- Company Announces First Half Cash
Dividend of $0.07 Per Share -
Deswell Industries, Inc. (Nasdaq: DSWL) today announced its
unaudited financial results for the first six months ended
September 30, 2016.
Net sales for the first six months ended September 30, 2016 were
$20.6 million, a decrease of 12.7% compared to net sales of $23.6
million for the six months ended September 30, 2015. Net sales
increased by 14.0% to $10.6 million in the plastic segment and
decreased by 30.1% to $10.0 million in the Company’s electronic
segment.
Total gross margin increased to 14.3% during the six months
ended September 30, 2016, as compared to 8.9% in the same period
last year. Gross profit margin in the plastic segment increased to
17.7% of net sales for the first half of fiscal 2017 compared to
13.5% of net sales for the corresponding period of last fiscal
year. The increase in gross profit and margin in the plastic
segment was mainly due to lower raw material and labor costs,
offsetting a slight increase in factory overhead, as a percentage
of sales. The operating loss in the first half of fiscal 2017
was $1.8 million, compared to an operating loss of $2.6 million for
the same period of fiscal 2016.
The Company reported net income of $0.7 million for the six
months ended September 30, 2016 compared to a net loss of $3.5
million for the six months ended September 30, 2015. Non-operating
income for the six months ended September 30, 2016 was $2,616,000,
as compared to non-operating expense of $728,000 in the year-ago
six months. This was primarily due to increase of $3,643,000 on the
fair value of marketable securities, which offset a decrease of
$471,000 in realized gain on sale of marketable securities during
the six months ended September 30, 2016, as compared to the same
six months of the prior fiscal year. Deswell reported basic and
diluted income per share of $0.04 for the first half of fiscal 2017
(based on 16,056,000 weighted average shares outstanding), compared
to basic and diluted loss per share of ($0.22) (based on 16,056,000
weighted average shares outstanding), for the six months ended
September 30, 2015.
The Company's financial position remained strong, with $10.3
million in cash and cash equivalents and working capital totaled
$41.1 million as of September 30, 2016. Furthermore, the Company
has no long-term or short-term borrowings as of September 30,
2016.
Mr. Edward So, Chief Executive Officer, commented, “Despite a
decline in revenue for the first six months of fiscal 2017 we
achieved solid gains in our overall gross margin performance as a
result of improved gross margin in both our plastics and
electronics segments. We continue to explore and develop growth
opportunities for our ODM business and we are focused on working
with our customers to bring new and innovative products to market.
Our balance sheet is strong, providing us flexibility and a solid
platform for the growth of our Company.”
First Half Dividend
The Company also announces that its board of directors today
declared a cash dividend of $0.07 per share for the first half of
the fiscal year ended September 30, 2016. The dividend will be
payable on December 16, 2016 to shareholders of record as of
November 29, 2016.
About Deswell
Deswell manufactures injection-molded plastic parts and
components, electronic products and subassemblies, and metallic
molds and accessory parts 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.
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 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) September 30, March 31,
2016
2016
ASSETS (Unaudited) (Audited) Current assets : Cash and cash
equivalents $ 10,3166 $ 11,996 Fixed deposits maturing over three
months 6,874 5,276 Marketable securities (note 2) 15,804 12,020
Available-for-sale securities (note 2) - 1,603 Accounts receivable,
net 11,057 9,208 Inventories (note 3) 9,912 8,114 Prepaid expenses
and other current assets 1,921 1,658 Assets held for sale -
778 Total current assets 55,884 50,653 Property, plant and
equipment - net 31,424 32,352 Time deposits maturing over twelve
months 4,492 4,566 Total assets $ 91,800 $ 87,571
LIABILITIES AND SHAREHOLDERS' EQUITY Current
liabilities Accounts payable $ 5,279 $ 2,228 Accrued payroll and
employee benefits 4,610 4,035 Customer deposits 2,322 1,423 Other
accrued liabilities 1,334 1,289 Income taxes payable 440 401
Deferred income tax liabilities 847 825 Dividend payable -
562 Total current liabilities 14,832 10,763
Shareholders' equity Common shares nil par value -
authorized 30,000,000 shares,
shares issued and outstanding as of
September 30, 2016 and
March 31, 2016 - 16,056,239; 53,063 53,063 Additional paid-in
capital 5,492 5,492 Accumulated other comprehensive income 5,316
5,305 Retained earnings 13,097 12,948 Total
shareholders' equity 76,968 76,808 Total liabilities
and shareholders' equity $ 91,800 $ 87,571
DESWELL
INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS &
COMPREHENSIVE INCOME (LOSS) (UNAUDITED) ( U.S. dollars in
thousands, except per share data ) Six
months ended September 30,
2016
2015
Net sales $ 20,634 $ 23,648 Cost of sales 17,687
21,546 Gross profit 2,947 2,102 Selling,
general and administrative expenses 4,526 4,425 Other expense, net
239 300 Operating loss (1,818 ) (2,623
) Non-operating income (expense), net 2,616
(728 ) Income (loss) before income taxes 798 (3,351 ) Income taxes
87 121 Net income (loss) attributable
to Deswell Industries, Inc. $ 711 $ (3,472 ) Other
comprehensive loss Unrealized loss on available-for-sale securities
$ - $ (54 ) Comprehensive income (loss) attributable to
Deswell Industries, Inc. $ 711 $ (3,526 ) Net
income (loss) per share attributable to Deswell Industries, Inc.
(note 4) Basic: Net income (loss) per share $ 0.04 $ (0.22 )
Weighted average common shares
outstanding
shares (in thousands)
16,056 16,056 Diluted: Net
income (loss) per share $ 0.04 $ (0.22 )
Weighted average number of shares
outstanding (in thousands)
16,056 16,056
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Investor Relations:Institutional Marketing Services
(IMS)John Nesbett/Jennifer Belodeau203-972-9200
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