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Southwall Announces 49 Percent Sequential Increase in Fourth-Quarter Fiscal 2004 Earnings

Published on 2005-02-28. Author : SpecialChem

PALO ALTO, Calif. -- Southwall Technologies Inc. (OTCBB:SWTX - News) released its financial results for the fourth quarter and fiscal 2004 following the close of market on February 24, 2005.

Selected Fourth Quarter Financial Highlights

  • Fourth quarter revenues of $16.0 million increased 47% from $10.9 million in the fourth quarter of 2003 and improved 1% from $15.9 million in the third quarter of 2004.
  • Fourth quarter 2004 gross margin was 42%, a significant improvement from the fourth quarter 2003 of negative 2% and a 6 point improvement over third quarter gross margin of 36%.
  • Fourth quarter 2004 net income of $3.2 million improved $19.3 million over the fourth quarter of 2003 and improved $1.0 million, or 49% from the third quarter of 2004.
  • Fourth quarter 2004 net income of $3.2 million was $0.10 per fully diluted share, compared to a net loss of $1.29 per fully diluted share in the fourth quarter of 2003 and a net income of $2.1 million, or $0.07 per fully diluted share, for the third quarter of 2004.

Selected Fiscal 2004 Financial Highlights

  • Annual revenues increased 8% from $53.3 million in 2003 to $57.6 million in 2004.
  • Annual gross margins improved from 14% in 2003 to 36% in 2004.
  • Annual net loss improved $42.1 million from a $42.3 million loss in 2003 to a net loss of $0.2 million in 2004.

"I'm extremely pleased with Southwall's operational and financial performance during the fourth quarter of 2004," said Thomas G. Hood, Southwall's president and chief executive officer. "Our revenue growth and profitability in the fourth quarter represents a satisfying conclusion to our 2004 turnaround and a significant improvement over fiscal 2003. As we continue to demonstrate improved manufacturing and financial effectiveness, we can now increase our focus on Southwall's longer term growth plans."

During the fourth quarter of 2004, Southwall issued an aggregate of approximately 13,783,000 shares of its common stock upon exercise of warrants held by Needham & Company, Inc. and its affiliates and Dolphin Direct Equity Partners. In addition, on December 31, 2004, Needham and its affiliates and Dolphin converted convertible notes in the aggregate principal amount of $4.5 million held by them into approximately 4,892,500 shares of Southwall's Series A 10% cumulative preferred stock. These warrants and convertible notes were issued as part of the Company's financing activities that began in late 2003 and it is expected that these transactions conclude the accounting for the financing.

About Southwall Technologies Inc.

Southwall Technologies Inc. designs and produces thin film coatings that selectively absorb, reflect or transmit light. Southwall products are used in a number of automotive, electronic display and architectural glass products to enhance optical and thermal performance characteristics, improve user comfort and reduce energy costs. Southwall is an ISO 9001:2000-certified manufacturer and sells advanced thin film coatings to over 25 countries around the world. Southwall's customers include Audi, BMW, DaimlerChrysler, Hewlett-Packard, Mitsubishi Electric, Mitsui Chemicals, 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 2005 or thereafter, that the Company will suffer a decline in manufacturing or financial effectiveness, 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, 2003, filed on April 14, 2004, as amended by Form 10-K/A filed on May 7, 2004, and the Quarterly Reports on Form 10-Q for the fiscal quarter ended March 28, 2004, filed on May 17, 2004, for the fiscal quarter ended June 27, 2004, filed on August 11, 2004, and for the fiscal quarter ended September 26, 2004, filed on November 8, 2004.

Source: Southwall Technologies Inc.


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