Contact: | |
Mallorie Burak | |
Southwall Technologies Inc. | |
Phone: (650) 798-1200 |
For Immediate Release
Southwall Announces Q3 2007 Results
Palo Alto, California- 14 November, 2007 –Southwall Technologies Inc. (OTCBB:SWTX) announced third quarter 2007 revenue of $9.249 million compared to $9.597 million in the third quarter of 2006 a 3.63% decrease. The decrease was primarily due to a decline in revenue relating to the electronic display products partially offset by an increase in window film and automotive glass products.
Third quarter 2007 net income was $250 thousand, earnings per fully diluted share was zero, compared to a net loss of $2.721 million or ($0.11) per fully diluted share for the third quarter of 2006. The increase was primarily due to $3.23 million lower operating expenses and $500 thousand in other income from a Technology Transfer and Service Agreement.
Our cash and cash equivalents at the end of the third quarter were $4.775 million.
Mr. Dennis Capovilla, President, said, “We are pleased to report our third consecutive quarter of profitability, which is a direct result of our focus on streamlining our infrastructure and directing our attention to core energy markets.”
About Southwall Technologies Inc.
Southwall Technologies Inc. is recognized worldwide as a leading innovator in the development and manufacture of high performance, energy-saving films and glass products that dramatically improve the energy efficiency of architectural and automotive glass. Southwall is an ISO 9001:2000-certified manufacturer with customers in over 25 countries around the world, including Audi, BMW, DaimlerChrysler, Mitsui Chemicals, Guardian, 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 may not continue to be profitable in future quarters or may not be able to achieve future long-term growth, that there will be a decline in one or more portions of our business in 2007 or thereafter, that the Company will not be successful in improving operations performance or controlling costs, that the Company will suffer a decline in manufacturing or financial effectiveness, that the Company’s new product development will not be successful, that there may be decreasing demand in markets in addition to the electronic display market, and that the Company will not be able to secure additional financing if required, as well as risks associated with its failure to meet potential covenant requirements under future credit facilities. 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, 2006, filed on April 02, 2007, and the Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2007, to be filed on November 14, 2007.
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SOUTHWALL TECHNOLOGIES INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
September 30, | December 31, | |||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,775 | $ | 5,524 | ||||
Restricted cash | 657 | 209 | ||||||
Accounts receivable, net | 5,764 | 3,608 | ||||||
Inventories, net | 5,971 | 5,598 | ||||||
Other current assets | 781 | 1,064 | ||||||
Total current assets | 17,948 | 16,003 | ||||||
Property, plant and equipment, net | 17,045 | 17,232 | ||||||
Restricted cash loans | 1,196 | 1,111 | ||||||
Other assets | 1,330 | 1,155 | ||||||
Total assets | $ | 37,519 | $ | 35,501 | ||||
LIABILITIES, PREFERRED STOCK AND SHAREHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long term debt and capital leases | $ | 1,118 | $ | 1,059 | ||||
Short term obligations | 3,000 | 2,996 | ||||||
Accrued payable | 1,411 | 955 | ||||||
Accrued compensation | 863 | 859 | ||||||
Government grants advanced | 234 | - | ||||||
Other accrued liabilities | 6,306 | 6,448 | ||||||
Total current liabilities | 12,932 | 12,317 | ||||||
Term debt and capital leases | 8,288 | 8,568 | ||||||
Government grants advanced | - | 220 | ||||||
Other long term liabilities | 2,619 | 2,550 | ||||||
Total liabilities | 23,839 | 23,655 | ||||||
Series A, convertible preferred stock | 4,810 | 4,810 | ||||||
Stockholders' equity: | ||||||||
Common stock | 28 | 27 | ||||||
Capital in excess of par value | 78,345 | 78,081 | ||||||
Accumulated other comprehensive income: Translation gain on subsidiary | 4,321 | 3,696 | ||||||
