Revenues for the Quarter Increased 45% Sequentially and 38% YoY
SANTA CLARA, Calif., July 17 /PRNewswire-FirstCall/ --
DSP Group, Inc. (Nasdaq: DSPG) today announced results for the second quarter
of 2002, ending June 30, 2002.
(Photo: http://www.newscom.com/cgi-bin/prnh/20020715/SFM118LOGO )
Moshe Zelnik, CFO of DSP Group, noted, "Given the contemplated combination
of our DSP Core licensing business with Parthus Technologies plc., under U.S.
GAAP, we have begun to report the statements of income of the product business
of DSPG (the 'continued operations') as a stand alone company, with one line
representing the net profit contribution of our DSP Core licensing business
(the 'Discontinued Operations') and, two lines representing the net assets and
net liabilities of the 'discontinued operations' in the balance sheets.
"Our statements of income for the second quarter 2002 include an unusual
loss item (Impairment of available for sale marketable securities) in the
amount of $9,815,000, associated with the decline in value of our holdings of
AudioCodes Ltd. shares (Nasdaq: AUDC). To facilitate the analysis of our
financial statements, we have supplemented our GAAP financial statement by
including a proforma P&L statements that excludes both this unusual loss item
and the tax credit related to it, as well as the unusual item related to the
'aborted spin off expenses and others,' in the first quarter 2002.
"For the convenience of our stockholders, we also included a separate
carve-out P&L statement for the Discontinued Operations -- Ceva Inc."
The Company previously reported that it has received a favorable ruling
from the Internal Revenue Service, which satisfies the final precondition of
the proposed combination of its DSP Cores Licensing business with Parthus
Technologies plc. announced on April 5th, 2002.
The transaction remains subject to normal closing conditions, including
approval by the High Court in Ireland and by the Parthus stockholders.
The Company also announced that it had two significant products launches
during this quarter, the Xpert Teak, which is a first silicon platform of its
kind offered in a licensing model, merging a DSP Core with a Host of
subsystems. An article published in the EE Times on July 8, 2002 quoted Will
Strauss, president of market research firm forward concepts (Tempe, Ariz.)
saying, "This is the most complete DSP IP System on the street."
During the second quarter 2002, the Company began to ship its new 2.4 GHz
Multi hand set chip sets which support up to 8 handsets on one base unit. The
chip set also enables direct outdoor communication between handsets (2 way
radio).
Eli Ayalon, Chairman & CEO of DSP Group, stated, "We are very proud of our
financial results, they reflect the success of our R&D investment strategy in
the last 4 years. Our R&D expense increased from $8,400,000 in 1997 to
$26,100,000 in 2001. This effort resulted in a series of new products that
drive our growth despite a very tough business environment. Our traditional
policy of tight control of headcount and company expenses, enabled us to
achieve a high degree of profitability during the second quarter, despite
market conditions."
Ayalon also stated, "The separate reports of our two business lines unveil
a sizeable and profitable fabless semiconductor company that has achieved a
gross margin of 40% and operating profit of 13%, demonstrating significant and
continuous growth.
"Our DSP Core Licensing business, despite the top line pressure due to the
crisis in the communications technology sector, has shown continued
profitability, with a gross margin of 93% and operating profit of 27.5% for
the second quarter 2002. We believe that the combination of this business
with Parthus will create a company that will play a major role in the Silicon
IP market and will demonstrate both growth and profitability."
About DSP Group, Inc.
DSP Group, Inc. is a global leader in the development and marketing of
high-performance, cost-effective, licensable digital signal processing cores.
The Company's family of DSP cores provides solutions for low-power,
cost-driven applications, such as cellular, broadband communication, VoIP,
multimedia, advanced telecommunication systems, disk drive controllers and
many other types of embedded control applications. By combining its DSP core
technologies with its proprietary, advanced speech-processing algorithms
-- DSP Group also delivers a wide range of enabling, application specific ICs
for full-featured integrated telephony products and applications, including
900 MHz and 2.4 GHz wireless technologies. DSP Group, Inc., maintains an
international presence with offices located around the globe.
This press release contains statements that qualify as "forward-looking
statements" under the Private Securities Litigation Reform Act of 1995,
including statements concerning the role of the combination of our DSP Cores
licensing business and Parthus in the Silicon IP market and its potential for
growth and profitability. These forward-looking statements are based on
current expectations and the Company assumes no obligation to update this
information. In addition, the events anticipated in these forward-looking
statements, including the proposed combination with Parthus, may not actually
arise. The Company's actual results could differ materially from those
described in this press release if for any reason the spin-off of our DSP
Cores licensing business does not occur. Other factors which may affect
future operating results or our stock price are discussed under "RISK FACTORS"
in our reports on form 10-K for the year ended December 31, 2001 and form 10-Q
for the quarter ended March 31, 2002, both of which have been filed with the
Securities and Exchange Commission and are available on our 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 second quarter results and invites you to listen to a the 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 through PRNewswire's web site at
http://www.videonewswire.com/event.asp?id=6006 .
