Deswell Industries, Inc. Announces Earnings of $0.42 Per Share for the Third Quarter; Third Quarter Dividend of $0.24 Per Share.Business Editors HONG n. 1. A mercantile establishment or factory for foreign trade in China, as formerly at Canton; a succession of offices connected by a common passage and used for business or storage. KONG--(BUSINESS WIRE)--Feb. 23, 2004 Deswell Industries, Inc. (Nasdaq: DSWL) today announced results for the third quarter and nine months ended December December: see month. 31, 2003. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the quarter were $24.8 million, a decrease of 2% compared to sales of $25.3 million in the third quarter ended December 31, 2002. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. decreased 4% to $4.4 million, compared to $4.6 million in the previous year. Net income for the quarter was $3.8 million, a slight increase compared to the same quarter last year. The basic earnings per share and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of decreased slightly to $0.42 and $0.40, respectively (based on 9,121,000 and 9,518,000 weighted average shares outstanding, respectively), compared to $0.43 and $0.43, respectively (based on 8,726,000 and 8,850,000 weighted average shares outstanding, respectively), in the quarter ended December 31, 2002. Net sales for the nine months ended December 31, 2003 were $75.9 million, an increase of 7% compared to sales of $71.2 million for the corresponding period in 2002. Operating income increased 15% to $13.6 million, compared to $11.8 million in the previous year. Net income was $12.0 million, compared to $11.2 million in the previous year. The basic earnings per share and diluted earnings per share increased to $1.32 and $1.29, respectively (based on 9,097,000 and 9,316,000 weighted average shares outstanding, respectively), compared to $1.30 and $1.28, respectively (based on 8,574,000 and 8,706,000 weighted average shares outstanding, respectively), in the nine months ended December 31, 2002. The Company's cash and cash equivalents at December 31, 2003 were $28.5 million, as compared to $34.4 million on March 31, 2003, due to internal funding for its new plastic-injection manufacturing plant construction in Dongguan and for the acquisition of the electronic and metal manufacturing factory in July July: see month. 2003. The Company has no long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. or short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. borrowings. Mr. Richard Ri·chard , Joseph Henri Maurice Known as "Rocket." 1921-2000. Canadian hockey player. A right wing for the Montreal Canadiens (1942-1960), he led his team to eight Stanley Cup championships and was the first player to score 50 goals in a Lau, chairman and chief executive officer, commented, "We continue to realize the benefits of last year's additional 20% investment in our electronic and metallic division. Revenues grew 11% in this division for the quarter, largely offsetting the 11% decrease in our plastics division. During the quarter, revenues at our plastic division were decreased as a result of some customers retiring old molds as they shift to new products. We will begin production with the new molds over the next six months which should translate into modest growth in the June June: see month. quarter." "Also during the quarter, we moved substantial machinery to the new Dongguan factory premises premises n. 1) in real estate, land and the improvements on it, a building, store, shop, apartment, or other designated structure. The exact premises may be important in determining if an outbuilding (shed, cabana, detached garage) is insured or whether a person . Additionally, we relocated re·lo·cate v. re·lo·cat·ed, re·lo·cat·ing, re·lo·cates v.tr. To move to or establish in a new place: relocated the business. v.intr. our Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov. corporate offices to Macau Macau: see Macao. Macau or Macao Chinese Aomen Special administrative region (pop., 2005 est.: 470,000), southern China. to further reduce our SG&A expenses." Third Quarter Dividends The Company also announced that on February February: see month. 