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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K/A
(Amendment No. 1)
(This Form 6-K/A amends registrant's Form 6-K submitted on November 29, 2000)
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of November, 2000
DESWELL INDUSTRIES, INC.
(Registrant's name in English)
Unit 516-517, Hong Leong Industrial Complex
No. 4 Wang Kwong Road, Kowloon Bay,
Kowloon, Hong Kong
(Address of principal executive offices)
<PAGE> 2
JOHN NESBETT, EXT. 121
212-838-3777
E-MAIL: [email protected]
DESWELL INDUSTRIES, INC.
ANNOUNCES 54% INCREASE IN SECOND QUARTER REVENUES,
47% INCREASE IN OPERATING INCOME,
AND EPS OF $0.75 PER SHARE
- COMPANY ANNOUNCES INTERIM DIVIDEND OF $0.33 PER SHARE -
HONG KONG (Nov. 6, 2000) - Deswell Industries, Inc. (Nasdaq Symbol: DSWL) today
announced results for the second quarter and six months ended September 30,
2000.
Net sales for the quarter were $24.8 million, an increase of 54.0% compared to
sales of $16.1 million in the second quarter ended September 30, 1999. Operating
income increased 47.0% to $5.07 million, compared to $3.45 million in the
previous year, and net income increased 20.2% to $4.01 million, compared to
$3.34 million in the previous year. Basic earnings per share and diluted
earnings per share increased to $0.75 and $0.74 respectively, (based on
5,349,000 and 5,413,000 weighted average shares outstanding, respectively),
compared to $0.61 and $0.61 respectively (based on 5,476,000 and 5,481,000
weighted average shares outstanding, respectively), in the second quarter ended
September 30, 1999.
Net sales for the six months ended September 30, 2000 were $42.6 million, an
increase of 51.1% compared to sales of $28.2 million for the corresponding
period in 1999. Operating income increased 46.8% to $7.9 million, compared to
$5.4 million in the previous year, and net income increased 24.2% to $6.8
million, compared to $5.5 million in the previous year. Basic earnings per share
and diluted earnings per share increased to $1.27 and $1.26 respectively, (based
on 5,348,000 and 5,379,000 weighted average shares outstanding, respectively),
compared to $1.00 and $0.99 (based on 5,476,000 and 5,477,00 weighted average
shares outstanding, respectively), for the six months ended September 30, 1999.
The Company reported a continued strong financial position with a book value per
share of $10.63 and cash per share of $4.78. The Company has no short term or
long term debt.
Mr. Richard Lau, Chief Executive Officer, said, "We are extremely pleased with
our strong revenue and earnings per share growth for the quarter. With improved
year-over-year performance across all subsidiaries, Jetcrown, our plastic
division, increased revenue by 33 percent and our electronic and metallic
division collectively increased revenue by 95 percent. These results are mainly
attributed to expanded business with our existing and new strong customer base
and a stable increase in orders from
<PAGE> 3
our electronic customers. The capacity expansion underway at our plastics
division, Jetcrown, is beginning to show returns and is reflected in our sales
increase."
Mr. Richard Lau, Chief Executive Officer, concluded, "Deswell is also pleased to
announce that its second phase investment in Dongguan Plastic operation will
commence operation by December 2000. The second phase of our expansion will
increase capacity of our tooling division by above 60 percent."
INTERIM DIVIDEND
The Company also announced that on November 4, 2000, its board of directors
declared an interim cash dividend of $0.33 per share (2000 interim dividend
$0.33 per share). The dividend will be payable on December 7, 2000 to
shareholders of record as of November 22, 2000.
Deswell manufactures injection-molded plastic parts and components and
electronic products and subassemblies and metallic products for original
equipment manufacturers ("OEMs") and contract manufacturers at its factories in
the People's Republic of China. The Company produces a wide variety of plastic
parts and components used in the manufacture of consumer and industrial
products; printed circuit board assemblies using surface mount ("SMT"), and
pin-through hole ("PHT") interconnection technologies; and finished products
such as telephones, telephone answering machines, sophisticated studio-quality
audio equipment and computer peripherals. The Company's customers include
Kyocera Mita Industrial (H.K.) Limited, Epson Precision (H.K.) Ltd., Namtai
Electronics (Shenzhen) Co. Ltd., Inter-Tel Incorporated, Vtech Communications
Ltd., and Shakespeare (H.K.) Limited.
