SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For March 30, 2006
BONSO ELECTRONICS INTERNATIONAL INC.
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(Translation of Registrant's name into English)
Unit 1106-1110, 11/F., Star House 3 Salisbury Road,
Tsimshatsui Kowloon, Hong Kong
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(Address of principal executive offices)
[Indicate by check mark whether the Registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.]
Form 20-F [X] Form 40-F [ ]
[Indicate by check mark whether the Registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.]
Yes [ ] No [X]
TABLE OF CONTENTS
REPORT FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2005 ON FORM 6-K
Page
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Third Quarter Shareholders Letter............................................3
Consolidated Financial Statements
Audited Consolidated Balance Sheets as of March 31, 2005 and.................6
Unaudited Consolidated Balance Sheets as of December 31, 2005
Unaudited Consolidated Statements of Income and..............................8
Comprehensive Income for the nine-Month Periods
Ended December 31, 2004 and 2005 and the
Three-Month Periods Ended December 31, 2004 and 2005
Management Discussion and Analysis of Financial Conditions...................9
and Results of Operations
Liquidity and Capital Resources.............................................12
Stock Repurchase Program....................................................12
Signature...................................................................13
Exhibits:
99.1 Press Release Reporting Third Quarter Results
99.2 Press Release Announcing ISO 14001 and OHSAS 18001 Certification
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BONSO ELECTRONICS INTERNATIONAL INC.
30 March 2006
Dear Shareholder:
For the third quarter ended 31 December 2005, Bonso's sales were $16,123,000 or
12.1% below the same quarter in 2004. This resulted in a net loss of $76,000 or
$0.01 per share (diluted) as compared to net income of $600,000 or $0.10 per
share (diluted) posted for the same period last year.
Sales for the nine-month period ended 31 December was $50,235,000 a decrease of
10.0% compared to sales of approximately $55,741,000 in the comparable 2004
period. Net income for the nine-month period ended 31 December 2005 was $815,000
or $0.14 per share (diluted), which is 61% below the net income of $2,080 or
$0.35 reported for the same period last year.
The third quarter results are primarily a combination of two factors: reduced
sales of our products, and increased material and labor costs in China which
have negatively impacted the gross profit margin. Prospects for improved sales
in our sensor based products continue to be promising and we are cautiously
optimistic about returning to sales growth in this sector in the future. We
anticipate the communications business to continue to be soft as we continue to
work with our existing customers on new applications with existing products, as
well as, new products and to attempt to secure new customers.
As I have reported previously, raw material (oil, metal, plastic, etc) and
skilled labor costs have been increasing significantly. These increases have
negatively impacted the gross profit margin. One of Bonso's major strengths has
always been our ability to reduce product cost as a result of a formalized
program of product redesign and process improvements. We are proud of our past
achievements in `Value Engineering' our products and processes to reduce cost
and improve margins. We intend to continue our ongoing efforts in this activity
in an attempt to further improve the gross profit margin moving forward.
On the whole, our balance sheet is strong. Undoubtedly, Bonso's revenue and
profit performance were disappointing last quarter and the challenge we face is
delivering profitable and sustained revenue growth.
I am proud to announce that our factory operations in Shenzhen, China have
expanded their international certification according to the internationally
recognized Environmental Management Standard known as ISO 14001 and the
Occupational Health and Safety Management Standard known as OHSAS 18001. Our
factory operations have been built on the foundation of the International
Standards Organization (ISO) for product quality based on the principles of ISO
9001. By integrating the Occupational Health and Safety Management Standards
(OHSAS 18001) into our quality and environmental systems we have created a total
Integrated Management System (IMS) - Quality, Environment and Health and Safety
by combining ISO 9001, ISO 14001 and OHSAS 18001 into one Quality / Environment
/ Health and Safety registration. Our ISO 14001 and OHSAS 18001 certifications
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ensure that our employees and environment are kept safe during the manufacturing
process. Just as adherence to ISO 9001 quality management standards have become
a de facto requirement for manufactures world wide, the ISO 14001 and OHSAS
18001 standards are becoming a necessary condition for international trade.
These initiatives demonstrate Bonso's ongoing commitment to delivering quality
products and services, while at the same time, continuing to maintain safe and
responsible employee practices in an environmentally friendly way.
Our cash position at the end of the third quarter is $8.9 million ($1.53 per
share). With no sizable long term debt and a strong balance sheet, we continue
to invest in the future of Bonso. We aggressively fund development of new
products and technologies, facilities and capital equipment. We believe we have
great upside potential in both the sensor based and telecommunications markets
we serve.
We believe that Bonso has a talented and dedicated workforce with enviable
know-how and expertise. Now, it is a matter of making sure we are leveraging
these core strengths with an energized spirit to perform at the highest levels
across the business and, most importantly, enhance our customer engagements.
