------
Operating income (loss) 102,175 119 (2,771) 99,523
Other income, net 4,718 -- (997) K 3,721
--------- ------- -------- ---------
Income (loss) before income taxes 106,893 119 (3,768) 103,244
Provision (benefit) for income taxes 39,978 580 (1,944) L 38,614
--------- ------- -------- ---------
Net income (loss) $ 66,915 $ (461) $ (1,824) $ 64,630
========= ======= ======== =========
Net income per share $ 1.14 $ 1.10
====== ======
Weighted average number of common and
dilutive common equivalent shares
outstanding 58,564 58,564
====== ======
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
combined financial statements.
4
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENTS OF INCOME
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Parametric CDRS
Six Months Ended Six Months Ended Pro Forma Pro Forma
April 1, 1995 March 31, 1995 Adjustments Combined
------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue:
License $ 114,879 $ 1,626 $ 116,505
Service 40,662 761 41,423
--------- -------- ---------
Total revenue 155,541 2,387 157,928
--------- -------- ---------
Cost of revenue:
License 657 16 $ 567 I 1,240
Service 13,038 336 13,374
--------- -------- ---------
Total cost of revenue 13,695 352 567 14,614
--------- -------- -------- ---------
Gross profit 141,846 2,035 (567) 143,314
--------- -------- -------- ---------
Operating expenses:
Sales and marketing 62,478 2,276 171 J 64,925
Research and development 8,783 1,204 70 J 10,057
General and administrative 7,785 588 577 J 8,950
--------- -------- -------- ---------
Total operating expenses 79,046 4,068 818 83,932
--------- -------- -------- ---------
Operating income (loss) 62,800 (2,033) (1,385) 59,382
Other income, net 3,714 -- (699) K 3,015
--------- -------- -------- ---------
Income (loss) before income taxes 66,514 (2,033) (2,084) 62,397
Provision (benefit) for income taxes 24,876 (600) (940) L 23,336
--------- -------- -------- ---------
Net income (loss) $ 41,638 $ (1,433) $ (1,144) $ 39,061
========= ======== ======== =========
Net income per share $ 0.70 $ 0.65
====== ======
Weighted average number of common and
dilutive common equivalent shares
outstanding 59,678 59,678
====== ======
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
combined financial statements.
5
<PAGE>
PARAMETRIC TECHNOLOGY CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma combined balance sheet has been prepared as if
the acquisition, which is being accounted for as a purchase, was completed as of
April 1, 1995, combining Parametric Technology Corporation ("the Company")
amounts as of April 1, 1995 and Conceptual Design and Rendering System ("CDRS")
software business operated by the Design Software Division of Evans & Sutherland
Computer Corporation ("Evans & Sutherland") amounts as of March 31, 1995. The
aggregate purchase price of $34.1 million has been allocated to assets acquired
and liabilities assumed. The aggregate purchase price is subject to a final
adjustment based upon the closing balance sheet of CDRS at April 12, 1995. The
allocation of the purchase price among the identifiable intangible assets was
based upon an independent appraisal of the fair market value of those assets.
This appraisal allocated $19.0 million to purchased research and development in
process, which has not yet reached technological feasibility and does not have
alternative future uses. This amount has been recorded as a pro forma adjustment
in accordance with generally accepted accounting principles.
To prepare the unaudited pro forma combined statement of income, the
Company's statement of income for the year ended September 30, 1994 has been
presented with the statement of operations of CDRS for the year ended December
30, 1994. Also, the Company's statement of income for the six months ended April
1, 1995 has been presented with the statement of operations of CDRS for the six
months ended March 31, 1995. This method of combined reporting is utilized
solely for presentation of unaudited combined financial statements. Actual
statements of income and operations of the Company and CDRS will be combined
from the effective date of the acquisition, with no retroactive restatement.
The unaudited pro forma combined financial statements should be read in
conjunction with the historical consolidated financial statements of the
Company and the historical financial statements of CDRS.
