Deswell Announces Fourth Quarter 2013 Results

  Deswell Announces Fourth Quarter 2013 Results

      Company Announces Fourth Quarter Cash Dividend of $0.05 Per Share

Business Wire

MACAO -- June 13, 2013

Deswell Industries, Inc. (Nasdaq: DSWL) today announced its financial results
for the fiscal fourth quarter ended March 31, 2013.

Net sales for the fourth quarter ended March 31, 2013 were $9.5 million, a
decrease of 22.0% compared to net sales of $12.2 million for the same quarter
ended March 31, 2012. Net sales decreased by 1.8% to $4.8 million in the
Company’s plastic segment and decreased by 35.6% to $4.7 million in the
electronic and metallic segment. The operating loss in the fourth quarter was
$2.7 million, compared to an operating loss of $1.7 million for the same
quarter of fiscal 2012.

Total gross margin decreased to 3.5% in the fourth quarter ended March 31,
2013 compared to 11.6% in the same quarter last year. Gross profit margin in
the plastic segment decreased to 2.2% of net sales for the fourth quarter of
fiscal 2013 compared to 12.6% 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 increases in raw materials cost and in labor cost resulting from
an increase in overtime allowances. Gross profit margin in the electronic and
metallic segment decreased to 4.8% of net sales for the fourth quarter ended
March 31, 2013 compared to 10.8% of net sales for the year-ago quarter. The
decrease in gross profit and margin in the electronic and metallic segment was
mainly attributed to an increase in labor costs as a percentage of sales,
resulting from a higher labor rate and additional allowances.

The Company reported a net loss of $2 million for the fourth quarter ended
March 31, 2013 compared to a net loss of $0.7 million for the quarter ended
March 31, 2012. Deswell reported a basic and diluted loss per share of ($0.12)
for the fourth quarter of fiscal 2013, (based on 16,794,000 and 16,810,000
weighted average shares outstanding, respectively) compared to a basic and
diluted loss per share of ($0.04), (based on 16,197,000 and 16,202,000
weighted average shares outstanding, respectively) for the quarter ended March
31, 2012.

Net sales for the year ended March 31, 2013 were $54.1 million, a decrease of
16.5%, compared to sales of $64.8 million for fiscal 2012. Operating loss for
the year ended March 31, 2013 was $3.7 million, compared to an operating loss
of $2.2 million for fiscal 2012. The Company reported a net loss of $2.0
million in fiscal 2013, compared to a net loss of $1.5 million for the year
ended March 31, 2012. Deswell reported basic and diluted net loss per share of
($0.12) for fiscal 2013, (based on 16,468,000 and 16,560,000 weighted average
share outstanding, respectively), compared to a basic and diluted loss per
share of ($0.09), (based on 16,197,000 and 16,207,000 weighted average shares
outstanding, respectively), for the prior fiscal year.

The Company's financial position remained strong at the end of the fourth
quarter of fiscal year 2013, with $32.0 million in cash and cash equivalents
at March 31, 2013, compared to $33.1 million at March 31, 2012. Working
capital totaled $58.3 million as of March 31, 2013, versus $60.9 million as of
March 31, 2012. Furthermore, the Company has no long-term or short-term
borrowings as of March 31, 2013.

Mr. Franki Tse, Chief Executive Officer, commented, “Saleswere soft during
the quarter primarily due to the poor economic situation in most of our export
markets. Furthermore, we saw continued increase in the minimum wage in
Dongguan China with a 19% increase this past May as well as continued RMB
appreciation. A key focus of the management team is to drive new sales by
strengthening our sales and engineering teams, improving product development
capabilities and enhancing our relationships with current customers while
maintaining a keen eye towards expense reduction. Our strong balance sheet
remains an important competitive advantage for us.”

Mr. Tse concluded, “We are confident, in spite of a challenging year, that we
will be able to deliver improved performance in fiscal 2014 for our
shareholders.”