As we look to the future, our goal remains to build and indeed to grow, a
business worthy of the products we make and the people who make them. Certainly,
there's plenty of challenge ahead. Yet we're confident our disciplined efforts
to create an even more resilient, growth-oriented enterprise will provide
benefits to all with a stake in our success for years to come.
Yours truly,
Bonso Electronics International, Inc.
George D. OLeary
President and CEO
Attachments: 1.Balance Sheet
2. Income Statement
This news release includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities and Exchange Act of 1934, as amended. Forward looking statements may
be identified by such words or phrases "should," "intends," "is subject to,"
"expects," "will," "continue," "anticipate," "estimated," "projected," "may,"
"we believe," "future prospects," or similar expressions. The forward-looking
statements above involve a number of risks and uncertainties. Factors that might
cause actual results to differ include, but are not limited to, conditions in
the general economy and in the markets served by the Company; competitive
factors, such as price pressures and the potential emergence of rival
technologies; interruptions of suppliers' operations affecting availability of
component materials at reasonable prices; timely development and market
acceptance, and warranty performance of new products; changes in product mix,
costs and yields, fluctuations in foreign currency exchange rates; uncertainties
related to doing business in Hong Kong and China; and the risk factors listed
from time to time in the Company's SEC reports. Forward-looking statements do
not include the impact of acquisitions or dispositions of assets, which could
affect results in the near term. Actual results may differ materially. The
Company assumes no obligation to update the information in this issue.
U.S. Contact: George O'Leary 949-760-9611, FAX 949-760-9607
Hong Kong Contact: Cathy Pang 852 2605 5822, FAX 852 2691 1724
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BONSO ELECTRONICS INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
(In U.S. Dollars)
31-Dec 31-Mar
2005 2005
---- ----
(Unaudited) (Audited)
Assets
Current assets
Cash and cash equivalents 8,914,048 9,707,588
Restricted cash deposits 5,030 4,848
Trade receivables, net 7,130,351 10,585,968
Inventories, net 12,518,409 11,402,239
Tax recoverable 64,117 486,618
Deferred income tax assets - current 52,057 52,057
Other receivables, deposits and prepayments 2,071,835 1,450,322
Total current assets 30,755,847 33,689,640
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Deposits 72,789 72,789
Long term investment 500,000 500,000
Deferred income tax assets - non current 32,213 46,849
Goodwill 1,100,962 1,100,962
Brand name and other intangible assets, net 2,580,366 2,740,530
Property, plant and equipment 13,462,556 14,311,986
Total assets 48,504,733 52,462,756
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Liabilities and shareholders' equity
Current liabilities
Bank Overdraft 446,007 281,085
Notes payable 4,504,459 3,744,726
Accounts payable 3,788,345 6,938,578
Accrued charges and deposits 2,181,553 1,978,222
Short-term loans 3,026,990 4,742,685
Current portion of long-term debt and capital lease 153,012 633,887
obligations
Total current liabilities 14,100,366 18,319,183
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Long-term debt and capital lease obligations, net of 367,427 167,735
current maturities
Deferred income tax 44,053 43,856
Shareholders' equity
Preferred stock par value $0.01 per share
- authorized shares - 10,000,000
- issued and outstanding shares : March & December-0 -- --
Common stock par value $0.003 per share
- authorized shares - 23,333,334
- issued and outstanding shares : March 2005
- 5,577,639 December 2005 - 5,577,639 16,729 16,729
Additional paid-in capital 21,764,788 21,764,788
Retained earnings 11,564,516 11,307,642
Accumulated other comprehensive income 646,854 842,823
33,992,887 33,931,982
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Total liabilities and shareholders' equity 48,504,733 52,462,756
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BONSO ELECTRONICS INTERNATIONAL INC.
