Exhibit 99.1
Contact: | |
Mallorie Burak | |
Southwall Technologies Inc. | |
Phone: (650) 798-1200 |
For Immediate Release
Southwall Announces Q1 2008 Results
DEMAND FOR ENERGY CONSERVATION PRODUCTS
DRIVES IMPROVED OPERATING MARGIN IN FIRST QUARTER
PALO ALTO, Calif.--(BUSINESS WIRE)—May 15, 2008--Southwall Technologies Inc. (OTCBB: SWTX) announced first quarter 2008 revenue of $10.6 million, up 21% from the fourth quarter of 2007 and up approximately 1% from the first quarter of 2007. The increase year over year was primarily due to higher sales of Automotive products, which more than offset the decline in revenue relating to Plasma Display product sales resulting from the Company’s decision to exit that business and focus on its core energy conservation products.
Net income increased to $2.0 million, or $.06 per fully diluted share, compared to net income of $0.2 million, or earnings of $0.00 per fully diluted share, in the first quarter of 2007. First quarter 2008 gross margins increased to 46% of sales from 42% in the first quarter of 2007 on a shift in product mix to higher margin energy conversation products and improved operating efficiencies. Operating margins increased to 20% of sales from 5% due to cost reduction efforts begun last year to more closely align the Company’s operating expenses with its strategic objectives of the Company. Overall, operating expenses decreased $1.1 million, or 29%, year over year.
Dennis Capovilla, Southwall’s President said of the Q1 results, “We believe that we are well positioned for growth in our core energy markets, where our products enable a new level of energy efficiency for green building and automotive designs. The recent increase in sales for our energy conservation products follows a growing global trend, highlighting consumer awareness that energy conservation is an efficient, effective and readily-available renewable technology choice that can have an immediate impact on saving energy and reducing carbon emissions.”
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 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, 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 and joint venture 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, 2007, filed on March 31, 2008.
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SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended | ||||||||
March 31, | March 31, | |||||||
2008 | 2007 | |||||||
Net Revenues | $ | 10,570 | $ | 10,505 | ||||
Cost of revenues | 5,719 | 6,095 | ||||||
Gross profit | 4,851 | 4,410 | ||||||
Operating expenses: | ||||||||
Research & Development | 709 | 1,369 | ||||||
Selling, general and administrative | 2,038 | 2,529 | ||||||
Recoveries for long-lived assets, net | - | (8 | ) | |||||
Total operating expenses | 2,747 | 3,890 | ||||||
Income from operations | 2,104 | 520 | ||||||
Interest expense, net | (139 | ) | (113 | ) | ||||
Other income, net | 193 | 6 | ||||||
Income before provision for income taxes | 2,158 | 413 | ||||||
Provision for income taxes | 113 | 181 | ||||||
Net income | 2,045 | 232 | ||||||
Deemed dividend on preferred stock | 122 | 122 | ||||||
Net income attributable to common stockholders | $ | 1,923 | $ | 110 | ||||
Net income per share: | ||||||||
Basic | $ | 0.07 | $ | 0.00 | ||||
Diluted | $ | 0.06 | $ | 0.00 | ||||
Weighted average shares used in computing net income per share : | ||||||||
Basic | 27,820 | 27,139 | ||||||
Diluted | 33,520 | 27,566 |
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 4,362 | $ | 6,492 | ||||
Restricted cash | 316 | 294 | ||||||
Accounts receivable, net | 8,183 | 4,346 | ||||||
Inventories, net | 7,241 | 5,640 | ||||||
Other current assets | 1,106 | 837 | ||||||
Total current assets | 21,208 | 17,609 | ||||||
Property, plant and equipment, net | 17,916 | 17,071 | ||||||
Restricted cash loans | 1,348 | 1,242 | ||||||
Other assets | 254 | 1,345 | ||||||
Total assets | $ | 40,726 | $ | 37,267 | ||||
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long term debt | $ | 1,262 | $ | 1,149 | ||||
Accounts payable | 3,353 | 964 | ||||||
Accrued compensation | 595 | 1,267 | ||||||
Other accrued liabilities | 4,826 | 6,350 | ||||||
Total current liabilities | 10,036 | 9,730 | ||||||
Term debt | 8,463 | 8,277 | ||||||
Other long term liabilities | 2,578 | 2,567 | ||||||
Total liabilities | 21,077 | 20,574 | ||||||
Series A, convertible preferred stock | 4,810 | 4,810 | ||||||
Stockholders' equity: | ||||||||
Common stock | 28 | 28 | ||||||
Capital in excess of par value | 78,215 | 78,290 | ||||||
Accumulated other comprehensive income: | ||||||||
Translation gain on subsidiary | 5,762 | 4,776 | ||||||
Accumulated deficit | (69,166 | ) | (71,211 | ) | ||||
Total stockholders' equity | 14,839 | 11,883 | ||||||
Total liabilities, preferred stock and stockholders' equity | $ | 40,726 | $ | 37,267 |
SOUTHWALL TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three months ended | ||||||||
March 31, | March 31, | |||||||
2008 | 2007 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 2,045 | $ | 232 | ||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||
Deferred income tax | 0 | (36 | ) | |||||
Impairment recoveries for long-lived assets | 0 | (8 | ) | |||||
Depreciation and amortization | 746 | 696 | ||||||
Stock compensation | 48 | 113 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | (4,099 | ) | (1,872 | ) | ||||
Inventories, net | (1,601 | ) | (117 | ) | ||||
Accrued restructuring | 0 | (10 | ) | |||||
Other current and non-current assets | 790 | 57 | ||||||
Accounts payable and accrued liabilities | 74 | (530 | ) | |||||
Net cash used in operating activities | (1,997 | ) | (1,475 | ) | ||||
Cash flows from investing activities: | ||||||||
Restricted cash | (13 | ) | (13 | ) | ||||
Proceeds from sale of property, plant and equipment | 0 | 8 | ||||||
Expenditures for property, plant and equipment | (369 | ) | (299 | ) | ||||
Net cash used in investing activities | (382 | ) | (304 | ) | ||||
Cash flows from financing activities: | ||||||||
Borrowings on line of credit | 0 | 3,000 | ||||||
Repayments on line of credit | 0 | (2,996 | ) | |||||
Repayments of notes payable | (293 | ) | (267 | ) | ||||
Net cash used in financing activities | (293 | ) | (263 | ) | ||||
Effect of foreign exchange rate changes on cash and cash equivalents | 542 | (95 | ) | |||||
Net decrease in cash and cash equivalents | (2,130 | ) | (2,137 | ) | ||||
Cash and cash equivalents, beginning of period | 6,492 | 5,524 | ||||||
Cash and cash equivalents, end of period | $ | 4,362 | $ | 3,387 | ||||
Supplemental cash flows disclosures: | ||||||||
Interest paid | $ | 263 | $ | 176 | ||||
Income taxes paid | $ | 131 | $ | 181 | ||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||
Dividends accrued | $ | 122 | $ | 122 |
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