EXHIBIT 99.1
Contact: | |
Kathy Taylor | |
Southwall Technologies Inc. | |
Phone: (650) 798-1200 |
For Immediate Release
Southwall Announces Year End 2008 Results
SALES UP 11% & PROFITS UP 46% ON GLOBAL SHIFT TOWARD
HIGH PERFORMANCE ENERGY CONSERVATION PRODUCTS
PALO ALTO, Calif.--(BUSINESS WIRE)--March 24, 2008--Southwall Technologies Inc. (OTCBB: SWTX) announced year end 2008 revenue of $41.9 million as compared to $37.7 million in 2007, an 11% increase. Revenue growth was broad-based, as all energy-focused business segments grew year over year. Year end 2008 net income was $5.2 million, an increase of 46% as compared to net income of $3.6 million for the year ending 2007. Year end 2008 earnings per fully diluted share was $0.15 as compared to earnings per fully diluted share of $0.11 for the year ended 2007. The increase was primarily due to improved gross margins attributable to higher volumes, product mix, focused efforts to maximize production efficiency, as well as continued tight control of operating expenses. In addition to increased profitability in 2008, significant focus was placed on strengthening the balance sheet.
Fourth quarter 2008 revenue was $7.0 million, down 34% from the third quarter of 2008 and down 19% from the fourth quarter of 2007, reflecting the weakness of the economy which is expected to continue into 2009. The Company posted a net loss of $0.2 million in the fourth quarter of 2008, or a loss of $0.01 per fully diluted share, as compared with net income of $2.6 million, or earnings of $0.08 per fully diluted share, in the fourth quarter of 2007, which was primarily due to a sales termination settlement agreement with Mitsui Chemicals in the fourth quarter of 2007.
"Overall, 2008 was a solid year for Southwall", said Dennis Capovilla, Southwall's Chief Executive Officer. "It is clear that our efforts in 2007 to focus on growth in our core energy efficiency products paid off in 2008.”
“Disciplined execution will remain the centerpiece of how we manage our business during the current economic downturn”, Mr. Capovilla continued. “We understand the need for fiscal discipline and have in place initiatives to manage costs across all areas of our business. As our core automotive and building markets continue to demand higher levels of energy conservation performance, we believe that Southwall is well positioned to benefit from this long term global trend."
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 2009 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 certain markets 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.
#
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, | |||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
Net Revenues | $ | 7,033 | $ | 8,729 | $ | 41,920 | $ | 37,733 | ||||||||
Cost of revenues | 4,315 | 5,235 | 24,378 | 23,907 | ||||||||||||
Gross profit | 2,718 | 3,494 | 17,542 | 13,826 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research & Development | 624 | 1,332 | 2,996 | 4,505 | ||||||||||||
Selling, general and administrative | 2,028 | 2,911 | 8,199 | 9,843 | ||||||||||||
Recoveries for long-lived assets, net | - | (7 | ) | - | (32 | ) | ||||||||||
Restructuring charges | - | 56 | - | 56 | ||||||||||||
Contract termination settlement | - | (2,959 | ) | - | (2,959 | ) | ||||||||||
Total operating expenses | 2,652 | 1,333 | 11,195 | 11,413 | ||||||||||||
Income from operations | 66 | 2,161 | 6,347 | # | 2,413 | |||||||||||
Interest expense, net | (154 | ) | (221 | ) | (586 | ) | (692 | ) | ||||||||
Other (loss) income, net | 61 | 785 | (62 | ) | 2,346 | |||||||||||
Income (loss) before provision for income taxes | (27 | ) | 2,725 | 5,699 | 4,067 | |||||||||||
Provision for income taxes | 185 | 112 | 511 | 510 | ||||||||||||
Net income (loss) | (212 | ) | 2,613 | 5,188 | # | 3,557 | ||||||||||
Deemed dividend on preferred stock | 122 | 123 | 489 | 489 | ||||||||||||
