Deswell Industries, Inc. Announces First Quarter Results; 8.0% Increase in First Quarter Net Income; Company Also Announces First Quarter Dividend of $0.17 Per Share.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. -- Deswell Industries, Inc. (Nasdaq: DSWL) today announced its financial results for the fiscal first quarter ended June June: see month. 30, 2006. Deswell reported 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 first quarter ended June 30, 2006 of $31.7 million, compared to $30.1 million for the first quarter 2005, an increase of 5.4%. 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. totaled $3.8 million, compared to $4.0 million for the same quarter in 2005, a decrease of 5.2%. The decrease was mainly attributed to a stock-based compensation cost of $0.8 million during the quarter. Net income for the quarter increased 8.0% to $3.4 million from $3.2 million in the year-ago quarter. Basic and diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. net income per share for the quarter increased to $0.23 and $0.23, respectively (based on 14,924,000 and 14,955,000 weighted average shares outstanding, respectively), compared to $0.21 and $0.21, respectively (based on 14,865,000 and 14,929,000 weighted average shares outstanding, respectively), for the comparable period in 2005. The Company's balance sheet remains strong, with cash and cash equivalents for the quarter totaling $21.9 million, compared to $25.4 million on March 31, 2006. Working capital totaled $59.0 million as of June 30, 2006, up from $55.1 million as of March 31, 2006. 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, chief executive officer, commented, "We are very pleased with the recorded 5.4% revenue growth in the first quarter, which was primarily driven by the 25.4% growth in our plastic division offsetting the 7.6% decrease in sales in our electronics and metallic segment as compared with the year-ago quarter. Some of that decrease was due to the shortage of certain electronic materials that delayed production and shipments in the quarter. The increase in revenue in the plastic division is primarily attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to the increase in orders from one of our telecommunication telecommunication Communication between parties at a distance from one another. Modern telecommunication systems—capable of transmitting telephone, fax, data, radio, or television signals—can transmit large volumes of information over long distances. customer and new customers." Mr. Lau continued, "During the quarter we invested approximately $2.5 million in new equipment and an updated automated au·to·mate v. au·to·mat·ed, au·to·mat·ing, au·to·mates v.tr. 1. To convert to automatic operation: automate a factory. 2. coating capability. We estimate it will be fully installed and operational by end of September September: see month. 2006. Moreover, management is confident about growth prospects in the coming two quarters as orders from some new customers develop." Annual General Meeting The Company will hold its 2006 Annual General Meeting at 9:30 a.m. on September 18, 2006 at the Wynn Las Vegas Las Vegas (läs vā`gəs), city (1990 pop. 258,295), seat of Clark co., S Nev.; inc. 1911. It is the largest city in Nevada and the center of one of the fastest-growing urban areas in the United States. Resort, 3131 Las Vegas Blvd Blvd abbr (= boulevard) → Bd South, Las Vegas, Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). 89109, U.S.A. First-Quarter Dividends The Company also announced that on August 7, 2006 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 $0.17 per share for the fiscal first quarter 2006. The dividend will be payable on September 6, 2006 to shareholders of record as of August 23, 2006. About Deswell 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 finished products such as telephones, telephone answering machines, sophisticated studio-quality audio equipment and computer peripherals. The Company's customers include Digidesign Digidesign is an American digital audio technology company. It was founded in 1984 by Peter Gotcher and Evan Brooks. The company began as a project to raise money for the founders' band, selling EPROM chips for drum machines. Inc., Vtech Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Ltd., Epson Precision (H.K.) Ltd., Inter-Tel Incorporated, Line 6 Manufacturing and 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. To learn more about Deswell Industries, Inc., please visit the Company's web site at www.deswell.com.
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(U.S. dollars in thousands, except per share data)
Quarter ended
June 30,
2006 2005
---------------------------
Net sales $ 31,689 $ 30,075
Cost of sales 23,243 22,435
----------- -----------
Gross profit 8,446 7,640
Selling, general and administrative
expenses 4,666 3,654
----------- -----------
Operating income 3,780 3,986
Interest expense - -
Other income, net 187 (360)
----------- -----------
Income before income taxes 3,967 3,626
Income taxes 151 25
----------- -----------
Income before minority interests 3,816 3,601
Minority interests 413 450
----------- -----------
Net income $ 3,403 $ 3,151
Other comprehensive income
Foreign currency translation adjustment 710 (404)
----------- -----------
Comprehensive income 4,113 2,747
=========== ===========
Net income per share
Basic:
Net income per share $ 0.23 $ 0.21
=========== ===========
Weighted average common shares
outstanding (in thousands) 14,924 14,865
=========== ===========
Diluted:
Net income per share $ 0.23 $ 0.21
=========== ===========
Weighted average common shares
outstanding (in thousands) 14,955 14,929
=========== ===========
DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(U.S. dollars in thousands)
June 30, March 31,
2006 2006
------------ ------------
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 21,910 $ 25,369
Restricted cash - 649
Marketable securities 110 164
Accounts receivable, net 26,589 18,318
Inventories 25,532 21,845
Prepaid expenses and other current assets 5,288 5,035
----------- -----------
Total current assets 79,429 71,380
Property, plant and equipment - net 59,849 58,286
Deferred income tax assets 225 294
Goodwill 712 710
----------- -----------
Total assets $ 140,215 $ 130,670
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,675 $ 10,886
Dividend payable - 2,089
Customer deposits and accrued expenses 3,761 3,107
Income taxes payable 10 184
----------- -----------
Total current liabilities 20,446 16,266
----------- -----------
Minority interests 8,068 7,636
----------- -----------
Shareholders' equity
Common stock
- authorized 30,000,000 shares;
issued and outstanding
14,923,730 shares at June 30, 2006 and
14,923,730 at March 31, 2006 42,074 41,254
Additional paid-in capital 6,970 6,970
Accumulated other comprehensive income 1,146 436
Retained earnings 61,511 58,108
----------- -----------
Total shareholders' equity 111,701 106,768
----------- -----------
Total liabilities and shareholders'
equity $ 140,215 $ 130,670
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