The unaudited pro forma combined statements of income do not include
the $19.0 million write-off of purchased research and development in process
arising from this acquisition, as it is a material nonrecurring charge. This
charge will be included in the actual consolidated statement of income of the
Company in the quarter ending July 1, 1995.
The following pro forma adjustments have been made to the pro forma
combined financial statements.
A) Reflects the cash paid to Evans & Sutherland
B) Reflects the receivable from Evans & Sutherland related to the
preliminary purchase price adjustment based upon the terms of the asset
purchase agreement
C) Reflects the adjustment to estimated fair market value of property and
equipment
D) Reflects the allocation of purchase price to purchased computer
software
E) Reflects the allocation of purchase price to the intangible assets of
$11.5 million and $7.1 million of deferred tax assets as a result of
the write-off of $19.0 million of purchased research and development in
process
F) Reflects the accrual of transaction costs directly attributable to the
acquisition
G) Reflects the elimination of Evans & Sutherland's equity in CDRS
H) Reflects the net, after tax impact of the write-off of purchased
research and development in process
6
<PAGE>
I) Reflects the amortization of the purchased computer software over an
estimated useful life of three years
J) Reflects the amortization of the intangible assets, excluding those
assets related to purchased research and development in process, over an
estimated useful life of seven years
K) Reflects the estimated reduction in interest income related to the $34.1
million cash payment to Evans & Sutherland
L) Reflects the tax effect of the pro forma adjustments at the Company's
effective tax rate and the estimated tax impact of combining the
operations of CDRS with the Company
(c) Exhibits
--------
2.1 Audited financial statements for the Conceptual Design and Rendering
System Operations of Evans & Sutherland Computer Corporation for the year
ended December 30, 1994.
2.2 Unaudited financial statements for the Conceptual Design and Rendering
System Operations of Evans & Sutherland Computer Corporation for the
three months ended March 31, 1995.
7
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Parametric Technology Corporation
June 22, 1995 By: /S/ James F. Kelliher
------------------------------------
James F. Kelliher
Vice President of Finance
and Assistant Treasurer
8
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
Exhibit No. Description Page
- - ----------- ----------- ----
<S> <C> <C>
13.1 Annual Report to Stockholders for the fiscal year ended *
September 30, 1994 (filed as Exhibit 13.1 to the Annual
Report on Form 10-K for the fiscal year ended September
30, 1994, and incorporated herein by reference).
13.2 Quarterly Report on Form 10-Q for the quarter ended April *
1, 1995
23.1 Consent of KPMG Peat Marwick LLP; filed herewith 10
99.1 Audited financial statements for the Conceptual Design and 11
Rendering System Operations of Evans & Sutherland Computer
Corporation for the year ended December 30, 1994
99.2 Unaudited financial statements for the Conceptual Design 21
and Rendering System Operations of Evans & Sutherland
Computer Corporation for the three months ended March
31, 1995
</TABLE>
* Incorporated by reference
<PAGE>
EXHIBIT 23.1
- - ------------
Consent of Independent Accountants
To the Board of Directors of Parametric Technology Corporation:
We consent to the inclusion in this Form 8-K/A of our report dated May 26, 1995,
on our audit of the financial statements of the Conceptual Design and Rendering
System Operations of Evans & Sutherland Computer Corporation as of December 30,
1994 and for the year then ended.
