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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 the month of March, 1997
DSG International Limited
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(Translation of registrant's name into English)
17/F Watson Centre, 16-22 Kung Yip Street,
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Kwai Chung, Hong Kong
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Tel. No. 852-2427-6951
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(Address of principal executive offices)
[Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.]
Form 20-F x Form 40-F
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[Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes No x
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[If "yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b):
82-___________.]
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DSG INTERNATIONAL LTD.
REVIEW OF OPERATIONS
FIRST QUARTER 1997
To our Shareholders:
We are pleased to announce our first quarter 1997 results.
The Company's net sales for the first quarter ended March 31, 1997 declined by
8.6% to $56.8 million compared to $62.1 for the corresponding period in 1996.
Net income for the period ended March 31, 1997 was $1.5 million, an increase of
30.0% compared to $1.1 million for the corresponding period in 1996.
The Company's earnings per share in the first quarter of 1997 were $0.22,
increased 57.1% compared to the same period in 1996, reflecting the decrease in
weighted average number of shares outstanding as a result of the Company's
tender offer transaction, which was completed in December 1996 and the ongoing
share repurchase program.
The Company's net sales continued to be adversely affected by the intense price
and promotional competition in North American and European markets. Gross profit
margin as a percentage of net sales increased by 6.1% to 36.1% in the first
quarter of 1997 from 30.0% in the corresponding period in 1996, primarily due to
lower fluff wood pulp price. Selling, general and administrative expenses as a
percentage of net sales increased to 30.3% for the first quarter of 1997 from
27.0% for the same period in 1996 due to higher advertising and promotional
expense to meet aggressive price and promotional competition in the North
American market.
Interest expense for the first quarter of 1997 was maintained at $0.6 million,
the same as in the first quarter of 1996 due to the same level of bank
borrowings. The Company reported an exchange loss of $644,000 in the first
quarter of 1997, representing a loss of $0.10 earnings per share, primarily due
to the unfavorable currency movement in translation of the intercompany loan
denominated in Swiss Franc. Other income of $501,000 in the first quarter of
1997 included interest income and a one-time settlement by a former tenant of
the Company's Australian operation.
Brandon Wang, the Chairman of the Company, said: "The Company achieved a
satisfactory result in the first quarter of 1997 despite the keen competition in
North American and European regions. The Company increased spending in
advertising and promotion expense to counteract the aggressive competition in
North America and to expand the sales in Asia. We believe that the Company has
excellent opportunities in the Asia Pacific region. We have entered into a joint
venture agreement with our
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distributor in Indonesia to start up a manufacturing operation
which is scheduled to operate early next year.
DSG International Limited and its predecessors have been in the business of
manufacturing and distributing disposable diapers since 1973. With manufacturing
plants in Hong Kong, California, Georgia, Australia, England, Singapore, Canada,
Switzerland, China and Thailand, the Company distributes its products throughout
Asia, Australia, North America, and Europe. The Company also produces private
label disposable diapers, adult incontinence products, feminine napkins and
training pants at certain of its operations. Its best selling brands include
"Fitti(R)", "Pet Pet(R)", "Cosios(R)", "Cosifits(R)", "Baby Love(R)", "Togs(R)",
"Cares(R)", "Vlesi(R)", "Dispo 123(TM)" and "Certainty(R)".
May 16, 1997
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STATEMENTS OF OPERATIONS AND BALANCE SHEET DATA
(In thousands, except earnings per share)
The Statements of Operations for the three months ended March 31, 1996 and March
31, 1997, and the Balance Sheet information as of March 31, 1997 have been
derived from unaudited financial statements which, in the opinion of the
management, include all adjustments necessary, consisting only of normal
recurring adjustments for a fair presentation of the results of operations for
such periods. The results for the three-month period are not necessarily
indicative of the results for the full year.
STATEMENTS OF OPERATIONS
Three Months Ended
March 31,
1997 1996
Net sales $56,768 $62,109
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Gross profits 20,532 18,658
Selling, general & administrative expenses 17,213 16,744
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Operating income 3,319 1,914
Interest expense (603) (592)
Exchange gain (loss) (644 331
Other Income 501 411
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Income before income taxes 2,573 2,064
Provision for income taxes (1,120) (958)
Minority interest in losses - 12
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Net income $1,453 $1,118
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Earnings per share $ 0.22 $ 0.14
Weighted average number of share outstanding 6,675 7,850
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BALANCE SHEET DATA
March 31, 1997 December 31, 1996
(unaudited)
Working capital $35,762 $31,683
Total assets 145,571 141,910
Long-term debt 21,826 21,940
(including deferred purchase
consideration)
Shareholders' equity 75,298 74,639
At March 31, 1997 the Company had cash of $12.2 million
SHARE REPURCHASE PROGRAM
During the first quarter of 1997, the Company repurchased 5,000 shares from the
public for a total cash consideration of $67,500.
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SIGNATURES
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.
DSG International Limited
(Registrant)
Date: May 12, 1997 By /s/ Peter Chang
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Peter Chang
Vice President