CONSOLIDATED INCOME STATEMENT
(In Thousands of U.S. Dollars)
Unaudited
Three months ended Dec. 31 Nine months ended Dec 31
-------------------------- ------------------------
2005 2004 2005 2004
---- ---- ---- ----
A B A B
Net sales 16,123 18,344 50,235 55,741
Cost of sales (13,169) (14,356) (0,549) (4,576)
---------- ---------- ---------- ----------
Gross margin 2,954 3,988 9,686 11,165
Selling expenses 517 701 1,624 1,992
Salaries and related costs 1,505 1,303 4,248 3,816
Research and development 109 128 381 332
expenses
Administration and general 664 877 2,280 2,468
expenses
Amortization of Brand Name 50 44 150 150
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Income from operations 109 935 1,003 2,407
Interest Income 74 75 160 168
Other income (82) (13) 173 294
Interest Expenses (150) (168) (370) (568)
Foreign exchange gains \(Loss) 3 -- (116) (59)
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Income/(Loss) before income (46) 829 850 2,242
taxes and minority interest
Income tax expense -30 -192 -35 -215
---------- ---------- ---------- ----------
Net income/(Loss) before 2,027
minority interest (76) 637 815
Minority interests -- 37 -- 53
Net income/(Loss) (76) 600 815 2,080
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Earnings/(Loss) per share (0.01) 0.10 0.14 0.35
Diluted
Adjusted weighted average 5,843,949 5,863,956 5,843,949 5,863,956
shares
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MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF QPERATIONS:
Nine Month Period ended December 31, 2005 compared to the Nine Month period
ended December 31, 2004
Net Sales. Our sales decreased 9.88% from approximately $55,741,000 for the
nine month period ended December 31, 2004, to approximately $50,235,000 for the
nine month period ended December 31, 2005, primarily as a result of a decrease
in sales of our products. Sales of our scales business decreased 8.8% from
approximately $36,782,000 for the nine month period ended December 31, 2004, to
approximately $33,543,000 for the nine month period ended December 31,2005, and
sales for telecommunications products were down 12% from approximately
$18,959,000 for the period ended December 31, 2004, to approximately $16,692,000
for the period ended December 31,2005.
Gross Margin. Gross margin as a percentage of revenue declined slightly to
19.3% during the nine-month period ended December 31, 2005 as compared to 20.0%
during the same period in the prior year. This decline was primarily the result
of a decrease in sales, increased pressure upon the sales price of both our FRS
telecommunication products and scales, and increased labor and material costs.
Selling Expenses. Selling expenses decreased by 18.47% from approximately
$1,992,000 for the nine month period ended December 31, 2004 to approximately
$1,624,000 for the nine month period ended December 31, 2005. This decrease was
attributable primarily to the decreased commissions paid as a result of the
reduced sales. As a percentage of revenue selling expenses decreased to 3.2%
during the nine month period ended December 31, 2005 as compared to 3.6% during
the same period in the prior year.
Salaries And Related Costs. Salaries and related costs increased by 11.32%
from approximately $3,816,000 for the period ended December 31 ,2004 to
approximately $4,248,000 for the period ended December 31 2005.This increase is
primarily the result of an increase in the number of employees.
Research And Development. Research and development expenses increased
14.76% from approximately $332,000 during the nine month period ended December
31, 2004 to approximately $381,000 during the nine month period ended December
31, 2005 due to increased research and development activities for
telecommunications products and new scale models. Research and Development as a
percentage of revenue increased to 0.8% during the nine month period ended
December 31, 2005 as compared to 0.6% during the prior year.
Administration And General Expenses. Administration and general expenses
decreased by 7.6% from approximately $2,468,000 during the nine month period
ended December 31, 2004 to approximately $2,280,000 for the nine month period
ended December 31, 2005. This decrease was primarily due to reduced in legal and
professional fees and consultancy fee.
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Amortization Of Brand Names. We amortized approximately $150,000 relating
to the brand names acquired upon the acquisitions of Korona and Gram Precision
during the nine month period ended December 31, 2005. Brand names are amortized
using the straight-line method over the related estimated useful life of 15
years.
Income/(Loss) From Operations. As a result of the above changes, income
from operations decreased by 58.33% from approximately $2,407,000 for the nine
month period ended December 31, 2004 to approximately $1,003,000 for the nine
month period ended December 31, 2005.
Interest Income. Interest income amounted to approximately $160,000 for the
nine month period ended December 31, 2005, compared to $168,000 in the nine
month period ended December 31, 2004.
Other Income. Other income decreased 41.16% from approximately $294,000 for
the nine month period ended December 31, 2004, to approximately $173,000 for the
nine month period ended December 31, 2005. The decrease was primarily due to a
change in categorizing scrap sales.
Interest Expenses. Interest expenses decreased 34.86% from approximately
$568,000 for the nine month period ended December 31, 2004 to approximately
$370,000 for the nine month period ended December 31, 2005. This decrease was
primarily due to the decrease of utilization of the banking facilities during
the current fiscal year.
Foreign Exchange Losses/Gains. Foreign exchange loss increased from a loss
of approximately $59,000 for the nine month period ended December 31, 2004 to a
loss of approximately $116,000 for the nine month period ended December 31,
2005. The increase was primarily attributable to the increased strength of the
U.S. Dollars against the Euro.
Income Tax Expense. Income tax expense decreased from approximately
$215,000 during the nine months ended December 31, 2004 to approximately $35,000
during the nine months ended December 31, 2005. The decrease was primarily the
result of the above changes.
Net Income/(Loss). As a result of the above changes, net income decreased
from approximately $2,080,000 for the nine month period ended December 31, 2004
to $815,000 for the nine month period ended December 31, 2005, a decrease of
approximately $1,265,000, or 60.82%.
