Deswell Announces Third Quarter 2013 Results - Company Announces Third Quarter Cash Dividend of $0.05 Per Share - Business Wire MACAO -- February 5, 2013 Deswell Industries, Inc. (Nasdaq: DSWL) today announced its financial results for the fiscal third quarter ended December 31, 2012. Net sales for the third quarter ended December 31, 2012 were $13.8 million, a decrease of 15.2% compared to net sales of $16.2 million for the same quarter ended December 31, 2011. Net sales decreased by 12.7% to $6.4 million in the Company’s plastic segment and decreased by 17.3% to $7.4 million in the electronic and metallic segment. The operating loss in the third quarter was $0.7 million, compared to an operating loss of $0.4 million for the same quarter of fiscal 2012. Total gross margin decreased to 11.7% in the third quarter ended December 31, 2012 compared to 14.6% in the same quarter last year. Gross profit margin in the plastic segment decreased to 10.9% of net sales for the third quarter of fiscal 2013 compared to 19.1% of net sales for the same quarter of last fiscal year. The decrease in gross profit and margin in the plastic segment was mainly due to an increase in raw materials and labor costs as a percentage of net sales. Gross profit margin in the electronic and metallic segment improved to 12.5% of net sales for the third quarter ended December 31, 2012 compared to 10.9% 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 and factory overheads. The Company reported a net loss of $0.2 million for the third quarter ended December 31, 2012 compared to net income of $0.09 million for the quarter ended December 31, 2011. Deswell reported a basic and diluted loss per share of ($0.013) for the third quarter of fiscal 2013, (based on 16,698,000 and 16,717,000 weighted average shares outstanding, respectively) compared to a basic and diluted income per share of $0.006, (based on 16,197,000 and 16,198,000 weighted average shares outstanding, respectively) for the same quarter ended December 31, 2011. Net sales for the nine months ended December 31, 2012 were $44.6 million, a decrease of 15.3%, compared to sales of $52.6 million for the corresponding period in fiscal 2012. Operating loss for the nine months ended December 31, 2012 was $1.0 million, compared to an operating loss of $0.5 million for the first nine months of fiscal 2012. The Company reported net income of $0.008 million in the first nine months of fiscal 2013, compared to a net loss of $0.7 million for the nine months ended December 31, 2011. Deswell reported basic and diluted net income per share of $0.0005 for the first nine months of fiscal 2013, (based on 16,482,000 and 16,559,000 weighted average share outstanding, respectively), compared to a basic and diluted loss per share of ($0.05), (based on 16,197,000 and 16,202,000 weighted average shares outstanding, respectively), for the prior corresponding period. The Company's financial position remained strong at the end of the third quarter of fiscal year 2013, with $28.4 million in cash and cash equivalents at December 31, 2012, compared to $33.1 million at March 31, 2012. Working capital totaled $60.6 million as of December 31, 2012, versus $60.9 million as of March 31, 2012. Furthermore, the Company has no long-term or short-term borrowings as of December 31, 2012. Mr. Franki Tse, Chief Executive Officer, commented, “Weakening demand in our export markets impacted sales and margins. We also continue to see increasing Chinese manufacturing costs and a shortage of available labor. In spite of these headwinds, we are focused on closely partnering with our customers, suggesting new product concepts and providing sophisticated design and development services. Our machinery and equipment is state of the art, and we continue to upgrade it while proactively managing our expenses. We are also aggressively seeking new customers. As the U.S. and European economies improve, we believe our efforts will result in improved performance for our shareholders. Meanwhile, our balance sheet is strong with cash and no debt. Cash from operations for the nine months ended December 31 totaled $6.2 million, and we continue to return capital to shareholders through dividends." Third Quarter Dividends The Company also announced that on February 5, 2013 its board of directors declared a cash dividend of $0.05 per share for the fiscal third quarter ended December 31, 2012. The dividends will be payable on March 7, 2013 to shareholders of record as of February 15, 2013. 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) December 31, March 31, 2012 2012 ASSETS (Unaudited) (Audited) Current assets : Cash and cash equivalents $ 28,464 $ 33,073 Fixed deposits maturing over three months 6,869 4,008 Marketable securities (note 2) 3,498 - Available-for-sale securities (note 2) 8,575 7,630 Accounts receivable, net 10,888 12,476 Inventories (note 4) 12,770 15,852 Prepaid expenses and other current assets 1,132 2,164 Total current assets 72,196 75,203 Property, plant and equipment - net 43,542 46,177 Deferred income tax assets 189 187 Goodwill 392 392 Total assets $ 116,319 $ 121,959 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities Accounts payable $ 4,364 $ 5,741 Accrued payroll and employee benefits 3,442 3,778 Customer deposits 1,297 2,257 Other accrued liabilities 1,368 1,311 Income taxes payable 572 438 Deferred income tax liabilities 519 421 Dividend payable - 324 Total current liabilities 11,562 14,270 Shareholders' equity Common shares nil par value - authorized 30,000,000 shares, shares issued and outstanding December 31, 52,443 50,816 2012 - 16,433,118 (note 6); March 31, 2012 - 16,196,810 Additional paid-in capital 6,949 8,265 Accumulated other comprehensive income 5,515 4,570 Retained earnings 39,850 44,038 Total shareholders' equity 104,757 107,689 Total liabilities and shareholders' equity $ 116,319 $ 121,959 DESWELL INDUSTRIES, INC. CONSOLIDATED STATEMENT OF OPERATIONS & COMPREHENSIVE INCOME (LOSS) (UNAUDITED) (U.S. dollars in thousands, except per share data) Quarter ended Nine months ended December 31, December 31, 2012 2011 2012 2011 Net sales $ 13,766 $ 16,241 $ 44,557 $ 52,585 Cost of sales 12,150 13,874 38,078 44,529 Gross profit 1,616 2,367 6,479 8,056 Selling, general and 2,403 2,798 7,749 9,038 administrative expenses Other income, net 130 25 219 465 Operating loss (657 ) (406 ) (1,051 ) (517 ) Non-operating income, net 496 589 1,284 208 Income (Loss) before (161 ) 183 233 (309 ) income taxes Income taxes 60 92 225 439 Net income (loss) attributable to Deswell $ (221 ) $ 91 $ 8 $ (748 ) Industries, Inc. Other comprehensive loss Unrealized gain (loss) on available-for-sale $ 381 $ (1,005 ) $ 945 $ (1,525 ) securities Comprehensive income (loss) attributable to $ 160 $ (914 ) $ 953 $ (2,273 ) Deswell Industries, Inc. Net income (loss) per share attributable to Deswell Industries, Inc. (note 5) Basic: Net income (loss) per $ (0.013 ) $ 0.006 $ 0.0005 $ (0.05 ) share Weighted average common shares outstanding shares 16,698 16,197 16,482 16,197 in thousands) Diluted: Net income (loss) per $ (0.013 ) $ 0.006 $ 0.0005 $ (0.05 ) share Weighted average number of shares outstanding (in 16,717 16,198 16,559 16,202 thousands) Contact: Investor Relations: Institutional Marketing Services (IMS) John Nesbett/Jennifer Belodeau 203-972-9200
Deswell Announces Third Quarter 2013 Results
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