Southwall Signs Chinese Supply And Manufacturing Agreement

Ltd. of China. Under the contract Southwall agreed to supply Xinyi with Southwall’s automotive and architectural XIR® films products through September 2006. During the term of the agreement, Southwall will license Xinyi to manufacture laminated glass units using XIR® film. Southwall has agreed that it will not appoint other companies to manufacture laminated glass units using XIR® films in Peoples Republic of China, including Hong Kong and Macau, during the term of the agreement, so long as Xinyi purchases minimum annual amounts of XIR film. Based on current pricing and assuming Xinyi purchases the minimum required amounts, sales volumes of Southwall products shipped to Xinyi over the life of the contract are expected to grow significantly year-to-year, and totaling at least $6.5 million over the contract term.

The XIR®-based glass products manufactured under the new agreement were officially launched by Xinyi on January 6, 2003, at the opening of their new tempering facility in Shenzhen, China.

“This is our first agreement with respect to our automotive XIR® films in mainland China, and we are very pleased to be doing business with Xinyi,” stated Thomas G. Hood, President and CEO of Southwall. “Xinyi will not only export the glass units, but also sell them domestically. China has a burgeoning passenger vehicle market that has shown astounding growth this year, with sales numbers running at a 40% increase over 2001 numbers. Presently 95% of the passenger cars sold in China are built there.”

“Our high performance XIR® products block near infrared and ultraviolet energy,” Hood continued, “while allowing visible light to pass through. Consumers with XIR® films in their autos and residences will enjoy clear unobstructed views, with less sun damage while also receiving the benefits of comfort and energy savings.”