Deswell Industries, Inc. (NASDAQ:DSWL)

MACAO--(BUSINESS WIRE)--

Company Announces First Half Cash Dividend of $0.06 Per Share

Deswell Industries, Inc. (DSWL) today announced its unaudited financial results for the first six months of fiscal 2019, ended September 30, 2018.

Net sales for the six months ended September 30, 2018 were $34.8 million, an increase of 16.9% compared to net sales of $29.8 million for the six months ended September 30, 2017. Net sales decreased by 1% to $13.6 million in the plastic segment and increased by 32.4% to $21.2 million in the Company’s electronic segment.

Total gross margin decreased to 13.8% of net sales during the six months ended September 30, 2018, as compared to 19.6% of net sales in the same period last year. Gross profit margin in the plastic segment decreased to 16.4% of net sales for the first half of fiscal 2019, compared to 24.3% of net sales for the corresponding period of last fiscal year. The decrease in gross profit and margin in the plastic segment was mainly due to increases in raw materials cost, offsetting a slight decrease in labor costs and subcontracting charges, as a percentage of sales. Gross profit margin in the electronic segment decreased to 12.1% of net sales for the first half of fiscal 2019, compared to 15.5% of net sales for the corresponding period of last fiscal year. The decrease in gross margin in the electronic segment was mainly attributable to an increase in raw materials costs, as a percentage of net sales. Operating income in the first half of fiscal 2019 was $0.2 million, compared to operating income of $1.6 million for the same period of fiscal 2018.

The Company reported net income of $2.8 million for the six months ended September 30, 2018, compared to net income of $3.7 million for the six months ended September 30, 2017. This was primarily due to a decrease in gross profit, as a percentage of sales, for the six months ended September 30, 2018. Deswell reported basic and diluted income per share of $0.17 for the first half of fiscal 2019 (based on 15,885,000 and 15,975,000 weighted average shares outstanding, respectively), compared to basic and diluted income per share of $0.23 (based on 15,885,000 weighted average shares outstanding), for the six months ended September 30, 2017.

The Company's financial position remained strong, with $15.5 million in cash and cash equivalents and working capital totaled $53.4 million as of September 30, 2018. Furthermore, the Company has no long-term or short-term borrowings as of September 30, 2018.

Mr. Edward So, Chief Executive Officer, commented, “We saw solid double-digit growth in our consolidated revenue driven by a 32% improvement in our electronic segment. This revenue increase was primarily attributable to increased orders from new and existing customers for professional audio equipment and home entertainment products. Gross margin in both our plastics and electronics business was lower during the period due to higher raw material costs. Throughout the first half of the fiscal year, the entire electronics industry faced shortages of semiconductors and other electronic components. While this impacted our margins, we were able to proactively manage the situation with our customers and effectively service their needs. Our balance sheet remains strong, and we continue to focus on expanding our business with both new and existing customers. On the other hand, in order to mitigate the uncertainties caused by the trade war between the US and China, we are studying the feasibility of reallocating part of the production to Southeast Asian countries.”

First Half Dividend

The Company also announces that its board of directors today declared a cash dividend of $0.06 per share for the first half of the fiscal year ended September 30, 2018. The dividend will be payable on December 18, 2018 to shareholders of record as of November 27, 2018.

MACAO--(BUSINESS WIRE)--

Deswell Industries, Inc. (DSWL) today announced its unaudited financial results for the second half of the fiscal year ended March 31, 2018.

Net sales for the six months ended March 31, 2018 were $30.9 million, an increase of 29.4% compared to net sales of $23.9 million for the six months ended March 31, 2017. Net sales increased by 13.7% to $14.4 million in the plastic segment and increased by 47.2% to $16.5 million in the Company’s electronic segment.

Total gross margin decreased to 12.6% during the six months ended March 31, 2018, as compared to 18.9% in the same period last year. Gross profit margin in the plastic segment decreased to 14.7% of net sales for the second half of fiscal 2018, as compared to 24.4% of net sales for the corresponding period of last fiscal year. The decrease in gross profit and margin in the plastic segment was mainly due to the appreciation of Renminbi and the increase in raw materials cost, offsetting a slight decrease in factory overhead, as a percentage of sales. Gross profit for the electronic segment for the six months ended March 31, 2018 decreased from 12.6% in second half of fiscal 2017 to 10.8% in the second half of fiscal 2018. The decrease was mainly due to the appreciation of Renminbi and increased raw materials costs.

