Revenues for the third quarter of 2001 were $22.8 million, up sequentially $0.9 million, or 4.1 percent, from the $21.9 million achieved in the second quarter of 2001.Revenue was down 13.6 percent from the $26.4 million recorded in the third quarter of 2000. Automotive products increased by 15.5 percent over the second quarter of 2001, and increased by 84.4 percent from the third quarter of 2000. Architectural products were up 22.2 percent from the second quarter of 2001, but down 9.9 percent from the same quarter of 2000. Display products declined 16.7 percent from the second quarter of 2001, and were down 52.3 percent from the same quarter last year. Display product revenues continue to be depressed by the worldwide decline of sales in the computer industry, which began in late 2000.
Net income for the third quarter of 2001 was $2.4 million, or $0.28 per diluted share, compared to a net loss of $1.5 million, or $0.20 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, revenue from the Company’s German operations and a reduction in general and administrative expenses. As a result of improved margins and lower operating expenses, net income increased sequentially $1.2 million to $2.4 million, or 100 percent, from net income of $1.2 million in the second quarter of 2001.
“This very positive financial performance in our third quarter is the direct result of improved operating performance in all of our plants, combined with a strong demand for our energy products ”, stated Mr. Thomas G. Hood, President and Chief Executive Officer. “Our energy product lines, which service the building and automotive glass markets, have shown consistent strength during 2001, with third quarter revenue to the automotive glass market showing dramatic improvement over the same period in 2000. However, the computer display business continues to be weak due to the worldwide slowdown in sales by the personal computer industry. Throughout the quarter, we enjoyed increased output from our new Dresden Plant, which has improved our ability to meet the product demands of our European automotive glass customers. We remain concerned about the overall softness in the world’s economy and the ongoing malaise in the display business. Additionally, given the current economic environment, when coupled with the Company’s normal seasonality, we expect a decline in revenues for the fourth quarter. However, with continuing improvements in operating performance, we expect the fourth quarter will be profitable.”
“During the third quarter the Company continued to generate positive operating cash flow,” reported Robert R. Freeman, Southwall’s Senior Vice President and Chief Financial Officer, “allowing it to further reduce payables and the Company’s line of credit balance. Since the beginning of the fiscal year, the Company has reduced its payables and borrowings against its line of credit by $7.6 million. In addition, the Company has continued to build cash reserves to meet its scheduled principal payments in the fourth quarter on long-term debt. Cash and cash equivalents at September 30, 2001 was $3.1 million.”