Attached files
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| 8-K - SOUTHWALL TECHNOLOGIES INC 8-K 3-28-2011 - SOUTHWALL TECHNOLOGIES INC /DE/ | form8-k.htm |
Exhibit 99.1
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Contact:
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Kathy Taylor
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Southwall Technologies Inc.
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Phone: (650) 798-1200
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Southwall Announces 2010 Fourth Quarter and Full Year Results
PALO ALTO, Calif.--(BUSINESS WIRE)--March 28, 2011--Southwall Technologies Inc. (OTCQB: SWTXD), an energy efficiency company that develops and manufactures high-performance films and glass products that save energy and reduce carbon emissions in buildings, homes and cars, announced fourth quarter 2010 revenue of $10.5 million, an increase of 22% as compared to the fourth quarter of 2009, reflecting stabilizing markets for our products. Full year 2010 revenue was $45 million, a 40% increase over 2009. The full-year revenue increase was primarily due to growth in the automotive and window film markets, as well as the addition of our glass segment resulting from the acquisition of a controlling interest in our insulating glass joint venture.
Net income before the Series A Preferred Dividend and fully diluted earnings per share for the fourth quarter of 2010 were $4.7 million and $0.63, respectively, as compared with net income before the Series A Preferred Dividend of $1.2 million and fully diluted earnings per share of $0.16 in the fourth quarter of 2009. Operating margins were lower in the fourth quarter of 2010 due to losses from our glass business and lower gross margins from automotive and architectural products. These lower margins were more than offset by the one-time reversal of a valuation allowance on deferred tax assets in the quarter. Operating income in 2010 was $6.3 million compared to $3.5 million in 2009 due to higher sales and improved operational efficiencies. These more than offset expenses attributed to the acquisitions of a controlling interest in Southwall Insulating Glass, LLC and of Crown Operations, Ltd.
“We are pleased with the 2010 performance that has enabled continued investment in long-term growth initiatives”, said Dennis Capovilla, president and chief executive officer. “The acquisition of Crown Operations and controlling interest in our joint venture expands our capabilities beyond film, moves us closer to the customer, and makes it easier for customers to integrate the performance of our core film technologies into their products. In an environment of increasing fuel costs and growing awareness of climate change, we believe that customers will increasingly turn to energy efficiency solutions such as ours to meet their energy savings and emission reduction goals.”
About Southwall Technologies Inc.
Southwall Technologies is the leading innovator of energy-saving films and glass products that dramatically improve the energy efficiency of buildings, homes and cars. Southwall is an ISO 9001/14001-certified manufacturer with customers in over 25 countries around the world.
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 2011 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, 2009, filed on March 25, 2010.
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SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
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Three months ended
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Twelve months ended
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December 31,
2010 |
December 31,
2009 |
December 31,
2010 |
December 31,
2009 |
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Net revenues
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$ | 10,548 | $ | 8,673 | $ | 45,017 | $ | 32,103 | ||||||||
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Cost of revenues
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6,413 | 4,150 | 24,962 | 17,704 | ||||||||||||
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Gross profit
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4,135 | 4,523 | 20,055 | 14,399 | ||||||||||||
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Operating expenses:
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Research & development
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1,124 | 756 | 3,733 | 2,874 | ||||||||||||
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Selling, general and administrative
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2,972 | 2,227 | 10,010 | 8,037 | ||||||||||||
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Restructuring recoveries
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- | (56 | ) | - | (56 | ) | ||||||||||
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Total operating expenses
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4,096 | 2,927 | 13,743 | 10,855 | ||||||||||||
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Income from operations
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39 | 1,596 | 6,312 | 3,544 | ||||||||||||
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Interest expense, net
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(69 | ) | (78 | ) | (295 | ) | (570 | ) | ||||||||
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Other income (expense), net
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(102 | ) | (367 | ) | 102 | 2,844 | ||||||||||
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Income (loss) before provision for (benefit from) income taxes
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(132 | ) | 1,151 | 6,119 | 5,818 | |||||||||||
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Provision for (benefit from) income taxes
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(4,637 | ) | (20 | ) | (3,678 | ) | 154 | |||||||||
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Net income
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4,505 | 1,171 | 9,797 | 5,664 | ||||||||||||
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Net loss attributable to noncontrolling interest
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(182 | ) | - | (334 | ) | - | ||||||||||
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Net income attributable to Southwall
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4,687 | 1,171 | 10,131 | 5,664 | ||||||||||||
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Deemed dividend on preferred stock
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123 | 123 | 489 | 489 | ||||||||||||
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Net income attributable to common stockholders
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$ | 4,564 | $ | 1,048 | $ | 9,642 | $ | 5,175 | ||||||||
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Net income per share:
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Basic
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$ | 0.79 | $ | 0.18 | $ | 1.67 | $ | 0.90 | ||||||||
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Diluted
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$ | 0.63 | $ | 0.16 | $ | 1.39 | $ | 0.82 | ||||||||
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Weighted average shares used in computing net income per share :
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Basic
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5,782 | 5,755 | 5,769 | 5,746 | ||||||||||||
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Diluted
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7,433 | 7,138 | 7,274 | 6,897 | ||||||||||||
SOUTHWALL TECHNOLOGIES INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
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December 31,
2010 |
December 31,
2009 |
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ASSETS
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Current assets:
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Cash and cash equivalents
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$ | 13,776 | $ | 12,454 | ||||
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Accounts receivable, net
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5,902 | 5,300 | ||||||
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Inventories, net
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5,536 | 4,522 | ||||||
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Prepaid income taxes
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2,017 | - | ||||||
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Other current assets
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1,901 | 1,479 | ||||||
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Total current assets
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29,132 | 23,755 | ||||||
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Property, plant and equipment, net
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15,235 | 14,393 | ||||||
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Goodwill
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1,854 | - | ||||||
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Intangible assets
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901 | - | ||||||
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Deferred tax and other assets
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3,468 | 156 | ||||||
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Total assets
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$ | 50,590 | $ | 38,304 | ||||
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LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY
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Current liabilities:
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Current portion of long term debt and capital leases
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$ | 1,024 | $ | 808 | ||||
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Accounts payable
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2,628 | 1,258 | ||||||
