Deswell Announces First Half 2017 Results

Deswell Industries, Inc. (Nasdaq: DSWL) today announced its unaudited financial results for the first six months ended September 30, 2016.

Net sales for the first six months ended September 30, 2016 were $20.6 million, a decrease of 12.7% compared to net sales of $23.6 million for the six months ended September 30, 2015. Net sales increased by 14.0% to $10.6 million in the plastic segment and decreased by 30.1% to $10.0 million in the Company's electronic segment.

Total gross margin increased to 14.3% during the six months ended September 30, 2016, as compared to 8.9% in the same period last year. Gross profit margin in the plastic segment increased to 17.7% of net sales for the first half of fiscal 2017 compared to 13.5% 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 raw material and labor costs, offsetting a slight increase in factory overhead, as a percentage of sales. The operating loss in the first half of fiscal 2017 was $1.8 million, compared to an operating loss of $2.6 million for the same period of fiscal 2016.

The Company reported net income of $0.7 million for the six months ended September 30, 2016 compared to a net loss of $3.5 million for the six months ended September 30, 2015. Non-operating income for the six months ended September 30, 2016 was $2,616,000, as compared to non-operating expense of $728,000 in the year-ago six months. This was primarily due to increase of $3,643,000 on the fair value of marketable securities, which offset a decrease of $471,000 in realized gain on sale of marketable securities during the six months ended September 30, 2016, as compared to the same six months of the prior fiscal year. Deswell reported basic and diluted income per share of $0.04 for the first half of fiscal 2017 (based on 16,056,000 weighted average shares outstanding), compared to basic and diluted loss per share of ($0.22) (based on 16,056,000 weighted average shares outstanding), for the six months ended September 30, 2015.

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