Deswell Announces First Quarter Results

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.

DESWELL INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
( U.S. dollars in thousands)
				June 30,			March 31,
				2011			2011
ASSETS				(Unaudited)			(Audited)
Current assets :
	Cash and cash equivalents			$	25,646		$	35,635
	Fixed deposits maturing over three months				3,089			-
	Marketable securities				903			1,045
	Available-for-sale securities				8,148			-
	Accounts receivable, net				17,130			17,210
	Inventories				18,990			19,517
	Prepaid expenses and other current assets				2,389			2,154
	Total current assets				76,295			75,561
Property, plant and equipment - net					49,763			51,052
Deferred income tax assets					157			154
Goodwill					392			392
	Total assets			$	126,607		$	127,159
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
	Accounts payable			$	6,939		$	6,864
	Accrued payroll and employee benefits				3,846			3,971
	Customer deposits				2,463			1,965
	Other accrued liabilities				1,381			1,453
	Income taxes payable				627			596
	Deferred income tax liabilities				213			213
	Dividend payable				810			810
	Total current liabilities				16,279			15,872
Shareholders' equity
	Common shares nil par value - authorized 30,000,000 shares,
	shares issued and outstanding June 30, 2011 - 16,196,810;
	March 31, 2011 - 16,194,810				50,816			50,809
	Additional paid-in capital				7,716			7,719
	Accumulated other comprehensive income				5,088			5,316
	Retained earnings				46,708			47,443
	Total shareholders' equity				110,328			111,287
	Total liabilities and shareholders' equity			$	126,607		$	127,159

DESWELL INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
( U.S. dollars in thousands, except per share data )
				Quarter ended				Quarter ended
				June 30,				June 30,
					2011				2010
Net sales				$	18,324			$	20,486
Cost of sales					15,163				19,585
Gross profit					3,161				901
Selling, general and administrative expenses					3,095				3,822
Other income, net					48				243
Operating income (loss)					114				(2,678	)
Non-operating income (expenses), net					(11	)			397
Income (loss) before income taxes					103				(2,281	)
Income taxes					28				(2	)
Net income (loss) attributable to Deswell Industries, Inc.				$	75			$	(2,279	)
Other comprehensive loss
	Unrealized loss on available for sale securities			$	(228	)		$	-
Comprehensive loss attributable to Deswell Industries, Inc.				$	(153	)		$	(2,279	)
Net income (loss) per share attributable to Deswell Industries, Inc.
Basic:
	Net income (loss) per share			$	0.0046			$	(0.14	)
	Weighted average common shares outstanding
	shares in thousands)				16,197				16,192
Diluted:
	Net income (loss) per share			$	0.0046			$	(0.14	)
	Weighted average number of shares
	outstanding (in thousands)				16,204				16,205

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