Southwall announces earnings for first quarter

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, compared to a net loss of $1.1 million, 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 percent, 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.