Net income (loss) attributable to common stockholders | $ | (334 | ) | $ | 2,490 | $ | 4,699 | $ | 3,068 | |||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.09 | $ | 0.17 | $ | 0.11 | |||||||
Diluted | $ | (0.01 | ) | $ | 0.08 | $ | 0.15 | $ | 0.11 | |||||||
Weighted average shares used in computing net income (loss) per share : | ||||||||||||||||
Basic | 28,705 | 27,820 | 28,252 | 27,576 | ||||||||||||
Diluted | 28,705 | 33,344 | 34,262 | 33,240 |
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 10,768 | $ | 6,492 | ||||
Restricted cash | 282 | 294 | ||||||
Accounts receivable, net | 3,709 | 4,346 | ||||||
Inventories, net | 5,965 | 5,640 | ||||||
Other current assets | 745 | 837 | ||||||
Total current assets | 21,469 | 17,609 | ||||||
Property, plant and equipment, net | 15,012 | 17,071 | ||||||
Restricted cash loans | - | 1,242 | ||||||
Other assets | 804 | 1,345 | ||||||
Total assets | $ | 37,285 | $ | 37,267 | ||||
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long term debt and capital leases | $ | 1,767 | $ | 1,149 | ||||
Accounts payable | 596 | 964 | ||||||
Accrued compensation | 1,372 | 1,267 | ||||||
Other accrued liabilities | 5,127 | 6,350 | ||||||
Total current liabilities | 8,862 | 9,730 | ||||||
Term debt and capital leases | 4,501 | 8,277 | ||||||
Other long term liabilities | 2,514 | 2,567 | ||||||
Total liabilities | 15,877 | 20,574 | ||||||
Series A, convertible preferred stock | 4,810 | 4,810 | ||||||
Stockholders' equity: | ||||||||
Common stock | 29 | 28 | ||||||
Capital in excess of par value | 78,323 | 78,290 | ||||||
Accumulated other comprehensive income: | ||||||||
Translation gain on subsidiary | 4,269 | 4,776 | ||||||
Accumulated deficit | (66,023 | ) | (71,211 | ) | ||||
Total stockholders' equity | 16,598 | 11,883 | ||||||
Total liabilities, preferred stock and stockholders' equity | $ | 37,285 | $ | 37,267 |
SOUTHWALL TECHNOLOGIES, INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(In thousands) | ||||||||
Years ended | ||||||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 5,188 | $ | 3,557 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Deferred income tax | 38 | (126 | ) | |||||
Loss on disposal of property, plant and equipment | 97 | 0 | ||||||
Impairment recoveries for long-lived assets | 0 | (32 | ) | |||||
Depreciation and amortization | 2,647 | 2,812 | ||||||
Stock-based compensation charge | 219 | 342 | ||||||
Changes in operating assets and liabilities: | ||||||||
Deferred revenues | 0 | 0 | ||||||
Accounts receivable, net | 649 | (767 | ) | |||||
Inventories, net | (325 | ) | (33 | ) | ||||
Other current and non-current assets | 601 | 40 | ||||||
Accounts payable and accrued liabilities | (2,014 | ) | (98 | ) | ||||
Net cash provided by operating activities | 7,100 | 5,695 | ||||||
Cash flows from investing activities: | ||||||||
Restricted cash | 1,189 | (79 | ) | |||||
Proceeds from sale of property, plant and equipment | 0 | 32 | ||||||
Expenditures for property, plant and equipment | (626 | ) | (710 | ) | ||||
Net cash provided by (used in) investing activities | 563 | (757 | ) | |||||
Cash flows from financing activities: | ||||||||
Proceeds from exercise of stock options | 304 | 357 | ||||||
Borrowings on line of credit | 0 | 4 | ||||||
Repayments on line of credit | 0 | (3,000 | ) | |||||
Use of investment allowance | 0 | (246 | ) | |||||
Repayments of notes payable and capital lease obligations | (3,551 | ) | (1,148 | ) | ||||
Net cash used in financing activities | (3,247 | ) | (4,033 | ) | ||||
Effect of foreign exchange rate changes on cash | (140 | ) | 63 | |||||
Net increase in cash and cash equivalents | 4,276 | 968 | ||||||
Cash and cash equivalents, beginning of year | 6,492 | 5,524 | ||||||
Cash and cash equivalents, end of year | $ | 10,768 | $ | 6,492 | ||||
Supplemental cash flows disclosures: | ||||||||
Interest paid | $ | 730 | $ | 837 | ||||
Income taxes paid | $ | 428 | $ | 462 | ||||
Supplemental schedule of non-cash investing and financing activities: | ||||||||
Dividends accrued | $ | 489 | $ | 489 |