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Announces Third Quarter Results PALO ALTO, Calif., October 23, 2002 -- Southwall Technologies Inc. (Nasdaq:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the automotive glass, electronic display and architectural markets, today reported financial results for the quarter ended September 29, 2002. Net revenues for the third quarter of 2002 were $16.3 million, down from the $22.8 million for the third quarter of 2001 and from $19.7 million for the second quarter of 2002. Net income for the third quarter of 2002 was $0.1 million, or $0.01 per diluted share, down from $2.4 million, or $0.28 per diluted share, for the same quarter last year and from $1.4 million sequentially. Total diluted shares outstanding increased by 44 percent from the third quarter of 2001, as a result of a public stock offering completed in July 2002. The year-over-year decline in net income was the result of lower sales and reduced gross margin of 28 percent, compared with 31 percent for the third quarter of 2001. "We are disappointed to report such a sharp decline in revenues and profits after five quarters of strong performance," said Thomas G. Hood, chief executive officer of Southwall Technologies. "To remain profitable at this level of sales reflected our continuing focus on controlling costs in an uncertain economic climate. We are taking advantage of available machine capacity to accelerate the development and testing of new products in a production environment. We have also benefited from a new program to recover expended precious metals used in production, thereby contributing to a reduction of material costs." Southwall Technologies' automotive product sales were down by $4.6 million, or 45 percent, from the third quarter of 2001. The decline was due primarily to lower volume and lower average product sale prices. Sales of electronic display products decreased by $2.6 million, or 35 percent from the comparable quarter of 2001, primarily as a result of a decrease in shipments and lower average sale prices for products used in flat-screen CRT monitors. This was partially offset by higher sales of products used in LCDs and plasma display products. Sales of architectural products were down by $0.7 million, or 13 percent, from the same quarter of 2001, reflecting decreased sales of Heat Mirror(R) products. Hood continued, "Based on orders currently on hand and customer trends we anticipate a sequential improvement in revenue in the fourth quarter of 2002. We expect automotive product sales to remain flat for the fourth quarter. At the same time, we expect to see a recovery in fourth-quarter shipments across the entire line of display products. Additionally, we received our first order for a tablet computer application, for which product will ship in the fourth quarter. The third-quarter decline in architectural sales was disappointing, after a strong first half of 2002. We are now producing this product line in Germany and focusing on increasing sales in Europe and the Middle East." In the third quarter of 2002, Southwall completed a follow-on public offering of 3.85 million shares of common stock, generating net proceeds of approximately $16 million. "With this additional capital, we reduced our debt by nearly $4.0 million during the third quarter and plan to pay down approximately another $4.0 million in the fourth quarter," said Robert R. Freeman, Southwall Technologies' senior vice president and chief financial officer. "This has strengthened the company's balance sheet, after a period of significant capital investment, and also improved its liquidity during the current economic slowdown. In view of the increased strength of the balance sheet, we expect to put in place a new working capital facility this quarter." Third-Quarter Results Teleconference About Southwall Technologies Inc. This press release may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), 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 shipments to customers will be materially less than anticipated, that are revenues will not sequentially improve in the fourth quarter of 2002, that automotive product sales will not remain flat in the fourth quarter, that shipments of display products will not recover in the fourth quarter, that we may not ship product for a tablet computer application in the fourth quarter, that sales in Europe and the Middle East will not increase, that production costs at the company's facilities will increase, that yields and throughputs will not be improved and production targets may not be met, that the company's markets will soften, or that the company will not repay another $4.0 million in the fourth quarter or that the company will not put in place anew working capital facility in the fourth quarter, as described above, as well as risks associated with its failure to meet covenants under credit facilities and strains on the company's liquidity. Further risks are detailed in the company's filing with the Securities and Exchange Commission, including those set forth in the company's most recent Form 10-K filed on April 1, 2002 and Form 10-Q, filed August 14, 2002. Announces Third Quarter Earnings Conference Call