Accumulated deficit | (73,824 | ) | (74,768 | ) | ||||
Total stockholders' equity | 8,870 | 7,036 | ||||||
Total liabilities, redeemable preferred stock and stockholders' equity | $ | 37,519 | $ | 35,501 | ||||
SOUTHWALL TECHNOLOGIES INC. | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three months ended | Nine months ended | |||||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net Revenues | $ | 9,249 | $ | 9,597 | $ | 29,005 | $ | 30,968 | ||||||||
Cost of revenues | 6,070 | 5,667 | 18,673 | 19,301 | ||||||||||||
Gross profit | 3,179 | 3,930 | 10,332 | 11,667 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research & Development | 934 | 1,659 | 3,173 | 5,376 | ||||||||||||
Selling, general and administrative | 2,122 | 4,674 | 6,932 | 9,761 | ||||||||||||
Impairment charge (recoveries) for long-lived assets | (17 | ) | (325 | ) | (25 | ) | (117 | ) | ||||||||
Restructuring charges | - | 263 | - | 974 | ||||||||||||
Total operating expenses | 3,039 | 6,271 | 10,080 | 15,994 | ||||||||||||
Income (loss) from operations | 140 | (2,341 | ) | 252 | (4,327 | ) | ||||||||||
Interest expense, net | (191 | ) | (169 | ) | (471 | ) | (550 | ) | ||||||||
Other income (expenses), net | 513 | (18 | ) | 1,561 | 161 | |||||||||||
Income (loss) before provision for income taxes | 462 | (2,528 | ) | 1,342 | (4,716 | ) | ||||||||||
Provision for income taxes | 212 | 193 | 398 | 719 | ||||||||||||
Net income (loss) | 250 | (2,721 | ) | 944 | (5,435 | ) | ||||||||||
Deemed dividend on redeemable preferred stock | 122 | 123 | 366 | 367 | ||||||||||||
Net income (loss) attributable to common stockholders | $ | 128 | $ | (2,844 | ) | $ | 578 | $ | (5,802 | ) | ||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | - | $ | (0.11 | ) | $ | 0.02 | $ | (0.22 | ) | ||||||
Diluted | $ | - | $ | (0.11 | ) | $ | 0.02 | $ | (0.22 | ) | ||||||
Shares used in computing net income (loss) per share : | ||||||||||||||||
Basic | 27,820 | 26,957 | 27,493 | 26,907 | ||||||||||||
Diluted | 28,867 | 26,957 | 28,313 | 26,907 | ||||||||||||
SOUTHWALL TECHNOLOGIES INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(in thousands) | ||||||||
Nine Months Ended | ||||||||
September 30, | September 30, | |||||||
2007 | 2006 | |||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 944 | $ | (5,435 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) | ||||||||
operating activities: | ||||||||
Deferred income tax | (56 | ) | 54 | |||||
Impairment charge (recoveries) from long-lived assets | (25 | ) | (117 | ) | ||||
Depreciation and amortization | 2,087 | 1,836 | ||||||
Stock compensation | 273 | 487 | ||||||
Change in assets and liabilities: | ||||||||
Accounts receivable, net | (2,129 | ) | 1,982 | |||||
Inventories, net | (373 | ) | 638 | |||||
Other current and non current assets | 161 | (524 | ) | |||||
Accrued liabilities - deferred rent | 0 | (1,192 | ) | |||||
Accounts payable and accrued liabilities | 10 | 2,123 | ||||||
Net cash provided by (used in) operating activities: | 892 | (148 | ) | |||||
Cash flows from investing activities: | ||||||||
Restricted cash | (417 | ) | 181 | |||||
Proceeds from sale of property, plant and equipment | 25 | 422 | ||||||
Expenditures for property, plant and equipment | (635 | ) | (781 | ) | ||||
Net cash used in investing activities | (1,027 | ) | (178 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 357 | 32 | ||||||
Repayments of term debt | (837 | ) | (1,133 | ) | ||||
Payments on line of credit | (2,996 | ) | 0 | |||||
Borrowings on line of credit | 3,000 | 0 | ||||||
Investment credit in Germany | (3 | ) | (219 | ) | ||||
Net cash used in financing activities | (479 | ) | (1,320 | ) | ||||
Effect of foreign exchange rate changes on cash | (135 | ) | 78 | |||||
Net decrease in cash and cash equivalents | (749 | ) | (1,568 | ) | ||||
Cash and cash equivalents, beginning of period | 5,524 | 6,600 | ||||||
Cash and cash equivalents, end of period | $ | 4,775 | $ | 5,032 | ||||
Supplemental cash flow disclosures: | ||||||||
Interest paid | $ | 670 | $ | 725 | ||||
Income taxes paid | $ | 398 | $ | 719 | ||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||
Dividends accrued | $ | 366 | $ | 367 |
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