SAN JOSE, Calif., Oct. 30 /PRNewswire-FirstCall/ -- DSP Group, Inc.
(Nasdaq: DSPG), a worldwide leader in developing and providing chip-set
solutions for residential wireless connectivity, announced today its results
for the third quarter ended September 30, 2008.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020715/SFM118LOGO)
Third Quarter Results:
Revenues for the third quarter of 2008 were $87,368,000, an increase of
41% from revenues of $61,866,000 for the third quarter of 2007. Net loss for
the third quarter of 2008 was $3,030,000, as compared to net loss of
$7,496,000 for the third quarter of 2007. Earnings per share (EPS) for the
third quarter of 2008 were a loss of $0.11 per share, as compared with a loss
of $0.25 per share for the third quarter of 2007.
Non-GAAP Results:
Non-GAAP net income and diluted EPS for the third quarter of 2008 were
$7,367,000 and $0.27 per share, respectively; a decrease of 3% from the
non-GAAP net income of $7,615,000 and an increase of 4% from non-GAAP diluted
EPS of $0.26 per share for the third quarter of 2007. Non-GAAP net income and
diluted EPS for the third quarter of 2008 excluded the impact of amortization
of acquired intangible assets of $5,702,000 associated with the acquisition of
the Cordless and VoIP Terminals business of NXP B.V.; equity-based
compensation expenses of $3,205,000; restructuring expenses of $1,870,000
associated with our cost cutting measures at various operating sites,
unrealized loss related to certain available-for-sale marketable securities of
$671,000 and the aggregate tax benefits associated with such expenses of
$1,051,000. Non-GAAP net income and diluted EPS for the third quarter of 2007
excluded the impact of an in-process R&D expense of $10,120,000 and the
amortization of acquired intangibles and other acquisition-related assets of
$3,704,000, both associated with the acquisition of the Cordless and VoIP
Terminals business of NXP B.V.; equity-based compensation expenses of
$2,880,000; and the aggregate tax benefits associated with such expenses of
$1,593,000.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "Despite a solid third
quarter and in view of the current economic crisis and the uncertainty of
consumer spending in 2009, we decided to implement further synergies aimed at
improving efficiencies across our various operating sites and reduce our
operating expenses in 2009." Mr. Ayalon also added, "During the third quarter
of 2008, we secured two design wins for XpandR, our new generation of wireless
multimedia system-on-a-chip (SoC) solution. Both Giant Wireless Technology
Ltd, a leading wireless technology creation company, and another leading
European-based OEM customer chose XpandR for its broad application
capabilities and high level of integration."
About DSP Group
DSP Group, Inc. is a fabless semiconductor company, offering advanced
chip-set solutions for a variety of applications. DSP Group is a worldwide
leader in the short-range wireless communication market, enabling home
networking convergence for voice, video and data. By combining its in-house
technologies of Digital Signal Processors (DSPs), portfolio of wireless
communication protocols, including DECT, Bluetooth and Wi-Fi, most advanced
Radio Frequency CMOS and SiGe, as well as VoIP ICs, DSP Group is a worldwide
leader and a one-stop-shop for a wide range of applications. These
applications include ISM band digital 900MHz, 2.4GHz and 5.8GHz telephony,
European DECT (1.9GHz) telephony, Bluetooth systems for voice, video and data
communication and deployment in residential, SOHO, SME, enterprise and
automotive applications. DSP Group's ICs provide solutions for MP3 players,
VoIP Phones, Gateways, and Integrated Access Devices and are widely used in
Digital Voice Recorders. More information about DSP Group is available at
http://www.dspg.com.
Forward Looking Statements
This press release may contain statements that qualify as "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995,
including Mr. Ayalon's statement about the company's implementation of further
synergies to reduce its 2009 operating expenses. These forward-looking
statements are based on current expectations and DSP Group assumes no
obligation to update this information. In addition, the events described in
these forward-looking statements may not actually arise. DSP Group's actual
results could differ materially from those described in this press release as
a result of various factors, including fluctuations in sales of DSP Group's
5.8GHz and DECT 6.0 products; successful implementation of the restructuring
plan to reduce 2009 operating expenses; slower than expected change in the
nature of residential communications domain; unexpected delays in the
introduction of new products or failure of such products to achieve broad
market acceptance; DSP Group's inability develop and produce new products at
competitive costs; decline or fluctuations in gross margins and the effect on
revenues and profitability; and general market demand for products that
incorporate DSP Group's technology in the market. These factors and other
factors which may affect future operating results or DSP Group's stock price
are discussed under "RISK FACTORS" in the Form 10-K for fiscal 2007 as well as
other reports DSP Group has filed with the Securities and Exchange Commission
and which are available on DSP Group's Web site (http://www.dspg.com) under
Investor Relations.
Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EDT today to
discuss the financial results for the third quarter of 2008 and invites you to
listen to a live broadcast over the Internet. The broadcast can be accessed by
all interested parties through the Investor Relations section (investor
message board) of DSP Group's Web site at http://www.dspg.com or link to:
http://ir.dspg.com./phoenix.zhtml?c=101665&p=irol-calendar.