PALO ALTO, Calif., October 16, 2002--Southwall Technologies Inc. (NYSE:SWTX) a global developer, manufacturer and marketer of thin-film coatings for the automotive glass, electronic display and architectural markets, will hold its quarterly conference call to discuss third quarter results on Thursday, October 24, 2002, at 12:30 p.m. Eastern Time (9:30 a.m. Pacific Time). This call is being webcast by CCBN and can be accessed at Southwall's web site at www.southwall.com The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at www.companyboardroom.com or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents (www.streetevents.com). About Southwall Technologies Inc. Southwall Technologies Inc. designs and produces technologically advanced thin film coatings that selectively absorb, reflect or transmit electromagnetic radiation. Southwall products are used in a number of architectural, automotive and electronic products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall exports advanced thin film coatings to over 25 countries around the world for use in products manufactured by such companies as Audi, BMW, Daimler-Chrysler, Renault, Peugeot-Citroen, Volvo, Saint-Gobain Sekurit, Pilkington, and Mitsubishi Electric. Expands On Financial Effect of Job Cuts and Near-term Business Expectations
PALO ALTO, Calif., August 9, 2002--Southwall Technologies Inc. (Nasdaq:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the automotive glass, electronic display and architectural markets, expanded on the Company's decision to reduce its workforce at its California location, the anticipated financial effect on the Company's costs in the future, and the near-term outlook for third quarter of 2002 revenues. Southwall Technologies was founded in Palo Alto, California in 1979 and, until 1997 it was the Company's only manufacturing location. Since 1997, Southwall has opened new manufacturing sites in Tempe, Arizona and Dresden, Germany. Due to the relatively high cost of labor, occupancy costs, and the inefficiencies of older production equipment, the California site has become less cost competitive relative to Southwall's Tempe and Dresden facilities. Consequently, the Company has initiated certain steps toward consolidating and restructuring its Palo Alto operations. In addition to the Company's recent reduction in force announced on August 7, the Company intends to reduce its occupancy costs, beginning in 2003, by consolidating office space into other existing Palo Alto buildings. Additionally, the Company intends to modify its manufacturing work schedules to reduce overtime and other related labor costs. The annual cost savings from these changes is expected to be approximately $1.7 million. Since the latest guidance offered in its Form 8-K filed on June 24, 2002, the Company has seen a slow down in orders from certain parts of its business in the third quarter. As a result, preliminary estimates of the Company's financial results for the quarter ending September 30, 2002, indicate that revenues for the quarter will be between $16.5 million and $18.0 million. At this early point in the quarter, the Company is not able to predict its net income or loss for the quarter but believes that a net loss is possible if revenues fall in the estimated range. As a result of the Company's current estimates of third quarter revenues, it is likely that revenues for fiscal 2002, previously estimated as between $78.0 million and $82.0 million, and net income for fiscal 2002, previously estimated between $4.8 million and $5.2 million, will be lower than those estimates. These estimates are, of course, subject to certain assumptions, risks and uncertainties that could cause actual revenues or net income for the periods discussed to be different than the estimates presented. "Although it's still somewhat early in the quarter, we are seeing a softening of orders in our U.S. architectural business," said Thomas G. Hood, President and Chief Executive Officer of Southwall Technologies. "Furthermore we are expecting to see a shortfall in orders for a couple of important display products that have, historically, shown strong sales in the first half of the year. We believe that these areas of current softness are not symptomatic of a reduced long-term demand for our products in these markets. We wish we had more visibility into some of these customers and markets, but that's not always possible," continued Hood. "We are certain that the recent cost reductions in Palo Alto will greatly assist in the Company's competitiveness in future quarters," concluded Mr. Hood. "As a result of our recently completed secondary offering, we believe that the Company's cash position and balance sheet have been significantly improved. Our balance sheet is stronger than in the recent past, with $13.8 million in cash and $44.3 million in equity at the end of July. The additional capital from the offering has enabled us to significantly reduce our outstanding debt obligations and given us increased financial wherewithal to support our business in the future. Furthermore, despite the anticipated slow down in orders, we expect to maintain the improvements in our operational efficiency which we've experienced in recent quarters," said Robert R. Freeman, Senior Vice-President and Chief Financial Officer. Southwall Technologies (www.southwall.com) designs and produces technologically advanced thin film coatings that selectively absorb, reflect or transmit electromagnetic radiation. Southwall products are used in a number of architectural, automotive