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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 August, 1999
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: August 30, 1999 By /s/ Peter Chang
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Peter Chang
Vice President
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DSG INTERNATIONAL LTD.
[LOGO APPEARS HERE]
REVIEW OF OPERATIONS
SECOND QUARTER 1999
To our Shareholders:
We are pleased to announce our second quarter and first half 1999 results.
Second Quarter ended June 30, 1999 compared to Second Quarter ended June 30,
1998
Net sales for DSG International Limited ("the Company") for the three-month
period ended June 30, 1999 were $48.7 million compared with $49.6 million for
the same period in 1998. Net income was $0.3 million compared with net loss of
$0.8 million for the same period in 1998.
The Company's sales in Australian region reported a strong volume growth of
15.0% in the second quarter of 1999 compared with the same period in 1998. The
Company's sales in the North American and Asian region maintained the same level
as the corresponding period in 1998. The Company's net sales were slightly
impacted by the sale of the private label baby diaper and feminine napkin
business of the Company's operation in Switzerland.
Gross profit as a percentage of net sales was 32.4% in the second quarter of
1999 compared with 28.4% for the same period in 1998. The higher margin was
primarily due to the improvement in Asian currencies and manufacturing
efficiency in most of the Company's operations. Selling, general and
administrative expenses as a percentage of net sales was 30.2% in the second
quarter of 1999, a slight increase of 1.0% compared with 29.2% for the second
quarter of 1998 due to higher promotional activities in the Company's Australian
operation. Interest expense for the Company in the second quarter of 1999 was
$577.000, compared with $601.000 for the same period in 1998.
Six Months concluding June 30, 1999 compared to Six Months concluding June 30,
1998
The Company's net sales for the six-month period ended June 30, 1999 was $102.3
million, which was on par with the corresponding period in 1998. Gross profit as
a percentage of net sales increase to 32.3% in the six-month period ended June
30, 1999, from 27.7% in the same period in 1998 due to the aforesaid reasons.
Selling, general and administrative expenses were $29.9 million, maintained at
the same level as the first half of 1998. The Company's operating income was
$3.7 million during the first half of 1999 compared with operating loss of $1.3
million during the same period in 1998. The Company's subsidiary in Switzerland,
Loring AG, sold all of its assets and business and ceased operations on March
31, 1999.
Mr. Brandon Wahg, Chairman of the Company, stated "I am pleased with the overall
performance of the Company and particularly pleased with the strong growth in
sales of our Australian operation. The improvement in efficiency of our North
American operations and the consolidation of operations in Europe both has
enhanced the Company's profitability. The "go local and go direct" strategy for
our Asian operations was put into effect. Our Malaysian operation has commenced
production this quarter and we will have in-house sales team in Singapore and
Malaysian operations to market and distribute our products by the third quarter
of 1999. The Company's overall adult incontinence business continues to report
encouraging growth in all regions."
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DSG INTERNATIONAL LTD.
[LOGO APPEARS HERE]
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, Thailand
and Indonesia. Additionally, the Company distributes its products throughout
Asia, Australia, North America and Europe. The Company produces private label
disposable diapers, adult incontinence products, and training pants at certain
of its operations. Its best selling brands include "Fitti(R)", "Pet Pet(R)",
"Cosies(R)", "Cosfits(R)", "Baby Love(R)", "Togs(R)", "Cares(R)", "Vlesi(R)",
Dispo 123(TM)", "Certainty(R)", "Handy(TM)", and "Merit(R)".
August 18, 1999
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DSG INTERNATIONAL LTD.
[LOGO APPEARS HERE]
STATEMENTS OF OPERATIONS AND BALANCE SHEET DATA
The Statements of Operations for the three-month and six-month periods ending
June 30, 1999 and 1998, and the Balance Sheet information as of June 30, 1999,
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 these periods, however, are not necessarily
indicative of the results for the full year.
SUMMARY OF RESULTS
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $48,732 $49,601 $102,323 $102,306
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Gross profit 15,784 14,064 33,057 28,343
Gain on sale of property, plant and - - 509 -
Selling, general & administrative expenses (14,735) (14,490) (29,878) (29,614)
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Operating Income (loss) 1,049 (426) 3,688 (1,271)
Interest expense (577) (601) (1,185) (1,200)
Exchange (loss) gain (82) (101) (152) 123
Other income 155 304 280 482
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Income (loss) before income taxes 545 (824) 2,631 (1,866)
Provision for income taxes (144) (157) (655) (354)
Minority interest (85) 195 (104) 353
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Net income (loss) $ 316 $ (786) $ 1,872 $ (1,867)
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Earnings (loss) per share
- - basic and diluted $ 0.05 $ (0.12) $ 0.28 $ (0.28)
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Weighted average number of shares
outstanding 6,675 6,675 6,675 6,675
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</TABLE>
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DSG INTERNATIONAL LTD.
[LOGO APPEARS HERE]
STATEMENTS OF COMPREHENSIVE INCOME
(in thousands)
<TABLE>
<CAPTION>
Three Months Six Months Ended
Ended
June 30, June 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income (loss) $ 316 $ (786) $1,872 $(1,867)
Other comprehensive expense, before tax
Foreign currency translation adjustments 1,541 (2,118) 780 (2,110)
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Comprehensive income (expense) $1,857 $(2,904) $2,652 $(3,977)
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</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>
June 30,1999 December 31, 1998
(unaudited)
<S> <C> <C>
Working capital $ 33,875 $ 30,091
Total assets 127,114 133,909
Long-term debt 18,696 20,957
Shareholders' equity 70,666 68,013
</TABLE>
On June 30, 1999 the Company had cash totaling $8.3 million.
