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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 November, 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 X
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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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[FITTI GRAPHIC]
dsg 1997
THIRD
QUARTER
REPORT
[COSIES GRAPHIC]
[DISPO GRAPHIC]
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REVIEW OF OPERATIONS THIRD QUARTER 1997 AND NINE MONTHS ENDED SEPTEMBER 30, 1997
To our Shareholders:
The net sales for DSG International Ltd ("the Company") for the three months
ended September 30, 1997 were $58.3 million, moderately higher than the net
sales of $58.0 million for the same period in 1996. Despite showing an overall
operating profit, the Company reported a net loss of $2.0 million for the third
quarter ended September 30, 1997, or the equivalent of a $0.30 loss per share.
This was primarily due to the weakening of Asian currencies. The Company also
recognized an exchange loss of $1.7 million, along with a non-recurring charge
of $0.3 million for the restructuring of manufacturing facilities in North
America.
The Company's net sales for the nine-month period in 1997 were $179.2 million,
close to the net sales of $180.1 million for the same period in 1996.
Additionally, during the nine-month period, the net income decreased from $5.7
million in 1996 to $0.8 million in 1997.
STRONG GROWTH IN ASIA PACIFIC AND AUSTRALIA
Chairman and CEO Brandon Wang stated, "Despite the currency problems and general
economic turmoil in the Asia Pacific region, DSG continues to gain new market
shares in several countries. Both our premium and economy brands continue to
gain strong positions in such highly populated nations as China and Indonesia.
Moreover, as consumers within this marketplace become increasingly familiar with
the advantages of disposable diapers, we expect our position there to be
considerably strengthened. The Australian market has also seen satisfactory
volume growth for this period, and we are encouraged by the results of the
recent steps taken by the Company to reduce costs and increase productivity. We
have further begun to introduce adult incontinence products into both the
Australian and Asia Pacific markets. The initial response is very positive, and
we are confident this diversification will enhance our standing as a leading
disposable hygiene product company within these regions."
SIGNIFICANT COST REDUCTION AND DIVERSIFICATION IN NORTH AMERICA
"The North American market is continuing to show the effects of pricing
pressure. Although the necessity of an increased promotional expenditure has
adversely impacted our profit margin, we have taken the measures needed to
streamline our operations, which will improve our ongoing profitability. In
addition, the strategy we initiated earlier this year - diversifying into the
adult incontinence market - has already shown promising results. We expect this
segment of the business will be an important part of next year's growth and
earnings."
ADULT INCONTINENCE MARKET EXPANSION IN EUROPE
"Following our acquisition of additional adult incontinence businesses in
Holland and Belgium, we will continue to focus our expansion on this less
price-sensitive sector," said Mr. Wang. "We are introducing a new range of
products to our institutional customers throughout the Benelux countries, along
with the rest of Europe. These actions should substantially improve our market
position within the European arena."
"As far as the baby diaper markets are concerned, some competitive pressure will
continue to impact growth in this area. We are now able to gain entry, however,
into a major retail chain in the UK, which will significantly improve our sales
turnover and margin for 1998."
DSG International Limited and its predecessors have been in the business of
manufacturing and distributing disposable diapers since 1973. With
manufacturing plants in Georgia and Wisconsin, the Company also maintains
facilities in Hong Kong, Australia, Great Britain, Singapore, Canada,
Switzerland, China and Thailand. Additionally, the Company distributes its
products throughout Asia, Australia, North America and Europe. The Company
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)", "Cosies(R)", "Cosifits(R)", "Baby
Love(R)", "Togs(R)", "Cares(R)", "Vlesi(R)", "Dispo 123(TM)" and "Certainty(R)".
November 26, 1997
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STATEMENTS OF OPERATIONS AND
BALANCE SHEET DATA
The Statements of Operations for the three-month and nine-month periods ending
September 30, 1997 and 1996, and the Balance Sheet information as of September
30, 1997, are derived from unaudited financial statements which, in the opinion
of the management, include all necessary adjustments, consisting only of
normally recurring adjustments, for a fair presentation of the results of
operations for these time frames. The results for the periods, however,
are not necessarily indicative of the results for the full year.
STATEMENTS OF OPERATIONS
(in thousands, except earnings per share)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $58,257 $57,992 $179,208 $180,096
======== ======== ======== ========
Gross profit 18,446 20,106 60,862 59,574
Selling, general &
administrative expense 18,167 15,720 54,497 48,912
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Operating income 279 4,386 6,365 10,662
Interest expense (759) (575) (2,169) (1,773)
Exchange (loss) gain (1,676) 127 (2,542) 384
Other income 44 383 677 1,379
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Income before income taxes (2,112) 4,321 2,331 10,652
Provision for income taxes 74 (1,978) (1,399) (4,911)
Minority interest 15 4 (84) 2
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Net (loss) income $(2,023) $2,347 $848 $5,743
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(Losses) earnings per share $(0.30) $0.80 $0.13 $0.74
======= ======= ======= =======
Weighted average number
of shares outstanding 6,675 7,745 6,675 7,797
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</TABLE>
BALANCE SHEET DATA
(in thousands)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
(unaudited)
<S> <C> <C>
Working capital $28,136 $31,714
Total assets 152,390 141,910
Long-term debt (including deferred
purchase consideration) 22,158 21,940
Shareholders' equity 72,119 74,639
</TABLE>
At September 30, 1997 the Company had cash totaling $10.5 million.
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[LOGO OF DSG INTERNATIONAL LTD]
DSG INTERNATIONAL LTD
17th Floor Watson Centre
Kung Yip Street
Kwai Chung
Hong Kong
Tel: (852) 2427 6951
Fax: (852) 2480 4491
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SIGNATURES
Pursuant to the requirements of the Securities and 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
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(Registrant)
Date: December 10, 1997 By /s/ Peter Chang
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Peter Chang
Vice President