If you cannot join the call, please listen to the replay, which will be
available for approximately two weeks after the call on DSP Group's Web site
or by calling the following numbers:
-- US Dial-In # 1-888-286-8010 (passcode: 59861318)
-- International Dial-In # 1-617-801-6888 (passcode: 59861318)
For more information, please contact Ofer Elyakim, DSP Group Inc. at
+852-9017-5426; or e-mail: ofere@dsp.co.il.
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product revenues
and other $87,368 $61,866 $234,250 $163,590
Cost of product
revenues and other 54,503 37,201 148,462 98,434
Gross profit 32,865 24,665 85,788 65,156
Operating expenses:
Research and
development 17,908 13,874 56,825 39,095
Sales and
marketing 5,483 4,680 17,124 12,987
General and
administrative 4,539 3,271 13,336 10,196
Amortization of
intangible assets 5,702 3,057 17,200 3,057
In-process R&D - 10,120 - 10,120
Restructuring
costs 1,870 - 1,870 -
Total operating
expenses 35,502 35,002 106,355 75,455
Operating loss (2,637) (10,337) (20,567) (10,299)
Other income :
Interest and other
income/(loss), net (185) 2,569 1,948 9,148
Loss before
provision for
income taxes (2,822) (7,768) (18,619) (1,151)
Provision for income
taxes ( income tax
benefit) 208 (272) (630) 2,016
Net Loss $(3,030) $(7,496) $(17,989) $(3,167)
Net loss per share:
Basic $(0.11) $(0.25) $(0.62) $(0.11)
Diluted $(0.11) $(0.25) $(0.62) $(0.11)
Weighted average
number of shares
of Common stock
used in the
computation of:
Basic 27,728 29,436 28,885 28,716
Diluted 27,728 29,436 28,885 28,716
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product revenues
and other $87,368 $61,866 $234,250 $163,590
Cost of product
revenues and other 54,295 36,411 147,750 97,312
Gross profit 33,073 25,455 86,500 66,278
Operating expenses:
Research and
development 16,267 12,424 51,201 33,628
Sales and marketing 5,127 4,351 15,832 11,771
General and
administrative 3,539 2,313 10,215 6,613
Total operating
expenses 24,933 19,088 77,248 52,012
Operating income 8,140 6,367 9,252 14,266
Other income:
Interest and
other income, net 486 2,569 2,619 10,144
Income before
provision for
income taxes 8,626 8,936 11,871 24,410
Provision for
income taxes 1,259 1,321 2,042 4,291
Net income $7,367 $7,615 $9,829 $20,119
Net earnings
per share:
Basic $0.27 $0.26 $0.34 $0.70
Diluted $0.27 $0.26 $0.34 $0.70
Weighted average
number of shares
of Common stock
used in the
computation of:
Basic 27,728 29,436 28,885 28,716
Diluted 27,740 29,549 28,957 28,903
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2008 2007 2008 2007
Unaudited Unaudited Unaudited Unaudited
GAAP net loss $(3,030) $(7,496) $(17,989) $(3,167)
Equity-based
compensation
expense included
in cost of
product revenues 208 143 712 475
Amortization of
adjustment of
Inventories to
market values - 647 - 647
Equity-based
compensation
expense included
in R&D 1,641 1,450 5,624 5,467
Equity-based
compensation
expense included
in SG&A 1,356 1,287 4,413 4,799
Amortization of
intangible assets
related to NXP
transaction 5,702 3,057 17,200 3,057
In-process R&D - 10,120 - 10,120
Restructuring costs 1,870 - 1,870 -
Unrealized loss
related to certain
available-for-sale
marketable securities 671 - 671 996
Tax benefit resulting
from equity-based
compensation,
amortization of
intangible assets,
in-process R&D,
restructuring costs
and loss related to
certain
available-for-sale
marketable securities (1,051) (1,593) (2,672) (2,275)
Non-GAAP net income $7,367 $7,615 $9,829 $20,119
Non-GAAP diluted
earnings per share $0.27 $0.26 $0.34 $0.70
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2008 2007
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $64,089 $69,586
Restricted deposits 115 -
Marketable securities and cash deposits 9,700 63,682
Trade receivables, net 44,233 51,636
Inventories 21,847 16,361
Other accounts receivable 15,682 8,173
Deferred income taxes 547 4,011
Total current assets 156,213 213,449
Property and equipment, net 16,451 14,270
Long term marketable securities 46,647 34,469
Severance pay fund 8,123 6,883
Deferred income taxes 8,842 5,109
Goodwill and other intangible assets 220,286 237,969
Other assets 1,704 694
Total assets $458,266 $512,843
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $31,794 $29,064
Other current liabilities 40,319 48,125
Total current liabilities 72,113 77,189
Accrued severance pay 8,491 7,303
Accrued pensions 1,091 1,758
Deferred tax liability 1,613 372
Other long term liabilities 455 1,364
Total long term liabilities 11,650 10,797
Stockholders' equity:
Common stock 28 31
Additional paid-in capital 311,296 300,542
Accumulated other comprehensive
income (loss) (378) 1,025
Retained earnings 166,219 187,063
Less - Cost of treasury stock (102,662) (63,804)
Total stockholders' equity 374,503 424,857
Total liabilities and stockholders' equity $458,266 $512,843