and electronic products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall exports advanced thin film coatings to over 25 countries around the world for use in products manufactured by such companies as Audi, BMW, DaimlerChrysler, Renault, Peugeot-Citroen, Volvo, Saint-Gobain Sekurit, Pilkington, and Mitsubishi Electric. This press release may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), 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 actual revenues and/or net income for the third quarter and the fiscal year may be materially different than those estimated above, that the cash position and/or balance sheet may deteriorate in future periods, that the Company may not maintain the operational efficiency experienced in recent quarters, that cost savings from the above-described job cuts and facility changes will not be as substantial or as beneficial to the Company as indicated, that current slowdown in orders may be continue in future periods, that shipments to customers will be materially less than anticipated, that the installation of the new production machine in Germany will take longer or be more expensive than we anticipate, that yields and throughputs will not be improved and production targets may not be met, or that the markets will soften, as well as risks associated with its failure to meet covenants under credit facilities and strains on the Company's liquidity. Further risks are detailed in the Company's filing with the Securities and Exchange Commission, including those set forth in the Company's most recent Form 10-K filed on April 1, 2002, and Form 10-Q, filed May 17, 2002. Announces Positive Earnings for Second Quarter
PALO ALTO, Calif., July 22, 2002--Southwall Technologies Inc. (NASDAQ:SWTX): Southwall Technologies Inc. (NASDAQ:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the automotive glass, electronic display and architectural markets, today reported financial results for the quarter ended June 30, 2002. Revenues for the second quarter of 2002 were $19.7 million, a decrease of $2.2 million, or 10 percent, from the $21.9 million achieved in the second quarter of 2001. Sequentially revenues increased 2 percent from $19.3 million in the first quarter of 2002. Automotive product sales were down by 29 percent from the second quarter of 2001. The decline was primarily due to less volume and lower average prices of products sold. Sales of electronic display products decreased 13 percent from the comparable quarter of 2001 primarily as a result of a decrease in Southwall's average sales prices for products used in flat screen CRT monitors, partially offset by higher sales of products used in LCD's and Plasma Display products. Sales of architectural products were up 27 percent from the same quarter of 2001 as a result of increased sales of Heat Mirror(R) products produced as a result of increased manufacturing capacity. Net income for the second quarter of 2002 was $1.4 million, or $0.15 per diluted share, compared to $1.2 million, or $0.15 per diluted share in the comparable period last year. The net income increase of 17 percent was the result of improved gross margins of 34 percent compared to 26 percent for the same period in 2001. Sequentially net income increased $0.2 million, or 17 percent, from $1.2 million in the first quarter of 2002. "I am pleased to report another quarter of positive earnings despite a softening of demand in the European automobile markets that use our solar control film in the windshields of cars", said Thomas G. Hood, Chief Executive Officer of Southwall Technologies. "Despite the 10 percent revenue reduction in the second quarter of 2002, net income increased as a result of continuing improved gross margins. We were able to improve our gross margins by lowering costs across the company and we continued to benefit from lower cost production from the Company's plant in Germany." "On July 8th, Southwall completed its follow-on public offering sale of 3.5 million shares of common stock, raising just under $15 million," reported Robert R. Freeman, Southwall Technologies Senior Vice President and Chief Financial Officer. "This has strengthened the Company's balance sheet, after a period of significant capital investment, and improved its liquidity during this economic slowdown. As a result of this additional capital, we expect to accelerate the repayment of certain debt this year and we look to put in place more competitively priced credit lines," concluded Mr. Freeman. Conference Call Information About Southwall Technologies Inc. Southwall Technologies (www.southwall.com) designs and produces technologically advanced thin film coatings that selectively absorb, reflect or transmit electromagnetic radiation. Southwall products are used in a number of architectural, automotive and electronic products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall exports advanced thin film coatings to over 25 countries around the world for use in products manufactured by such companies as Audi, BMW, DaimlerChrysler, Renault, Peugeot-Citroen, Volvo, Saint-Gobain Sekurit, Pilkington, and Mitsubishi Electric. This press release may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), 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 shipments to customers will be materially less than anticipated, that production costs at the Company's German facility, or elsewhere, will increase, that yields and throughputs will not be improved and production targets may not be met, that the building and automotive markets will soften, or that the Company will not repay debt or put in place more competitively priced credit lines, as described above, as well as risks associated with its failure to meet covenants under credit facilities and strains on the Company's liquidity. Further risks are detailed in the Company's filing with the Securities and Exchange Commission, including those set forth in the Company's most recent Form 10-K filed on April 1, 2002 and Form 10-Q, filed May 17, 2002. Announces Closing of Public Offering of Shares of Common Stock
