Exhibit 99.1 | Contact: | |
Kathy Taylor | ||
Southwall Technologies Inc. | ||
Phone: (650) 798-1200 |
For Immediate Release
Southwall Announces Year End 2007 Results
PROFITABLE 2007 AND FOCUS ON ENERGY CONSERVATION PRODUCTS
PALO ALTO, Calif.--(BUSINESS WIRE)--March 27, 2008--Southwall Technologies Inc. (OTCBB: SWTX) announced fourth quarter 2007 revenue of $8.7 million, down 5.6% from third quarter of 2007 and down 5.5% from the fourth quarter of 2006. Year end 2007 revenue was $37.7 million as compared to $40.2 million in 2006, a 6% decrease. The decrease was primarily due to a decline in revenue relating to Plasma Display products, which was partially offset by revenue increases for Automotive and Window Film products that improve energy efficiency in cars and buildings.
Fourth quarter 2007 net income was $2.6 million, or earnings per fully diluted share of $0.08, as compared with a net loss of $75 thousand, or a loss of $0.01 per fully diluted share, in the fourth quarter of 2006. Year end 2007 net income was $3.6 million, significantly higher as compared to a loss of $5.5 million for the year ending 2006. Year end 2007 earnings per fully diluted share were $0.11, as compared to earnings per fully diluted share of ($0.22) for the year ending 2006. The increase was primarily due to lower operating expenses, a sales termination settlement agreement with a large plasma display customer, other income from a Technology Transfer and Service Agreement, and a shift in product mix toward higher margin energy conservation products.
"2007 was a turnaround year for Southwall", said Dennis Capovilla, Southwall's President. "We reduced operating expenses across the company, exited unprofitable business segments, and realigned management accordingly to focus on growth. As demand for and interest in energy conservation continues to increase in importance globally, we believe that Southwall is now in a better position to respond to the growing opportunity for products that improve energy efficiency."
About Southwall Technologies Inc.
Southwall Technologies Inc. is recognized as an 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, 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 2008 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.
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended | Twelve months ended | |||||||||||||||
December 31, | December 31, | December 31, | December 31, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||||
Net Revenues | $ | 8,729 | $ | 9,241 | $ | 37,733 | $ | 40,209 | ||||||||
Cost of revenues | 5,235 | 5,445 | 23,907 | 24,746 | ||||||||||||
Gross profit | 3,494 | 3,796 | 13,826 | 15,463 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research & Development | 1,332 | 1,406 | 4,505 | 6,782 | ||||||||||||
Selling, general and administrative | 2,911 | 2,244 | 9,843 | 12,005 | ||||||||||||
Recoveries for long-lived assets, net | (7 | ) | (97 | ) | (32 | ) | (214 | ) | ||||||||
Restructuring charges (recoveries) | 56 | (59 | ) | 56 | 915 | |||||||||||
Contract termination settlement | (2,959 | ) | - | (2,959 | ) | - | ||||||||||
Total operating expenses | 1,333 | 3,494 | 11,413 | 19,488 | ||||||||||||
Income (loss) from operations | 2,161 | 302 | 2,413 | (4,025 | ) | |||||||||||
Interest expense, net | (221 | ) | (187 | ) | (692 | ) | (737 | ) | ||||||||
Other income, net | 785 | 49 | 2,346 | 210 | ||||||||||||
Income (loss) before provision for income taxes | 2,725 | 164 | 4,067 | (4,552 | ) | |||||||||||
Provision for income taxes | 112 | 239 | 510 | 958 | ||||||||||||
Net income (loss) | 2,613 | (75 | ) | 3,557 | (5,510 | ) | ||||||||||
Deemed dividend on preferred stock | 123 | 122 | 489 | 489 | ||||||||||||
Net income (loss) attributable to common stockholders | $ | 2,490 | $ | (197 | ) | $ | 3,068 | $ | (5,999 | ) | ||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | 0.09 | $ | (0.01 | ) | $ | 0.11 | $ | (0.22 | ) | ||||||
