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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 April, 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 and 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. LETTERHEAD]
Contact: Mr. Peter Chang
(770) 497-9800
For Immediate Release
DSG INTERNATIONAL LIMITED REPORTS FOURTH QUARTER
AND YEAR-END 1997 RESULTS
Hong Kong, April 27, 1998 - DSG International Limited (NASDAQ: DSGIF) today
reported that earnings per share in 1997 were $0.15 compared with $1.18 in 1996.
Net income for the year 1997 dropped to $1.0 million compared with $9.2 million
for 1996.
The Company's net sales in 1997 were $230.9 million compared with $236.1 million
in 1996. Sales for the Company were adversely affected by continued intense
price and promotional competition in the North American region and also by the
unfavorable translation of the Asian and Australian Dollar into U.S. Dollar
reporting currency, resulting from the currency turmoil in the Asian Pacific
region.
In 1997, the gross profit margin declined by 0.8% to 33.3%, due to lower sales
volume in the North American operation and the higher cost, in local currency,
of imported materials in the Company's Asian operations, an additional result of
the currency turmoil. Selling, general and administrative expenses as a
percentage of net sales increased by 3.9% to 31.2% in 1997. This was due to the
increased expenses of the Company's North American operations in order to meet
intensified price and promotional competition and higher selling, general and
administrative expenses for the Company's newly acquired operations. In 1997,
the Company closed several of its manufacturing operations in the North American
and Asian Pacific regions and wrote-down certain surplus equipment used in its
European operation, with a total restructuring cost of $1.4 million. The
Company's interest expense in 1997 increased to $2.8 million from $2.3 million
in 1996, due to increased borrowings for the companies acquired in 1997. The
decrease in other income to $1.3 million for the year 1997 from $1.8 million for
the year 1996 was primarily due to less interest income from reduced average
bank balances.
In the fourth quarter of 1997, there was a loss of $0.12 per share, compared
with earnings per share of $0.45 for the corresponding period in 1996. Net loss
for the fourth quarter of 1997 was $0.8 million compared with a net income of
$3.4 million in the corresponding quarter of 1996. The Company's net sales in
the fourth quarter of 1997 declined by 7.6% to $51.7 million, compared with
$56.0 million for the same period in 1996. The adverse effect of competition in
the North American region and economic turmoil in Asian Pacific countries
affected both the Company's sales volume and revenue. Gross profit margin for
the fourth quarter of 1997 was 31.2% compared to 37.2% of the previous year.
This was primarily due to a lower sales volume combined with the higher cost of
imported materials for the Company's Asian Pacific operations. Selling, general
and administrative expenses for the fourth quarter of 1997 increased to $17.8
million compared with $15.5 million in the fourth quarter of 1996, resulting
from the
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increased expenditure for promotional activities and additional selling, general
and administrative expenses from the newly acquired operations. In addition, the
restructuring costs referred to above were largely booked in the fourth quarter.
Brandon Wang, the Chairman of the Company, said: "1997 has been a difficult year
for the Company with the currency turmoil in the Asia-Pacific region affecting
the volume growth that had been experienced in prior years. Additionally, the
Company's margins were adversely affected because certain raw materials are
purchased in U.S. dollars, yet selling prices in local currencies could not be
increased in time to reflect the increased raw materials costs in local
currency. Despite all of this, we believe we have held our market share position
in the Asia-Pacific region. During 1997, there was no change in the intense
price and promotional competition in the North American market, and we see no
improvement in market conditions for baby diaper products in 1998. I am,
however, encouraged by the growth of the adult incontinent market in North
America and am pleased that the Company has recently been awarded adult
incontinent business for two of the largest drugstore chains, Walgreen's and
Rite-Aid. Also in 1997, to reduce costs, the Company consolidated production
operations in several locations in North America and Asia. We are, however,
moving forward with our joint venture in Indonesia, and we expect our production
facility will be in operation sometime in the second quarter of this year. We
believe that our local manufacturing capability there will significantly
decrease costs of marketing and distribution in Indonesia, which we regard as a
market with great potential. As result of these measures and an anticipated
stabilization of the currency turmoil in 1997, we look forward to 1998 with
confidence that it will be a better year."
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 manufacturing
operations in Hong Kong, Australia, Great Britain, 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/, Viesi/R/,
Dispo 123/TM/, Certainty/R/ and Handy/TM/.
This press release contains forward-looking statements that involve assumptions
and uncertainties. The Company's actual results could differ materially from
what is projected here; in fact, some of the more consequential factors that
could cause or contribute to such differences are noted within the Company's
various reports filed with the Securities and Exchange Commission and include,
but are not limited to, general economic factors, competitive pricing pressures,
costs of raw materials, lack of acceptance of new products, currency
fluctuations and economic conditions in international markets.
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[DSG INTERNATIONAL LTD. LETTERHEAD]
SUMMARY OF RESULTS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Twelve months ended
December 31, December 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales $51,722 $55,954 $230,930 $236,050
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Gross profit 16,139 20,829 77,001 80,403
Selling, general & administrative
expenses 17,760 15,508 72,034 64,420
Restructuring expenses 1,166 -- 1,389 --
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Operating income (loss) (2,787) 5,321 3,578 15,983
Interest expense (664) (494) (2,833) (2,267)
Exchange gain (losses) 752 (560) (610) (176)
Other income 604 432 1,282 1,811
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Income (loss) before income taxes (2,095) 4,699 1,417 15,351
Provision for income taxes 1,234 (1,274) (443) (6,185)
Minority interest in losses 84 (2) -- --
Net income $ (777) $ 3,423 $ 974 $ 9,166
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Earnings per share $ (0.12) $ 0.45 $ 0.15 $ 1.18
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Weighted average number of shares
outstanding 6.675 7,599 6,675 7,747
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</TABLE>
<TABLE>
<CAPTION>
BALANCE SHEET DATA December 31, December 31,
(In thousands, unaudited) 1997 1996
<S> <C> <C>
Working capital $30,823 $31,683
Total assets 130,273 141,910
Long-term debts 21,281 21,940
(including deferred purchase
consideration)
Shareholders' equity 64,778 74,639
</TABLE>
On December 31, 1997, the Company had cash and cash equivalents of $18,588.
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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)
Dated: May 21, 1998 By /s/ Peter Chang
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Peter Chang
Vice President
