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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, 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: December 9, 1999 By /s/ Peter Chang
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Peter Chang
Vice President
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REVIEW OF OPERATIONS
THIRD QUARTER 1999 AND
NINE MONTHS ENDED SEPTEMBER 30, 1999
To our Shareholders:
We are pleased to announce our third quarter ended September 30, 1999 results.
Third Quarter ended September 30, 1999 compared to Third Quarter ended
September 30, 1998
Net sales for the three months ended September 30, 1999 were $50.3 million
compared with $48.9 million for the same period in 1998. Net income for the
third quarter of 1999 was $0.7 million compared with a net loss of $0.3 million
for the same period in 1998.
The Company's net sales increased by 2.8% in the third quarter of 1999 due to
the increase in baby diapers sales volume in the North American and Australian
regions and the increase in adult incontinence sales volume in all regions.
Gross profit as a percentage of net sales increased by 5.9% to 33.6% for the
third quarter of 1999 from 27.7% for the same period in 1998. Gross margin for
the North American, Asian and European operations improved due to better
manufacturing efficiency and implementation of "go local and go direct" strategy
in Asian operations. Selling, general and administrative expenses as a
percentage of net sales for the third quarter of 1999 increased to 31.0% from
27.6% for the corresponding period in 1998 due to stepping up of promotional
activities in the Asian, Australian and European operations. The Company
realized a gain of $0.7 million from the sale of its factory building in
Singapore in the third quarter of 1999.
Interest expense for the third quarter of 1999 was $0.6 million, the same level
as in the same period in 1998. The Company recognized an exchange loss of $0.5
million this quarter, primarily due to the realization of currency translation
reserves for the Company's dormant operations in Canada and Switzerland. The
Company's taxes in the United States were reduced by a net tax credit of
approximately $0.4 million.
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Nine Months concluding September 30, 1999 compared to Nine Months concluding
September 30, 1998
The Company's net sales for the nine-month period in 1999 were $152.6 million
compared with $151.2 million for the same period in 1998. Gross profit as a
percentage of net sales increased to 32.7% in the nine-month period ended
September 30, 1998 from 27.7% for the same period in 1998. Selling, general and
administrative expenses increased to $45.5 million for the nine-month period in
1999 from $43.1 million for the corresponding period in 1998, primarily due to
stepping up promotional activities in the Asian, Australian and European
operations.
Interest expense for the nine-month period in 1999 was $1.7 million, the same
level as in the corresponding period in 1998. Exchange losses recognized for the
three quarters ended 1999 were $0.7 million, which included an exchange loss of
$0.4 million on realization of currency translation reserve loss for the
Company's dormant operations. Income taxes were reduced by a net tax credit of
approximately $0.4 million in respect of the United States operations. The
Company's net income for the nine months ended September 30, 1999 was $2.6
million, compared with a net loss of $2.2 million for the same period in 1998.
Brandon Wang, Chairman of the Company, said "I am very pleased to see that our
Company recovered rapidly from the loss position in 1998 and is growing in sales
volume and profitability. The improvement in manufacturing efficiency, the
consolidation of the European operations and the "go local and go direct"
strategy in Asia have contributed positively to our profitability. We shall
continue to expand adult incontinence markets and upgrade the features in baby
diapers products. We are looking forward to a more profitable Year 2000 and to
increase our shareholders' value."
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,
Indonesia and Malaysia. 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)", "Cosics(R)", "Cosifits(R)", "Baby Love(R)", "Togs(R)", "Carcs(R)",
"Vlcsi(R)", "Dispo 123(TM)", "Certainty(R)", "Handy(TM)" and "Merit(R)".
November 22, 1999
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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, 1999 and 1998, and the Balance Sheet information as of September
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 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,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales $50,282 $ 48,895 $152,605 $151,201
======= ======== ======== ========
Gross profit 16,904 13,550 49,961 41,893
Gain on sale of property,
plant and equipment 423 - 932 -
Selling, general &
administrative expenses (15,572) (13,478) (45,450) (43,092)
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Operating income (loss) 1,755 72 5,443 (1,199)
Interest expense (551) (590) (1,736) (1,790)
Exchange loss (538) (125) (690) (2)
Other income 277 391 557 873
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Income (loss) before
income taxes 943 (252) 3,574 (2,118)
Provision for income taxes 65 (418) (590) (772)
Minority interest (261) 323 (365) 676
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Net income (loss) $ 747 $ (347) $ 2,619 $ (2,214)
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Earnings (loss) per share $ 0.11 $ (0.05) $ 0.39 $ (0.33)
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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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STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net income (loss) $ 747 $ (347) $ 2,619 $(2,214)
Other comprehensive income
(expense), before tax
Foreign currency translation
adjustments (1,155) 1,245 (375) (865)
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Comprehensive income (expense) $ (408) $ 898 $ 2,244 $(3,079)
======= ====== ======= =======
</TABLE>
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
(Dollars in thousands, unaudited)
September 30, December 31,
1999 1998
Working capital $ 32,547 $ 30,091
Total assets 120,373 133,909
Long-term debt 8,440 20,957
Shareholders' equity 70,258 68,013
At September 30, 1999 the Company had cash totaling $12.4 million.
