E&S notes a smaller loss in 3rd quarter

Evans & Sutherland Computer Corp. reported a third-quarter net loss on Thursday, but its top executive reiterated that the Salt Lake-based company expects to return to profitability in the fourth quarter.

E&S reported a net loss of $6.2 million, or 59 cents per share, for the quarter ended Sept. 26. That compares with a loss of $1.8 million, or 17 cents per share, for the same period a year ago.

Including restructuring charges and a gain from a business unit sale, the operating loss was $5.5 million, compared to a loss of $1 million last year. The company's operating loss was $2.9 million before considering restructuring charges of $2.6 million — including the costs of employee layoffs. The company has nearly 400 employees.

Sales totaled $23.4 million, down from $26.6 million in the prior-year period.

But James R. Oyler, president and chief executive officer, said a more-relevant comparison was with the previous quarter. Revenue was up sequentially from $22.2 million to $23.4 million, gross margins increased from 38.9 percent to 39.6 percent and the operating loss dropped from $3.4 million to $2.9 million without the one-time items, he said.

"In general, the third quarter continued a pattern we have seen for most of this year, which is slow improvement in revenue and gross margins and reduction in the operating loss, net of one-time events," Oyler said during a Thursday conference call with analysts.

"Market conditions that we face remain very difficult, though we believe it is reaching bottom. We've seen a pattern of reduced operating losses. We believe we're getting to a bottom as far as market conditions and expect to maintain revenue levels approximately where we are now through 2004."

Oyler said expenses, not counting the restructuring charge, were higher than in the second quarter because the company has accelerated development work on a new laser projection product. The restructuring should result in lower expenses in the fourth quarter and through the first half of next year, he said.

"Our break-even point now has been substantially reduced from the past, as you would expect. . . . We now can operate profitably in a range of between $90 (million) and $100 million of revenue next year," he said.

Evans & Sutherland produces visual systems for simulation, training and visualization in defense and commercial applications; digital theaters; and related applications.