EX-99.1 CHARTER 2 exhibit991.htm EXHIBIT 99.1 exhibit991.htm
   
 
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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