Evans & Sutherland Reports Second Quarter 2006 Results

SALT LAKE CITY, UTAH, August 18, 2006, Evans & Sutherland Computer Corporation (E&S) (NASDAQ: ESCC) today reported financial results in its Form 10-Q filing for the second quarter ended June 30, 2006.

Sales for the second quarter were $2.5 million, down 40% from sales of $4.2 million in the second quarter of 2005 adjusted on a continuing operations basis. Although the overall result for the quarter, after the gain realized on sale of the Company’s simulation business, was net income of $35.1 million, there was a net loss for continuing operations of $3.8 million or $0.35 per share, compared to net loss for continuing operations of $0.4 million or $0.04 per share, in the same quarter of 2005.

Comments from David H. Bateman, President and Chief Executive Officer "The second quarter of this year was a period of enormous change for E&S. Activity was dominated by completion of the sale of our historical core simulation division for $71.5 million, and the acquisition of Spitz to strengthen our digital theater business. Within our ongoing operations, results for the quarter were nevertheless somewhat disappointing, and reflected increased expense as we complete the development and transition to production of the laser projector. This transition included costs to support late stage pre-production projectors that were delivered to support existing customers. Late deliveries of certain key components and the need to refine certain components for final production projectors also contributed to the additional costs, as did changes in our senior management and other personnel. We see these additional costs reducing through the third quarter and the fourth quarter as we move to a more stable production and organizational environment.

Digital Theater orders were also down for the quarter, reflecting delays in procurement decisions by several customers. These procurement delays are now easing and we have started to see an increase in orders. For instance, we were recently awarded a significant contract from the National Maritime Museum in Greenwich, England which will be the eleventh order we have received for our new Digistar 3 Laser system. Additional orders will be realized in the second half of the year.

We expect the second half of the year to continue the product and process improvement trend, with the result being reduced costs and higher margins for both current and future programs. The loyalty, cooperation, and continuing commitment of customers and employees have been key factors in what has been a difficult development-to-production transition. We continue to be excited by the prospects of our laser technology and strengthened digital theater activities as we move forward in a new era for the company."

About Evans & Sutherland

Evans & Sutherland produces professional hardware and software to create highly realistic visual images for digital theater and other applications throughout the world. The company has recently introduced its laser projector for ultra-high resolution projection requirements in simulation, digital theaters, and other high-end projection applications. In April 2006, E&S completed the acquisition of Spitz, Inc., adding to its digital theater capabilities. Headquartered in Salt Lake City, Utah, E&S employs approximately 125 professionals worldwide. Additional information is available at www.es.com.

Statements in this press release which are not historical, including statements regarding E&S’s or management’s intentions, hopes, beliefs, expectations, representations, projections, plans, or predictions of the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Consolidated Statements of Operations (XLS)

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Contact:
David H. Bateman
President and CEO
Evans & Sutherland
770 Komas Drive, Salt Lake City, UT 84108
801-588-1674

E&S is a registered trademark of Evans & Sutherland Computer Corporation.