Fourth Quarter Dividends

The Company also announced that on June 13, 2013 its board of directors
declared a cash dividend of $0.05 per share for the fiscal fourth quarter
ended March 31, 2013. The dividends will be payable on July 18, 2013 to
shareholders of record as of June 26, 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)
                                                      March 31,     March 31,
                                                       2013          2012
ASSETS                                                 (Unaudited)   (Audited)
Current assets :
  Cash and cash equivalents                            $  32,030     $ 33,073
  Fixed deposits maturing over three months               8,684        4,008
  Marketable securities (note 2)                          6,168        -
  Available-for-sale securities (note 2)                  1,586        7,630
  Accounts receivable, net                                8,291        12,476
  Inventories (note 4)                                    11,376       15,852
  Prepaid expenses and other current assets              1,152       2,164
  Total current assets                                    69,287       75,203
Property, plant and equipment - net                       42,694       46,177
Deferred income tax assets                                192          187
Goodwill                                                 392         392
  Total assets                                         $  112,565    $ 121,959
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                                     $  3,144      $ 5,741
  Accrued payroll and employee benefits                   4,133        3,778
  Customer deposits                                       1,254        2,257
  Other accrued liabilities                               1,260        1,311
  Income taxes payable                                    592          438
  Deferred income tax liabilities                         606          421
  Dividend payable                                       -           324
  Total current liabilities                              10,989      14,270
Shareholders' equity
  Common shares nil par value - authorized
  30,000,000 shares,
  shares issued and outstanding March 31, 2013 -
  16,387,648 (note 6);
  March 31, 2012 - 16,196,810                             52,443       50,816
  Additional paid-in capital                              6,831        8,265
  Accumulated other comprehensive income                  5,288        4,570
  Retained earnings                                      37,014      44,038
  Total shareholders' equity                             101,576     107,689
  Total liabilities and shareholders' equity           $  112,565    $ 121,959
                                                                     

                                                                
DESWELL INDUSTRIES, INC.

CONSOLIDATED STATEMENT OF
OPERATIONS &
   COMPREHENSIVE INCOME (LOSS)
   (UNAUDITED)
   ( U.S. dollars in
   thousands, except per share
   data )
                                                                     
                                 Quarter ended           Year ended
                                 March 31,               March 31,
                                  2013       2012       2013       2012
                                                                     
Net sales                        $ 9,517     $ 12,198    $ 54,074    $ 64,783
Cost of sales                     9,186      10,789     47,264     55,318
Gross profit                       331         1,409       6,810       9,465
Selling, general and               3,054       3,235       10,803      12,273
administrative expenses
Other income, net                 55         174        274        639
Operating loss                     (2,668)     (1,652)     (3,719)     (2,169)
Non-operating income, net         772        982        2,056      1,190
Loss before income taxes           (1,896)     (670)       (1,663)     (979)
Income taxes                      103        43         328        482
Net loss attributable to         $ (1,999)   $ (713)     $ (1,991)   $ (1,461)
Deswell Industries, Inc.
                                                                     
Other comprehensive income
(loss)
   Unrealized gain (loss) on
   available-for-sale            $ (227)     $ 779       $ 718       $ (746)
   securities
Comprehensive income (loss)
attributable to Deswell          $ (2,226)   $ 66        $ (1,273)   $ (2,207)
Industries, Inc.
                                                                     
                                                                     
Net loss per share
attributable to
   Deswell Industries, Inc.
   (note 5)
Basic:
   Net loss per share            $ (0.12)    $ (0.04)    $ (0.12)    $ (0.09)
   Weighted average common                     .
   shares outstanding
   shares in thousands)           16,794     16,197     16,468     16,197
                                                                     
Diluted:
   Net loss per share            $ (0.12)    $ (0.04)    $ (0.12)    $ (0.09)
   Weighted average number of
   shares
   outstanding (in thousands)     16,810     16,202     16,560     16,207
                                                                     

Contact:

Investor Relations:
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
203.972.9200
 
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