Operating income for the second half of fiscal 2018 was $0.2 million, as compared to an operating loss of $0.3 million for the same period of fiscal 2017.

The Company reported net income of $2.5 million for the six months ended March 31, 2018, as compared to a net income of $0.7 million for the six months ended March 31, 2017. Non-operating income for the six months ended March 31, 2018 was $2.3 million, as compared to non-operating income of $1.1 million in the year-ago six months. Non-operating income during the six months ended March 31, 2018 was primarily comprised of $630,000 from rental income, $459,000 of dividend income from securities investment, $133,000 from interest income, $865,000 from change in the fair value of marketable securities, as well as $268,000 of realized gain from sale of marketable securities, Deswell reported basic and diluted income per share of $0.16 for the second half of fiscal 2018 (based on 15,885,000 and 15,953,000 weighted average shares outstanding, respectively), as compared to basic and diluted income share of $0.04 (based on 16,013,000 weighted average shares outstanding), for the six months ended March 31, 2017.

Net sales for the year ended March 31, 2018 were $60.7 million, an increase of 36.3% compared to net sales of $44.5 million for fiscal 2017. Operating income for the year ended March 31, 2018 increased to $1.8 million, as compared to operating loss of $2.1 million for fiscal 2017. The Company reported net income of $6.2 million in fiscal 2018, as compared to net income of $1.4 million for the year ended March 31, 2017. Deswell reported basic and diluted net income per share of $0.39 for fiscal 2018, (based on 15,885,000 and 15,985,000 weighted average share outstanding, respectively), as compared to basic and diluted income per share of $0.09 (based on 16,035,000 weighted average shares outstanding), for the prior fiscal year.

The Company's financial position remained strong, with $15.2 million in cash and cash equivalents and working capital totaled $49.8 million as of March 31, 2018. Furthermore, the Company has no long-term or short-term borrowings as of March 31, 2018.

Mr. Edward So, Chief Executive Officer, commented, “During the second half of 2018, we experienced strong revenue growth in both our plastic and electronic segments. In addition to our core audio customers, we saw increased business in new end markets such as kitchen appliances and gardening equipment. Gross margins were negatively impacted by currency, but we continue to focus on cost control and maintained our selling, general and administrative expenses consistent with the prior year period resulting in a positive operating income. Other income grew considerably, benefiting from rental income as well as to investment returns from marketable securities, helping to drive considerable net income growth for the period.”

Second Half Dividend

The Company also announces that its board of directors today declared a cash dividend of $0.04 per share for the second half of the fiscal year ended March 31, 2018. The dividend will be payable on July 12, 2018 to shareholders of record as of June 26, 2018.

Dividends to be declared in the future will depend upon the Company’s future growth and earnings, of which there can be no assurance, and the Company’s cash flow needs for future development.

MACAO--(BUSINESS WIRE)--

Deswell Industries, Inc. (DSWL) today announced its unaudited financial results for the second half of the fiscal year ended March 31, 2018.

Net sales for the six months ended March 31, 2018 were $30.9 million, an increase of 29.4% compared to net sales of $23.9 million for the six months ended March 31, 2017. Net sales increased by 13.7% to $14.4 million in the plastic segment and increased by 47.2% to $16.5 million in the Company’s electronic segment.

Total gross margin decreased to 12.6% during the six months ended March 31, 2018, as compared to 18.9% in the same period last year. Gross profit margin in the plastic segment decreased to 14.7% of net sales for the second half of fiscal 2018, as compared to 24.4% of net sales for the corresponding period of last fiscal year. The decrease in gross profit and margin in the plastic segment was mainly due to the appreciation of Renminbi and the increase in raw materials cost, offsetting a slight decrease in factory overhead, as a percentage of sales. Gross profit for the electronic segment for the six months ended March 31, 2018 decreased from 12.6% in second half of fiscal 2017 to 10.8% in the second half of fiscal 2018. The decrease was mainly due to the appreciation of Renminbi and increased raw materials costs.

Operating income for the second half of fiscal 2018 was $0.2 million, as compared to an operating loss of $0.3 million for the same period of fiscal 2017.

