FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR JUNE 17, 2002
DESWELL INDUSTRIES, INC.
(Registrant's name in English)
Unit 516 517, Hong Leong Industrial Complex,
No. 4 Wang Kwong Road, Kowloon Bay,
Kowloon, Hong Kong
(Address of principal executive offices)
DESWELL [LOGO]
CONTACT:
John G. Nesbett
Ryan Daniels
Lippert/Heilshorn & Associates
212-838-3777
e-mail: jnesbett@lhai.com
DESWELL INDUSTRIES, INC.
ANNOUNCES 3-FOR-2 STOCK SPLIT
HONG KONG (June 17, 2002) - Deswell Industries, Inc. (Nasdaq: DSWL) ("Deswell"
or the "Company"), today announce that its board of directors has approved a
3-for-2 stock split in the Company's common stock, payable on July 22, 2002, to
shareholders of record on July 8, 2002. The stock split will increase the number
of total shares outstanding from approximately 5.6 million shares to 8.4 million
shares.
GENERAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF STOCK SPLIT
The following general description of the United States federal income
tax consequences of the stock split is based on the Internal Revenue Code of
1986, as amended, the applicable Treasury Regulations promulgated thereunder,
judicial authority and current administrative rulings and practices as in effect
on the date of this press release, all of which are subject to change (possibly
with retroactive effect) and to differing interpretations. This discussion is
for general information only and does not address all the tax consequences that
may be relevant to shareholders in light of their particular tax circumstances
or to shareholders who may be subject to special tax treatment. We have not
sought, and will not seek, an opinion of counsel or a ruling from the U.S.
Internal Revenue Service ("IRS") regarding the federal income tax consequences
of the stock split. Furthermore, no foreign, state or local tax consequences are
discussed herein. ACCORDINGLY, EACH SHAREHOLDER IS URGED TO CONSULT HIS OR HER
OWN TAX ADVISOR TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE STOCK SPLIT TO
SUCH HOLDER.
The stock split should be treated as a tax-free stock dividend made
to our shareholders. Accordingly, no gain or loss should be recognized by our
shareholders on the receipt of new common shares. The aggregate tax basis in the
old common shares held by a shareholder immediately before the stock split
should be allocated between the old and the new common shares in proportion to
the relative fair market value of the old and the new shares on the date of the
distribution, reduced by the basis allocable to any fractional shares that the
shareholder is treated as having redeemed for cash. See "Cash in Lieu of
Fractional Shares" below. The holding period of the new common shares should
include the holding period of the old common shares, provided such shares were
held as a capital asset for United States tax purposes.
CASH IN LIEU OF FRACTIONAL SHARES. Subject to the PFIC rules
described below, shareholders who receive cash in lieu of fractional shares
should be treated for U.S. income tax purposes as if the fractional share
interest had been issued in the stock split and then had been redeemed by us for
cash. The amount of any gain or loss should be equal to the difference between
the portion of the tax basis allocated to such fractional share and the cash
received in lieu thereof. Any such gain or loss should constitute long-term
capital gain or loss provided old common shares were held for more than one year
at the time of the stock split.
PASSIVE FOREIGN INVESTMENT COMPANY CONSIDERATIONS. The Company
believes it is not a passive foreign investment company ("PFIC") for U.S. income
tax purposes. However, the Company has not made a specific determination of its
PFIC status. If we were a PFIC, a United States person (e.g., a U.S. citizen or
resident) who receives new common shares in the stock split and cash in lieu of
a fractional share interest, could, possibly, be treated as receiving an "excess
distribution" under the PFIC rules, and an interest charge as described in (d)
below could be imposed on such shareholders. An "excess distribution" is
generally the portion of any distribution received by a shareholder from the
PFIC in a taxable year in excess of 125% of the average annual distributions
received by the shareholder in the three preceding taxable years, and (ii) any
gain realized on the sale or other disposition of the PFIC shares. Under these
rules (a) the excess distribution or gain will be allocated ratably over the
shareholder's aggregate holding period for the shares; (b) the amount allocated
to the current taxable year will be taxed as ordinary income; (c) the amount
allocated to each of the other taxable years will be subject to tax at the
highest rate of tax in effect for the applicable class of taxpayer for that
year; and (d) an interest charge for the deemed deferral benefit will be imposed
with respect to the resulting tax attributable to each such other taxable year.
Because of the complexity of the PFIC rules, our U.S. shareholders are strongly
urged to consult their own tax advisors regarding the PFIC rules as they may
apply to them.
BACKUP WITHHOLDING. Cash payments made to our shareholders may, under
certain circumstances, be subject to U.S. backup withholding at a rate of 30%.
There is no withholding for shareholders who provide the Company's transfer
agent with their correct U.S. federal taxpayer identification number and who
certify that no loss of exemption from backup withholding has occurred on IRS
Form W-9 or its substitute. Certain categories of persons (generally
corporations and non-U.S. persons) are not subject to backup withholding. In
order for a foreign (i.e., non-U.S. person) to qualify as an exempt recipient,
such person must generally provide the Company's transfer agent with a completed
IRS Form W-8BEN or its substitute. Any amounts withheld under the backup
withholding rules are not an additional tax. Rather, any such amounts will be
allowed as a credit or refund against such shareholder's U.S. federal income tax
liability provided that the shareholder furnish to the IRS all required
information.
* * *
ABOUT DESWELL. Deswell manufactures injection-molded plastic parts and
components, electronic products and subassemblies, and metallic products for
original equipment manufacturers ("OEMs") and contract manufacturers at its
factories in the People's Republic of China. The Company produces a wide variety
of plastic parts and components used in the manufacture of consumer and
industrial products; printed circuit board assemblies using surface mount
("SMT"), and pin-through hole ("PHT") interconnection technologies; and finished
products such as telephones, telephone answering machines, sophisticated
studio-quality audio equipment and computer peripherals. The Company's customers
include Kyocera Mita Industrial Co. (H.K.) Limited, Epson Precision (H.K.) Ltd.,
Inter-Tel Incorporated, Vtech Communications Ltd., Peavey Electronics
Corporation and Emerson.
To learn more about Deswell Industries, Inc., please visit the Company's web
site at www.deswell.com.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
For and on behalf of
DeswellIndustries,Inc.
By:/S/ RICHARD LAU
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Richard Lau
Chief Executive Officer
Date: June 17, 2002