Revenues for the Fourth Quarter Increased 14% YoY
All-Time Record Revenues for 2002 Increased 40% YoY to $125.2 Million
SANTA CLARA, Calif., Jan. 21 /PRNewswire/ --
DSP Group Inc. (Nasdaq: DSPG) today announced results for the fourth quarter
and year ending December 31, 2002.
Fourth Quarter Results:
The company announced fourth quarter 2002 revenues of $28,128,000, an
increase of 14% from revenues of $24,744,000 for the fourth quarter of 2001.
Net income from continuing operations for the fourth quarter of 2002 was
$3,626,000 an increase of 22% from $2,970,000 in the fourth quarter of 2001.
However, net income for the fourth quarter of 2002 was $3,604,000 a decrease
of 11% from net income of $4,043,000 for the fourth quarter of 2001. Diluted
earnings per share (EPS) for the fourth quarter of 2002 decreased 13% to
$0.13, compared with $0.15, for the fourth quarter of 2001. Net income and
diluted EPS for the fourth quarter of 2001 and one month of the fourth quarter
of 2002 included the spun off DSP Core licensing activity.
Year-end Results:
Revenues for the year ended December 31, 2002, were $125,158,000, an
increase of 40% over 2001 revenues of $89,430,000. Net income from continuing
operations for 2002 was $12,672,000 an increase of 10% compared to $11,561,000
for 2001. Net income for the year 2002 was $15,142,000 compared to $21,916,000
for the year 2001, a decrease of 31%. Diluted EPS for the year 2002 decreased
by 32% to $0.54 from $0.79 for the year 2001. Net income and diluted EPS for
2001 and for the first ten months of 2002 included the spun off DSP Core
licensing activity.
Proforma Results:
Results for the fourth quarter of 2002 and for the year ended December 31,
2002 include an unusual loss item for impairment of available for sale
marketable securities of $414,000 and $10,229,000 respectively, mainly
associated with the decline in value of our holdings in AudioCodes Ltd. shares
(Nasdaq: AUDC) in the second quarter of 2002. In addition, we recorded in the
first quarter of 2002, an amount of $865,000 as an unusual expense related to
the abandoned IPO expenses of the "Ceva" DSP Core licensing business.
The results of operations of the company for the fourth quarter of 2002
and the year December 31, 2002 include a net loss from the discontinued
operations of $22,000 and net income from the discontinued operations of
$2,470,000 compared to a net income of $1,073,000 and $10,355,000 for the
fourth quarter and year ended December 31, 2001.
Proforma net income and EPS for the company excluding the discontinued
operations, and the unusual loss and expense items described above, for the
fourth quarter of 2002 would have been $3,961,000 and $0.14, respectively. An
increase of 33% and 27% of net income and EPS, respectively, compared to the
fourth quarter 2001. Proforma net income and EPS for year ended December 31,
2002 would have been $19,930,000 and $0.71 respectively. An increase of 72%
and 69% of net income and EPS, respectively compared to 2001.
Eli Ayalon, Chairman & CEO of DSP Group Inc. stated: "We are very proud
of our achievements this year, our fourth quarter results conclude a year of
success for DSP Group. Despite facing a challenging business environment and
severe contraction in the semiconductor industry, we succeeded to
significantly grow our revenues and proforma net income.
"A remarkable year over year growth of 40% in our product business and a
three years CAGR of 29% (from 1999), are the result of paying close attention
to the needs of our customers and our investment policy in R&D that gave birth
to a series of new products, which aided our OEM customers to increase their
market share and spearheaded our growth."
Mr. Ayalon added: "Despite, and in large part due to, a significant
increase of our R&D from approximately $12,000,000 in 1999 to approximately
$20,000,000 in 2002, our proforma net income for the semiconductor business
also increased. Our management spirit of tight control on expenses, and high
productivity of each individual employee allowed us to achieve these results.
In 2002 we surpassed our own productivity records with an average revenue per
employee of approximately $840,000 (among the highest in our industry), an
increase of 41% over 2001.
"We reached a level of average proforma net income per employee (excluding
the one time charges described above) of $134,000, an increase of 74% over
2001."
Mr. Ayalon went on saying: "In 2002, we completed the separation of the
DSP Core Licensing business from the company.