The Company reported net income of $2.5 million for the six months ended March 31, 2018, as compared to a net income of $0.7 million for the six months ended March 31, 2017. Non-operating income for the six months ended March 31, 2018 was $2.3 million, as compared to non-operating income of $1.1 million in the year-ago six months. Non-operating income during the six months ended March 31, 2018 was primarily comprised of $630,000 from rental income, $459,000 of dividend income from securities investment, $133,000 from interest income, $865,000 from change in the fair value of marketable securities, as well as $268,000 of realized gain from sale of marketable securities, Deswell reported basic and diluted income per share of $0.16 for the second half of fiscal 2018 (based on 15,885,000 and 15,953,000 weighted average shares outstanding, respectively), as compared to basic and diluted income share of $0.04 (based on 16,013,000 weighted average shares outstanding), for the six months ended March 31, 2017.

Net sales for the year ended March 31, 2018 were $60.7 million, an increase of 36.3% compared to net sales of $44.5 million for fiscal 2017. Operating income for the year ended March 31, 2018 increased to $1.8 million, as compared to operating loss of $2.1 million for fiscal 2017. The Company reported net income of $6.2 million in fiscal 2018, as compared to net income of $1.4 million for the year ended March 31, 2017. Deswell reported basic and diluted net income per share of $0.39 for fiscal 2018, (based on 15,885,000 and 15,985,000 weighted average share outstanding, respectively), as compared to basic and diluted income per share of $0.09 (based on 16,035,000 weighted average shares outstanding), for the prior fiscal year.

The Company's financial position remained strong, with $15.2 million in cash and cash equivalents and working capital totaled $49.8 million as of March 31, 2018. Furthermore, the Company has no long-term or short-term borrowings as of March 31, 2018.

Mr. Edward So, Chief Executive Officer, commented, “During the second half of 2018, we experienced strong revenue growth in both our plastic and electronic segments. In addition to our core audio customers, we saw increased business in new end markets such as kitchen appliances and gardening equipment. Gross margins were negatively impacted by currency, but we continue to focus on cost control and maintained our selling, general and administrative expenses consistent with the prior year period resulting in a positive operating income. Other income grew considerably, benefiting from rental income as well as to investment returns from marketable securities, helping to drive considerable net income growth for the period.”

Second Half Dividend

The Company also announces that its board of directors today declared a cash dividend of $0.04 per share for the second half of the fiscal year ended March 31, 2018. The dividend will be payable on July 12, 2018 to shareholders of record as of June 26, 2018.

Dividends to be declared in the future will depend upon the Company’s future growth and earnings, of which there can be no assurance, and the Company’s cash flow needs for future development.

MACAO--(BUSINESS WIRE)--

Deswell Industries, Inc. (DSWL) today announced its unaudited financial results for the first six months ended September 30, 2017.

Net sales for the first six months ended September 30, 2017 were $29.8 million, an increase of 44.2% compared to net sales of $20.6 million for the six months ended September 30, 2016. Net sales increased by 30.6% to $13.8 million in the plastic segment and increased by 58.4% to $16.0 million in the Company’s electronic segment.

Total gross margin increased to 19.6% of net sales during the six months ended September 30, 2017, as compared to 14.3% of net sales in the same period last year. Gross profit margin in the plastic segment increased to 24.3% of net sales for the first half of fiscal 2018, compared to 17.9% of net sales for the corresponding period of last fiscal year. The increase in gross profit and margin in the plastic segment was mainly due to lower factory overhead, offsetting a slight increase in raw material and labor costs, as a percentage of sales. Gross profit margin in the electronic segment increased to 15.5% of net sales for the first half of fiscal 2018, compared to 10.5% of net sales for the corresponding period of last fiscal year. The increase in gross profit and margin in the electronic segment was mainly attributable to a decrease in labor cost and factory overhead, as a percentage of net sales. The operating income in the first half of fiscal 2018 was $1.6 million, compared to an operating loss of $1.8 million for the same period of fiscal 2017.

The Company reported net income of $3.7 million for the six months ended September 30, 2017, compared to net income of $0.7 million for the six months ended September 30, 2016. This was primarily due to an increase in gross profit and decrease in SG&A expense, as a percentage of sales, for the six months ended September 30, 2017. Deswell reported basic and diluted income per share of $0.23 for the first half of fiscal 2018 (based on 15,885,000 weighted average shares outstanding), compared to basic and diluted income per share of $0.04 (based on 16,056,000 weighted average shares outstanding), for the six months ended September 30, 2016.

The Company's financial position remained strong, with $11.7 million in cash and cash equivalents and working capital totaled $42.7 million as of September 30, 2017. Furthermore, the Company has no long-term or short-term borrowings as of September 30, 2017.

