Annual Revenues Increased 16% YoY
SANTA CLARA, Calif., Jan. 24 /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 fourth quarter and year ended December 31, 2006.
Fourth Quarter Results:
Revenues for the fourth quarter of 2006 were $40,383,000, a decline of
5% from revenues of $42,401,000 for the fourth quarter of 2005. Net income
for the fourth quarter was $1,600,000, a decline of 72% from net income of
$5,708,000 for the fourth quarter of 2005. Diluted earnings per share (EPS)
for the fourth quarter of 2006 were $0.06, a decline of 68% from $0.19 for
the fourth quarter of 2005.
Year End Results:
Revenues for the year ended December 31, 2006, were $216,948,000, an
increase of 16% over 2005 revenues of $187,225,000. Net income for 2006 was
$22,379,000, a decrease of 24% from $29,473,000 for 2005. Diluted EPS for
2006 was $0.74, a decrease of 25% from $0.99 for 2005.
Pro Forma Results:
Pro forma net income and diluted EPS for the fourth quarter of 2006,
excluding the impact of equity-based compensation expense as required by
SFAS 123(R), were $4,740,000 and $0.16, respectively, representing a
decrease of 17% and 16%, respectively, from the fourth quarter of 2005.
Pro forma net income and diluted EPS for the full year ended December
31, 2006, excluding the impact of equity-based compensation expense as
required by SFAS 123(R), were $34,013,000 and $1.13, respectively,
representing an increase of 15% and 14%, respectively, from the year ended
December 31, 2005.
Share Buyback:
During the fourth quarter of 2006, DSP Group repurchased 995,000 shares
of its Common Stock at an average price of $21.5 per share, for an
aggregate price of approximately $21.4 million.
For the full year ended December 31, 2006, DSP Group repurchased
2,242,400 shares of its Common Stock at an average price of $23.55 per
share, for an aggregate price of approximately $52.8 million.
The Company announced that in light of the Company's strong cash
position and its focus on shareholder value, its Board of Directors has
authorized management to repurchase an additional 3.0 million shares of the
Company's common stock in open-market and privately negotiated
transactions.
After giving effect to the most recent repurchases and the additional
3.0 million share repurchase authorization, approximately 3.8 million
shares of the Company's Common Stock remain authorized for repurchase under
the current repurchase program approved by the Company's Board of
Directors.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "Despite a temporary
deceleration in the fourth quarter, 2006 was another year of growth for DSP
Group. Our revenues increased by 16% as compared to 2005, and the overall
financial results of the Company in 2006 reflect solid execution in a
challenging environment."
Ayalon also stated: "We have demonstrated a series of new innovative
products and platforms driven by our system-on-chip solutions at the CES
(Consumer Electronics Show) earlier this month in Las Vegas. We believe
that our innovative products position the company at the heart of the
residential communication transformation by enabling high quality in house
wireless coverage for sensitive real-time multimedia applications."
The Company believes that the pro forma presentation of net income and
diluted EPS presented in this press release is useful to investors in
comparing results for the quarter and year ended December 31, 2006 to the
same periods during 2005, because results for the fourth quarter of and the
full year 2005 did not include equity-based compensation expenses relating
to SFAS 123(R). Further, the Company believes it is useful to investors to
understand how the expenses associated with the application of SFAS 123(R)
are reflected on its statements of income.