"DSP Group has now a clear and focused fabless semiconductor model which
we intend to develop and enhance through strong cooperation with our customers
and suppliers and which will continue to be implemented and executed by the
Company's dedicated employees and experienced management team."
Boaz Edan, COO of DSP Group said: "We continue to have a strong demand
for our 2.4GHz line of Products. The company plans to launch new products in
2003 (including the DECT (1.9GHz), Bluetooth solutions and DVR's with MP3
applications). These new developments, among others are on schedule. We
continue to invest efforts of our marketing and R&D teams to work closely with
key customers to define the future generations of products and solutions to be
launched in 2004 and 2005."
About DSP Group
DSP Group, Inc. is a semiconductor fabless company that is a leader in the
short-range wireless market. By combining its DSP cores technology with
advanced RF, communication technology and speech-processing algorithms, DSP
Group is a worldwide leader in developing and providing Total Telephony
Solutions(TM). These applications include digital 900MHz, 2.4GHz, DECT
(1.9GHz), 5.8GHz and Bluetooth for voice and data communication in
residential, SOHO, SME, enterprise and automotive applications. DSP Group's
advanced RF CMOS and communications technology provides the company with a
clear path to a Phone-on-a-Chip(TM) solution. DSP Group also develops and
markets embedded, integrated silicon/software solution for Voice-over-Digital-
Subscriber Line (VoDSL), Voice-over-Internet-Protocol (VoIP) applications, and
other Voice over Packet applications for Integrated Access Device (IAD) and IP
Phone. More information about DSP Group is available at http://www.dspg.com.
NOTE: Total Telephony Solutions and Phone-on-a-Chip are trademarks of DSP
Group, Inc.
This press release may contains statements that qualify as "forward-
looking statements" under the Private Securities Litigation Reform Act of
1995, including statements made by Mr. Edan concerning continued demand for
our 2.4GHz line of products and our corporate plans to develop and launch new
products. 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, the
acceptance by customers in the digital voice recorder market of DSP Group's
products, DSP Group's ability to differentiate its products from those of its
competitors in the same market and the general market demand for products that
incorporate DSP Group's technology in the market. These factors and other
factors which may effect future operating results or DSP Group's stock price
are discussed under "RISK FACTORS" in the Form 10-K for the year ended
December 31, 2001 as well as other report, including Form 10-Qs, 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 8:00 a.m. EST today to
discuss fourth quarter results 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
website at http://www.dspg.com or link to:
http://www.dspg.com/website/ir/investor_messageb.html .
For more information, please contact Yaniv Arieli, President of US
Operations, Investor Relations, DSP Group at (408) 986-4423.
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - US GAAP
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Product revenues
and other $ 28,128 $ 24,744 $ 125,158 $ 89,430
Cost of product
revenues and other 16,213 14,665 74,412 53,122
Gross profit 11,915 10,079 50,746 36,308
Operating expenses:
Research and
development 4,621 5,807 19,745 21,066
Sales and marketing 2,767 2,325 10,745 9,168
General and
administrative 1,523 1,280 5,048 4,907
Aborted spin off
expenses and other -- -- 865 --
Total operating
expenses 8,911 9,412 36,403 35,141
Operating income 3,004 667 14,343 1,167
Other income :
Interest and other
income, net 1,886 2,885 9,452 12,522
Equity in earnings
of affiliates -- -- -- 105
Minority interest
in loss of
subsidiary -- -- -- 173
Income after financial
and other income 4,890 3,552 23,795 13,967
Impairment of
available-for-sale
marketable securities (414) -- (*)(10,229) --
Income before
provision for income
taxes 4,476 3,552 13,566 13,967
Provision for
income taxes 850 582 (**)894 2,406
Net income from
continuing
operations 3,626 2,970 12,672 11,561
Net income (loss)
from discontinued
