**SECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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FORM 10-Q/A

**(MARK ONE)**

**x**                              QUARTERLYREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 [NO FEE REQUIRED]

**Forthe quarterly period ended June 27, 2004**

**o**                                 TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934 [NO FEE REQUIRED]

**Forthe transition periodfrom               to               **

**CommissionFile Number: 0-15930**

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SOUTHWALL TECHNOLOGIES INC.

(Exact name of registrantas specified in its charter)

| **DELAWARE**                                                     | **94-2551470**                           |
|------------------------------------------------------------------|------------------------------------------|
| (State or other  jurisdiction of  incorporation or organization) | (I.R.S. Employer Identification  Number) |
| **3975 East Bayshore Road, Palo Alto, California**               | **94303**                                |
| (Address of  principal executive offices)                        | (Zip Code)                               |

 

Registrant’s telephonenumber, including area code: **(650) 962-9111**

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Indicate by check mark whetherthe registrant (1) has filed all reports required to be filed by Section 13or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to filesuch reports), and (2) has been subject to such filing requirements forthe past 90 days. Yes x  No o

Indicate by check markwhether the registrant is an accelerated filer (as defined in Rule 12b-2of the Exchange Act). Yes o  No x

As of August 19,2004, there were 12,549,992 shares of the Registrant’s Common Stock outstanding.

 

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**EXPLANATORYNOTE**

This Form 10-Q/Aamends and restates Item 4—Controls and Procedures of the Quarterly Report on Form 10-Qfor Southwall Technologies Inc. (the “Company”) for the quarterly period ended June 27,2004 as filed with the Securities and Exchange Commission on August 11,2004 (the “Original Filing”). The Company is hereby amending and restating Item4—Controls and Procedures in the Original Filing to include language explainingthat the Company’s controls and procedures provide reasonable assurance thatinformation required to be disclosed by the Company in the reports the Companyfiles or submits under the Securities Exchange Act of 1934 is recorded,processed, summarized and reported within the time periods specified by theSecurities and Exchange Commission. The amended and restated Item 4 reads asfollows:

**Item 4—Controls and Procedures**

(a)          *Evaluationof Disclosure Controls and Procedures*.   As of June 27,2004, the Company carried out an evaluation, under the supervision and with theparticipation of the Company’s management, including the Chief ExecutiveOfficer and the Chief Financial Officer of the Company, of the effectiveness ofthe design and operation of the Company’s disclosure controls and procedures asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e). Based uponthat evaluation, the Chief Executive Officer and the Chief Financial Officer ofthe Company concluded that as of the date of such evaluation, the Company’sdisclosure controls and procedures were (1) designed to ensure thatmaterial information relating to the Company, including its consolidatedsubsidiaries, is made known to the Company’s Chief Executive Officer and ChiefFinancial Officer by others within those entities, particularly during theperiod in which this report was being prepared and (2) effective, in thatthey provide reasonable assurance that information required to be disclosed bythe Company in the reports the Company files or submits under the SecuritiesExchange Act is recorded, processed, summarized and reported within the timeperiods specified by the Securities and Exchange Commission’s rules andforms, particularly during the period for which this quarterly report has beenprepared. The Company notes, however, that the design of any system of controlsis based in part upon certain assumptions about the likelihood of futureevents, and that any controls and procedures, no matter how well designed and operated,can provide only reasonable assurance of achieving their objectives. As wereported in our Form 10-K/A for the year ended December 31, 2003, inconnection with the audit of our financial statements for that year,PricewaterhouseCoopers LLP identified significant deficiencies, whichrepresented a material weakness, caused by a reduction in force that wasinitiated in the second and fourth quarters of 2003 and related to theinadequacy of review and supervision of the preparation of accounting recordsand the untimely reconciliation of certain accounts. Although we reported thismaterial weakness in our Form 10-K/A under “Changes in internal controlsover financial reporting,” the material weakness also resulted in theineffectiveness, as of December 31, 2003, of our disclosure controls andprocedures. See the discussion below as to improvements we have made since December 31,2003 in our internal controls.

(b)         *Changes ininternal controls over financial reporting*.   As described insection (a) above, we reported a material weakness as of December 31,2003. The Company has taken steps to attempt to improve its internal controlsand its control environment. The Company has hired a new Corporate Controller,a new Director of Financial Planning and Analysis, a new Senior CostAccountant, and a new Senior Accountant for the Company’s Germany subsidiary;appointed a new Plant Manager for the Company’s U.S. manufacturing operations;initiated re-training of personnel on the correct use of the Company’s new ERPsystem; initiated procedures to attempt to ensure all accounts are reconciledand reviewed on a timely basis; and, is in the process of documenting itsprocedures and reviewing its internal controls to ensure compliance under 

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section 404 of theSarbanes-Oxley Act. The Company believes the corrective steps described hereinhave enabled management to conclude that the internal controls over itsfinancial reporting are effective. The Company will continue its efforts toidentify, assess and correct any additional material weaknesses in its internalcontrols.

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**PART II—OTHER INFORMATION**

**Item 6—Exhibits and Reports on Form 8-K**

(a)          Exhibits
| Exhibit  Number | ** ** | **Item**                                                                                                                                                          |
|-----------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 31.1            |       | Certification of  Principal Executive Officer pursuant to Section 302 of the  Sarbanes-Oxley Act of 2002.                                                    |
| 31.2            |       | Certification of Principal Financial Officer  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                     |
| 32.1            |       | Certification of Principal Executive Officer  pursuant to 18 U.S.C Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2            |       | Certification of Principal Financial Officer  pursuant to 18 U.S.C Section 1350, as adopted pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002. |

 

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**SIGNATURES**

Pursuant to therequirements of the Securities Exchange Act of 1934, the registrant has dulycaused this report to be signed on its behalf by the undersigned thereunto dulyauthorized.
| Dated:   September 7, 2004 |   |                                         |
|-------------------------------------------|--------|----------------------------------------------|
|                                      |   | **Southwall  Technologies Inc.**             |
|                                      | By:    | /s/ Thomas G. Hood                           |
|                                      |   | Thomas G. Hood                               |
| * *                                  |   | *President and Chief Executive Officer*      |
|                                      | By:    | /s/ Maury Austin                             |
|                                      |   | Maury Austin                                 |
| * *                                  |   | *Vice President and Chief Financial Officer* |

 

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