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Southwall Technologies: first quarter 1998 results

14 May 1998: US-based Southwall Technologies Inc. recently reported a net loss of US$ 3.38 million for the first quarter ended 29 March 1998, compared with net income of US$ 766,000 for the same perio…

14 May 1998: US-based Southwall Technologies Inc. recently reported a net loss of US$ 3.38 million for the first quarter ended 29 March 1998, compared with net income of US$ 766,000 for the same period a year earlier. Revenues decreased by 4% to US$ 10.42 million in the current first quarter from US$ 10.86 million for the same period a year earlier. The company said the loss was primarily due to process and machine problems at the new Tempe, Arizona facility. There were also yield problems on the company“s XIR films for automotive in Palo Alto, California. Additionally, there were one time charges of approximately US$ 900,000. The company said that higher costs were mostly due to lower anti-reflective film yields from the new Tempe facility which were less than half the level expected, contributing to an increase in average cost of the product of approximately 35%. In addition, average production yields on Heat Mirror XIR films were approximately 16% lower than in the first quarter 1997, increasing labour and material costs and using additional machine time to meet customer demand. “We are disappointed to report a loss for the first quarter of 1998,” said Thomas G. Hood, president and chief executive officer. “The Company experienced equipment and process problems that contributed to lower yields on anti-reflective film produced on the new production machine in the Tempe, Arizona facility. We have solutions in place for the most serious problem discovered during the quarter, and other problems are under control, with improvements being implemented during the coming months. During the second quarter we estimate that the Tempe plant will produce approximately 85% of its potential. We remain confident that we will solve the issues inhibiting our growth and achieve our full production and yield targets in the next three to six months.”

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