41% Sequential Revenue Growth From Q4-04 to Q1-05, Visibility
Continues to Improve
SANTA CLARA, Calif., April 20 /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 first quarter of 2005.
Revenues for the three months ended March 31, 2005 were $40,163,000, an
increase of 4% from revenues of $38,708,000 for the three months ended March
31, 2004. Net income for the first quarter of 2005 was $5,007,000, a decrease
of 75% from net income of $20,114,000 for the first quarter of 2004. Diluted
earnings per share (EPS) for the first quarter of 2005 were $0.17, a decrease
of 74% from $0.66 for the first quarter of 2004. Results for the first quarter
of 2004 included a pre-tax capital gain of $20,827,000 resulting from the sale
of two million shares of the AudioCodes Ltd. stock, and a pre-tax capital gain
of $490,000 resulting from the sale of all of the Company's holdings in the
Tomen Corporation stock. The aggregate taxes related to these capital gains
were $8,517,000.
Pro forma net income and diluted EPS for the first quarter of 2004,
excluding the effect of the capital gains described above and the related
taxes, would have been $7,314,000 and $0.24, respectively.
The Company believes that this pro forma presentation of net income and
diluted EPS is useful to investors in comparing the results for the first
quarter of 2005 to the same quarter of 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.
Specifically, the Company's management believes the exclusion of the capital
gains and related taxes associated with the stock sales is useful to investors
because such gains may not be indicative of the Company's core operating
results when comparing the first quarters of 2004 and 2005.
Eli Ayalon, Executive Chairman of DSP Group, stated: "The first quarter of
2005 demonstrated our ability to fully recover from the revenue slowdown we
encountered in the second half of 2004. Revenues were up 41% sequentially in
the first quarter of 2005 compared to the fourth quarter of 2004. A very
strong flow of orders in the first quarter of 2005, coupled with forecasts
from our marketing channels, give us good visibility into the second quarter
of 2005 and increase our confidence in the growth projections of the company
for 2005."
About DSP Group
DSP Group, Inc. is a fabless semiconductor company, offering advanced
chipsets solutions for a variety of applications. DSP Group is a worldwide
leader in the short-range wireless communication market, enabling home
networking convergence of voice, video & data. By combining its in-house
technologies of Digital Signal Processors, portfolio of wireless communication
protocols, including DECT, Bluetooth and WiFi, advanced Radio Frequency CMOS
and SiGe, as well as VoIP ICs, DSP Group is 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 which are deployed 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.
Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EDT today to
discuss the financial results for the first quarter and year 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: 80981422)
-- International Dial-In # 1-617-801-6888 (passcode: 80981422)
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 concerning the recovery from the
revenue slowdown DSP Group encountered in the second quarter of 2004,
favorable forecasts from DSP Group's marketing channels, the good visibility
into the second quarter of 2005 and increased confidence in DSP Group's growth
projections for 2005. 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
unexpected delays in the introduction of new products; failure of DSP Group's
new products to achieve broad market acceptance, especially in the European
markets; DSP Group's inability to develop and produce new products at
competitive costs and in a timely manner; declines or fluctuations in selling
prices and gross margins as a result of entry into new markets; challenges
faced by the consumer electronics industry; changes in silicon manufacturing
costs; and general market demand for products that incorporate DSP Group's
technology. Further, although the backlog information is useful, it may not
be a reliable measure of our sales for any future period. These and other
factors which may affect future operating results and DSP Group's stock price
are discussed under "RISK FACTORS" in the Form 10-K for the year ended
December 31, 2004, as well as other reports, 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.
For more information, please contact Yaniv Arieli, President of US
Operations, Investor Relations, DSP Group Inc. at 408-986-4423; or e-mail:
yarieli@dspg.com
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - US GAAP
(In thousands, except per share amounts)
Three Months Ended
March 31,
2005 2004
Unaudited Unaudited
Product revenues and other $40,163 $38,708
Cost of product revenues and other 22,244 19,858
----- -----
Gross profit 17,919 18,850
Operating expenses:
Research and development 9,399 7,554
Sales and marketing 2,886 2,803
General and administrative 1,865 1,806
----- -----
Total operating expenses 14,150 12,163
----- -----
Operating income 3,769 6,687
Other income:
Interest and other income, net 2,272 2,125
Capital gains -- 21,317
----- -----
Income before provision for
Income taxes 6,041 30,129
Provision for income taxes 1,034 10,015
----- -----
Net income $5,007 $20,114
===== =====
Net earnings per share:
Basic $0.18 $0.70
Diluted $0.17 $0.66
Weighted average number of shares of Common
Stock used in the computation of:
Basic 28,113 28,767
Diluted 29,606 30,698
DSP GROUP, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended
March 31,
2005 2004
Unaudited Unaudited
Product revenues and other $40,163 $38,708
Cost of product revenues and other 22,244 19,858
----- -----
Gross profit 17,919 18,850
Operating expenses:
Research and development 9,399 7,554
Sales and marketing 2,886 2,803
General and administrative 1,865 1,806
----- -----
Total operating expenses 14,150 12,163
----- -----
Operating income 3,769 6,687
Other income:
Interest and other income, net 2,272 2,125
----- -----
Income before provision for income taxes
6,041 8,812
Provision for income taxes 1,034 1,498
----- -----
Net income $5,007 $7,314
===== =====
Net earnings per share:
Basic $0.18 $0.25
Diluted $0.17 $0.24
Weighted average number of shares of Common
Stock used in the computation of:
Basic 28,113 28,767
Diluted 29,606 30,698
The above pro forma consolidated statements
of income have been adjusted to exclude
following items to US GAAP reported net income:
Reported net income per US GAAP
Adjustments: $5,007 $20,114
Capital gains -- (21,317)
Tax expenses (benefit) -- 8,517
----- -----
Pro forma net income $5,007 $7,314
===== =====
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2005 2004
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $35,140 $60,827
Marketable securities and cash deposits 83,431 74,497
Trade receivables, net 13,537 5,976
Inventories 10,770 9,469
Other accounts receivable 2,476 2,213
Deferred income taxes 1,168 1,168
----- -----
Total current assets 146,522 154,150
Property and equipment, net 11,115 6,683
Long term marketable securities 205,655 195,671
Severance pay fund 3,868 3,437
Long term pre-paid expenses and lease deposits 641 628
Goodwill 1,500 1,500
Deferred income taxes 1,410 1,410
Other intangible assets 3,197 3,482
----- -----
Total assets $373,908 $366,961
===== =====
Liabilities and Stockholders' Equity
Current liabilities:
Trade payable $12,001 $7,830
Other current liabilities 32,897 39,857
----- -----
Total current liabilities 44,898 47,687
Accrued severance pay 4,056 3,784
Stockholders' equity:
Common Stock 28 28
Additional paid-in capital 187,547 187,471
Accumulated other comprehensive income 17 65
Retained earnings 161,392 157,723
Less - Cost of treasury stock (24,030) (29,797)
Total stockholders' equity 324,954 315,490
----- -----
Total liabilities and stockholders' equity $373,908 $366,961
===== =====
SOURCE DSP Group Inc.
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Related links:
http://www.dspg.com
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CONTACT:
Yaniv Arieli, President of US Operations,
Investor Relations of DSP Group Inc., +1-408-986-4423, or
yarieli@dspg.com
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