Mr. Edward So, Chief Executive Officer, commented, “Our strong operating performance in the first half of 2018 is a result of the strategic initiatives we have focused on over the past few years. The top line growth reflects our efforts to drive revenue by expanding business with existing customers and adding new customers; both our plastic and electronic assembly segments saw strong growth in the period. Furthermore, we have continued to reduce costs, enabling us to achieve enhanced margins and considerable growth in earnings per share. Our pipeline is healthy, and we remain diligently focused on aligning with the right customers and products.”

First Half Dividend

The Company also announces that its board of directors today decided no cash dividend will be paid for the first half of the fiscal year ended September 30, 2017. The Company expects the distribution of dividend will be resumed no later than March 31, 2019.

MACAO--(BUSINESS WIRE)--

Deswell Industries, Inc. (DSWL) today announced that going forward it will release financial results semi-annually, rather than quarterly as it has done in the past. Under the new practice, the Company expects to report its semi-annual unaudited financial results for the first half of fiscal year 2017 in November 2016, and to report semi–annual financial results approximately every six months thereafter. The Company remains committed to continued compliance with all applicable United States Securities and Exchange Commission (the “SEC”) filing requirements, including filing with the SEC a Form 6-K that includes an interim balance sheet as of the end of the Company’s second fiscal quarter and a semi-annual income statement for the first two quarters and the filing of the Company’s annual report on Form 20-F with the SEC.

Mr. Edward So, Chief Executive Officer, commented, “After careful consideration, we have decided to adopt a semi-annual reporting schedule, consistent with many other foreign issuers, in order to minimize corporate overhead as we look to drive enhanced profitability in our business. Importantly, we remain fully committed to maintaining consistent and transparent communications with the investment community.”

Third Quarter Dividends

The Company also announced that on March 11, 2016 its board of directors declared a cash dividend of $0.035 per share for the fiscal third quarter ended December 31, 2015. The dividend will be payable on April 14, 2016 to shareholders of record as of March 23, 2016.

• Net sales for the second quarter ended September 30, 2015 were $12.4 million, an increase of 21.4% compared to net sales of $10.2 million for the quarter ended September 30, 2014.
• Basic and diluted loss per share of ($0.15) for the second quarter of fiscal 2016 (based on 16,056,000 weighted average shares outstanding), compared to a basic and diluted loss per share of ($0.11).

Net sales for the six months ended September 30, 2015 were $23.6 million, an increase of 23.7%, compared to sales of $19.1 million for the corresponding period in fiscal 2015. Operating loss for the six months ended September 30, 2015 was $2.6 million, compared to an operating loss of $2.7 million for the first six months of fiscal 2015. The Company reported a net loss of $3.5 million in the first half of fiscal 2016, compared to net loss of $1.7 million for the six months ended September 30, 2014. Deswell reported basic and diluted net loss per share of ($0.22) for the first six months of fiscal 2016, (based on 16,056,000 weighted average shares outstanding), compared to basic and diluted loss per share of ($0.11) (based on 16,056,000 weighted average shares outstanding), for the prior corresponding period.

The Company's financial position remained strong, with $9.1 million in cash and cash equivalents at September 30, 2015 compared to $19.5 million at September 30, 2014. Working capital totaled $42.6 million as of September 30, 2015, versus $49.0 million as of September 30, 2014. Furthermore, the Company has no long-term or short-term borrowings as of September 30, 2015.

Edward So, Chief Executive Officer of Deswell Industries, stated, �Our Company made good progress in the second quarter, achieving strong consolidated revenue growth and improving gross margin performance, while also delivering a 14% reduction in SG&A expenses. We�re very pleased to have seen continued and significant sales growth from our electronic division which we believe reflects our efforts to strengthen our design, manufacturing and sales efforts to meet the needs of our customers, both existing and new. Our balance sheet remains strong, providing a solid foundation for the continued growth of our business.

Second Quarter Dividends

The Company also announces that its board of directors today declared a cash dividend of $0.035 per share for the fiscal second quarter ended September 30, 2015. The dividends will be payable on December 10, 2015 to shareholders of record as of November 23, 2015.

