Westinghouse Solar Announces Second Quarter 2012 Results

Focus on Completing Merger With CBD, Collaboration and Diversification Efforts


CAMPBELL, Calif., Aug. 14, 2012 (GLOBE NEWSWIRE) -- Westinghouse Solar, Inc. (Nasdaq:WEST), a designer and manufacturer of solar power systems, today announced its second quarter 2012 financial results.

Westinghouse Solar CEO Margaret Randazzo commented, "The focus this quarter has been on our work toward completing the merger with CBD Energy Limited, and setting the framework for future growth. We managed our costs tightly, reducing our total operating expenses to $2.1 million in the second quarter, compared to $2.7 million in the first quarter of 2012. Settling the patent litigation with ZEP was also a priority. Our collaborative efforts with CBD brought a key international distribution opportunity for Westinghouse Solar during the quarter - a 5 MW order of solar panels from Harvey Norman in Australia. Domestically, these efforts resulted in a win for a design, engineering, procurement and construct (EPC) contract to build a solar system for a school in New Jersey. We are also leveraging our sales channels by partnering with distributors like Comtec, who have embraced the plug-and-play simplicity of the Westinghouse Solar Instant Connect(TM) AC panels. Recognizing the economic headwinds in our industry, particularly in the U.S., we are focusing our efforts on locations without tariffs, and looking for ways to diversify to sustain growth and mitigate volatility in the future."

Second Quarter Financial Results

Revenue for the quarter ended June 30, 2012 was $1.2 million, compared to $2.8 million in the second quarter of 2011, and $2.4 million in the first quarter of 2012. The year-over-year and sequential declines in revenue were due to decreases in sales to strategic partners and the overall soft solar market conditions following punitive tariff announcements in the U.S. related to solar modules manufactured in China. The year-over-year decline in revenue was also attributable to lower average selling prices. For the first two quarters of 2012, revenue was $3.6 million compared to $4.8 million in the comparable 2011 period, a decrease of 23.6%.  

Gross loss for the second quarter of 2012 was $34,000 or 2.8% of revenue, compared to gross profit of $194,000 or 7.0% of revenue for the second quarter of 2011, and $242,000 or 10.0% of revenue for the first quarter of 2012. The year-over-year decline in gross margin was driven by year-to-date impact of imposed tariffs on solar modules manufactured in China and lower average selling prices, partially offset by a decline in panel and component costs. Excluding the tariff expense of $86,000, gross profit would have been $52,000 or 4.3% of revenue. 

Total operating expenses in the second quarter of 2012 were $2.1 million, compared to $2.2 million for the same period last year and $2.7 million for the first quarter of 2012. The year-over-year decrease is due to lower sales and marketing costs of $233,000 partially offset by higher general and administrative expenses of $200,000. The year-over-year decrease in sales and marketing costs reflects decreased expenditures for advertising and trade shows, travel costs and payroll and commission expense. The year-over-year increase in general and administrative expenses was due to higher legal and professional fees related to the pending CBD merger transaction and recently settled patent litigation, partially offset by lower payroll costs. Compared to the first quarter of 2012, total operating expenses decreased $555,000 due to declines in general and administrative expense of $400,000 and sales and marketing expense of $156,000. The sequential decrease in general and administrative expenses was due to lower payroll costs and a decline in research and development expenditures, partially offset by higher professional fees related to the CBD merger. The sequential decrease in sales and marketing costs is due to lower payroll and commission costs and decreased expenditures for advertising, trade shows and travel costs. Stock-based compensation expense included in total operating expenses was $145,000 for the second quarter of 2012, compared to $189,000 for the same period of 2011 and $296,000 in the first quarter of 2012. Cash operating expenses (adjusted to exclude stock-based compensation expense and depreciation and amortization expense) were $1.9 million for the second quarters of both 2012 and 2011, and $2.3 million for the first quarter of 2012.