To learn more about Deswell Industries, Inc., please visit the Company's web
site at www.deswell.com
- more -
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DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATE)
<TABLE>
<CAPTION>
Quarter ended Six months ended
September 30, September 30,
-------------------------- --------------------------
2000 1999 2000 1999
-------- -------- -------- --------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $ 24,809 $ 16,110 $ 42,595 $ 28,191
Cost of sales 15,654 9,383 27,185 16,872
-------- -------- -------- --------
Gross profit 9,155 6,727 15,410 11,319
Selling, general and administrative
expenses 4,084 3,277 7,519 5,944
-------- -------- -------- --------
Operating income 5,071 3,450 7,891 5,375
Interest expense (5) -- (5) --
Other income, net (55) 310 174 645
-------- -------- -------- --------
Income before income taxes 5,011 3,760 8,060 6,020
Income taxes 259 172 463 359
-------- -------- -------- --------
Income before minority interests 4,752 3,588 7,597 5,661
Minority interests 741 252 829 212
-------- -------- -------- --------
Net income $ 4,011 $ 3,336 $ 6,768 $ 5,449
======== ======== ======== ========
Basic earnings per share (note 3) $ 0.75 $ 0.61 $ 1.27 $ 1.00
======== ======== ======== ========
Weighted average number of shares
outstanding (in thousands) 5,349 5,476 5,348 5,476
======== ======== ======== ========
Diluted earnings per share (note 3) $ 0.74 $ 0.61 $ 1.26 $ 0.99
======== ======== ======== ========
Diluted weighted average number of
shares outstanding (in thousands) 5,413 5,481 5,379 5,477
======== ======== ======== ========
</TABLE>
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DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(U.S. DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
------------- ---------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets :
Cash and cash equivalents $23,498 $27,156
Restricted cash 2,058 2,129
Marketable securities -- 1,308
Accounts receivable, net 19,557 10,607
Inventories 12,059 10,932
Prepaid expenses and other current assets 2,259 2,295
Income taxes receivable 164 164
------- -------
Total current assets 59,595 54,591
Property, plant and equipment - net 18,839 16,701
Goodwill 530 549
------- -------
Total assets $78,964 $71,841
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 7,555 $ 5,401
Customer deposits and accrued expenses 4,377 4,362
Income taxes payable 320 101
------- -------
Total current liabilities 12,252 9,864
------- -------
Deferred income tax 15 15
------- -------
Minority interests 9,749 8,931
------- -------
Shareholders' equity
Common stock
- authorized 20,000,000 shares; issued and outstanding
5,357,931 shares at September 30, 2000
and 5,347,931 shares at March 31, 2000 54 53
Additional paid-in capital 24,227 24,100
Retained earnings 32,667 28,878
------- -------
Total shareholders' equity 56,948 53,031
------- -------
Total liabilities and shareholders' equity $78,964 $71,841
======= =======
</TABLE>
<PAGE> 6
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(U.S. DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Six months ended
September 30,
--------------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,768 $ 5,449
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,534 2,297
Loss on disposal of property, plant and equipment 15 3
Minority interests 830 237
Changes in current assets and liabilities:
Accounts receivable (8,964) (3,522)
Marketable securities 1,306 134
Inventories (1,141) (1,404)
Prepaid expenses and other current assets 33 1,712
Income taxes receivable -- 180
Accounts payable 2,161 1,121
Customer deposits and accrued expenses 21 21
Income taxes payable 219 62
-------- --------
Net cash provided by operating activities 3,782 6,290
-------- --------
Cash flows from investing activities:
Purchase of property, plant and equipment (4,690) (3,427)
Acquisition, excluding cash acquired -- (32)
Increase in long term investment -- (499)
Purchase of property, plant and equipment 68 42
-------- --------
Net cash used in investing activities (4,622) (3,916)
-------- --------
Cash flows from financing activities:
Common stock repurchased & cancelled -- (1,256)
Common stock issued 159 --
Exchange difference on translation (35) --
Dividends paid (2,942) (3,012)
-------- --------
Net cash used in financing activities (2,818) (4,268)
-------- --------
Net decrease in cash and cash equivalents (3,658) (1,894)
Cash and cash equivalents, at beginning of period 27,156 27,556
-------- --------
Cash and cash equivalents, at end of period 23,498 25,662
======== ========
Supplementary disclosures of cashflow information:
Cash paid during the period for:
Interest 5 --
Income taxes 244 116
======== ========
Acquisition of subsidiary, excluding cash acquired:
Goodwill -- 224
Minority Interests -- (192)
-------- --------
Cash paid, net of cash acquired -- 32
======== ========
</TABLE>
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DESWELL INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
1. MANAGEMENT'S STATEMENT
In the opinion of Management, the accompanying unaudited financial
statements contain all adjustments (all of which are normal and
recurring in nature) necessary to present fairly the financial position
of Deswell Industries, Inc. (the "Company") at September 30, 2000 and
March 31, 2000, the results of operations for the quarters and six
months ended September 30, 2000 and September 30, 1999, and the cash
flows for the six months ended September 30, 2000 and September 30,
1999. The notes to the Consolidated Financial Statements, which are
contained in the Form 20-F Annual Report filed on July 6, 2000 under the
Securities Exchange Act of 1934 should be read in conjunction with these
Consolidated Financial Statements.
