Net sales for the six months ended September 30, 2012 were $30.7 million, a decrease of 15.3%, compared to sales of $36.3 million for the corresponding period in fiscal 2012. Operating loss for the six months ended September 30, 2012 was $0.4 million, compared to operating loss of $0.1 million for the first six months of fiscal 2012. The Company reported a net income of $0.2 million in the first half of fiscal 2013, compared to a net loss of $0.8 million for the six months ended September 30, 2011. Deswell reported basic and diluted net income per share of $0.014 for the first six months of fiscal 2013, (based on 16,596,000 and 16,654,000 weighted average share outstanding, respectively), compared to basic and diluted loss per share of ($0.052), (based on 16,197,000 and 16,201,000 weighted average shares outstanding, respectively), for the prior corresponding period.

The Company's financial position remained strong at the end of the second quarter of fiscal year 2013, with $26.7 million in cash and cash equivalents at September 30, 2012, compared to $33.1 million at March 31, 2012. Working capital totaled $61.1 million as of September 30, 2012, versus $60.9 million as of March 31, 2012. Furthermore, the Company has no long-term or short-term borrowings as of September 30, 2012.

Mr. Franki Tse, Chief Executive Officer, commented, “In the plastic segment, our more consumer-related business, sales and gross margin have improved. Recently we obtained the quality management system ISO13485:2003 certification which allows us to manufacture plastic parts for medical devices, a new market opportunity for us. In our electronic and metallic segment, the softening demand prevails and sales of professional audio products and fixtures are still suffering from the global economic situation. We are devoting more effort and resources into product design and development and expect this will help us to secure more orders and improved gross margins in the future. Our balance sheet remains particularly strong with cash and no long or short term debt and we expect to declare dividends in each of the coming three quarters of at least $0.05 per share.

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