Net loss from continuing operations was $2.2 million in the second quarter of 2012, or $0.12 per share, compared to a net loss of $1.3 million, or $0.11 per share in the same period last year, and a net loss of $2.9 million in the first quarter of 2012, or $0.17 per share. The net loss included favorable non-cash adjustments to the fair value of common stock warrants of $10,000 and $668,000 for the second quarters of 2012 and 2011, respectively, and an unfavorable non-cash adjustment to the fair value of common stock warrants of $437,000 for the first quarter of 2012. Excluding the impact of the common stock warrant fair value adjustments in all periods, net loss from continuing operations for the second quarter of 2012 was $2.2 million or $0.12 per share, compared to a net loss of $2.0 million or $0.17 per share, for the second quarter of 2011, and a net loss of $2.4 million or $0.15 per share, for the first quarter of 2012.

The loss from discontinued operations was $3,000 in the second quarter of 2012, compared to a gain of $10,000 in the same period last year, and a gain of $26,000 in the first quarter of 2012. For the first and second quarters of 2012, the net loss attributable to common stockholders also included non-cash preferred stock dividends of $21,000.

Net loss including discontinued operations and the preferred stock dividend was $2.2 million or $0.12 per share in the second quarter of 2012, compared $2.9 million or $0.17 per share in the first quarter of 2012. Net loss including discontinued operations was $1.3 million or $0.11 per share in the second quarter last year.

Cash and cash equivalents at June 30, 2012 were $193,000. There was a $94,000 balance drawn on the Company's $750,000 line of credit at the end of the quarter. Common shares outstanding as of June 30, 2012 were 19.2 million compared to 16.0 million at December 31, 2011, and 18.8 million at March 31, 2012.

The number of employees at the end of the second quarter of 2012 was 20 full time equivalents, compared to 31 at June 30, 2011 and 23 at March 31, 2012.

About Westinghouse Solar: (Nasdaq:WEST)

Westinghouse Solar is a designer and manufacturer of solar power systems. In 2007, Westinghouse Solar pioneered the concept of integrating the racking, wiring and grounding directly into the solar panel. This revolutionary solar panel, originally branded "Andalay", quickly won industry acclaim. In 2009, the company again broke new ground with the first integrated AC solar panel, reducing the number of components for a rooftop solar installation by approximately 80 percent and lowering labor costs by approximately 50 percent. This first AC panel, which won the 2009 Popular Mechanics Breakthrough Award, has become the industry's most widely installed AC solar panel. Award-winning Westinghouse Solar Power Systems provide the best combination of safety, performance and reliability, while backed by the proven quality of the Westinghouse name. For more information on Westinghouse Solar, visit www.westinghousesolar.com.

The Westinghouse Solar logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7708

About CBD Energy (ASX:CBD)

CBD is Australia's emerging leader in renewable energy, enabling the efficient use of renewable energy for utilities, businesses and households through operations in wind, solar, energy storage and engineering. It has become one of the largest non-utility suppliers and installers of solar energy generation equipment for both large- and domestic-scale operation in Australia. Utilizing its globally-competitive supply chain, CBD is also currently developing and profitably installing solar projects in Europe and Southeast Asia, both directly and through joint ventures.  For more information on CBD, visit http://www.cbdenergy.com.au/.