KPMG Peat Marwick LLP
Salt Lake City, Utah
June 22, 1995
<PAGE>
EXHIBIT 99.1
- - ------------
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
FINANCIAL STATEMENTS
DECEMBER 30, 1994
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE>
Independent Auditors' Report
----------------------------
The Board of Directors of
Parametric Technology Corporation
We have audited the accompanying balance sheet of Conceptual Design and
Rendering System Operations of Evans & Sutherland Computer Corporation as of
December 30, 1994, and the related statements of operations, parent's equity,
and cash flows for the year ended December 30, 1994. These financial statements
are the responsibility of the management of Conceptual Design and Rendering
System Operations of Evans & Sutherland Computer Corporation. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Conceptual Design and Rendering
System Operations of Evans & Sutherland Computer Corporation as of December 30,
1994, and the results of its operations and its cash flows for the year ended
December 30, 1994, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Salt Lake City, Utah
May 26, 1995
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
BALANCE SHEET
DECEMBER 30, 1994
<TABLE>
Assets
------
<S> <C>
Current assets:
Accounts receivable $ 1,520,038
Inventories 96,442
Prepaid expenses 32,058
Deferred tax assets (note 4) 23,596
------------
Total current assets 1,672,134
------------
Property and equipment, net (note 2) 1,320,736
------------
$ 2,992,870
============
Liabilities and Parent's Equity
-------------------------------
Current liabilities:
Accounts payable $ 259,226
Accrued expenses (note 3) 141,969
Deferred revenue 680,063
------------
Total current liabilities 1,081,258
Deferred tax liability (note 4) 23,596
Parent's equity 1,888,016
------------
$ 2,992,870
============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 30, 1994
<TABLE>
Net sales:
<S> <C>
Software licenses $ 5,762,124
Maintenance and support 1,830,928
-----------
Total net sales 7,593,052
-----------
Cost of sales:
Software licenses 82,091
Maintenance and support 615,486
-----------
Total cost of sales 697,577
-----------
Gross profit 6,895,475
-----------
Sales and marketing 3,988,086
Research and development 1,864,899
General and administrative 923,513
-----------
6,776,498
-----------
Earnings before income taxes 118,977
Income tax expense (note 4) 580,000
-----------
Net loss $ (461,023)
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
STATEMENT OF PARENT'S EQUITY
YEAR ENDED DECEMBER 30, 1994
<TABLE>
<S> <C>
Balance at December 31, 1993 $ 2,367,560
Capital contribution for income tax expense 580,000
Return of capital to parent (598,521)
Net loss (461,023)
-----------
Balance at December 30, 1994 $ 1,888,016
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 30, 1994
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss $ (461,023)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation on property and equipment 462,384
Tax expense offset to parent's equity 580,000
Change in operating assets and liabilities:
Accounts receivable 64,118
Inventories 281,291
Prepaid expenses (525)
Accounts payable and accrued expenses 265,350
Deferred revenue 405,355
----------
Net cash provided by operating activities 1,596,950
----------
Cash used in investing activities - purchases of property and equipment (921,794)
----------
Cash used in financing activities - return of capital to parent (598,521)
----------
Effect of foreign exchange rate changes (76,635)
Net change in cash -
Cash at beginning of year -
----------
Cash at end of year $ -
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) Summary of Significant Accounting Policies
------------------------------------------
(a) Description of Business and Related Party Transactions
------------------------------------------------------
The Conceptual Design and Rendering System Operations of Evans &
Sutherland Computer Corporation ("CDRS") are engaged in the
development, production, marketing, and support of computer software.
The rights to use the products are sold under license agreements. CDRS
is a business group of Evans & Sutherland Computer Corporation (the
"Parent"). General and administrative expenses are allocations from the
Parent, which are determined from a formula based on revenues, payroll,
property and equipment, and inventory. In the opinion of management
these allocations are reasonable.
(b) Fiscal Year
-----------
The Parent's fiscal year ends the last Friday in December. The fiscal
year end for the year included in the accompanying financial statements
is the 52-week period ended December 30, 1994. Unless otherwise
specified, all references to a year are to the fiscal year ending in
the year stated.
(c) Inventories
-----------
Inventories are stated at lower of first-in, first-out cost or market.
(d) Property and Equipment
----------------------
Property and equipment are stated at cost. Depreciation on property and
equipment is calculated on the straight-line method over the estimated
useful lives of the assets, ranging from five to seven years.