20, 2004 its board of directors declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. a dividend of $0.24 per share for the third quarter. The dividend will be payable on March 23, 2004 to shareholders of record as of March 9, 2004. Deswell manufactures injection-molded plastic parts and components, electronic products and subassemblies, and metallic products for original equipment manufacturers ("OEMs") and contract manufacturers at its factories in the People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China. The Company produces a wide variety of plastic parts and components used in the manufacture of consumer and industrial products; printed circuit board assemblies using surface mount ("SMT (1) (Surface Mount Technology) See surface mount. (2) (Station ManagemenT) An FDDI network management protocol that provides direct management. Only one node requires the software. SMT - Station Management "), and pin-through hole ("PHT PHT Phenytoin (antiepileptic, Dilantin) PHT Pulmonary Hypertension PhT Pharmacy Technician PHT Post-Harvest Technology PHT Pattern History Table PHT Pressure Half Time PHT Public Health Trust ") interconnection in·ter·con·nect v. in·ter·con·nect·ed, in·ter·con·nect·ing, in·ter·con·nects v.intr. To be connected with each other: The two buildings interconnect. v.tr. technologies; and finished products such as telephones, telephone answering machines, sophisticated studio-quality audio equipment and computer peripherals. The Company's customers include Kyocera Kyocera Corporation (京セラ株式会社 Mita Industrial Co. (H.K.) Limited, Epson Precision (H.K.) Ltd., Inter-Tel Incorporated, Vtech Communications Ltd., Peavey Electronics Peavey Electronics Corporation is one of the largest audio equipment manufacturers in the world, headquartered in Meridian, Mississippi in the United States. History Hartley Peavey founded Peavey Electronics in 1965 after building his first amplifier in 1957. Corporation and Emerson. To learn more about Deswell Industries, Inc., please visit the Company's web site at www.deswell.com.
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
( U.S. dollars in thousands, except per share data )
Quarter ended Nine months ended
December 31, December 31,
----------------- -----------------
2003 2002 2003 2002
-------- ------- -------- -------
(Unaudited) (Unaudited)
Net sales $24,784 $25,272 $75,938 $71,180
Cost of sales 16,383 16,799 51,146 47,527
------- ------- ------- -------
Gross profit 8,401 8,473 24,792 23,653
Selling, general and administrative
expenses 3,998 3,890 11,232 11,103
------- ------- ------- -------
Operating income 4,403 4,583 13,560 11,780
Interest expense (1) - (16) (6)
Other income, net (17) 206 528 1,035
------- ------- ------- -------
Income before income taxes 4,385 4,789 14,072 11,670
Income taxes 81 366 511 79
------- ------- ------- -------
Income before minority interests 4,304 4,423 13,561 11,178
Minority interests 480 636 1,551 1,580
------- ------- ------- -------
Net income $ 3,824 $ 3,787 $12,010 $11,150
======= ======= ======= =======
Basic earnings per share $ 0.42 $ 0.43 $ 1.32 $ 1.30
======= ======= ======= =======
Weighted average number of shares 9,121 8,726 9,097 8,574
outstanding (in thousands) ======= ======= ======= =======
Diluted earnings per share $ 0.40 $ 0.43 $ 1.29 $ 1.28
======= ======= ======= =======
Diluted weighted average number of
shares outstanding (in thousands) 9,518 8,850 9,316 8,706
======= ======= ======= =======
DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
( U.S. dollars in thousands)
December 31, March 31,
2003 2003
------------- ----------
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 28,517 $ 34,400
Restricted cash 390 2,366
Marketable securities - 4,821
Accounts receivable 21,754 16,727
Inventories 16,497 14,784
Prepaid expenses and other current assets 3,907 2,648
Income taxes receivable 76 323
---------- ----------
Total current assets 71,141 76,069
Property, plant and equipment - net 43,413 29,623
Other investments 2 2
Goodwill 478 478
---------- ----------
Total assets $ 115,034 $ 106,172
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 12,749 $ 9,643
Customer deposits and accrued expenses 4,792 4,257
Income taxes payable 903 3,946
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Total current liabilities 18,444 17,846
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Minority interests 7,466 6,465
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Deferred income tax 15 15
---------- ----------
Shareholders' equity
Common stock
- authorized 30,000,000 shares; issued and
outstanding 9,144,085 shares at December 31,
2003 and 9,030,835 shares at March 31,
2003 29,874 28,247
Additional paid-in capital 6,970 6,970
Retained earnings 52,265 46,629
---------- ----------
Total shareholders' equity 89,109 81,846
---------- ----------
Total liabilities and shareholders' equity $ 115,034 $ 106,172
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