FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For August 12, 2005
DESWELL INDUSTRIES, INC.
(Registrant's name in English)
Unit 516 517, Hong Leong Industrial Complex,
No. 4 Wang Kwong Road, Kowloon Bay,
Kowloon, Hong Kong
(Address of principal executive offices)
Deswell Industries, Inc. Announces First Quarter Results;
4.5% Increase in First Quarter Net Sales;
Company also Announces First Quarter Dividend of $0.16 Per Share
MACAO--(BUSINESS WIRE)--Aug. 8, 2005--Deswell Industries, Inc.
(Nasdaq: DSWL) today announced its financial results for the fiscal
first quarter ended June 30, 2005.
Deswell reported net sales for the first quarter 2005 of $30.1
million, compared to $28.8 million for the first quarter 2004, an
increase of 4.5%. Operating income totaled $4.0 million, compared to
$4.8 million for the same quarter in 2004, a decrease of 17.2%. Net
income for the quarter decreased 21.1% to $3.2 million, or $0.21 per
fully diluted share, compared to $4.0 million, or $0.28 per fully
diluted share, for the comparable period in 2004.
The Company's balance sheet remains strong, with cash and cash
equivalents for the quarter totaling $30.4 million, compared to $28.1
million on March 31, 2005. Working capital totaled $60.2 million as of
June 30, 2005, up from $57.6 million as of March 31, 2005. The Company
has no long-term or short-term borrowings.
Mr. Richard Lau, chairman and chief executive officer, commented,
"We are very pleased with the electronics and metallic division's
29.7% revenue growth in the first quarter. This growth was primarily
driven by our continued success manufacturing audio equipment. The
decrease in revenue in the plastic division can be primarily
attributed to three reasons: First, our business with Vtech decreased
by approximately two-thirds as we chose not to take on significantly
lower margin business. Second, technical issues involved in another
customer's models delayed the progress of new model production,
resulting in an 80% drop in purchase orders from this customer.
Finally, we are still suffering from the increased cost of resin due
to high oil prices. Over 50% of this cost could not be passed along to
our customers."
Mr. Lau continued, "While the plastic division faced a tough start
this year with a 19.6% decrease in revenue, we expect this situation
to improve in the third quarter. A substantial amount of molds from
new customers and large molds from existing customers will be
completed in September and production should commence in October.
These new molds are for such items as color printers and vacuum
cleaners for two Japanese brand names."
Annual General Meeting
The Company will hold its 2005 Annual General Meeting at 9:30 a.m.
on September 19, 2005 at the Wynn Las Vegas Resort, 3131 Las Vegas
Blvd South, Las Vegas, Nevada 89109, U.S.A.
First-Quarter Dividends
The Company also announced that on August 8, 2005 its board of
directors declared a dividend of $0.16 per share for the fiscal first
quarter 2005. The dividend will be payable on September 5, 2005 to
shareholders of record as of August 22, 2005.
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 Digidesign Inc., Vtech
Telecommunications Ltd., Epson Precision (H.K.) Ltd., Inter-Tel
Incorporated, Line 6 Manufacturing and Peavey Electronics Corporation.
To learn more about Deswell Industries, Inc., please visit the
Company's web site at www.deswell.com.
This press release may contain forward-looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934.
Forward-looking statements in this press release are based on current
expectations and are subject to change. Actual results may differ
materially from the forward-looking statements. Deswell does not
undertake to update any such forward-looking statements or to publicly
announce developments or events relating to the matters described
herein. Uncertainties and risks are described in Deswell's most
recently filed SEC documents, such as its most recent form 20-F.