PALO ALTO, Calif., July 8, 2002--Southwall Technologies Inc. (SWTX) announced the completion on June 8, 2002 of a follow-on public offering of 3,500,000 shares of its common stock at a price of $4.50 per share. The managing underwriters for the offering were Needham & Company, Inc., Adams, Harkness & Hill, Inc. and Wells Fargo Securities, LLC. All of the shares were sold by the company. The net proceeds to the company from the offering were approximately $14.8 million. Southwall designs and produces technologically advanced thin film coatings that selectively absorb, reflect or transmit electromagnetic radiation. Southwall products are used in a number of architectural, automotive and electronic products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. This press release may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), 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 are detailed in the Company's filings with the Securities and Exchange Commission, including those set forth in the Company's S-1, as amended, that was declared effective by the SEC on June 27, 2002. Announces Earnings for First Quarter
PALO ALTO, Calif., April 22, 2002--Southwall Technologies Inc. (Nasdaq:SWTX) Selected First Quarter Highlights Southwall generated revenues of $19.3 million in the first quarter
of 2002 compared to revenues of $17.7 million in the first quarter
of 2001. Southwall Technologies Inc. (Nasdaq:SWTX), a global developer, manufacturer and marketer of thin-film coatings for the automotive glass, electronic display and architectural markets today reported financial results for the quarter ended March 31, 2002. Revenues for the first quarter of 2002 were $19.3 million, an increase of $1.5 million, or 9 percent, from the $17.7 million in the first quarter of 2001. Sequentially revenues declined 6 percent from $20.5 million in the fourth quarter of 2001. Automotive product sales were down by 12 percent from the first quarter of 2001. The decline was due to less sales volume and lower average prices of products sold. Electronic display product sales increased 15 percent from the comparable quarter of 2001. Southwall recorded $2.0 million of sales in the first quarter of 2002 of its newly introduced film for use in plasma display panels. Architectural product sales were up 24 percent from the same quarter of 2001. Net income for the first quarter of 2002 was $1.2 million, or $0.13 per diluted share, compared to a net loss of $1.1 million, or $0.15 per diluted share, in the comparable period last year. The year over year increase in net income was primarily due to higher operating margins as a result of yield improvement and cost reduction programs put in place in the Palo Alto and Tempe manufacturing facilities, and increased revenue from the Company's German operations. The increase in net income from these factors was partially offset by higher operating expenses. Sequentially net income declined $1.0 million, or 45%, from $2.2 million in the fourth quarter of 2001. While gross margins were comparable in the first quarter of 2002 and the fourth quarter of 2001, lower sales volume in the first quarter of 2002 resulted in this decrease in net income from the fourth quarter of 2001. Additionally, operating expenses were higher in the first quarter of 2002 than the fourth quarter of 2001 due to higher selling, general and administrative costs and increased research and development expenses. "The year over year improvement in financial performance is the direct result of improved operating performance in all of our manufacturing plants,'' stated Mr. Thomas G. Hood, President and Chief Executive Officer. ``We now have the production capacity to actively seek additional business in the automotive and architectural glass markets. The success of our plant in Germany has freed up our domestic production capacity and allowed us to accelerate our product development efforts and improve our ability to meet the delivery schedules of our customers. I am also pleased that our lower cost structure in our German plant allows us to be more competitive in the European marketplace for our automotive and architectural products. Additionally, increased sales of our electronic display products, particularly our sales of the recently introduced film for plasma display panels, is encouraging. At the same time we remain concerned about the overall softness in the world's economy. While we traditionally experience a slowdown in the first quarter, we expect this will continue into the next quarter.'' "We will continue to carefully monitor our costs and expenses during these uncertain times,'' said Mr. Robert R. Freeman, Senior Vice President and Chief Financial