DESWELL INDUSTRIES, INC.
ANNOUNCES FOURTH QUARTER AND YEAR-END RESULTS
- YEARLY SALES DECREASE 19%, YEARLY NET INCOME DECREASE 25% -
- FINAL DIVIDEND $0.55 PER SHARE -
HONG KONG (June 1, 1999) - Deswell Industries, Inc. (NASDAQ NM Symbol: DSWL)
(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
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
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
Click here to view accompanying tables and notes.
John Nesbett, ext. 303