Diluted | $ | 0.08 | $ | (0.01 | ) | $ | 0.11 | $ | (0.22 | ) | ||||||
Weighted average shares used in computing net income (loss) per share : | ||||||||||||||||
Basic | 27,820 | 27,073 | 27,576 | 26,949 | ||||||||||||
Diluted | 33,344 | 27,073 | 33,240 | 26,949 |
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 6,492 | $ | 5,524 | ||||
Restricted cash | 294 | 209 | ||||||
Accounts receivable, net | 4,346 | 3,608 | ||||||
Inventories, net | 5,640 | 5,598 | ||||||
Other current assets | 837 | 1,064 | ||||||
Total current assets | 17,609 | 16,003 | ||||||
Property, plant and equipment, net | 17,071 | 17,232 | ||||||
Restricted cash loans | 1,242 | 1,111 | ||||||
Other assets | 1,345 | 1,155 | ||||||
Total assets | $ | 37,267 | $ | 35,501 | ||||
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long term debt | $ | 1,149 | $ | 1,059 | ||||
Short term obligations | - | 2,996 | ||||||
Accounts payable | 964 | 955 | ||||||
Accrued compensation | 1,267 | 859 | ||||||
Other accrued liabilities | 6,350 | 6,448 | ||||||
Total current liabilities | 9,730 | 12,317 | ||||||
Term debt | 8,277 | 8,568 | ||||||
Government grants advanced | - | 220 | ||||||
Other long term liabilities | 2,567 | 2,550 | ||||||
Total liabilities | 20,574 | 23,655 | ||||||
Series A, convertible preferred stock | 4,810 | 4,810 | ||||||
Stockholders' equity: | ||||||||
Common stock | 28 | 27 | ||||||
Capital in excess of par value | 78,290 | 78,081 | ||||||
Accumulated other comprehensive income: | ||||||||
Translation gain on subsidiary | 4,776 | 3,696 | ||||||
Accumulated deficit | (71,211 | ) | (74,768 | ) | ||||
Total stockholders' equity | 11,883 | 7,036 | ||||||
Total liabilities, preferred stock and stockholders' equity | $ | 37,267 | $ | 35,501 |
SOUTHWALL TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Years ended | ||||||||
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
Cash flows used in operating activities: | ||||||||
Net income (loss) | $ | 3,557 | $ | (5,510 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
Deferred income tax | (126 | ) | 51 | |||||
Impairment recoveries for long-lived assets, net | (32 | ) | (214 | ) | ||||
Depreciation and amortization | 2,812 | 2,406 | ||||||
Stock-based compensation charge | 342 | 551 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (767 | ) | 3,136 | |||||
Inventories, net | (33 | ) | 281 | |||||
Other current and non-current assets | 40 | (81 | ) | |||||
Accounts payable and accrued liabilities | (98 | ) | 128 | |||||
Net cash provided by operating activities | 5,695 | 748 | ||||||
Cash flows used in investing activities: | ||||||||
Restricted cash | (79 | ) | 168 | |||||
Proceeds from sale of property, plant and equipment | 32 | 519 | ||||||
Expenditures for property, plant and equipment | (710 | ) | (1,192 | ) | ||||
Net cash used in investing activities | (757 | ) | (505 | ) | ||||
Cash flows used in financing activities: | ||||||||
Proceeds from exercise of stock options | 357 | 123 | ||||||
Borrowings on line of credit | 4 | - | ||||||
Repayments on line of credit | (3,000 | ) | - | |||||
Use of investment allowance | (246 | ) | (222 | ) | ||||
Repayments of notes payable | (1,148 | ) | (1,434 | ) | ||||
Net cash used in financing activities | (4,033 | ) | (1,533 | ) | ||||
Effect of foreign exchange rate changes on cash | 63 | 214 | ||||||
Net increase (decrease) in cash and cash equivalents | 968 | (1,076 | ) | |||||
Cash and cash equivalents, beginning of year | 5,524 | 6,600 | ||||||
Cash and cash equivalents, end of year | $ | 6,492 | $ | 5,524 | ||||
Supplemental cash flows disclosures: | ||||||||
Interest paid | $ | 837 | $ | 944 | ||||
Income taxes paid | $ | 462 | $ | 836 | ||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||
Dividends accrued | $ | 489 | $ | 489 |