Three Month Period ended December 31, 2005 compared to the Three Month period
ended December 31, 2004
Net Sales. Net sale for the three months ended December 31, 2005 was
approximately $16,123,000, represented a decrease of approximately $2,221,000,
or 12.1%, from approximately $18,344.000 for the same period in the prior year.
Sales of our scales business decreased 13.8% from approximately $13,182,000 for
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the three months period ended December 31, 2004, to approximately $11,360,000
for the three months period ended December 31,2005, and sales for
telecommunications products were down 7.7% from approximately $5,162,000 for the
three months period ended December 31, 2004, to approximately $4,763,000 for the
three months period ended December 31,2005. The decrease was primarily due to a
general decrease of demand for our products.
Gross Margin. Gross margin as a percentage of revenue declined to 18.3%
during the three-month period ended December 31, 2005 as compared to 21.7%
during the same period in the prior year. This decline was primarily the result
of the increased pressure upon the sales price of both our FRS telecommunication
products and scales and the increased labor and material costs.
Selling Expenses. Selling expenses decreased by 26.2% from approximately
$701,000 for the three months ended December 31, 2004 to approximately $517,000
in the three months ended December 31, 2005. This decrease was attributable to
the decreased cost of commission as a result of decreased sales and insurance.
Salaries And Related Costs. Salaries and related costs increased by 15.5%
from approximately $1,303,000 for the three months ended December 31, 2004 to
approximately $1,505,000 for the three months ended December 31, 2005. This
increase is primarily the result of an increase in the number of employees.
Research And Development. Research and development expenses decreased 14.8%
from approximately $128,000 for the three months ended December 31, 2004 to
approximately $109,000 for the three months ended December 31, 2005 due to
decreased research and development during this period.
Administration And General Expenses. Administration and general expenses
decreased by 24.3% from approximately $877,000 for the three months ended
December 31, 2004 to approximately $664,000 for the three months ended December
31, 2005. This decrease was primarily due to reduced legal & professional fee
and consultancy fee.
Amortization Of Brand Names. Brand names are amortized using the
straight-line method over the related estimated useful life of 15 years. We
amortized approximately $50,000 relating to the brand names acquired upon the
acquisitions of Korona and Gram Precision during the three month period ended
December 31, 2005.
Income From Operations. As a result of the above changes, income from
operations decreased by 88.3% from approximately $935,000 for the three months
ended December 31, 2004 to $109,000 for the three months ended December 31,
2005.
Interest Income. Interest income decreased slightly to approximately
$74,000 for the three months ended December 31, 2005, compared to $75,000 in the
three months ended December 31, 2004.
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Other Income. Other income decreased 530.8% from approximately a deficit of
$13,000 for the three months ended December 31, 2004, to approximately a deficit
of $82,000 for the three months ended December 31, 2005. The decrease was
primarily due to a change in categorizing scrap sales.
Interest Expenses. Interest expenses decreased 10.7% from approximately
$168,000 for the three months ended December 31, 2004 to approximately $150,000
for the three months ended December 31, 2005. This decrease was primarily the
result of the decreased use of our banking facilities.
Foreign Exchange Losses/Gains. Foreign exchange gain increased slightly to
approximately $3,000 for the three months ended December 31, 2005.
Net Income/(Loss). As a result of the above changes, net income decreased
from approximately $600,000 for the three month ended December 31, 2004 to a net
loss of $76,000 for the three months ended December 31, 2005, a decrease of
approximately $676,000, or 112.7%.
Liquidity and Capital Resources
We have financed our growth and cash needs to date primarily from
internally generated funds and bank debt. We do not use off-balance sheet
financing arrangements, such as securitization of receivables or obtaining
access to assets through special purpose entities, as sources of liquidity. Our
primary uses of cash have been to fund expansions and upgrades of our
manufacturing facilities and to fund increases in inventory.
As of December 31, 2005 we had $8,914,048 in cash and cash equivalents as
compared to $9,707,588 as of March 31, 2005. Working capital at December 31,
2005 was $16,655,481 compared to $15,370,457 at March 31, 2005. We believe that
our cash flows from operations, our current cash balance and funds available
under our working capital and credit facilities will be sufficient to meet our
working capital needs and planned capital expenditures in the foreseeable
future.
Stock Repurchase Program
In August 2001, the Company's Board of Directors authorized a program for
the Company to repurchase up to $500,000 of its common stock. This repurchase
program does not obligate the Company to acquire any specific number of shares
or acquire shares over any specified period of time. No shares were purchased
under this program in the nine months ended December 31, 2005. The Company may
from time to time repurchase shares of its Common Stock under this program.
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SIGNATURE
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.
BONSO ELECTRONICS INTERNATIONAL, INC.
(Registrant)
Date: March 30, 2006 By: /s/ George O'Leary
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George O'Leary, President and Chief
Executive Officer
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