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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 December, 1998
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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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
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(Registrant)
Date: December 23, 1998 By /s/ Peter Chang
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Peter Chang
Vice President
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DISPOSABLE
SOFT [LOGO APPEARS HERE]
GOODS
THIRD QUARTER REPORT 1998
[GRAPHIC ART APPEARS HERE]
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REVIEW OF OPERATIONS
THIRD QUARTER 1998
AND NINE MONTHS ENDED
SEPTEMBER 30, 1998
To our Shareholders:
We are pleased to announce our third quarter ended September 30, 1998 results.
THIRD QUARTER ENDED SEPTEMBER 30, 1998 COMPARED TO THIRD QUARTER ENDED SEPTEMBER
30, 1997
The Company's net sales for the three-month ended September 30, 1998 were $48.9
million compared with net sales of $58.3 million for the same period in 1997.
Net loss for the third quarter of 1998 was $0.3 million compared with net loss
of $2.0 million for the same period in 1997.
Although the Company's sales in Asia Pacific region had a moderate recovery in
the third quarter of 1998 over the previous quarter, the Company's sales
declined compared with the same period in 1997, primarily due to the decrease in
volume in both North America and Europe.
Gross profit as a percentage of net sales reduced by 4.0% to 27.7% for the third
quarter of 1998 from 31.7% of the same period in 1997. The reduction in gross
profit was due to lowered unit selling prices and productivity in the Company's
operations in North America and higher cost of imported raw materials in the
Asia Pacific operations. On the other hand, the Company continued to reduce its
selling, general and administrative expenses, and as a percentage to net sales,
the expenses for the third quarter of 1998 dropped to 27.6% from 31.2% for the
corresponding period in 1997.
Interest expense for the third quarter of 1998 was $0.6 million, compared with
$0.8 million for the same period in 1997. The Company recognized exchange loss
of $0.1 million in this quarter, which was less than the $1.7 million loss for
the same period in 1997.
NINE MONTHS CONCLUDING SEPTEMBER 30, 1998 COMPARED TO NINE MONTHS CONCLUDING
SEPTEMBER 30, 1997
The Company's net sales for the nine-month period in 1998 were $151.2 million
compared to $179.2 million for the same period in
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1997. Gross profit as a percentage of net sales decreased to 27.7% in the
nine-month period ended September 30, 1998, from 34.0% for the same period in
1997. Selling, general and administrative expenses were reduced by $11.4 million
to $43.1 million for the nine-month period in 1998 from $54.5 million for the
corresponding period in 1997.
Interest expense for the nine-month period in 1998 was $1.8 million, reduced
from $2.2 million for the same period in 1997 due to retirement of debt.
Exchange loss recognized was significantly reduced to $2,000 in 1998 compared
with $2.5 million in 1997. Overall, the Company's net loss for the nine-month
ended September 30, 1998 was $2.2 million, compared with net income of $0.8
million for the same period in 1997.
Brandon Wang, the Chairman of the Company, stated "I see the gradual recovery of
the Asian currencies against the US dollar, and I am very pleased to see that
our key Asian operations are benefited. We are pressing ahead with our projects
in South East Asian countries, and coupled with this "go local" strategy, I
expect that our Asian operations would return to profitability very soon. In
North America, where competition is so keen that only the highly efficiency
operation will survive, we are committed to new generation high speed machines
to improve efficiency and to reduce costs and we shall see the results in three
to six months' time. In Europe, we plan to consolidate our operations, we
anticipate certain restructuring costs in the coming quarter."
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/",
"Vlesi/R/", "Dispo 123/TM/", "Certainty/R/" and "Handy/TM/".
December 8, 1998
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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, 1998 and 1997, and the Balance Sheet information as of September
30, 1998, 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,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $48,895 $58,257 $151,201 $179,208
======= ======= ======== ========
Gross profit 13,550 18,446 41,893 60,862
Selling, general &
administrative expense 13,478 18,167 43,092 54,497
------- ------- -------- --------
Operating income (loss) 72 279 (1,199) 6,365
Interest expense (590) (759) (1,790) (2,169)
Exchange loss (125) (773) (2) (1,639)
Other income 391 44 873 677
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Income before income taxes (252) (1,209) (2,118) 3,234
Provision for income taxes (418) 74 (772) (1,399)
Minority interest 323 15 676 (84)
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Net (loss) income $ (347) $(1,120) $ (2,214) $ 1,751
======= ======= ======== ========
(Losses) earnings per share $ (0.05) $ (0.17) $ (0.33) $ 0.26
======= ======= ======== ========
Weighted average number of
shares outstanding 6,675 6,675 6,675 6,675
======= ======= ======== ========
</TABLE>
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STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net (loss) income $ (347) $(1,120) $(2,214) $ 1,751
Other comprehensive income
(expense), before tax
Foreign currency
translation adjustments 1,245 (2,149) (865) (3,318)
Provision for income
taxes -- -- -- --
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Other comprehensive income
(expense), net of tax 1,245 (2,149) (865) (3,318)
------- ------- ------- -------
Comprehensive income (expense) $ 898 $(3,269) $(3,079) $(1,567)
======= ======= ======= =======
</TABLE>
During the year, the Company adopted the Statement of Financial Accounting
Standards ("SFAS") No. 130 Reporting Comprehensive Income, issued by the
Financial Accounting Standards Board. SFAS No. 130 requires the reporting of
comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of certain financial information that historically has not been
recognized in the calculation of net income. The inclusion represents all
changes in equity except those resulting from investments by, and distributions
to owners.
BALANCE SHEET DATA
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
(unaudited)
<S> <C> <C>
Working capital $ 29,806 $ 30,823
Total assets 122,035 130,273
Long-term debt (including deferred
purchase consideration) 19,124 21,281
Shareholders' equity 61,700 64,778
</TABLE>
At September 30, 1998 the Company had cash totaling $11.2 million.
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DSG INTERNATIONAL LTD.
17th Floor Watson Centre
Kung Yip Street
Kwai Chung
Hong Kong
Tel: (852) 2427 6951
Fax: (852) 2480 4491
