Quarterly and Annual Revenues Increased 48% YoY and 19% YoY Respectively
SANTA CLARA, Calif., Jan. 25 /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, 2005.
Fourth Quarter Results:
Revenues for the fourth quarter of 2005 were $42,401,000, an increase of
48% from revenues of $28,555,000 for the fourth quarter of 2004. Net income
for the fourth quarter was $5,708,000, an increase of 364% from net income of
$1,229,000 for the fourth quarter of 2004. Diluted earnings per share (EPS)
for the fourth quarter of 2005 were $0.19, an increase of 375% from $0.04 for
the fourth quarter of 2004. Results for the fourth quarter of 2004 included a
one-time write-off in the amount of $2,682,000 for in-process research and
development related to the acquisition of Bermai Inc.'s Wi-Fi assets in
October 2004. The related tax benefit on the one-time write-off was $939,000.
Year End Results:
Revenues for the year ended December 31, 2005, were $187,225,000, an
increase of 19% over 2004 revenues of $157,511,000. Net income for 2005 was
$29,473,000, a decrease of 42% from $51,094,000 for 2004. Diluted EPS for 2005
was $0.99, a decrease of 42% from $1.70 for 2004.
Results for 2004 included an aggregate capital gain of $44,448,000,
resulting from the sale of all of our holdings of AudioCodes Ltd. ordinary
shares and the Tomen Corporation common stock. The tax effect of these capital
gains was $16,450,000. Financial results for 2004 also included the one-time
write-off of in-process research and development related to the Bermai
acquisition and related tax benefit as discussed above, as well as a one-time
goodwill impairment charge of $4,304,000 arising from the GAAP-required
re-evaluation of the remaining goodwill associated with the acquisition of
VoicePump Inc. in March 2000. The capital gains are included in the Company's
statements of income as "Other income," and the write-off and impairment
charge are included as "Operating expenses."
Pro Forma Results:
Pro forma net income and diluted EPS for the fourth quarter of 2004,
excluding the one-time write-off of in-process research and development
related to the Bermai acquisition and related tax benefit, as stated above,
were $2,972,000 and $0.10, respectively.
Pro forma net income and diluted EPS for year 2004, excluding the effects
of the aforementioned capital gains, as well as the write-off and impairment
charge and related tax benefit, was $29,143,000 and $0.97, respectively.
Eli Ayalon, Chairman of DSP Group, stated: "2005 was another very good
year for DSP Group. Our revenues increased by 19% as compared to 2004, and the
overall financial results of the Company reflect the continued strength of our
business. Strong demand for our products during both the course of the year
and the fourth quarter resulted in strong bookings and an increased backlog at
the end of 2005, as compared to the end of 2004 and the end of the third
quarter of 2005."
Mr. Ayalon added: "A series of new and fascinating products driven by
DSPG chip sets were launched by our OEM customers at the CES (Consumer
Electronics Show) earlier this month in Las Vegas. As a result of our
calculated increased investment in R&D and the quality of our engineering
staff, we are at the forefront of the revolution in the home communications
domain, which includes the wireless transmission of video in addition to
voice, full cordless VoIP connecting wirelessly to the PC, and the ongoing
convergence of cellular and fixed line networks in the home. With good
visibility into the first quarter of 2006 and strong forecasts from our
customers, we look forward to another a year of growth and profitability."
Mr. Zelnik, CFO of DSP Group, stated: "During the fourth quarter of 2005,
the Company repurchased 297,000 shares of its common stock at an average price
of $25.31 per share, at a cost of approximately $7.5 million, bringing the
total number of shares repurchased in year 2005 to 682,200 shares at an
average price of $24.98 per share for approximately $17.0 million. As of
December 31, 2005, approximately 3.0 million shares remain available for
repurchase from previous board authorizations. Our cash position at year end,
consisting of cash, cash equivalents and marketable securities, reached a
level of approximately $345 million. We generated $25.2 million of cash from
operating activities in 2005."
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, 2005 to the same
periods during 2004, because it excludes items that management does not
consider meaningful for purposes of analyzing the Company's operating results
and making budget-planning decisions.
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.
