Record High Revenues and 11% Revenue Increase YoY
SANTA CLARA, Calif., July 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 second quarter of 2005.
Revenues for the second quarter of 2005 were $49,047,000, an increase of
11% from revenues of $44,016,000 for the second quarter of 2004. Net income
for the second quarter of 2005 decreased 12% to $8,248,000, as compared to
$9,371,000 for the second quarter of 2004. Diluted earnings per share (EPS)
for the second quarter of 2005 decreased 7% to $0.28, as compared to $0.30 for
the second quarter of 2004.
Results for the second quarter of 2004 included a capital gain of
$7,671,000 resulting from the sale of 801,000 shares of AudioCodes Ltd. and 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.
Pro-forma net income and diluted EPS for the second quarter of 2004,
excluding the effects of the capital gain and related taxes of $3,068,000 as
well as the impairment of VoicePump goodwill, would have been $9,072,000 and
$0.29, respectively.
The company believes that the above pro forma presentation of net income
and diluted EPS is useful to investors in comparing results for the quarter
ended June 30, 2005 to the same period during 2004, because it excludes items
that management does not consider meaningful for purposes of analyzing the
company's core operating results and making budget-planning decisions.
Eli Ayalon, Executive Chairman of DSP Group, stated: "In keeping with the
company's policy of maintaining high levels of operating profitability even
while increasing investment in research and development to strengthen our
product offerings, we achieved a strong operating profit level of 15% of
revenues, despite a significant increase in research and development expenses
in the second quarter of 2005 as compared to the second quarter of 2004. This
higher level of research and development expenses reflect an increase of
resources dedicated to developing multimedia over Wi-Fi products from
technologies acquired from Bermai, Inc. in October 2004. We believe that this
combined approach will continue to benefit our stockholders and increase our
competitive edge."
Inon Beracha, CEO of DSP Group, stated: "Record high revenues were
achieved by the company in the second quarter of 2005, reflecting increased
demand and market share in North America for our products. This together with
a strong flow of orders during the quarter improves our revenue visibility for
the third quarter and fiscal year 2005 and continues to validate our business
strategy."
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 the benefits of increased
investment in research and development and Mr. Beracha about revenue
visibility for the third quarter and fiscal year 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 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 second 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 # 888-286-8010 (passcode: 97349393)
-- International Dial-In # 617-801-6888 (passcode: 97349393)
For more information, please contact Yaniv Arieli, President of US
Operations, Investor Relations, DSP Group Inc. at +1-408-986-4423; or e-mail:
yarieli@dspg.com
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME - US GAAP
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
(Unaudited) (Unaudited)
Product revenues and other $49,047 $44,016 $89,210 $82,724
Cost of product revenues
and other 25,990 22,918 48,234 42,776
Gross profit 23,057 21,098 40,976 39,948
Operating expenses:
Research and development 10,542 7,310 19,941 14,864
Sales and marketing 3,290 3,282 6,176 6,085
General and administrative 1,783 1,734 3,648 3,540
Impairment of goodwill -- 4,304 -- 4,304
Total operating expenses 15,615 16,630 29,765 28,793
Operating income 7,442 4,468 11,211 11,155
Other income:
Interest and other income, net 2,499 2,159 4,771 4,284
Capital gains -- 7,671 -- 28,988
Income before provision for
income taxes 9,941 14,298 15,982 44,427
Provision for income taxes 1,693 4,927 2,727 14,942
Net income $8,248 $9,371 $13,255 $29,485
Net earnings per share:
Basic $0.29 $0.32 $0.47 $1.02
Diluted $0.28 $0.30 $0.45 $0.96
Weighted average number of
shares of Common Stock used
in the computation of:
Basic 28,328 29,159 28,221 28,963
Diluted 29,718 30,957 29,662 30,827
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,
2005 2004 2005 2004
(Unaudited) (Unaudited)
Product revenues and other $49,047 $44,016 $89,210 $82,724
Cost of product revenues
and other 25,990 22,918 48,234 42,776
Gross profit 23,057 21,098 40,976 39,948
Operating expenses:
Research and development 10,542 7,310 19,941 14,864
Sales and marketing 3,290 3,282 6,176 6,085
General and administrative 1,783 1,734 3,648 3,540
Total operating expenses 15,615 12,326 29,765 24,489
Operating income 7,442 8,772 11,211 15,459
Other income:
Interest and other income, net 2,499 2,159 4,771 4,284
Income after financial and
other income 9,941 10,931 15,982 19,743
Provision for income taxes 1,693 1,859 2,727 3,357
Net income $8,248 $9,072 $13,255 $16,386
Net earnings per:
Basic $0.29 $0.31 $0.47 $0.57
Diluted $0.28 $0.29 $0.45 $0.53
Weighted average number of
shares of Common Stock used
in computing of:
Basic 28,328 29,159 28,221 28,963
Diluted 29,718 30,957 29,662 30,827
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 $8,248 $9,371 $13,255 $29,485
Adjustments:
Impairment of goodwill -- 4,304 -- 4,304
Capital gains -- (7,671) -- (28,988)
Tax expenses -- 3,068 -- 11,585
Pro forma net income $8,248 $9,072 $13,255 $16,386
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2005 2004
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $44,362 $60,827
Marketable securities and cash deposits 71,907 74,497
Trade receivables, net 18,837 5,976
Inventories 12,539 9,469
Other accounts receivable 1,267 2,213
Deferred income taxes 1,168 1,168
Total current assets 150,080 154,150
Property and equipment, net 11,484 6,683
Long term marketable securities 212,206 195,671
Severance pay fund 3,920 3,437
Long term pre-paid expenses and lease deposits 670 628
Goodwill 1,500 1,500
Deferred income taxes 1,410 1,410
Other intangible assets 2,911 3,482
Total assets $384,181 $366,961
Liabilities and Stockholders' Equity
Current liabilities:
Trade payable $15,486 $7,830
Other current liabilities 29,221 39,857
Total current liabilities 44,707 47,687
Accrued severance pay 4,110 3,784
Stockholders' equity:
Common Stock 28 28
Additional paid-in capital 187,569 187,471
Accumulated other comprehensive income (67) 65
Retained earnings 169,029 157,723
Less -- Cost of treasury stock (21,195) (29,797)
Total stockholders' equity 335,364 315,490
Total liabilities and stockholders' equity $384,181 $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, DSP Group Inc., +1-408-986-4423, or
yarieli@dspg.com
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