Southwall Announces 80 Percent Increase in Third-Quarter Fiscal 2004 Earnings
PALO ALTO, Calif.--Nov. 1, 2004--Southwall Technologies Inc. (OTCBB:SWTX) released its financial results for the third quarter fiscal 2004 following the close of market on November 1, 2004.Selected Third Quarter 2004 Operational Highlights
-- Quarterly revenues increased 34 percent from the third quarter of 2003 to the third quarter of 2004 from $11.9 million to $15.9 million
-- Quarterly revenues increased 10 percent from $14.5 million in the second quarter of 2004 to $15.9 million
-- Quarterly net income improved 80 percent from $1.2 million in the second quarter of 2004 to $2.1 million
Southwall's third quarter 2004 net income was $2.1 million, a gain of $0.07 per fully diluted share, compared with net income of $1.2 million, a gain of $0.04 per fully diluted share, for the second quarter of 2004 and with a net loss of $22.8 million, or $1.82 per share, for the same quarter a year ago. During the third quarter of 2004, Southwall incurred a non-cash charge of $0.5 million associated with the financing completed during the first quarter.
"Southwall's revenues during the third quarter of 2004 grew sequentially for the third consecutive quarter and grew on a year to year basis as well," said Thomas G. Hood, Southwall's president and chief executive officer. "Three of our four business segments experienced growth. Our balance sheet is improving as we continue to generate cash from operations and pay down our debt. We also held a successful shareholder meeting in October culminating the refinancing activities we began late last year. With this behind us, the management team will now increase its focus on improving operating efficiencies and longer term profitable growth plans."
The company will hold a teleconference at 2:00 p.m. PT / 5:00 p.m. ET today to discuss the results in more detail.
This call will be open to all investors via a webcast accessible at www.southwall.com and by phone. Both phone and webcast replays will be available for approximately one week after the teleconference, beginning approximately two hours after the call ends.
How to Access the Webcast
Go to the Investor Relations page of the Southwall website at www.southwall.com and click on the CCBN webcast icon. From here, you can listen to the teleconference, assuming that your computer system is configured properly.
How to Access the Call
Using access code # 1857366, domestic U.S. callers can dial 877-481-7179, while international callers can dial 706-634-7186. The phone replay will be accessible at 800-642-1687 or 706-645-9291, access code # 1857366.
About Southwall Technologies Inc.
Southwall Technologies Inc. designs and produces thin film coatings that selectively absorb, reflect or transmit light. Southwall products are used in a number of automotive, electronic display and architectural glass products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall is an ISO 9001:2000-certified manufacturer and sells advanced thin film coatings to over 25 countries around the world. Southwall's customers include Audi, BMW, DaimlerChrysler, Hewlett-Packard, Mitsubishi Electric, Mitsui Chemicals, Peugeot-Citroen, Philips, Pilkington, Renault, Saint-Gobain Sekurit, and Volvo.
This press release may contain forward-looking statements, including, without limitation, statements regarding the Company's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements in this press release are based on information available to the Company on the date hereof, and the Company assumes no obligation to update any such forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those presented. These risks include the possibility that the Company's expected future results will be materially worse than estimated, that the Company's recent financings and restructuring efforts will not be sufficient to allow the Company to be profitable in future quarters or continue as a going concern, that there will be a decline in one or more portions of our business in 2004 or thereafter, and that the Company will not be able to secure additional financing, as well as risks associated with its failure to meet covenants under the Needham investment agreement or credit facilities, and strains on the Company's liquidity. Further risks are detailed in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's most recent Annual Report on Form 10-K for the year ended December 31, 2003, filed on April 14, 2004, as amended by Form 10-K/A filed on May 7, 2004, and the Quarterly Reports on Form 10-Q for the fiscal quarter ended March 28, 2004, filed on May 1, 20057, 2004, and for the quarter ended June 27, 2004, filed on August 11, 2004.
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended Nine months ended
Sept. 26, Sept. 28, Sept. 26, Sept. 28,
2004 2003 2004 2003
-------- -------- -------- --------
Net revenues $15,932 $ 11,902 $41,547 $ 42,451
Cost of sales 10,152 10,238 27,554 34,826
-------- -------- -------- --------
Gross profit 5,780 1,664 13,993 7,625
-------- -------- -------- --------
Operating expenses:
Research and
development 841 1,592 2,422 4,777
Selling, general
and administrative 2,308 2,896 7,891 8,707
Impairment charge
for long-lived
assets - 19,380 - 19,380
Impairment
recoveries for
long-lived assets (85) - (1,513) -
-------- -------- -------- --------
Total operating
expenses 3,064 23,868 8,800 32,864
-------- -------- -------- --------
Income (loss) from
operations 2,716 (22,204) 5,193 (25,329)
Interest expense, net (444) (325) (1,754) (834)
Cost of warrants
issued (491) - (6,782) -
Other 53 (155) 371 208
-------- -------- -------- --------
Income (loss) before
provision for
(benefit from)
income taxes 1,834 (22,684) (2,972) (25,865)
Provision for
(benefit from)
income taxes (298) 97 400 288
-------- -------- -------- --------
Net income (loss) $ 2,132 $(22,781) $(3,372) $(26,153)
======== ======== ======== ========
Net income (loss)
per share:
Basic $ 0.17 $ (1.82) $ (0.27) $ (2.09)
Diluted $ 0.07 $ (1.82) $ (0.27) $ (2.09)
Weighted average
shares of common
stock and dilutive
potential common
stock:
Basic 12,550 12,542 12,550 12,534
Diluted 31,218 12,542 12,550 12,534
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 26, December 31,
2004 2003
-------- --------
ASSETS
------
Current assets:
Cash and cash equivalents $ 2,660 $ 1,152
Restricted cash 616 739
Accounts receivable, net of allowance
for bad debts of $544 at September 26,
2004 and $778 at December 31, 2003 5,742 7,096
Inventories, net 6,323 6,830
Other current assets 2,870 2,617
-------- --------
Total current assets 18,211 18,434
Property, plant & equipment, net 19,370 21,787
Restricted cash loans 1,038 1,066
Other assets 1,245 434
-------- --------
Total assets $ 39,864 $ 41,721
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long term debt and
capital leases $ 1,238 $ 2,042
Line of credit 3,195 6,844
Accounts payable 2,684 6,315
Accrued compensation 877 1,392
Other accrued liabilities 6,805 6,051
-------- --------
Total current liabilities 14,799 22,644
Term debt and capital leases 11,083 13,658
Convertible promissory notes 3,344 --
Government grants advanced 483 614
Other long term liabilities 13,167 3,084
-------- --------
Total liabilities 42,876 40,000
-------- --------
Stockholders' equity (deficit):
Common stock, $0.001 par value; 20,000
shares authorized, and 12,550 and
12,548 shares outstanding at
September 26, 2004 and
December 31, 2003, respectively 13 13
Capital in excess of par value 69,795 70,861
Accumulated other comprehensive income:
Cumulative translation adjustment 2,945 3,240
Accumulated deficit (75,765) (72,393)
-------- --------
Total stockholders' equity (deficit) (3,012) 1,721
-------- --------
Total liabilities and
stockholders' equity $ 39,864 $ 41,721
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