Fourth Quarter and Year-End Results
Company Press Release
Deswell Industries, Inc. Announces Fourth Quarter and Year-End Results
- Yearly Sales Decrease 19%, Yearly Net Income Decrease 25% -
HONG KONG--(BUSINESS WIRE)--June 1, 1999-- - Final Dividend $0.55 Per Share -
Deswell Industries, Inc. (NASDAQ NM Symbol: DSWL - news; the ''Company'') today announced its results for the fourth quarter and year ended March 31, 1999.
Net sales for the year ended March 31, 1999 were $53.4 million, a decrease of 19% compared to sales of $66.2 million for the year ended March 31, 1998. Operating income decreased 31% to $10.9 million, compared to $15.9 million in the previous year, and net income decreased 25% to $9.7 million, compared to $13.0 million in the previous year. Basic earnings per share and diluted earnings per share decreased to $1.77 and $1.76 respectively (based on 5,478,000 and 5,524,000 weighted average shares outstanding, respectively), compared to $2.59 and $2.40 respectively (based on 5,006,000 and 5,394,000 weighted average shares outstanding, respectively), for the year ended March 31, 1998.
Net sales for the fourth quarter decreased 34% to $9.6 million compared to sales of $14.6 million in the fourth quarter ended March 31, 1998. Operating income decreased 70% to $1.0 million for the most recent quarter, compared to $3.4 million for the year-ago quarter. Net income for the fourth quarter decreased 62% to $1.1 million compared to $2.9 million for the year-ago quarter. Basic earnings per share and diluted earnings per share decreased to $0.19 and $0.19 respectively (based on 5,476,000 and 5,476,000 weighted average shares outstanding, respectively), compared to $0.55 and $0.52 respectively (based on 5,244,000 and 5,504,000 weighted average shares outstanding, respectively), in the fourth quarter ended March 31, 1998.
The Company reported cash and cash equivalents increased to $27.6 million at March 31, 1999 compared to $21.9 million as of March 31, 1998. Working capital was $41.3 million as of March 31, 1999, versus $36.0 million as of March 31, 1998. The Company has no short term and long term debt.
The Company also announced that on May 28, 1999 its board of director declared a final dividend of $0.55 per share (compared to $0.50 per share in 1998). The dividends will be payable on June 30 to shareholders of record as of June 15, 1999.
Mr. Lau, Chairman and Chief Executive Officer, commented, ''Given the competitive market conditions resulting from the Asian turmoil, we are pleased that we could maintain an overall operating profit margin of 20.4% for the year. The Asian market downturn has affected the company's performance particularly in the last two quarters. Fiscal 1999 was the first time that the Company recorded a revenue decreased in the past ten years. We currently face keen pricing pressure, and it was unavoidable that we had to lower our prices to support our customers. Moreover, the impact of economic turmoil on the electronic operation was most significant; OEM assembly & subcontracted sale operations, especially the SMT business, experienced significant sales decreases compared with the extremely favorable results in prior year.
''In the coming year, we see that both the plastic and metal operations are relatively stable and have a good chance to experience unit growth. There will be increases in plastic product orders from our customers Mita and Vtech Communications. New tooling machines of approximately $700,000 will be purchased in July to meet new orders. However, pricing pressure will most likely continue. For the electronic operation, we are working hard to improve its financial performance and estimate that this business will need at least two or three more quarters to recover.'' Mr. Lau added.
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 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 pin-through hole (''PHT'') interconnection 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 Electronics (Shenzhen) Co. Ltd., Inter-Tel Incorporated, Behringer Holdings (Pte) Ltd., Vtech Communications Ltd. and Shakespeare (H.K.) Limited. To learn more about Deswell Industries, Inc., please visit the Company's web site at www.deswellindustries.com
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(U.S. dollars in thousands, except per share data)
Quarter ended Year ended
March 31, March 31,
1999 1998 1999 1998
(Unaudited) (Unaudited) (Audited)
Net sales $ 9,585 $ 14,509 $ 53,439 $ 66,169
Cost of sales 6,247 8,605 32,179 36,246
Gross profit 3,338 5,904 21,260 29,923
Selling, general and
administrative expenses 2,312 2,531 10,364 14,067
Operating income 1,026 3,373 10,896 15,856
Interest expense - - (306) (2)
Other income, net (431) 394 888 1,094
Income before income
taxes 595 3,767 11,478 16,948
Income taxes (431) 366 204 688
Income before minority
interests 1,026 3,401 11,274 16,260
Minority interests (33) 533 1,575 3,289
Net income $ 1,059 $ 2,868 $ 9,699 $ 12,971
Basic earnings per
share $ 0.19 $ 0.55 $ 1.77 $ 2.59
Weighted average number
of shares outstanding
(in thousands) 5,476 5,244 5,478 5,006
Diluted earnings per
share $ 0.19 $ 0.52 $ 1.76 $ 2.40
Diluted weighted average
number of shares
outstanding (in thousands) 5,476 5,504 5,524 5,394
DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(U.S. dollars in thousands)
March 31, March 31,
1999 1998
ASSETS (Unaudited) (Audited)
Current assets :
Cash and cash equivalents $ 27,556 $ 21,902
Restricted cash 2,376 2,927
Accounts receivable, net 7,796 10,079
Trading investment 82 -
Inventories 5,902 6,415
Prepaid expenses and other
current assets 4,116 1,640
Income taxes receivable 507 218
--------- ---------
Total current assets 48,335 43,181
Property, plant and equipment - net 15,639 15,582
Goodwill 357 381
--------- ---------
Total assets $ 64,331 $ 59,144
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,873 $ 3,763
Customer deposits and accrued
expenses 4,138 3,175
Income taxes payable 51 275
--------- ---------
Total current liabilities 7,062 7,213
--------- ---------
Minority interests 8,280 6,705
--------- ---------
Deferred income tax 15 15
--------- ---------
Shareholders' equity
Common stock
- authorized 20,000,000 shares;
issued and outstanding 5,476,131
shares at March 31, 1999 and
5,479,131 shares at March 31, 1998 55 55
Additional paid-in capital 25,355 22,402
Retained earnings 23,564 22,754
--------- ---------
Total shareholders' equity 48,974 45,211
--------- ---------
Total liabilities and
shareholders' equity $ 64,331 $ 59,144
========= =========
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Contact:
Lippert/Heilshorn & Associates, Inc., New York
John Nesbett, ext. 303
212/838-3777
E-Mail: jgn@lhai.com |
