Deswell Industries, Inc. Announces Third Quarter Results.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. 12, 1999--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: DSWLF) today announced its results for the third quarter and nine months ended December December: see month. 31, 1998. 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 $12.6 million, a decrease of 34% compared to sales of $19.0 million in the third quarter ended December 31, 1997. 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 57% to $2.3 million, compared to $5.3 million in the previous year, and net income decreased 49% to $2.1 million, compared to $4.2 million in the previous year. 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 54% and 50% to $0.39 and $0.39 respectively (based on 5,478,000 and 5,487,000 weighted average shares outstanding, respectively), compared to $0.84 and $0.78 respectively (based on 4,994,000 and 5,357,000 weighted average shares outstanding, respectively), in the third quarter ended December 31, 1997. Net sales for the nine months ended December 31, 1998 were $43.9 million, a decrease of 15% compared to sales of $51.7 million for the corresponding period in 1997. Operating income decreased 21% to $9.9 million, compared to $12.5 million in the previous year, and net income decreased 15% to $8.6 million, compared to $10.1 million in the previous year. Basic earnings per share and diluted earnings per share decreased 23% and 17% to $1.58 and $1.56 respectively (based on 5,478,000 and 5,525,000 weighted average shares outstanding, respectively), compared to $2.05 and $1.88 respectively (based on 4,928,000 and 5,362,000 weighted average shares outstanding, respectively), for the nine months ended December 31, 1997. The Company reported a continued strong financial position. Cash and cash equivalents have increased to 28.2 million at December 31, 1998 compared to $21.9 million at March 31, 1998. Working capital was $39.3 million as of December 31, 1998, versus $36.0 million as of March 31, 1998, and our current ratio was 6.2, with no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered 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 commented, "The Company as well as its customers continued to be affected by the recent Asian economic turmoil. There was a reduction in orders from Mita Industrial (H.K.) Co., Ltd. as a result of its reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. , and from some other existing customers in the plastic molding molding, in architecture, furniture, and decorative objects, a surface or group of surfaces of projecting or receding contours. A molding may serve as a defining element, terminating a unit or an entire composition (e.g. operation. The 43% decrease in revenues at our electronics division was primarily due to the decrease in orders from subcontracted sub·con·tract n. A contract that assigns some of the obligations of a prior contract to another party. intr. & tr.v. sub·con·tract·ed, sub·con·tract·ing, sub·con·tracts PCB PCB: see polychlorinated biphenyl. PCB in full polychlorinated biphenyl Any of a class of highly stable organic compounds prepared by the reaction of chlorine with biphenyl, a two-ring compound. assembly customers as well as reduced prices in both the sub-contracted and OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and business. Management is working hard to broaden its customer base in the electronics division. With regards to our plastic tooling division, it is now running near full capacity and we are also ready to upgrade and increase the tooling capacity to meet increasing demand. We are confident that the Company will recover as market conditions improve." 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.) 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. -0-
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,
1998 1997 1998 1997
---- ---- ---- ----
(Unaudited) (Unaudited)
Net sales $ 12,612 $ 18,993 $ 43,854 $ 51,660
Cost of
sales 7,802 8,744 25,932 27,641
-------------- -------------- ------------ -------------
Gross
profit 4,810 10,249 17,922 24,019
Selling,
general and
administrative
expenses 2,522 4,931 8,052 11,536
-------------- -------------- -------------- --------------
Operating
income 2,288 5,318 9,870 12,483
Interest
expense
(102) (1) (306) (2)
Other income,
net 554 308 1,319 700
-------------- -------------- -------------- --------------
Income
before
income
taxes 2,740 5,625 10,883 13,181
Income
taxes 433 84 635 322
-------------- -------------- -------------- --------------
Income
before
minority
interests 2,307 5,541 10,248 12,859
Minority
interests 159 1,344 1,608 2,756
-------------- -------------- -------------- --------------
Net income $ 2,148 $ 4,197 $ 8,640 $ 10,103
======== ======== ======== ========
Basic
earnings
per share
(note 3) $ 0.39 $ 0.84 $ 1.58 $ 2.05
======== ======== ======== ========
Weighted
average
number of
shares
outstanding
(in thousands)5,478 4,994 5,478 4,928
======== ======== ======== ========
Diluted earnings
per share
(note 3) $ 0.39 $ 0.78 $ 1.56 $ 1.88
======== ======== ======== ========
Diluted
weighted
average
number of
shares
outstanding
(in thousands)5,487 5,357 5,525 5,362
======== ======== ======== ========
DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
( U.S. dollars in thousands)
December, 31 March 31,
1998 1998
ASSETS (Unaudited)
Current assets :
Cash and cash equivalents $ 28,174 $ 21,902
Restricted cash
2,098 2,927
Accounts receivable, net
6,731 10,079
Inventories
5,485 6,415
Prepaid expenses
and other current assets
4,159 1,640
Income taxes receivable
228 218
-------------- ----------------
Total current assets 46,875 43,181
Long term investment 451 -
Property, plant and
equipment - net 16,160 15,582
Goodwill 363 381
----------------- ----------------
Total assets $ 63,849 $ 59,144
================= ================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,809 $ 3,763
Customer deposits
and accrued expenses
4,293 3,175
Income taxes payable 504 275
----------------- ----------------
Total current liabilities 7,606 7,213
----------------- ----------------
Minority interests 8,312 6,705
----------------- ---------------
Deferred income tax 15 15
----------------- ----------------
Shareholders' equity
Common stock
- authorized
20,000,000 shares;
issued and outstanding
5,476,131 shares
at December 31,
1998 and
5,479,131 shares
at March 31, 1998 55 55
Additional paid-in
capital 22,384 22,402
Retained earnings 25,477 22,754
----------------- ----------------
Total shareholders' equity 47,916 45,211
----------------- ----------------
Total liabilities
and shareholders' equity $ 63,849 $ 59,144
================= ================
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