2. INVENTORIES
<TABLE>
<CAPTION>
September 30, March 31,
2000 2000
------------- ---------
<S> <C> <C>
Inventories by major categories :
Raw materials $ 6,684 $ 6,924
Work in progress 2,539 1,553
Finished goods 2,836 2,466
------- -------
$12,059 $10,932
======= =======
</TABLE>
3. EARNINGS PER SHARE
The basic net income per share and diluted net income per share are
computed in accordance with the Statement of Financial Accounting
Standards No. 128 "Earnings Per Share".
The basic net income per share is computed by dividing income available
to common holders by the weighted average number of common shares
outstanding during the period. Diluted net income per share gives effect
to all dilutive potential common shares outstanding during the period.
The weighted average number of common shares outstanding is adjusted to
include the number of additional common shares that would have been
outstanding if the dilutive potential common shares had been issued. In
computing the dilutive effect of potential common shares, the average
stock price for the period is used in determining the number of treasury
shares assumed to be purchased with the proceeds from exercise of
options.
The net income for the quarters and six months ended September 30, 2000
and 1999 were both from the Company's continuing operations.
- MORE -
<PAGE> 8
DESWELL INDUSTRIES, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
General
The Company's revenues are derived from the manufacture and sale of (i)
injection-molded plastic parts and components, (ii) electronic products and
subassemblies and (iii) metallic parts and components. The Company carries out
all of its manufacturing operations in southern China, where it is able to take
advantage of the lower overhead costs and inexpensive labor rates as compared to
Hong Kong.
Quarter Ended September 30, 2000 Compared to Quarter Ended September 30, 1999
The Company's net sales for the quarter ended September 30, 2000 were
$24,809,000, an increase of $8,699,000 or 54.0% as compared to corresponding
period in 1999. The significant increase in sales was mainly related to the
increase in sales of injection-molded plastic products and electronics and
metallic products of $3,530,000 and $5,169,000, respectively. This represented
increases of 33.1% and 95.0% respectively, as compared with the net sales in the
corresponding period in the prior year.
The increases in net sales in both operations were attributed to the substantial
increase in orders from its existing strong customer base together with the new
orders from new customers.
The gross profit for the quarter ended September 30, 2000 was $9,155,000,
representing a gross profit margin of 36.9%. This compares with the overall
gross profit and gross profit margin of $6,727,000 or 41.8% for the quarter
ended September 30, 1999. The decrease in the overall gross profit margin of
4.9% was mainly attributed to the combined effect of the increase in resin costs
and electronic component costs in the plastic and electronic division
respectively.
Selling, general and administrative expenses for the quarter ended September 30,
2000 were $4,084,000, amounting to 16.5% of total net sales, as compared to
$3,277,000 or 20.3% of total net sales for the quarter ended September 30, 1999.
As a result of the increase in net sales, operating income was $5,071,000 for
the quarter ended September 30, 2000, an increase of $1,621,000 or 47.0% as
compared with the corresponding quarter in the prior year.
Minority interests represent the 49% minority interest in both the electronics
and metallic subsidiaries. The increase in minority interests to $741,000 for
the quarter ended September 30, 2000 from $252,000 for the quarter ended
September 30, 1999 reflects the increased profits generated by the electronic
and metallic business.
As a result of the above factors, net income was $4,011,000 for the quarter
ended September 30, 2000, an increase of $675,000 or 20.2%, as compared to the
quarter ended September 30, 1999 and net income as a percentage of net sales
decreased to 16.2% from 20.7%.
- more -
<PAGE> 9
DESWELL INDUSTRIES, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Six Months Ended September 30, 2000 Compared to Six Months Ended September 30,
1999
The Company's net sales for the six months ended September 30, 2000 were
$42,595,000, an increase of $14,404,000 or 51.1% as compared to corresponding
period in 1999. The significant increase in sales was mainly related to the
increase in sales of injection-molded plastic products and electronics and
metallic products of $6,370,000 and $8,034,000, respectively. This represented
increases of 34.6% and 81.9% respectively, as compared with the net sales in the
corresponding period in the prior year.
The increases in net sales in both operations were attributed to the substantial
increase in orders from its existing strong customer base together with the new
orders from new customers.
The gross profit for the six months ended September 30, 2000 was $15,410,000,
representing a gross profit margin of 36.2%. This compares with the overall
gross profit and gross profit margin of $11,319,000 or 40.2% for the six months
ended September 30, 1999. The decrease in the overall gross profit margin of
4.0% was mainly attributed to the combined effect of the increase in resin costs
and electronic component costs in the plastic and electronic division
respectively.
