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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 May, 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 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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[LETTERHEAD OF DSG INTERNATIONAL LTD.]
For Immediate Release
DSG INTERNATIONAL LIMITED FIRST QUARTER
1998 OPERATION RESULTS
Hong Kong, May 27, 1998 - DSG International Limited (NASDAQ: DSGIF) The
Company's net sales were $52.7 million in the first quarter ended March 31,
1998, a 7.2% decrease from $56.8 million in the corresponding period in 1997.
Net loss for the period ended March 31, 1998 was $1.1 million compared to net
income of $1.5 million for the corresponding period in 1997.
The Company's net sales continued to be affected by the currency turmoil in the
Asia Pacific region. The exchange rate impacted negatively the Company's
reported net sales by $4.2 million. Gross profit margin as a percentage of net
sales decreased to 27.1% in the first quarter of 1998 from 36.2% in the
corresponding period in 1997. This decrease is primarily due to lower unit
selling prices in North America and the adverse impact of higher costs of
imported raw materials in the Asia Pacific region. Selling, general and
administrative expenses as a percentage of net sales decreased to 28.7% for the
first quarter of 1998 from 30.3% for the same period in 1997, attributable
primarily to reduced promotional expenditure in favor of lower selling prices in
North America and the closing of manufacturing operations in California, Canada
and Singapore.
Interest expense for the first quarter of 1998 was $0.6 million, the same as the
first quarter of 1997. The Company reported an exchange gain of $0.2 million, in
the first quarter of 1998, primarily due to the slight recovery of certain Asian
currencies from the end of 1997. Other income for the first quarter of 1998
decreased to $0.2 million from $0.5 million for the same period in 1997 due to
lower interest income.
Brandon Wang, the Chairman of the Company said, "although the company continued
to be impacted by the currency crisis in Asia Pacific, I am encouraged to see
the volume improvement in the North American operation, after we implemented the
new pricing strategy last Quarter. In addition, we have also added several new
customers in Europe for disposable baby diapers". The Chairman further
commented, "with regard to the recent political instability in Indonesia, we
have decided to delay the start-up of the manufacturing operation until things
settle down".
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[LETTERHEAD OF DSG INTERNATIONAL LTD.]
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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STATEMENT OF RESULTS AND BALANCE SHEET DATA
STATEMENT OF RESULTS
(in thousands, except earnings per share, unaudited)
Three months ended
March 31 1998,
1998 1997
Net sales $52,705 $56,768
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Gross profit 14,279 20,532
Selling, general & administrative expenses 15,124 17,213
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Operating income (loss) (845) 3,319
Interest expense (599) (603)
Exchange gain (loss) 244 (644)
Other income 178 501
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Income (loss) before income taxes (1,042) 2,573
Provision for income taxes (197) (1,120)
Minority interest in losses 158 --
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Net income (loss) $(1,081) $ 1,453
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Earnings (loss) per share $ (0.16) $ 0.22
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Weighted average number of shares outstanding 6,675 8,875
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BALANCE SHEET DATA March 31, 1998 December 31, 1997
(in thousands, unaudited)
Working capital $ 30,997 $ 30,823
Total assets 127,804 130,273
Long-term debt 20,315 21,281
(including deferred purchase consideration)
Shareholders' equity 63,706 84,778
On March 31, 1998, the Company had cash and cash equivalents of $16.3 million.