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 leadership in the
revolution in the home communications domain, visibility into the first
quarter of 2006, forecasts from our customers, and growth and profitability
during 2006. 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 home communications domain,
unexpected delays in the introduction of new 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 2004 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 fourth quarter of 2005 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: 70149272)
-- International Dial-In # 617-801-6888 (passcode: 70149272)
For more information, please contact Ofer Elyakim, Director of Investor
Relations, DSP Group Inc. at (408) 986-4421; or e-mail: ofere@dsp.co.il
(Logo: http://www.newscom.com/cgi-bin/prnh/20020715/SFM118LOGO )
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - US GAAP
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
(Unaudited) (Unaudited) (Unaudited) (Audited)
Product revenues
& other $42,401 $28,555 $187,225 $157,511
Cost of product
revenues & other 23,420 14,191 101,074 80,368
Gross profit 18,981 14,364 86,151 77,143
Operating expenses:
Research and development 9,862 8,820 40,290 32,147
Sales and marketing 3,237 2,278 13,119 11,292
General and
administrative 1,846 1,854 7,398 7,112
Impairment of goodwill -- -- -- 4,304
In-process research
and development
write-off -- 2,682 -- 2,682
Total operating expenses 14,945 15,634 60,807 57,537
Operating income (loss) 4,036 (1,270) 25,344 19,606
Other income
Interest & other
income, net 2,830 2,169 10,166 8,522
Capital gains -- -- -- 44,448
Income before
provision for
Income taxes 6,866 899 35,510 72,576
Provision (benefit)
for income taxes 1,158 (330) 6,037 21,482
Net income $5,708 $1,229 $29,473 $51,094
Net earnings per share:
Basic $0.20 $0.04 $1.04 $1.79
Diluted $0.19 $0.04 $0.99 $1.70
Weight average number
of shares of
Common Stock used in
the computation of
Basic 28,636 27,959 28,435 28,574
Diluted 29,970 29,092 29,843 30,026
DSP GROUP, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
(Unaudited) (Unaudited)
Product revenues
& other $42,401 $28,555 $187,225 $157,511
Cost of product
revenues & other 23,420 14,191 101,074 80,368
Gross profit 18,981 14,364 86,151 77,143
Operating expenses:
Research and
development 9,862 8,820 40,290 32,147
Sales and marketing 3,237 2,278 13,119 11,292
General and
administrative 1,846 1,854 7,398 7,112
Total operating
expenses 14,945 12,952 60,807 50,551
Operating income 4,036 1,412 25,344 26,592
Other income:
Interest & other
income, net 2,830 2,169 10,166 8,522
Income before
provision for
Income taxes 6,866 3,581 35,510 35,114
Provision for
income taxes 1,158 609 6,037 5,971
Net income $5,708 $2,972 $29,473 $29,143
Net earnings
per share:
Basic $0.20 $0.11 $1.04 $1.02
Diluted $0.19 $0.10 $0.99 $0.97
Weight average number
of shares of
Common Stock used in
the computation of:
Basic 28,636 27,959 28,435 28,574
Diluted 29,970 29,092 29,843 30,026
The above pro forma
consolidated statements
of income have been
adjusted to exclude
the following to US
GAAP reported net income:
Reported net incomer
per US GAAP $5,708 $1,229 $29,473 $51,094
Adjustments:
Impairment of goodwill -- -- -- 4,304
In-process research &
development write-off -- 2,682 -- 2,682
Capital gains -- -- -- (44,448)
Tax expenses (benefit) -- (939) -- 15,511
Pro forma net income $5,708 $2,972 $29,473 $29,143
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, December 31,
2005 2004
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $50,460 $60,827
Marketable securities and cash deposits 108,928 74,497
Trade receivables, net 16,991 5,976
Inventories 12,686 9,469
Other accounts receivables 1,617 2,213
Deferred income taxes 1,227 1,168
Total current assets 191,909 154,150
Property and equipment, net 11,704 6,683
Long term marketable securities 185,828 195,671
Severance pay fund 4,419 3,437
Long term pre-paid expenses 670 628
Goodwill 1,500 1,500
Deferred income taxes 1,638 1,410
Other intangible assets 2,337 3,482
Total assets $400,005 $366,961
Liabilities and Stockholders' Equity
Current liabilities:
Trade payable $12,753 $7,830
Other current liabilities 33,411 39,857
Total current liabilities 46,164 47,687
Long term liabilities:
Accrued severance pay 4,707 3,784
Stockholders' equity:
Common stock 29 28
Additional paid-in capital 188,539 187,471
Accumulated other comprehensive income 45 65
Retained earnings 179,968 157,723
Less -- Cost of treasury stock (19,447) (29,797)
Total stockholders' equity 349,134 315,490
Total liabilities and stockholders' equity $400,005 $366,961
SOURCE DSP Group Inc.
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Related links:
http://www.dspg.com
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PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Ofer Elyakim, Director of Investor Relations
of DSP Group Inc., +1-408-986-4421, or ofere@dsp.co.il
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