operations(***) (22) 1,073 2,470 10,335
$3,604 $4,043 $15,142 $ 21,916
Net income
Net earnings per
share for continuing
operations:
Basic $0.13 $0.11 $0.47 $0.43
Diluted $0.13 $0.11 $0.45 $0.42
Net earnings (loss)
per share for
discontinued
operations:
Basic $(0.00) $0.04 $0.09 $0.39
Diluted $(0.00) $0.04 $0.09 $0.37
Net earnings per
share (combined):
Basic $0.13 $0.15 $0.56 $0.82
Diluted $0.13 $0.15 $0.54 $0.79
Weighted average
number of shares of
Common Stock used
in computing of:
Basic 27,188 26,834 27,070 26,641
Diluted 28,028 27,818 28,041 27,606
(*) Related to impairment of marketable securities
(**) Including tax credit related to impairment of marketable securities
(***) Related to the DSP Licensing business (Ceva) which was discontinued
following the merger with Parthus
DSP GROUP, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2002 2001 2002 2001
Product revenues
and other $28,128 $24,744 $125,158 $89,430
Cost of product
revenues and other 16,213 14,665 74,412 53,122
Gross profit 11,915 10,079 50,746 36,308
Operating expenses:
Research and
development 4,621 5,807 19,745 21,066
Sales and marketing 2,767 2,325 10,745 9,168
General and
administrative 1,523 1,280 5,048 4,907
Total operating
expenses 8,911 9,412 35,538 35,141
Operating income 3,004 667 15,208 1,167
Other income:
Interest and other
income, net 1,886 2,885 9,452 12,522
Equity in earnings
of affiliates -- -- -- 105
Minority interest
in loss of
subsidiary -- -- -- 173
Income after financial
and other income 4,890 3,552 24,660 13,967
Provision for
income taxes 929 582 4,730 2,406
Net income from
continuing
operations 3,961 2,970 19,930 11,561
Net income (loss)
from discontinued
operations(***) (22) 1,073 2,470 10,355
$3,939 $4,043 $22,400 $21,916
Net income
Net earnings per
share for continuing
operations:
Basic $0.15 $0.11 $0.74 $0.43
Diluted $0.14 $0.11 $0.71 $0.42
Net earnings (loss)
per share for
discontinued
operations:
Basic $(0.00) $0.04 $0.09 $0.39
Diluted $(0.00) $0.04 $0.09 $0.37
Net earnings per
share (combined):
Basic $0.15 $0.15 $0.83 $0.82
Diluted $0.14 $0.15 $0.80 $0.79
Weighted average
number of shares of
Common Stock used
in computing of:
Basic 27,188 26,834 27,070 26,641
Diluted 28,028 27,818 28,041 27,606
The above pro forma
consolidated statements
of income have been
adjusted to exclude
the following items
to US GAAP reported
net income:
Reported net income
per US GAAP $3,604 $4,043 $15,142 $21,916
Adjustments:
Aborted spin off
expenses and other -- -- 865 --
Impairment of
available-for-sale
marketable securities 414 -- 10,229 --
Tax benefit (79) -- (3,836) --
Pro forma net income $3,939 $4,043 $22,400 $21,916
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
Assets 2002 2001
Current Assets:
Cash and cash equivalents $39,919 $39,146
Marketable securities and short term
bank deposits 45,371 70,893
Trade receivable, net 4,873 6,315
Inventories 6,916 2,048
Other accounts receivable 1,352 1,547
Deferred income taxes 1,685 2,098
Assets of discontinued operation, net 4,737 12,197
Total current assets 104,853 134,244
Property and equipment, net 4,690 5,390
Long term marketable securities 150,692 139,752
Other investments 12,031 25,536
Other assets, net 6,190 6,229
Severance pay fund 1,616 1,228
Total Assets $280,072 $312,379
Liabilities and Stockholders' Equity
Current liabilities:
Trade payable $6,745 $5,123
Other current liabilities 21,552 11,592
Liabilities of discontinued operation -- 7,852
Total current liabilities 28,297 24,567
Long term liabilities:
Accrued severance pay 1,686 1,294
Deferred income taxes 2,371 7,541
Total long term liabilities 4,057 8,835
Stockholders' equity:
Common stock 27 27
Additional paid-in capital 156,443 155,969
Less cost of treasury stock -- (8,623)
Accumulated other comprehensive income 476 2,652
Retained earnings 90,772 128,952
Total stockholders' equity 247,718 278,977
Total liabilities and stockholders' equity $280,072 $312,379
SOURCE DSP Group Inc.
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http://www.dspg.com
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CONTACT:
Yaniv Arieli, President of US Operations,
Investor Relations of DSP Group, +1-408-986-4423
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