(e) Software Development Costs
--------------------------
CDRS applies the criteria set forth in the Statement of Financial
Accounting Standards (SFAS) No. 86, Accounting for the Costs of
Software to be Sold, Leased, or Otherwise Marketed, to determine the
amount of capitalized software development costs upon the establishment
of technological feasibility of the product. The capitalization of
software costs has been determined to have an immaterial effect on
CDRS's financial statements. All development costs have been expensed
in the period incurred.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(f) Revenue Recognition
-------------------
CDRS recognizes revenue from software licenses upon delivery and
customer acceptance. CDRS recognizes revenue from software maintenance
contracts ratably over the term of the contract, typically one year.
(g) Income Taxes
------------
The provision for income taxes is computed using the asset and
liability method on a separate return basis. CDRS is included in the
consolidated federal and state income tax returns of its parent. The
Parent does not allocate income taxes to CDRS. Accordingly, tax expense
is reflected as a capital contribution in the accompanying statement of
parent's equity.
(h) Foreign Currency Translation
----------------------------
The local foreign currency is the functional currency for CDRS's
foreign operations. Assets and liabilities of foreign subsidiaries are
translated to U.S. dollars at the current exchange rates as of the
applicable balance sheet date. Revenues and expenses are translated at
the average exchange rates prevailing during the period. Non-cash
adjustments resulting from translation are included in capital
contributions in the accompanying statement of parent's equity. Net
gains and losses from foreign currency transactions were not
significant during the year presented.
(2) Property and equipment
----------------------
Property and equipment is summarized as follows:
<TABLE>
<S> <C>
Computer equipment $ 2,746,102
Furniture and fixtures 178,394
-----------
2,924,496
Less accumulated depreciation (1,603,760)
-----------
$ 1,320,736
===========
</TABLE>
(3) Accrued Expenses
----------------
Accrued expenses consist of the following:
<TABLE>
<S> <C>
Accrued employee related costs $ 118,297
Other 23,672
-----------
$ 141,969
===========
</TABLE>
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(4) Income Taxes
------------
The components of income tax expense were as follows:
<TABLE>
<S> <C>
Current tax expense:
Federal $ 500,000
State and local 80,000
---------
Total tax expense $ 580,000
=========
</TABLE>
The actual tax expense differs from the "expected" tax expense (computed by
applying the U.S. corporate tax rate of 34 percent) as follows:
<TABLE>
<S> <C>
Expected tax expense $ 40,435
Loss on foreign operations for which there is no
current tax benefit 308,301
Change in the beginning of the year valuation
allowance for deferred taxes 144,000
State income taxes, net of federal income tax benefit 53,000
Other 34,264
---------
$ 580,000
=========
</TABLE>
The tax effects of temporary differences that give rise to deferred tax
assets and liabilities are summarized as follows:
<TABLE>
<S> <C>
Current deferred income taxes - deferred revenue $ 255,024
Current deferred income taxes - vacation accrual 44,514
Less valuation allowance (275,942)
---------
Deferred tax assets 23,596
Noncurrent deferred income taxes - property and equipment (23,596)
---------
Deferred tax liability (23,596)
---------
Net deferred tax asset $ -
=========
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1994 was
$131,942. The valuation allowance increased $144,000 for the year ended
December 30, 1994.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(5) Foreign Operations and Foreign Sales
------------------------------------
CDRS's foreign operations have historically been conducted principally
through the Parent's foreign subsidiaries. Foreign operations are
summarized below:
<TABLE>
<S> <C>
Net sales to unaffiliated customers $ 1,283,259
Operating loss 906,768
Identifiable assets 855,272
</TABLE>
Total CDRS sales to unaffiliated foreign customers (including export sales)
are as follows:
<TABLE>
<S> <C>
Europe $ 1,283,259
Far East 491,826
-----------
Total $ 1,775,085
===========
</TABLE>
(6) Concentration of Credit Risks
-----------------------------
Financial instruments that potentially subject CDRS to concentrations of
credit risks consist of trade receivables. CDRS has adopted credit policies
and standards to evaluate the risk associated with its sales. CDRS's
largest customer accounted for more than 73 percent of sales and 38 percent
of gross accounts receivable at December 30, 1994. Two additional customers
accounted for 30 percent of gross accounts receivable at December 30, 1994.
