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Evans & Sutherland cuts work force 15%

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Evans & Sutherland Computer Corp. said Friday it has cut 15 percent of its work force in a move to reduce costs, leaving the company with about 400 workers.

The Salt Lake-based producer of simulation systems declined to reveal how many jobs were eliminated, although it had about 450 employees after an earlier round of job cuts in March.

The company said the cuts were the final piece of restructuring efforts started about two years ago. Spokeswoman Joan Mitchell said the company's work force total has fallen 60 percent from its 1999 peak of about 950. That year was the last one in which the company earned a profit.

Mitchell said company officials believe the restructuring will allow Evans & Sutherland to be profitable during the 2003 fourth quarter and during 2004.

"We believe we have a strategy in place to improve financial performance," she said. "We're dealing with a very unfavorable market cycle, and we're planning to emerge from that in good condition. We made a reduction in March based on forecasts for what the (simulation) market would be doing the rest of 2003.

"A lot of those improvements haven't come to pass. We don't expect the market to come around significantly until at least 2005, so we are adjusting staff levels to be profitable under the current conditions."

Most of the employees affected by the new layoffs worked in Salt Lake City and Horsham, England. Those in the United States were let go Friday with two weeks of severance pay in lieu of notice, plus outplacement help.

"For several years, we have been working to complete legacy military programs which were causing losses, and to introduce new products based on lower-cost components available from the personal computer industry," James R. Oyler, E&S president and chief executive officer, said in a prepared statement. "In addition, we have had to adjust to the deepest downturn in the history of our industry.

"With today's actions, we believe we have completed our adjustment to these conditions. Our new products are achieving excellent success, and we have introduced lower-cost designs to our entire product range, including the low-, medium- and high-end segments."

That, he said, will result in higher revenue and better margins in the second half of this year, compared with the first half, although the sustained market recovery isn't expected until 2005.

The company attributed Friday's actions to finishing several low-margin military programs dating back to 1997 and using lower-cost designs on product lines. Mitchell said the company is expanding the use of personal-computer components and adjusting research and development activities to reduce development and production costs.

Unaffected by the restructuring is the company's digital theater division, which manufactures products for use in planetariums. That division is expected to be profitable the remainder of the year, Mitchell said.

E&S stock rose 9 cents Friday to close at $6.06 per share. During the past year, the price has ranged from $2.06 to $6.90.

E-mail: bwallace@desnews.com