It was an "eventful year" for Evans & Sutherland Computer Corp. in 1989, say the firm's chairman, David C. Evans, and president and chief executive officer, Rodney S. Rugelot in their 1989 annual report to shareholders published last week.
Rugelot, himself, was one of the "events" last year as he joined the Salt Lake-based firm in a major administrative reshuffling that included naming of two new division presidents: Robert S. Schumacker now heads the Simulation Division and Gary Hodgman the Design Systems Division.The year also saw the closure of the company's supercomputer development project in Mountain View, Calif., which the report says "will dramatically affect the reported financial results of the company in 1990 and beyond."
In their letter to shareholders, Evans and Rugelot say the decision to drop the supercomputer project was made after it was determined that "significant schedule delays had eroded the competitive advantage that we were projecting for the ES-1 (supercomputer), and we concluded that the cost of continuing the project would not be in the best interest of the company and its shareholders."
Although sales of the engineering work-stations, graphics terminals and software systems E&S designs and builds at its facilities in Research Park and St. Louis, Mo., were up 7 percent in 1989, from $129.62 million to $138.56 million, net earnings declined 47 percent from $1.88 million in 1988 to $1 million last year.
Net earnings per share declined 45 percent from 22 cents to 12 cents and return on stockholders' equity was halved from 2 percent to 1 percent. Total assets at year's end were $200.61 million, up from $187.01 million at the end of 1988 for a 7 percent increase.
Working capital was down 4 percent at the end of 1989 to $91.08 million and long term debt was down 9 percent to $51.74 million. Stockholders' equity was up 3 percent to $101.02 million while the number of employees increased 18 percent to 1,418.
Sales in E&S's five primary markets varied widely in 1989, according to the report. The U.S. military segment had the largest volume increase, up 47 percent to $41.4 million, while the foreign simulation segment, where the company says it enjoyed some "significant breakthroughs," had the greatest percentage increase, up 121 percent to $12.6 million.
As expected, says the report, the cyclical U.S. engineering segment was down 23 percent to $12.70 million. The world civil pilot training business continued to grow in 1989 - up 5 percent - and the company's visual systems continues strong.
The report noted that revenues continued to slide in the CAE/graphics/chemistry sector, down 18 percent to $38.80 million, as a result of "competitive pressures and an aging product line." As part of the dropping of the super-computer, the graphics part of the business, together with the company's Tripos subsidiary, was re-organized as the new Design Systems Division.
Tripos is E&S's software business for chemistry applications located in St. Louis. Sales of the subsidiary jumped 60 percent last year while it introduced several new products.
E&S has never paid a dividend on its common stock and the report says that the company intends to retain its earnings for the operation and expansion of the business "for the foreseeable future."
The report says E&S will continue planning this year to add additional facilities at its Research Park headquarters as projected revenue and employee growth will soon fill the current space. The company now occupies some 450,000 square feet of space in six buildings on 35 acres.
"Commitment to our customers, pride in our achievements, and enthusiasm about our potential are energizing the company," say Evans and Rougelot.
"We intend to continue our technically aggressive, financially conservative style as we move confidently to convert the opportunities of the '90s into solid growth and performance for our customers, our shareholders, and our employees . . . "