DESWELL INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(U.S. dollars in thousands, except per share data)

Third Quarter 2015 Financial Results 

• Net sales for the third quarter ended December 31, 2014 were $10.8 million, an increase of 1.0% compared to net sales of $10.7 million for the same quarter ended December 31, 2013.
• Basic and diluted loss per share of ($0.07) for the third quarter of fiscal 2015 (based on 16,056,000 and 16,056,000 weighted average shares outstanding, respectively), compared to a basic and diluted loss per share of ($0.09) (based on 16,262,000 and 16,266,000 weighted average shares outstanding, respectively), for the quarter ended December 31, 2013.

Mr. Edward So, Chief Executive Officer, commented, "We are pleased to have delivered a slight increase in revenues during the quarter after many years of decreasing sales. This is a result of our strengthened sales and engineering teams who are focused on collaborating with our customers on new product designs and development. While this entails a long sales cycle, we are encouraged by the progress being made. We continued to keep our SG&A low and focus resources on areas that can best drive future sales growth and margins."

DESWELL INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(U.S. dollars in thousands, except per share data)

• Net sales for the fourth quarter ended March 31, 2014 were $7.9 million, a decrease of 16.5% compared to net sales of $9.5 million for the same quarter ended March 31, 2013.
• Deswell reported basic and diluted net loss per share of ($0.46) for fiscal 2014, (based on 16,186,000 and 16,186,000 weighted average share outstanding, respectively), compared to basic and diluted loss per share of ($0.12)

Mr. Edward So, Chief Executive Officer, commented, �While the global economic environment continues to be challenging, we are focused on growing our business by providing our customers the tools they need to remain competitive, such as product design assistance to reduce development costs and accelerate time to market. We are investing in new equipment and developing new capabilities to increase automation and quality assurance and we've introduced ongoing initiatives to streamline internal processes using Six Sigma and Lean manufacturing to reduce waste and increase operational efficiency. Another priority is developing our ability to leverage our existing strengths to gain exposure to related market segments to enhance our reach and drive new business growth. We are pleased to have maintained our strong balance sheet with $23 million in cash and no debt."

Third Quarter 2013 Financial Results

• Net sales for the third quarter ended December 31, 2013 were $10.7 million, a decrease of 22.1% compared to net sales of $13.7 million for the same quarter ended December 31, 2012.
• Basic and diluted loss per share of ($0.09) vs. last years quarterly loss of $(0.01).

Mr. Edward So, Chief Executive Officer, commented, �Despite the challenges of the current economic environment, our efforts are focused on bolstering sales and marketing, particularly in the United States. A top priority for the Company is to streamline operational efficiency, particularly by increasing automation in the production process. We are additionally strengthening our Research & Development capabilities and diversifying into alternate market segments that align well with our core competencies. Our balance sheet remains strong with approximately $23 million in cash and no short or long term debt.�

First Quarter Dividends

The Company also announced that on August 30, 2013 its board of directors declared a cash dividend of $0.05 per share and a special cash dividend of $0.02 for the fiscal first quarter ended June 30, 2013. The dividends will be payable on September 30, 2013 to shareholders of record as of September 11, 2013.

First Quarter Dividends

The Company also announced that on August 30, 2013 its board of directors declared a cash dividend of $0.05 per share and a special cash dividend of $0.02 for the fiscal first quarter ended June 30, 2013. The dividends will be payable on September 30, 2013 to shareholders of record as of September 11, 2013.

First quarter 2014 Financial Results

• Net sales for the first quarter ended June 30, 2013 were $11.1 million, a decrease of 23.2% compared to net sales of $14.5 million for the same quarter ended June 30, 2012.
• Total gross margin decreased to 7.0% in the first quarter ended June 30, 2013 compared to 15.4% in the same quarter last year. Gross profit margin in the plastic segment decreased to 8.7% of net sales for the first quarter of fiscal 2014 compared to 19.1% of net sales for the same quarter of last fiscal year.
• The Company reported a net loss of $1.7 million for the first quarter ended June 30, 2013 compared to a net income of $0.04 million for the quarter ended June 30, 2012. Deswell reported a basic and diluted loss per share of ($0.11) for the first quarter of fiscal 2014, (based on 16,289,000 and 16,289,000 weighted average shares outstanding, respectively) compared to a basic and diluted income per share of $0.0025, (based on 16,203,000 and 16,207,000 weighted average shares outstanding, respectively) for the quarter ended June 30, 2012.

