Deswell Announces Second Quarter 2013 Results

  Deswell Announces Second Quarter 2013 Results

    -Company Announces Second Quarter Cash Dividend of $0.05 Per Share -

Business Wire

MACAO -- November 16, 2012

Deswell Industries, Inc. (Nasdaq: DSWL) today announced its financial results
for the fiscal second quarter ended September 30, 2012.

Net sales for the second quarter ended September 30, 2012 were $16.3 million,
a decrease of 9.5% compared to net sales of $18.0 million for the same quarter
ended September 30, 2011. Net sales increased by 9.2% to $8.4 million in the
Company’s plastic segment and decreased by 23.5% to $7.9 million in the
electronic and metallic segment. The operating loss in the second quarter was
$0.08 million, compared to an operating loss of $0.2 million for the same
quarter of fiscal 2012.

Total gross margin increased to 16.1% in the second quarter ended September
30, 2012 compared to 14.0% in the same quarter last year. Gross profit margin
in the plastic segment increased to 19.3% of net sales for the second quarter
of fiscal 2013 compared to 16.3% of net sales for the same quarter of last
fiscal year. The increase of gross profit and margin in the plastic segment
was mainly due to decreases in factory overhead and depreciation expense as a
percentage of net sales. Gross profit margin in the electronic and metallic
segment slightly improved to 12.7% of net sales for the second quarter ended
September 30, 2012 compared to 12.3% of net sales for the year-ago quarter.
The improvement in gross profit margin in the electronic and metallic segment
was mainly attributed to efficient usage of raw materials, offsetting an
increase in labor cost as a percentage of net sales.

The Company reported a net income of $0.2 million for the second quarter ended
September 30, 2012 compared to net loss of $0.9 million for the quarter ended
September 30, 2011. Deswell reported a basic and diluted income per share of
$0.011 for the second quarter of fiscal 2013, (based on 16,726,000 and
16,749,000 weighted average shares outstanding, respectively) compared to a
basic and diluted loss per share of ($0.056), (based on 16,197,000 and
16,199,000 weighted average shares outstanding, respectively) for the same
quarter ended September 30, 2011.

Net sales for the six months ended September 30, 2012 were $30.7 million, a
decrease of 15.3%, compared to sales of $36.3 million for the corresponding
period in fiscal 2012. Operating loss for the six months ended September 30,
2012 was $0.4 million, compared to operating loss of $0.1 million for the
first six months of fiscal 2012. The Company reported a net income of $0.2
million in the first half of fiscal 2013, compared to a net loss of $0.8
million for the six months ended September 30, 2011. Deswell reported basic
and diluted net income per share of $0.014 for the first six months of fiscal
2013, (based on 16,596,000 and 16,654,000 weighted average share outstanding,
respectively), compared to basic and diluted loss per share of ($0.052),
(based on 16,197,000 and 16,201,000 weighted average shares outstanding,
respectively), for the prior corresponding period.

The Company's financial position remained strong at the end of the second
quarter of fiscal year 2013, with $26.7 million in cash and cash equivalents
at September 30, 2012, compared to $33.1 million at March 31, 2012. Working
capital totaled $61.1 million as of September 30, 2012, versus $60.9 million
as of March 31, 2012. Furthermore, the Company has no long-term or short-term
borrowings as of September 30, 2012.

Mr. Franki Tse, Chief Executive Officer, commented, “In the plastic segment,
our more consumer-related business, sales and gross margin have improved.
Recently we obtained the quality management system ISO13485:2003 certification
which allows us to manufacture plastic parts for medical devices, a new market
opportunity for us. In our electronic and metallic segment, thesoftening
demand prevails and sales of professional audio products and fixtures are
still suffering from the global economic situation. We are devoting more
effort and resources into product design and development and expect this will
help us to secure more orders and improved gross margins in the future. Our
balance sheet remains particularly strong with cash and no long or short term
debt and we expect to declare dividends in each of the coming three quarters
of at least $0.05 per share.

Second Quarter Dividends

The Company also announced that on November 16, 2012 its board of directors
declared a cash dividend of $0.05 per share for the fiscal second quarter
ended September 30, 2012. The dividends will be payable on December 18, 2012
to shareholders of record as of November 29, 2012.

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 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”) and
finished products such as telephones, telephone answering machines,
sophisticated studio-quality audio equipment and computer peripherals. The
Company’s customers include Vtech Telecommunications Ltd. and Digidesign Inc.

To learn more about Deswell Industries, Inc., please visit the Company’s
website at www.deswell.com.