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 & 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,
data and video communication and deployment in residential, SOHO, SME,
enterprise and automotive applications. DSP Group 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 statements made by Mr. Ayalon about DSP Group's
products positioning the company at the heart of the residential
communication transformation. 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 slower than expected change in the nature of the
residential communications domain, unexpected delays in the introduction of
new products, especially DECT products; failure to achieve broad market
acceptance of existing and new products by existing and potential OEM
customers; DSP Group's inability to add new customers and develop and
produce new products at competitive costs and in a timely manner; 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 2005 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. EST today to
discuss the financial results for the fourth quarter of 2006 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: 64548377)
--International Dial-In # 1-617-801-6888 (passcode: 64548377)
For more information, please contact Ofer Elyakim, Director of Investor
Relations & Business Development, DSP Group Inc. at (408) 986-4421; or e-mail:
ofere@dsp.co.il
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues $40,383 $42,401 $216,948 $187,225
Cost of revenues 24,883 23,420 128,559 101,074
--- --- --- ---
Gross profit 15,500 18,981 88,389 86,151
Operating expenses:
Research and
development 11,972 9,862 47,525 40,290
Sales and marketing 4,074 3,237 16,306 13,119
General and
administrative 2,671 1,846 11,137 7,398
--- --- --- ---
Total operating
expenses 18,717 14,945 74,968 60,807
--- --- --- ---
Operating income
(loss) (3,217) 4,036 13,421 25,344
Other income:
Interest and other
income, net 3,366 2,830 13,198 10,166
--- --- --- ---
Income before provision
for income taxes 149 6,866 26,619 35,510
Income taxes (1,451) 1,158 4,240 6,037
--- --- --- ---
Net income $1,600 $5,708 $22,379 $29,473
Net earnings per share:
Basic $0.06 $0.20 $0.76 $1.04
Diluted $0.06 $0.19 $0.74 $0.99
Weighted average number
of shares of Common Stock
used in the computation of:
Basic 28,746 28,636 29,343 28,435
Diluted 29,031 29,970 30,049 29,843
DSP GROUP, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Audited)
Revenues $40,383 $42,401 $216,948 $187,225
Cost of revenues 24,756 23,420 128,098 101,074
--- --- --- ---
Gross profit 15,627 18,981 88,850 86,151
Operating expenses:
Research and
development 10,197 9,862 41,172 40,290
Sales and marketing 3,720 3,237 14,987 13,119
General and
administrative 1,631 1,846 7,146 7,398
--- --- --- ---
Total operating
expenses 15,548 14,945 63,305 60,807
--- --- --- ---
Operating income 79 4,036 25,545 25,344
Other income :
Interest and other
income, net 3,366 2,830 13,198 10,166
--- --- --- ---
Income before provision
for income taxes 3,445 6,866 38,743 35,510
Income taxes (1,295) 1,158 4,730 6,037
--- --- --- ---
Net income $4,740 $5,708 $34,013 $29,473
Net earnings per share:
Basic $0.16 $0.20 $1.16 $1.04
Diluted $0.16 $0.19 $1.13 $0.99
Weighted average number
of shares of Common Stock
used in the computation of:
Basic 28,746 28,636 29,343 28,435
Diluted 29,031 29,970 30,049 29,843
The above pro forma consolidated statements of income have been adjusted
to exclude the following to US GAAP reported net income:
(In thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
(Unaudited) (Unaudited) (Unaudited) (Audited)
Reported net income
per US GAAP $1,600 $5,708 $22,379 $29,473
Adjustments:
Equity-based compensation
expense included in
cost of revenues 127 -- 461 --
Equity-based compensation
expense included
in research and
development 1,775 -- 6,353 --
Equity-based compensation
expense included in
sales and marketing 354 -- 1,319 --
Equity-based compensation
expense included in
general and
administrative 1,040 -- 3,991 --
Tax benefit resulting
from equity-based
compensation (156) -- (490) --
Pro forma net income $4,740 $5,708 $34,013 $29,473
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2006 2005
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $37,344 $50,460
Marketable securities and cash deposits 132,170 108,928
Trade receivables, net 21,489 16,991
Inventories 14,366 12,686
Other accounts receivable 4,049 1,617
Deferred income taxes 1,516 1,227
________ ________
Total current assets
210,934 191,909
Property and equipment, net 12,644 11,704
Long term marketable securities 179,368 185,828
Severance pay fund 5,689 4,419
Deferred income taxes 1,987 1,638
Other assets 3,366 4,507
________ ________
Total assets $413,988 $400,005
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $12,205 $12,753
Other current liabilities 28,969 33,411
________ ________
Total current liabilities 41,174 46,164
Accrued severance pay 6,065 4,707
Stockholders' equity:
Common Stock 28 29
Additional paid-in capital 216,041 188,539
Accumulated other comprehensive income 28 45
Retained earnings 195,198 179,968
Less - Cost of treasury stock (44,546) (19,447)
________ ________
Total stockholders' equity 366,749 349,134
________ ________
Total liabilities and
stockholders' equity $413,988 $400,005
SOURCE DSP Group, Inc.
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Related links:
http://www.dspg.com/
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CONTACT:
Ofer Elyakim, Director of Investor Relations
& Business Development of DSP Group Inc., +1-408-986-4421, or
ofere@dsp.co.il
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