Deswell announces third quarter results
Macao--(business wire)--deswell industries, inc. (nasdaq: dswl) today announced its financial results for the fiscal third quarter ended december 31, 2011. net sales for the third quarter ended december 31, 2011 were $16.2 million, a decrease of 31.0% compared to net sales of $23.5 million for the same quarter ended december 31, 2010. net sales decreased by 36.4% to $7.3 million in the company’s plastic segment and by 25.9% to $8.9 million in the electronic and metallic segment. the operating loss in the third quarter was $0.4 million, compared to an operating loss of $4.0 million for the same quarter of fiscal 2011. total gross margin increased to 14.6% in the third quarter ended december 31, 2011 compared to 14.1% in the same quarter last year. gross profit margin in the plastic segment decreased to 19.1% of net sales for the third quarter of fiscal 2012 compared to 24.8% of net sales for the same quarter of last fiscal year. the decreases of gross profit and margin in the plastic segment were mainly due to an increase in raw materials cost due to a price increase for plastic resin, and an increase in factory overhead as a percentage of net sales. gross profit margin in the electronic and metallic segment increased to 10.9% of net sales for the third quarter ended december 31, 2011 compared to 3.9% of net sales for the year-ago quarter. the increase in gross margin in the electronic and metallic segment was mainly related to relatively less inventory purchased than in the prior fiscal quarter, offsetting an increase in labor cost due to higher contract labor cost for replacing lower headcount as well as an increase in factory overheads. the company reported net income of $91,000 for the third quarter ended december 31, 2011 compared to a net loss of $3.6 million for the quarter ended december 31, 2010. deswell reported basic and diluted earnings per share of $0.006, (based on 16,197,000 and 16,198,000 weighted average shares outstanding, respectively) compared to basic and diluted net loss per share of ($0.22), (based on 16,195,000 and 16,203,000 weighted average shares outstanding, respectively) for the same quarter ended december 31, 2010. net sales for the nine months ended december 31, 2011 were $52.6 million, a decrease of 22.7%, compared to sales of $68.0 million for the corresponding period in fiscal 2011. total gross margin for the first nine months of fiscal 2012 increased to 15.3% compared to total gross margin of 10.4% in the first nine months of fiscal 2011. operating loss for the nine months ended december 31, 2011 was $0.5 million, compared to operating loss of $8.4 million for the first nine months of fiscal 2011. the company reported a net loss of $0.7 million in the first nine months of fiscal 2012, compared to a net loss of $7.5 million for the nine months ended december 31, 2010. deswell reported basic and diluted net loss per share of ($0.05) for the first nine months of fiscal 2012, (based on 16,197,000 and 16,202,000 weighted average shares outstanding, respectively), compared to basic and diluted loss per share of ($0.46), (based on 16,193,000 and 16,201,000 weighted average shares outstanding, respectively), for the prior corresponding period. net cash provided by (used in) operating activity from the nine months ended december 31, 2011 was $9.1 million compared to ($5.1) million last year. the company's financial position remained strong at the end of the third quarter of fiscal year 2012, with $27.7 million in cash and cash equivalents at december 31, 2011, compared to $35.6 million at march 31, 2011. working capital totaled $59.6 million as of december 31, 2011, versus $59.7 million as of march 31, 2011. furthermore, the company has no long-term or short-term borrowings at december 31, 2011. mr. franki tse, chief executive officer, commented, “despite a decline in revenues related to the challenging worldwide economy, we achieved improved margins in the third quarter and made progress in significantly reducing our net loss as compared to the third quarter of fiscal 2011. we continue to maintain tight control on our spending reflected in our reduced sg&a expenses. we remain focused on meeting the needs of our existing customers to build upon those relationships while also seeking out new projects and customers. our balance sheet remains strong, with approximately $28 million in cash and no debt. we believe our good cash flow and solid balance sheet positions us well to drive enhanced performance for our shareholders over the long term.” third quarter dividends the company also announced that on march 7, 2012 its board of directors declared a dividend of $0.02 per share for the fiscal third quarter ended december 31, 2011. the dividend will be payable on april 12, 2012 to shareholders of record as of march 20, 2012. about deswell deswell manufactures injection-molded plastic parts and components, 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 finished products such as telephones, telephone answering machines, sophisticated studio-quality audio equipment and computer peripherals. the company’s customers include vtech telecommunications ltd. and digidesign inc. to learn more about deswell industries, inc., please visit the company’s website at www.deswell.com. forward-looking statements statements in this press release that are "forward-looking statements" are based on current expectations and assumptions that are subject to risks and uncertainties. for example, our statements regarding our expected growth in sales from the electronic and metallic division in the coming year and our efforts to reduce overhead costs in our plastic division are forward-looking statements. actual results could differ materially because of the following factors, among others, which may cause revenues and income to fall short of anticipated levels or our overhead expenses to increase: our dependence on a few major customers; vigorous competition forcing product price reductions or discounts; the timing and amount of significant orders from our relatively few significant customers; continuing increases in resin prices that cannot be passed on to customers; unexpected production delays; obsolete inventory or product returns; losses resulting from fraudulent activity of our customers or employees; labor shortages that increase labor and costs; changes in the mix of product products we manufacture and sell; adverse currency fluctuations in the renminbi and hong kong dollar when translated to us dollars; potential new accounting pronouncements; and the effects of travel restrictions and quarantines associated with major health problems, such as the severe acute respiratory syndrome, on general economic activity. for further information regarding risks and uncertainties associated with the company’s business, please refer to the “risk factors” section of company’s annual report on form 20-f, copies of which may be obtained from the website maintained by the securities and exchange commission at http://www.sec.gov. all information in this release is made as of the date of this press release. deswell undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in deswell’s expectations. 2011 2011 marketable securities available-for-sale securities inventories common shares nil par value - authorized 30,000,000 shares, shares issued and outstanding december 31, 2011 - 16,196,810; march 31, 2011 - 16,194,810 deswell industries, inc. 2011 2010 2011 2010 net income (loss) per share attributable to deswell industries, inc. weighted average common shares outstanding shares in thousands) weighted average number of shares outstanding (in thousands)