Forward-Looking And Cautionary Statements – Safe Harbor

This press release may contain forward-looking statements, including with respect to future sales, new products, and implementation and effects of the proposed business combination between Westinghouse Solar and CBD.  Those statements and statements made in this release that are not historical in nature, including those related to future revenue, revenue growth, gross margin, operating expense rates, achievement of cashflow and EBITDAS breakeven and profitability, product introductions and cost reductions in future periods, and anticipated outcomes in litigation, constitute forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as "expects," "projects," "plans," "will," "may," "anticipates," believes," "should," "intends," "estimates," and other words of similar meaning. These statements are based on current plans, estimates and projections, and, therefore, you should not place undue reliance on them. These statements are subject to risks and uncertainties that cannot be predicted or quantified, and CBD and Westinghouse Solar caution that actual results may differ materially from those expressed or implied by such forward-looking statements. These statements are subject to the following risks and uncertainties: difficulties, delays, unexpected costs or the inability to consummate the proposed merger between CBD and Westinghouse Solar and other transactions referred to in this communication and those described in the documents that Westinghouse Solar files with the U.S. Securities and Exchange Commission, as well as risks associated with the inherent uncertainty of future financial results, additional capital financing requirements, and development and introduction of new products by CBD, Westinghouse Solar or their respective competitors, uncertainties in the timing of availability and manufacturing volumes of products from suppliers, the effectiveness, profitability, and marketability of new products, the ability to protect and defend proprietary rights and information, the impact of current, pending, or future legislation, regulation and incentive programs on the solar power industry, the impact of competitive products or pricing, technological changes, the ability to identify and successfully acquire and grow distribution customers, and the effect of general economic and business conditions. All forward-looking statements included in this communication are made as of the date of this communication, and neither CBD nor Westinghouse Solar assumes any obligation to update any such forward-looking statements, whether as a result of new information, future events or otherwise.

Statement Regarding Additional Information That Will Become Available

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. The publication or distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, CBD, Westinghouse Solar and their respective affiliates disclaim any responsibility or liability for the violation of such restrictions by any person.

This communication is being made in respect of a proposed merger involving CBD and Westinghouse Solar. In connection with the proposed merger, CBD and Westinghouse Solar will file with the U.S. Securities and Exchange Commission (the "SEC") a Registration Statement on Form F-4 containing a proxy statement/prospectus, and each of CBD and Westinghouse Solar may file with the SEC other documents regarding the proposed merger. CBD will provide disclosure and arrange for solicitation of the votes of its shareholders in accordance with Australian regulations. Such documents are not currently available. BEFORE MAKING AN INVESTMENT OR VOTING DECISION, INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER FILED DOCUMENTS CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders may obtain a copy of the Registration Statement on Form F-4 containing a proxy statement/prospectus (when available) and all other documents filed with the SEC by CBD and Westinghouse Solar free of charge at the SEC's website at www.sec.gov. Investors and security holders may also obtain copies of these documents, free of charge, from Westinghouse Solar by directing a request to Westinghouse Solar, Attention: Margaret Randazzo, (408) 402-9400, or by going to Westinghouse Solar's website at www.westinghousesolar.com. Additionally, investors may obtain copies of these documents, free of charge, from CBD by going to CBD's website at www.cbdenergy.com.au/.

Participants in the Merger Solicitation

Westinghouse Solar and CBD, and their respective directors and executive officers, may be deemed to be participants in the solicitation of proxies in respect of the proposed merger and related matters. Information regarding Westinghouse Solar's directors and executive officers is contained in Westinghouse Solar's annual report on Form 10-K, filed with the SEC on March 16, 2012, and amendment on Form 10-K/A, filed with the SEC on March 26, 2012. Information regarding CBD's directors and executive officers is contained in CBD's statement on Schedule 13D, filed with the SEC on January 9, 2012 (as amended to date). Additional information regarding the interests of such potential participants will be included in the Registration Statement on Form F-4 containing a proxy statement/prospectus and the other relevant documents filed with the SEC (when available).  Investors can also obtain free copies of these documents from CBD and Westinghouse Solar using the contact information above.

