[GRAPHIC]
DISPOSABLE SOFT GOODS
SECOND QUARTER REPORT 2001
DSG INTERNATIONAL LTD. [LOGO OF DSG INTERNATIONAL LTD.]
FOR IMMEDIATE RELEASE
DSG INTERNATIONAL REVENUES UP 7.0% IN FIRST QUARTER
Drypers acquisition boosts North America revenue
DULUTH, Ga., August 2, 2001--DSG International Limited (NASDAQ:DSGIF) today
announced financial results for the first quarter ended March 31, 2001. Net
sales for the quarter were $59.8 million, a 7.0% increase over the $55.9
million reported for the first quarter last year. Net loss for the quarter was
$108,000, or $0.02 per share, compared to net income of $1.6 million, or $0.24
per share, for the year-ago period.
Brandon Wang, Chairman, said, "The highlight of the quarter was the acquisition
of the North American operations of Drypers. Although the acquisition was
completed in the last month of the first quarter, it still accounted for an
increase of 16.9% in our North America sales. As we go forward, this
acquisition will eventually result in doubling our sales in North America."
Wang said Asia Pacific sales also increased sharply, up 18.9% over the first
quarter last year. "Aggressive marketing strategies and tactics were key
factors in penetrating these developing markets, and we expect the region will
continue to be a promising market for DSG International."
Gross margin for the period declined to 30.5%, compared to 33.3% for the first
quarter last year, due primarily to the lower margin of finished goods acquired
at net realizable value from Drypers North America and the installation and
testing of new production equipment in the Company's Australian operations.
Selling, general and administrative expense as a percentage of net sales was
29.1%, slightly higher than the 28.2% of the same period last year. As a result
of the Drypers acquisition, interest expense in the first quarter this year
increased to $568,000, compared to $396,000 last year. The Company's exchange
loss of $348,000 in the first quarter of 2001 was primarily due to the
unfavorable exchange rate fluctuation of Thai and Indonesian currencies against
the U.S. dollar. At March 31, 2001, DSG International had working capital of
$37.1 million, total assets of $152.3 million and a debt-to-equity ratio of
1:2.4.
"We're very pleased with the results of our first quarter and with the
integration of the Drypers organization into our North American subsidiary. We
believe we are poised for profitable growth on several fronts," Wang said.
As previously reported on June 27, 2001 a jury in U.S. District Court in Albany,
Georgia returned a verdict that certain component machinery used by the company
to place a foam waistband into disposable diapers infringed U.S. Patent No.
5,308,345 and awarded $4.0 million in damages. The jury verdict also provided
for potential enhanced damages
of up to an additional $7.0 million. The Company will file post trial motions
to overturn the jury verdict and, if necessary, will appeal the verdict to the
U.S. Court of Appeals for the Federal Circuit. The Company believes that it is
reasonably possible that it will be successful in overturning the jury verdict.
DSG International Limited and its predecessors have been in the business of
manufacturing and distributing disposable diapers since 1973. With
manufacturing plants in Georgia, Wisconsin, Ohio and Washington, the Company
also maintains manufacturing operations in Hong Kong, Australia, Great Britain,
China, Thailand, Indonesia and Malaysia. Additionally, the Company distributes
its products throughout Asia, Australia, North America and Europe. The Company
produces private label disposable diapers, adult incontinence products and
training pants at certain of its operations. Its best selling brands include
"Fitti(R)", "Pet Pet(R)", "Cosies(R)", "Cosifits(R)", "Baby Love(R)",
"Babyjoy(R)", "Lullaby(R)", "Cares(R)", "Cuddles(R)", "Super Fan-nies(R)",
"Dispo 123(TM)", "Handy(TM)", "Certainty(R)", "Merit(R)" and "Drypers(R)".
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
- --------------------------------------------------------------------------------
This news release may contain forward-looking statements or predictions. These
statements represent our judgment as of this date and are subject to risks and
uncertainties that could cause actual results or events to differ materially
from those expressed in such forward-looking statements. Potential risks and
uncertainties are discussed in depth in DSG International Ltd. filings with the
SEC, copies of which may be accessed through the SEC's World Wide Web site at
http://www.sec.gov.
###
Company Contact: Media Contact:
Karen Ortega Don King
DSG International Limited Bates Churchill Investor Relations
678-957-9989 or 713-267-7280
kareno@ahpdiaper.com
STATEMENTS OF OPERATIONS AND BALANCE SHEET DATA
The Statements of Operations for the three-month period ended March 31, 2001 and
2000, and the Balance Sheet information as of March 31, 2001, are derived from
unaudited financial statements which, in the opinion of the management, include
all necessary adjustments, consisting only of normally recurring adjustments,
for a fair presentation of the results of operations for these time frames. The
results for the periods, however, are not necessarily indicative of the results
for the full year.
SUMMARY OF RESULTS
(In thousands, except per share amounts)
Three months ended
March 31,
2001 2000
Net sales $59,804 $55,868
Gross profit 18,246 18,635
Gain on sale of property, plant
And equipment 19 23
Selling, general and administrative
Expense (27,419) (15,753)
Operating income 846 2,905
Interest expense (568) (396)
Exchange loss (348) (59)
Other income 146 20
Income before income taxes 76 2,470
Provision for income taxes (214) (689)
Minority interest 30 (178)
Net income (loss) (108) $1,603
Earnings (losses) per share $(0.02) $0.24
Weighted average number of
Shares outstanding 6,675 6,675
STATEMENTS OF COMPREHENSIVE INCOME
(Dollars in thousands)
Three months ended
March 31,
2001 2000
Net income (loss) $ (108) $ 1,603
Other comprehensive expense
Foreign currency translation
Adjustments (1,257) (1,220)
Comprehensive income (loss) $(1,365) $383
BALANCE SHEET DATA
(Dollars in thousands, unaudited)
March 31, December 31,
2001 2000
Working capital $ 37,077 $ 32,423
Total assets 152,272 111,409
Long-term debt 26,473 5,577
Shareholders' equity 62,365 63,447
On March 31, 2001, the Company had cash and cash equivalents of $14.8 million.
DSG INTERNATIONAL LTD.
17th Floor Watson Centre
Kung Yip Street
Kwai Chung
Hong Kong
Tel: (852) 2484 4820
Fax: (852) 2480 4491