Deswell Industries, Inc. Announces Second Quarter EPS of $0.61 Per Share.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)--Nov. 8, 1999-- - Company Announces Interim Dividend of $0.33 Per Share - - Company Acquires Minority Interest of Metallic Operation - Deswell Industries, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on NM Symbol: DSWL) today announced results for the second quarter and six months ended September September: see month. 30, 1999. 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 $16.1 million, an increase of 2.0% compared to sales of $15.8 million in the second quarter ended September 30, 1998. 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 12.5% to $3.45 million, compared to $3.94 million in the previous year, and net income increased 0.2% to $3.34 million, compared to $3.33 million in the previous year. 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 increased 1.7 % to $0.61 (based on 5,481,000 weighted average shares outstanding), compared to $0.60 (based on 5,511,000 weighted average shares outstanding), in the second quarters ended September 30, 1998. Net sales for the six months ended September 30, 1999 were $28.2 million, a decrease of 9.8% compared to sales of $31.2 million for the corresponding period in 1998. Operating income decreased 29.1% to $5.4 million, compared to $7.6 million in the previous year, and net income decreased 16.1% to $5.4 million, compared to $6.5 million in the previous year. Diluted earnings per share decreased 16.1% to $0.99 (based on 5,477,000 weighted average shares outstanding), compared to $1.18 (based on 5,523,000 weighted average shares outstanding), for the six months ended September 30, 1998. The Company reported a continued strong financial position with book value per share of $9.34 and cash per share of $5.23. The Company has no short tem or long term debt. 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, said, "We have begun to see what we believe to be a sustainable recovery in our business. Jetcrown, our plastic division, recorded a 39% and 11% increase in net revenue for the quarter and for the six months respectively over the prior year. This improved performance is mainly attributed to expanded business with our existing strong customer base. It is important to note that the improved performance for the quarter only includes one month of meaningful revenues from Epson, our new customer. We continue to aggressively pursue new customer relationships. Though the electronic & metallic business recorded a 36% and 35% decrease in net revenues for the quarter and six months respectively, this quarter's results showed significant improvement over the first quarter." Acquisition of Minority Interest of Metallic Operation Kwanasia Electronics Co., Ltd., Deswell's 51% owned electronic division, acquired from individual shareholders the remaining 35.1% minority interest in Kwanta Precision Metal Products Co., Ltd. Kwanta is now a wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. of Kwanasia. Mr. Lau commented " We are also very pleased with the recent purchase of the minority interest in our metals operation. Kwanta is strategically important for us by providing customers with a high quality metal making operation which complements our plastics and electronics assembly offerings. This division, however, has consistently underperformed. As 100% owners we will be able to more aggressively work to improve the performance and returns of the metal subsidiary for our shareholders." Interim Dividend The Company also announced that on November November: see month. 5, 1999, 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. an interim cash dividend of $0.33 per share (1999 interim dividend $0.33 per share). The dividend will be payable on December December: see month. 7, 1999 to shareholders of record as of November 23, 1999. Share Buyback Buyback The buying back of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies will buyback shares either to increase the value of shares still available (reducing supply), or to eliminate any threats by shareholders who may The Company repurchased 128,200 shares during the quarter under its share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. program which was approved by the Board of Directors on October October: see month. 10, 1998. Deswell has repurchased and cancelled can·cel v. can·celed also can·celled, can·cel·ing also can·cel·ling, can·cels also can·cels v.tr. 1. To cross out with lines or other markings. See Synonyms at erase. 2. a total of 131,200 shares. Deswell manufactures injection-molded plastic parts and components and 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 Mita Industrial (H.K.) Co. Limited, Namtai Electronic (Shenzhen Shenzhen (shĕn`jŭn`), city (1994 est. pop. 695,600), S Guangdong prov., China, on the South China Sea, N of Hong Kong. Designated a special economic zone in 1979, the city's spectacular economic growth led China to create over a dozen more ) Co. Ltd., Inter-Tel Incorporated, Behringer BEHRINGER Spezielle Studiotechnik GmbH (Behringer) is a German audio equipment manufacturer, founded in its present form in 1989. Products The company designs and manufactures audio products, including public address systems, mixing consoles, amplifiers and Holdings (Pte) Ltd., Vtech Communications Ltd., Prod-Art Company Limited and Shakespeare (H.K.) Limited. To learn more about Deswell Industries, Inc., please visit the Company's web site at www.deswellindustries.com -0-
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(U.S. dollars in thousands, except per share date)
Quarter ended Six months ended
September 30, September 30
-----------------------------------------------
1999 1998 1999 1998
(Unaudited) (Unaudited)
Net sales $16,110 $15,795 $28,191 $31,242
Cost of sales 9,383 9,359 16,872 18,130
---------- ---------- --------- ----------
Gross profit 6,727 6,436 11,319 13,112
Selling, general and 3,277 2,493 5,944 5,530
administrative expenses
---------- ---------- --------- ----------
Operating income 3,450 3,943 5,375 7,582
Interest expense - (153) - (204)
Other income, net 310 389 645 765
---------- ---------- --------- ----------
Income before income
taxes 3,760 4,179 6,020 8,143
Income taxes 172 101 359 202
---------- ---------- --------- ----------
Income before minority
interests 3,588 4,078 5,661 7,941
Minority interests 252 748 212 1,449
---------- ---------- --------- ----------
Net income $3,336 $3,330 $5,449 $6,492
========== ========== ========= ==========
Basic earnings per share $0.61 $0.61 $1.00 $1.18
========== ========== ========= ==========
Weighted average number
of shares outstanding
(in thousands) 5,476 5,479 5,476 5,479
========== ========== ========= ==========
Diluted earnings
per share $0.61 $0.60 $0.99 $1.18
========== ========== ========= ==========
Diluted weighted average 5,481 5,511 5,477 5,523
number of shares
outstanding
(in thousands) ========== ========== ========= ==========
DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
( U.S. dollars in thousands)
September 30, March 31,
1999 1999
ASSETS (Unaudited)
Current assets :
Cash and cash equivalents $ 25,662 $ 27,556
Restricted cash 2,334 2,376
Accounts receivable, net 11,318 7,796
Trading investment - 134
Inventories 7,306 5,902
Prepaid expenses and other current
assets 2,404 4,116
Income taxes receivable 217 397
Total current assets 49,241 48,277
Property, plant and equipment - net 16,781 15,639
Goodwill 566 357
Long term investment 499 -
Total assets $ 67,087 $ 64,273
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 3,994 $ 2,873
Customer deposits and accrued
expenses 4,159 4,138
Income taxes payable 262 200
Total current liabilities 8,415 7,211
Minority interests 8,709 8,280
Deferred income tax 15 15
Shareholders' equity
Common stock
- authorized 20,000,000 shares;
issued and outstanding
5,347,931 shares at September
30, 1999 and 5,476,131 shares at
March 31, 1999 53 55
Additional paid-in capital 24,100 25,355
Retained earnings 25,795 23,357
Total shareholders' equity 49,948 48,767
Total liabilities and shareholders'
equity $ 67,087 $ 64,273
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