Selling, general and administrative expenses for the six months ended September
30, 2000 were $7,519,000, amounting to 17.7% of total net sales, as compared to
$5,944,000 or 21.1% of total net sales for the six months ended September 30,
1999.
As a result of the increase in net sales, operating income was $7,891,000 for
the six months ended September 30, 2000, an increase of $2,516,000 or 46.8% as
compared with the corresponding period in the prior year.
Minority interests represent the 49% minority interest in both the electronics
and metallic subsidiaries. The increase in minority interests to $829,000 for
the six months ended September 30, 2000 from $212,000 for the six months ended
September 30, 1999 reflects the increased profits generated by the electronic
and metallic business.
As a result of the above factors, net income was $6,768,000 for the six months
ended September 30, 2000, an increase of $1,319,000 or 24.2%, as compared to the
six months ended September 30, 1999 and net income as a percentage of net sales
decreased to 15.9% from 19.3%.
- more -
<PAGE> 10
DESWELL INDUSTRIES, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES
Traditionally, the Company has relied primarily upon internally generated funds
and short-term borrowings (including trade finance facilities) to finance its
operations and expansion, although capital expenditure has been partly financed
by long-term debt, including capital leases.
As of September 30, 2000, the Company had a working capital surplus of
$47,343,000. This compares with a working capital surplus of $44,727,000 at
March 31, 2000. The increase in working capital was mainly attributed to the
substantial increase in net sales netting off a dividend distribution of
$2,942,000 and the capital investment of $4,690,000 during the six months ended
September 30, 2000.
The Company has generated sufficient funds from its operating activities to
finance its operations and there is little need for external financing other
than short-term borrowings which are used to finance accounts receivable and are
generally paid from cash generated from operations. The Company has no
outstanding short-term borrowings and no long-term debt as of September 30,
2000.
As of September 30, 2000, the Company had in place general banking facilities
with two financial institutions aggregating approximately $15,698,000. Such
facilities, which are subject to annual review, include overdrafts, letters of
credit, import facilities, trust receipt financing, inward bills financing as
well as fixed loans. As of September 30, 2000, the Company had (i) unused
credit facilities of $15,698,000 (ii) cash and cash equivalents of $23,498,000
and (iii) restricted cash of $2,058,000. The restricted cash of $1,962,000 and
leasehold land and buildings of $1,392,000 have been pledged as collateral for
those credit facilities. The Company also had $96,000 pledged as deposit for
customs duty in Dongguan, China.
The Company expects that working capital requirements and capital additions will
continue to be funded through a combination of internally generated funds and
existing facilities.
- end -
<PAGE> 11
DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (UNAUDITED)
(U.S. DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
COMMON STOCK
---------------------------- ADDITIONAL
SHARES PAID-IN RETAINED SHAREHOLDERS'
OUTSTANDING AMOUNT CAPITAL EARNINGS EQUITY
----------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance at April 1,1997 4,801,337 $ 48 $ 16,188 $ 13,231 $ 29,467
Exercise of stock options and warrants,
net of issue of cost of $138 677,794 7 6,214 -- 6,221
Capitalization of retained earnings of a
subsidiary (note 8) -- -- 2,972 (2,972) --
Net income -- -- -- 12,971 12,971
Dividends ($0.70 per share) -- -- -- (3,448) (3,448)
------------------------------------------------------------------------------
Balance at March 31, 1998 5,479,131 55 25,374 19,782 45,211
Repurchase and cancellation of common stock (3,000) -- (19) -- (19)
Net income -- -- -- 9,492 9,492
Dividends ($1.08 per share) -- -- -- (5,917) (5,917)
------------------------------------------------------------------------------
Balance at March 31, 1999 5,476,131 55 25,355 23,357 48,767
Repurchase and cancellation of common stock (128,200) (2) (1,255) -- (1,257)
Net income -- -- -- 10,298 10,298
Dividends ($0.88 per share) -- -- -- (4,777) (4,777)
------------------------------------------------------------------------------
Balance at March 31, 2000 5,347,931 53 24,100 28,878 53,031
Exercise of stock options 10,000 1 158 -- 159
Net income -- -- -- 6,768 6,768
Dividends ($0.50 per share) -- -- -- (2,942) (2,942)
Exchange difference on translation -- -- (31) (37) (68)
------------------------------------------------------------------------------
Balance at September 30, 2000 5,357,931 54 24,227 32,667 56,948
========== ========== ========== ========== ==========
</TABLE>
<PAGE> 12
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.
For and on behalf of
Deswell Industries, Inc.
by
/s/ Richard Lau
------------------------------------
Richard Lau
Chief Executive Officer
Date: January 9, 2001