Mr. Franki Tse, Chief Executive Officer, commented, �We are still facing a challenging environment which is reflected in our decreased sales in the quarter. Given the increases in labor wages, RMB appreciation and weak export sales, we believe the situation will remain difficult for the near term, but expect to see some slight improvement later this fiscal year. We will continue to be cautious with our expenses, and plan to sell some out of date SMT and idle injection machines, restructure our factory operations and keep strengthening our R&D and marketing teams. We are working closely with customers on both OEM and ODM projects, to explore more sales, business and investment opportunities. Our balance sheet remains strong with no short-term or long term debt..�

Fourth Quarter ended March 31, 2013

We are confident, in spite of a challenging year, that we will be able to deliver improved performance in fiscal 2014 for our shareholders.

Net sales for the fourth quarter ended March 31, 2013 were $9.5 million, a decrease of 22.0% compared to net sales of $12.2 million for the same quarter ended March 31, 2012. Net sales decreased by 1.8% to $4.8 million in the Company�s plastic segment and decreased by 35.6% to $4.7 million in the electronic and metallic segment. The operating loss in the fourth quarter was $2.7 million, compared to an operating loss of $1.7 million for the same quarter of fiscal 2012.

Total gross margin decreased to 3.5% in the fourth quarter ended March 31, 2013 compared to 11.6% in the same quarter last year. Gross profit margin in the plastic segment decreased to 2.2% of net sales for the fourth quarter of fiscal 2013 compared to 12.6% of net sales for the same quarter of last fiscal year. The decrease in gross profit and margin in the plastic segment was mainly due to increases in raw materials cost and in labor cost resulting from an increase in overtime allowances. Gross profit margin in the electronic and metallic segment decreased to 4.8% of net sales for the fourth quarter ended March 31, 2013 compared to 10.8% of net sales for the year-ago quarter. The decrease in gross profit and margin in the electronic and metallic segment was mainly attributed to an increase in labor costs as a percentage of sales, resulting from a higher labor rate and additional allowances.

The Company reported a net loss of $2 million for the fourth quarter ended March 31, 2013 compared to a net loss of $0.7 million for the quarter ended March 31, 2012. Deswell reported a basic and diluted loss per share of ($0.12) for the fourth quarter of fiscal 2013, (based on 16,794,000 and 16,810,000 weighted average shares outstanding, respectively) compared to a basic and diluted loss per share of ($0.04), (based on 16,197,000 and 16,202,000 weighted average shares outstanding, respectively) for the quarter ended March 31, 2012.

Net sales for the year ended March 31, 2013 were $54.1 million, a decrease of 16.5%, compared to sales of $64.8 million for fiscal 2012. Operating loss for the year ended March 31, 2013 was $3.7 million, compared to an operating loss of $2.2 million for fiscal 2012. The Company reported a net loss of $2.0 million in fiscal 2013, compared to a net loss of $1.5 million for the year ended March 31, 2012. Deswell reported basic and diluted net loss per share of ($0.12) for fiscal 2013, (based on 16,468,000 and 16,560,000 weighted average share outstanding, respectively), compared to a basic and diluted loss per share of ($0.09), (based on 16,197,000 and 16,207,000 weighted average shares outstanding, respectively), for the prior fiscal year.

The Company's financial position remained strong at the end of the fourth quarter of fiscal year 2013, with $32.0 million in cash and cash equivalents at March 31, 2013, compared to $33.1 million at March 31, 2012. Working capital totaled $58.3 million as of March 31, 2013, versus $60.9 million as of March 31, 2012. Furthermore, the Company has no long-term or short-term borrowings as of March 31, 2013.

Mr. Franki Tse, Chief Executive Officer, commented, �Sales were soft during the quarter primarily due to the poor economic situation in most of our export markets. Furthermore, we saw continued increase in the minimum wage in Dongguan China with a 19% increase this past May as well as continued RMB appreciation. A key focus of the management team is to drive new sales by strengthening our sales and engineering teams, improving product development capabilities and enhancing our relationships with current customers while maintaining a keen eye towards expense reduction. Our strong balance sheet remains an important competitive advantage for us.�

Mr. Tse concluded, �We are confident, in spite of a challenging year, that we will be able to deliver improved performance in fiscal 2014 for our shareholders.�

Fourth Quarter Dividends

The Company also announced that on June 13, 2013 its board of directors declared a cash dividend of $0.05 per share for the fiscal fourth quarter ended March 31, 2013. The dividends will be payable on July 18, 2013 to shareholders of record as of June 26, 2013.