Officer, ``as we focus on maintaining profitable operations and generating positive cash flow. This has allowed us to improve our liquidity and leverage ratios and strengthen our balance sheet.'' About Southwall Technologies Inc. This press release may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), 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 shipments to customers will be materially less than anticipated, that yields and throughputs will not be improved and production targets may not be met, or that the Company's automotive, electronic display or architectural markets will soften, as well as risks associated with its failure to meet covenants under credit facilities and strains on the Company's liquidity. Further risks are detailed in the Company's filing with the Securities and Exchange Commission, including those set forth in the Company's most recent Form 10-K filed on April 1, 2002. Announces Results for the Year 2001
PALO ALTO, Calif., March 4, 2002--Southwall Technologies Inc. (Nasdaq:SWTX), a leading developer, manufacturer and marketer of thin-film coatings for the automotive glass, electronic display and residential and commercial building glass markets today reported financial results for the fourth quarter and year ended December 31, 2001. Revenues for the fourth quarter of 2001 were $20.5 million, down 2.4 percent from the $21.0 million recorded in the fourth quarter of 2000. Sequentially, revenues declined $2.3 million, or 10.1 percent, from $22.8 million in the third quarter of 2001. Net income for the fourth quarter of 2001 was $2.2 million, or $0.25 per diluted share, compared to a net loss of $1.3 million, or $0.17 per diluted share in the comparable period last year. The year over year increase in net income was primarily due to higher operating margins as a result of yield improvement and cost reduction programs put in place in the Palo Alto and Tempe manufacturing facilities, and revenue from the Company's plant in Germany. As a result of the decline in revenues from the third quarter of 2001, net income in the fourth quarter decreased sequentially by $0.2 million or 8.3%, from net income of $2.4 million in the third quarter of 2001. For the year ending December 31, 2001, Southwall recorded revenues of $83.0 million, a decline of $2.3 million, or 2.7% from the $85.3 million in revenues in 2000. The Company experienced a significant decline in the sale of anti-reflective film to the computer display markets, primarily as a result of the worldwide slowdown in computer sales in 2001. This decline was offset largely by significant increases in sales of solar control film for use in the automotive industry in Europe, and of similar solar control film for the residential and commercial glass industry. Southwall returned to profitability in 2001, recording net income of $4.6 million compared to a net loss of $6.2 million in 2000. Earnings per diluted share in 2001 were $0.57 compared to a loss of $0.81 per share in 2000. "While revenues declined $2.3 million in 2001, we were able to reduce cost of sales by $9.0 million, resulting in an improvement in gross margin of $6.7 million,'' reported Mr. Robert R. Freeman, Southwall's Senior Vice President and Chief Financial Officer. ``The Company also benefited from reduced operating expenses of $2.0 million, and an increase in other income, including sublease income and foreign currency gains, of $1.6 million, resulting in net income increasing $10.8 million for 2001.'' "We are very pleased with our fourth quarter and with the year as a whole,'' stated Mr. Thomas G. Hood, President and Chief Executive Officer. ``Southwall has performed an impressive turnaround from 2000, and the employees should be very proud of this accomplishment. This improvement in performance is the result of many factors, including tighter cost controls, more efficient manufacturing in the U.S., and increased revenue from its plant in Germany.'' "During the fourth quarter the Company continued to generate positive operating cash flow,'' noted Mr. Freeman, ``allowing it to further reduce payables and the Company's line of credit balance. Since the beginning of the 2001 fiscal year through December 31, 2001, the Company reduced its payables and borrowings against its line of credit by $12.3 million. The Company also reduced its term debt by another $3.6 million during that period. Combined with an increase of $6.3 million in equity arising from 2001 earnings and proceeds from sale of stock, Southwall's balance sheet improved during 2001. Cash and cash equivalents at December 31, 2001 were $3.4 million.'' Conference Call Information When: Thursday March 7, 2002 About Southwall Technologies Inc. This press release may contain forward-looking statements (as that term is defined in the Private Securities Litigation Reform Act of 1995), 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 shipments to customers will be materially less than anticipated, that yields and throughputs will not be improved and production targets may not be met, or that the building and automotive markets will soften, as well as risks associated with its failure to meet covenants under credit facilities and strains on the Company's liquidity. Further risks are detailed in the Company's filing with the Securities and Exchange Commission, including those set forth in the Company's most recent Form 10-Q. |