Management believes that any risk of loss is significantly reduced due to
the financial position of the customers and distributors with whom it does
business.
(7) Subsequent Event
----------------
On April 12, 1995, the Parent completed the sale of CDRS to Parametric
Technology Corporation for cash consideration of approximately $34,500,000.
<PAGE>
EXHIBIT 99.2
- - ------------
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
INTERIM FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
BALANCE SHEET
<TABLE>
<CAPTION>
Assets March 31, 1995
------
(Unaudited)
--------------
<S> <C>
Current assets:
Accounts receivable $ 1,014,948
Inventories 87,829
Prepaid expenses 65,349
Deferred tax assets 68,923
-----------
Total current assets 1,237,049
-----------
Property and equipment, net 1,246,943
-----------
$ 2,483,992
===========
Liabilities and Parent's Equity
-------------------------------
Current liabilities:
Accounts payable $ 358,678
Accrued expenses 181,641
Deferred revenue 792,056
-----------
Total current liabilities 1,332,375
Deferred tax liability 68,923
Parent's equity 1,082,694
-----------
$ 2,483,992
===========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
1994 1995
----------- -----------
<S> <C> <C>
Net sales:
Software licenses $ 1,315,861 $ 432,559
Maintenance and support 337,683 289,625
----------- -----------
Total net sales 1,653,544 722,184
----------- -----------
Cost of sales:
Software licenses 19,917 4,910
Maintenance and support 140,887 69,830
----------- -----------
Total cost of sales 160,804 74,740
----------- -----------
Gross profit 1,492,740 647,444
----------- -----------
Sales and marketing 814,881 1,218,914
Research and development 486,701 695,450
General and administrative 140,701 305,685
----------- -----------
1,442,283 2,220,049
----------- -----------
Income (loss) before income taxes 50,457 (1,572,605)
Income tax expense (benefit) 300,000 (360,000)
----------- -----------
Net loss $ (249,543) $(1,212,605)
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended March 31,
1994 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (249,543) $ (1,212,605)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation on property and equipment 130,386 216,458
Tax expense (benefit) offset to parent's equity 300,000 (360,000)
Change in operating assets and liabilities:
Accounts receivable (2,031,639) 505,090
Inventories 182,049 8,613
Prepaid expenses (18,880) (33,291)
Accounts payable and accrued expenses 80,259 139,124
Deferred revenue 516,952 111,993
----------- -----------
Net cash used by operating activities (1,090,416) (624,618)
----------- -----------
Cash used in investing activities - purchases of property and equipment (171,318) (142,665)
----------- -----------
Cash provided by financing activities - capital contribution from parent 1,261,734 767,283
----------- -----------
Net change in cash - -
Cash at beginning of year - -
----------- -----------
Cash at end of year $ - $ -
=========== ===========
</TABLE>
See accompanying notes to unaudited financial statements.
<PAGE>
CONCEPTUAL DESIGN AND RENDERING SYSTEM
OPERATIONS OF EVANS & SUTHERLAND COMPUTER CORPORATION
NOTES TO FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The accompanying unaudited financial statements include the accounts of
the Conceptual Design and Rendering System ("CDRS") Operations of Evans &
Sutherland Computer Corporation (the "Parent"), and have been prepared by CDRS
in accordance with generally accepted accounting principles. In the opinion of
management, the accompanying unaudited financial statements contain all
adjustments, consisting only of those of a normal recurring nature necessary for
a fair presentation of the financial position, results of operations and cash
flows of CDRS at the dates and for the periods indicated. While CDRS believes
that the disclosures presented are adequate to make the information not
misleading, these financial statements should be read in conjunction with the
audited financial statements of CDRS for the year ended December 30, 1994
included elsewhere in this Form 8-K/A.
(2) Subsequent Event
----------------
On April 12, 1995, the Parent completed the sale of CDRS to Parametric
Technology Corporation for cash consideration of approximately $34,500,000.