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(U.S. dollars in thousands, except per share data)
Quarter ended
June 30,
2005 2004
Net sales $ 30,075 $ 28,788
Cost of sales 22,435 20,470
---------- -----------
Gross profit 7,640 8,318
Selling, general and administrative expenses 3,654 3,506
---------- -----------
Operating income 3,986 4,812
Interest expense - -
Other income, net (360) 30
---------- -----------
Income before income taxes 3,626 4,842
Income taxes 25 131
---------- -----------
Income before minority interests 3,601 4,711
Minority interests 450 716
---------- -----------
Net income $ 3,151 $ 3,995
========== ==========
Basic:
Net income per share (note 3) $ 0.21 $ 0.29
========== ==========
Weighted average common shares 14,865 13,724
outstanding (in thousands) (note 4) ========== ==========
Diluted:
Net income per share (note 3) $ 0.21 $ 0.28
========== ==========
Weighted average common and potential 14,929 14,227
Common shares (in thousands) (note 4) ========== ==========
DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(U.S. dollars in thousands)
June 30, March 31,
2005 2005
---- ----
(Unaudited) (Audited)
ASSETS
Current assets:
Cash and cash equivalents $ 30,398 $ 28,073
Restricted cash 776 1,040
Marketable securities 178 244
Accounts receivable, net 24,469 25,091
Inventories 19,634 21,136
Prepaid expenses and other current assets 5,072 4,761
Income taxes receivable 173 20
---------- ---------
Total current assets 80,700 80,365
Property, plant and equipment - net 56,583 56,133
Goodwill 710 478
---------- ---------
Total assets $ 137,993 $ 139,976
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 13,849 $ 16,449
Customer deposits and accrued expenses 6,203 6,015
Income taxes payable 403 325
---------- ---------
Total current liabilities 20,455 22,789
---------- ---------
Deferred income tax - -
---------- ---------
Minority interests 7,645 9,420
---------- ---------
Shareholders' equity
Common stock
- authorized 30,000,000 shares; issued
and outstanding 14,908,730 shares at
June 30, 2005 and 14,778,730 at
March 31, 2005 (note 4) 41,043 39,068
Additional paid-in capital 6,970 6,970
Retained earnings 61,880 58,729
---------- ---------
Total shareholders' equity 109,893 104,767
---------- ---------
Total liabilities and
shareholders' equity $ 137,993 $ 136,976
========== =========
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(U.S. dollars in thousands )
Quarter ended
June 30,
2005 2004
---- ----
Cash flows from operating activities:
Net income $ 3,151 $ 3,995
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,581 1,121
Gain on sale of property, plant and equipment 4 9
Minority interests 425 716
Changes in current assets and liabilities:
Accounts receivable 622 (3,697)
Marketable securities 66 -
Inventories 1,502 (5,761)
Prepaid expenses and other current assets (311) (769)
Income taxes receivable (153) -
Accounts payable (2,600) 5,708
Customer deposits and accrued expenses 188 995
In income taxes payable 78 102
--------- --------
Net cash provided by operating activities 4,553 2,419
--------- --------
Cash flows from investing activities
Purchase of property, plant and equipment (2,033) (3,624)
Proceeds from disposal of property, plant
and equipment - 6
--------- --------
Net cash used in investing activities (2,033) (3,618)
--------- --------
Cash flows from financing activities
Common stock issued 141 -
Dividends paid to minority shareholders of
a subsidiary (430) (126)
Distribution to minority shareholders
of a subsidiary (170) (26)
Decrease/(increase) in restricted cash 264 (1,000)
--------- --------
Net cash used in financing activities (195) (1,152)
--------- --------
Net (decrease)/increase in cash and
cash equivalents 2,325 (2,351)
Cash and cash equivalents,
at beginning of period 28,073 30,193
--------- --------
Cash and cash equivalents,
at end of period 30,398 27,942
========= ========
Supplementary disclosures of cashflow information:
Cash paid during the period for:
Interest - -
Income taxes 100 29
========= ========
Supplementary disclosures of significant
non-cash transactions:
Issuance of common stock in connection
of acquisition of Additional 5%
shareholdings of a subsidiary 1,834 -
Excess of acquisition cost over the fair
value of acquired net assets of additional
5% shareholdings of a subsidiary (234) -
========= ========
CONTACT: The Investor Relations Group
John G. Nesbett
Jordan Silverstein
212-825-3210
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
For and on behalf of
Deswell Industries, Inc.
By: /s/ Richard Lau
---------------
Richard Lau
Chief Executive Officer
Date: August 12, 2005