Forward-Looking Statements

Statements in this press release that are "forward-looking statements" are
based on current expectations and assumptions that are subject to risks and
uncertainties. For example, our statements regarding our expected growth in
sales from the electronic and metallic division in the coming year and our
efforts to reduce overhead costs in our plastic division are forward-looking
statements. Actual results could differ materially because of the following
factors, among others, which may cause revenues and income to fall short of
anticipated levels or our overhead expenses to increase: our dependence on a
few major customers; vigorous competition forcing product price reductions or
discounts; the timing and amount of significant orders from our relatively few
significant customers; continuing increases in resin prices that cannot be
passed on to customers; unexpected production delays; obsolete inventory or
product returns; losses resulting from fraudulent activity of our customers or
employees; labor shortages that increase labor and costs; changes in the mix
of product products we manufacture and sell; adverse currency fluctuations in
the renminbi and Hong Kong dollar when translated to US dollars; potential new
accounting pronouncements; and the effects of travel restrictions and
quarantines associated with major health problems, such as the Severe Acute
Respiratory Syndrome, on general economic activity.

For further information regarding risks and uncertainties associated with the
Company’s business, please refer to the “Risk Factors” section of Company’s
Annual Report on Form 20-F, copies of which may be obtained from the Website
maintained by the Securities and Exchange Commission at http://www.sec.gov.

All information in this release is made as of the date of this press release.
Deswell undertakes no duty to update any forward-looking statement to conform
the statement to actual results or changes in Deswell’s expectations.


DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(U.S. dollars in thousands)
                                                      9/30/2012    3/31/2012
ASSETS                                                 (Unaudited)   (Audited)
Current assets :
Cash and cash equivalents                              $  26,749     $ 33,073
Fixed deposits maturing over three months                 5,967        4,008
Marketable securities                                     2,082        -
Available-for-sale securities                             8,194        7,630
Accounts receivable, net                                  14,559       12,476
Inventories                                               15,241       15,852
Prepaid expenses and other current assets                1,695       2,164
Total current assets                                      74,487       75,203
Property, plant and equipment - net                       44,201       46,177
Deferred income tax assets                                187          187
Goodwill                                                 392         392
Total assets                                           $  119,267    $ 121,959
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable                                       $  5,874      $ 5,741
Accrued payroll and employee benefits                     3,655        3,778
Customer deposits                                         1,482        2,257
Other accrued liabilities                                 1,268        1,311
Income taxes payable                                      524          438
Deferred income tax liabilities                           500          421
Dividend payable                                         -           324
Total current liabilities                                13,303      14,270
Shareholders' equity
Common shares nil par value - authorized 30,000,000
shares, shares issued and outstanding September 30,       52,443       50,816
2012 - 16,635,101; March 31, 2012 - 16,196,810
Additional paid-in capital                                7,478        8,265
Accumulated other comprehensive income                    5,134        4,570
Retained earnings                                        40,909      44,038
Total shareholders' equity                               105,964     107,689
Total liabilities and shareholders' equity             $  119,267    $ 121,959
                                                                     

                                                               
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS &
COMPREHENSIVE INCOME (LOSS) (UNAUDITED)
(U.S. dollars in thousands, except per share data)
                             Quarter ended             Six months ended
                             September 30,             September 30,
                             2012         2011         2012         2011
                                                                    
Net sales                    $ 16,303     $ 18,020     $ 30,791     $ 36,344
Cost of sales                 13,678     15,492     25,928     30,655 
Gross profit                   2,625        2,528        4,863        5,689
Selling, general and           2,767        3,145        5,346        6,240
administrative expenses
Other income, net             67         392        89         440    
Operating loss                 (75    )     (225   )     (394   )     (111   )
Non-operating income          345        (370   )    788        (381   )
(expenses), net
Income (Loss) before           270          (595   )     394          (492   )
income taxes
Income taxes                  81         319        165        347    
Net income (loss)
attributable to Deswell      $ 189        $ (914   )   $ 229        $ (839   )
Industries, Inc.
Other comprehensive loss
Unrealized gain (loss) on
available-for-sale           $ 613       $ (292   )   $ 564       $ (520   )
securities
Comprehensive loss
attributable to Deswell      $ 802       $ (1,206 )   $ 793       $ (1,359 )
Industries, Inc.
Net income (loss) per
share attributable to
Deswell Industries, Inc.
Basic:
Net income (loss) per        $ 0.011     $ (0.056 )   $ 0.014     $ (0.052 )
share
Weighted average common
shares outstanding shares     16,726     16,197     16,596     16,197 
(in thousands)
Diluted:
Net income (loss) per        $ 0.011     $ (0.056 )   $ 0.014     $ (0.052 )
share
Weighted average number of
shares outstanding (in        16,749     16,199     16,654     16,201 
thousands)

Contact:

Investor Relations:
Institutional Marketing Services (IMS)
John Nesbett/Jennifer Belodeau
203-972-9200