Westinghouse Solar, Inc.
Condensed Consolidated Balance Sheets 
   
   
 June 30, 2012December 31,
 20122011
Assets  
Current assets  
Cash and cash equivalents $ 192,544 $ 1,346,777
Accounts receivable, net 573,552 1,096,580
Other receivables 467,401 469,469
Inventory, net 2,319,705 4,172,809
Prepaid expenses and other current assets, net 474,423 978,709
Assets of discontinued operations 17,296 87,455
Assets held for sale 15,570 18,293
Total current assets 4,060,491 8,170,092
Property and equipment, net 116,302 196,718
Other assets 1,546,427 955,570
Assets of discontinued operations - long term 200,000 209,913
Total assets $ 5,923,220 $ 9,532,293
Liabilities and Stockholders' Equity  
Current liabilities  
Accounts payable $ 3,100,461 $ 3,865,039
Accrued liabilities 725,191 428,813
Accrued warranty 294,036 217,812
Common stock warrant liability 10,123 317,490
Credit facility 94,077 92,266
Current portion of capital lease obligations 4,731 4,699
Current portion of long-term debt 95,067 283,252
Liabilities of discontinued operations - short term 1,117,999 1,308,820
Total current liabilities 5,441,685 6,518,191
   
Capital lease obligation, long-term 2,362 4,713
Long-term liabilities of discontinued operations --  10,200
Total liabilities 5,444,047 6,533,104
   
Commitments, contingencies and subsequent events (Notes 17 and 19)   
   
Stockholders' equity:  
Preferred stock $0.001 par value; 1,000,000 shares authorized; 2,273 shares issued and outstanding at June 30, 2012 and December 31, 2011 751,223 751,223
Common stock $0.001 par value; 100,000,000 shares authorized; 19,165,060 and 16,040,581 shares issued and outstanding at June 30, 2012 and December 31, 2011, respectively 19,165 16,041
Additional paid-in capital 75,250,830 72,683,781
Accumulated deficit (75,542,045) (70,451,856)
Total stockholders' equity 479,173 2,999,189
Total liabilities and stockholders' equity $ 5,923,220 $ 9,532,293
 
Westinghouse Solar, Inc.
Condensed Consolidated Statements of Operations
     
     
     
 Three Months Ended June 30, 2012Six Months Ended June 30, 2012
 2012201120122011
     
Net revenue $ 1,209,211 $ 2,757,729 $ 3,631,551 $ 4,752,091
Cost of sales 1,243,034 2,563,842 3,423,003 4,280,405
Gross profit (33,823) 193,887 208,548 471,686
Operating Expenses    
Sales and marketing 467,523 700,103 1,090,703 1,046,431
General and administrative 1,663,885 1,464,269 3,727,294 3,143,214
Total operating expenses 2,131,408 2,164,372 4,817,997 4,189,645
Loss from operations (2,165,231) (1,970,485) (4,609,449) (3,717,959)
Other income (expense)    
Interest income (expense), net (39,006) (35,148) (34,786) (57,849)
Adj to the Fair Value of Common Stock Warrants 10,303 668,041 (426,640) 1,130,989
Total other income (expense) (28,703) 632,893 (461,426) 1,073,140
Loss before provision for income taxes (2,193,934) (1,337,592) (5,070,875) (2,644,819)
Provision for income taxes -- -- -- --
Net loss from continuing operations (2,193,934) (1,337,592) (5,070,875) (2,644,819)
Loss from operations of discontinued component (2,880) 9,830 22,973 3,568
Net loss (2,196,814) (1,327,762) (5,047,902) (2,641,251)
Preferred stock dividend (21,028) -- (42,287) --
Preferred deemed dividend -- -- -- (975,460)
Net loss attributable to common stockholders $ (2,217,842) $ (1,327,762) $ (5,090,189) $ (3,616,711)
     
Net loss attributable to common stockholders per common and common equivalent share (basic and diluted) $ (0.12) $ (0.11) $ (0.29) $ (0.31)
     
Weighted average shares used in computing loss per common share (basic and diluted): 18,459,159 11,387,874 17,302,561 11,374,872
CONTACT: FOR WESTINGHOUSE SOLAR:
Investor Relations Contact
Matt Selinger
Genesis Select
(303) 415-0200
mselinger@genesisselect.com

Public Relations Contact:
Gary Mull
Westinghouse Solar Inc.
(408) 402-9478
pr@westinghousesolar.com

FOR CBD ENERGY:
United States Contact:
James Greer
CBD Energy
(917) 714-4791
james.greer@cbdenergy.com.au

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