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Accrued compensation
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1,742 | 1,395 | ||||||
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Other accrued liabilities
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4,764 | 4,274 | ||||||
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Total current liabilities
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10,158 | 7,735 | ||||||
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Term debt and capital leases
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3,511 | 3,358 | ||||||
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Other long term liabilities
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112 | 58 | ||||||
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Total liabilities
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13,781 | 11,151 | ||||||
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Series A, convertible preferred stock
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4,810 | 4,810 | ||||||
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Stockholders' equity:
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Common stock
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29 | 29 | ||||||
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Capital in excess of par value
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78,759 | 78,291 | ||||||
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Accumulated other comprehensive income:
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Translation gain on subsidiary
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3,466 | 4,382 | ||||||
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Accumulated deficit
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(50,228 | ) | (60,359 | ) | ||||
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Total Southwall stockholders' equity
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32,026 | 22,343 | ||||||
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Noncontrolling interest
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(27 | ) | - | |||||
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Total equity
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31,999 | 22,343 | ||||||
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Total liabilities, preferred stock
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and stockholders' equity
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$ | 50,590 | $ | 38,304 | ||||
SOUTHWALL TECHNOLOGIES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
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Years ended
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December 31,
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December 31,
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2010
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2009
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Cash flows from operating activities:
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Net income
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$ | 9,797 | $ | 5,664 | ||||
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Adjustments to reconcile net income to net cash provided by operating activities:
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Gain on acquisition of controlling interest in SIG
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(706 | ) | - | |||||
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Gain on settlement of liability
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- | (2,359 | ) | |||||
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Deferred income tax
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(4,414 | ) | (38 | ) | ||||
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Net excess tax benefits from stock options
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(17 | ) | - | |||||
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(Gain) loss on disposal of property, plant and equipment
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33 | (4 | ) | |||||
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Depreciation and amortization
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2,813 | 2,596 | ||||||
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Stock-based compensation charge
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628 | 403 | ||||||
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(Provision for) recovery of inventory reserves
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(300 | ) | 107 | |||||
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(Provision for) recovery of returns and allowances reserves
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594 | (784 | ) | |||||
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Non-cash effect of acquisition of controlling interest in SIG
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(232 | ) | - | |||||
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Changes in operating assets and liabilities:
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Accounts receivable, net
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657 | (2,230 | ) | |||||
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Inventories, net
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(622 | ) | 1,354 | |||||
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Other current and non-current assets
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(2,030 | ) | (20 | ) | ||||
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Accounts payable and accrued liabilities
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(595 | ) | 539 | |||||
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Net cash provided by operating activities
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5,606 | 5,228 | ||||||
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Cash flows from investing activities:
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Acquisition of assets of Crown Operations International
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(3,302 | ) | - | |||||
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Acquisition of controlling interest in SIG, net of cash acquired
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(195 | ) | - | |||||
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Restricted cash
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- | 261 | ||||||
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Proceeds from sale of property, plant and equipment
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- | 34 | ||||||
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Expenditures for property, plant and equipment
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(1,888 | ) | (1,725 | ) | ||||
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Net cash used in investing activities
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(5,385 | ) | (1,430 | ) | ||||
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Cash flows from financing activities:
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Proceeds from exercise of stock options
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273 | 54 | ||||||
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Net excess tax benefits from stock options
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17 | - | ||||||
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Borrowings from term loan
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1,250 | - | ||||||
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Investment credit in Germany
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379 | 221 | ||||||
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Repayments of term debt and capital leases
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(921 | ) | (2,242 | ) | ||||
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Net cash provided by (used in) financing activities
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998 | (1,967 | ) | |||||
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Effect of foreign exchange rate changes on cash
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103 | (145 | ) | |||||
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Net increase in cash and cash equivalents
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1,322 | 1,686 | ||||||
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Cash and cash equivalents, beginning of year
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12,454 | 10,768 | ||||||
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Cash and cash equivalents, end of year
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$ | 13,776 | $ | 12,454 | ||||
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Supplemental cash flows disclosures:
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Interest paid
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$ | 309 | $ | 508 | ||||
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Income taxes paid
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$ | 2,412 | $ | 717 | ||||
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Supplemental schedule of non-cash investing and financing activities:
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Dividends accrued
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$ | 489 | $ | 489 | ||||
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Acquisition of interest in SIG
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$ | 39 | - | |||||
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Abandonment of leased asset and cancellation of lease with Sound Solutions
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$ | 411 | - | |||||
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Deposits applied to acquisition of property, plant and equipment
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- | 210 | ||||||
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Property, plant and equipment acquired through capital leases
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$ | 270 | $ | 88 | ||||