For more information, please contact Yaniv Arieli, Director of 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 Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Product revenues
and other $31,899 $19,338 $53,025 $37,544
Cost of product
revenues and other 19,154 11,416 31,766 21,157
Gross profit 12,745 7,922 21,259 16,387
Operating expenses:
Research and
development 4,975 4,921 9,879 9,986
Sales and marketing 2,541 2,325 4,477 4,432
General and
administrative 985 1,220 1,915 2,236
Aborted spin off
expenses and other -- -- 865 --
Total operating
expenses 8,501 8,466 17,136 16,654
Operating income (loss) 4,244 (544) 4,123 (267)
Other income (expense):
Interest and other
income, net 2,541 3,344 5,150 6,621
Equity in gain of
unconsolidated
subsidiaries -- -- -- 105
Minority interest in
loss of subsidiary -- -- --- 173
Income after
financial and other 6,785 2,800 9,273 6,632
Impairment of
available-for-sale
marketable
securities (*)(9,815) -- (*)(9,815) --
Income (loss) before
provision for
income taxes (3,030) 2,800 (542) 6,632
Provision (benefit)
for (from) income
taxes (**)(2,112) 1,115 (**)(1,799) 1,720
Net income (loss)
from continued
operations (918) 1,685 1,257 4,912
Net income from
discontinued
operations (***) 995 3,672 1,510 6,107
Net income $77 $5,357 $2,767 $11,019
Net earnings
per share:
Basic $0.00 $0.20 $0.10 $0.42
Diluted $0.00 $0.20 $0.10 $0.40
Shares used in per
share computations:
Basic 27,035 26,574 26,993 26,495
Diluted 27,896 27,445 27,946 27,427
(*) Related to AudioCodes Ltd. Stock amortization
(**) Including tax credit related to AudioCodes Ltd.
(***) Related to the DSP Licensing activities which are planned
to be discontinued following the merger with Parthus
DSP GROUP, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Product revenues
and other $31,899 $19,338 $53,025 $37,544
Cost of product
revenues and other 19,154 11,416 31,766 21,157
Gross profit 12,745 7,922 21,259 16,387
Operating expenses:
Research and
development 4,975 4,921 9,879 9,986
Sales and marketing 2,541 2,325 4,477 4,432
General and
administrative 985 1,220 1,915 2,236
Total operating
expenses 8,501 8,466 16,271 16,654
Operating income (loss) 4,244 (544) 4,988 (267)
Other income (expense):
Interest and other
income, net 2,541 3,344 5,150 6,621
Equity in gain of
unconsolidated
subsidiaries -- -- -- 105
Minority interest in
loss of subsidiary -- -- -- 173
Income after financial
and other 6,785 2,800 10,138 6,632
Provision for
income taxes 1,355 1,115 1,958 1,720
Net income (loss)
from continued
operations 5,430 1,685 8,180 4,912
Net income from
discontinued
operations 995 3,672 1,510 6,107
Net income $6,425 $5,357 $9,690 $11,019
Net earnings
per share:
Basic $0.24 $0.20 $0.36 $0.42
Diluted $0.23 $0.20 $0.35 $0.40
Shares used in per
share computations:
Basic 27,035 26,574 26,993 26,495
Diluted 27,896 27,445 27,946 27,427
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 $77 $5,357 $2,767 $11,019
Adjustments:
Aborted spin off
expenses and other -- -- 865 --
Impairment of
available-for-sale
marketable securities
(AudioCodes Ltd.) 9,815 -- 9,815 --
Tax benefit (3,467) -- (3,757) --
Pro forma net income $6,425 $5,357 $9,690 $11,019
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
Assets 2002 2001
Current Assets:
Cash and cash equivalents $30,969 $39,146
Cash designated to combination 40,000
Marketable securities and
short term bank deposits 56,133 70,893
Trade receivable, net 13,550 6,315
Inventories 9,747 2,048
Deferred income taxes 2,098 2,098
Other accounts receivable and prepaid
Expenses 964 1,547
Assets of discontinued operation 14,544 12,197
Total current assets 168,005 134,244
Property and equipment, net 5,027 5,390
Long term marketable securities 126,795 139,752
Other investments 11,557 25,536
Other assets, net 6,263 6,229
Severance pay fund 1,252 1,228
Total Assets $318,899 $312,379
Liabilities and Stockholders' Equity
Current liabilities:
Trade payable $13,603 $5,123
Other current liabilities 15,114 11,592
Liabilities of discontinued operation 5,806 7,852
Total current liabilities 34,523 24,567
Long term liabilities:
Accrued severance pay 1,287 1,294
Deferred income taxes 2,205 7,541
Total long term liabilities 3,492 8,835
Stockholders' equity:
Common stock 27 27
Additional paid-in capital 155,969 155,969
Less cost of treasury stock (4,209) (8,623)
Accumulated other comprehensive
income (loss) (200) 2,652
Retained earnings 129,297 128,952
Total stockholders' equity 280,884 278,977
Total liabilities and
stockholders' equity $318,899 $312,379
CEVA INC.
CONSOLIDATED STATEMENTS OF INCOME - US GAAP
(In thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
License and royalties $3,782 $5,856 $6,995 $10,666
Technical support,
maintenance and other 804 1,164 1,687 2,322
Total revenues 4,586 7,020 8,682 12,988
Cost of revenues 305 341 616 607
Gross profit 4,281 6,679 8,066 12,381
Operating expenses:
Research and
development, net 1,566 1,481 3,216 2,688
Sales and marketing 790 702 1,493 1,330
General and
administrative 662 674 1,355 1,354
Total operating
expenses 3,018 2,857 6,064 5,372
Operating income 1,263 3,822 2,002 7,009
Financial income, net 32 115 50 221
Income before provision
for income taxes 1,295 3,937 2,052 7,230
Provision for
income taxes 300 265 542 1,123
Net income $995 $3,672 $1,510 $6,107
SOURCE DSP Group, Inc.
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Related links:
http://www.dspg.com
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CONTACT:
Yaniv Arieli, Director of Investor Relations
of DSP Group, +1-408-986-4423
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