Quarterly Revenues Increased 15% YoY
SANTA CLARA, Calif., Oct. 23 /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 third quarter ended September 30, 2006.
Third Quarter Results:
Revenues for the third quarter of 2006 were $63,875,000, an increase of
15% from revenues of $55,614,000 for the third quarter of 2005. Net income
for the third quarter was $8,052,000, a decline of 23% from net income of
$10,510,000 for the third quarter of 2005. Diluted earnings per share (EPS)
for the third quarter of 2006 were $0.27, a decline of 23% from $0.35 for
the third quarter of 2005.
Pro Forma Results:
Pro forma net income and diluted EPS for the third quarter of 2006,
excluding the impact of equity-based compensation expense as required upon
adoption of Statement of Financial Accounting Standards No. 123R, "Share
Based Payment" ("SFAS 123(R)"), were $10,903,000 and $0.37, respectively,
representing an increase of 4% and 6%, respectively, from the third quarter
of 2005.
Share Buyback:
During the third quarter of 2006, DSP Group repurchased approximately
270,000 shares of its Common Stock at an average price of $24 per share,
for an aggregate price of approximately $6.5 million.
After giving effect to the most recent repurchases, approximately 1.8
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: "The third quarter
of 2006 was another quarter of growth for DSP Group. Our revenues increased
by 15% as compared to 2005, and the overall financial results of the
Company for the third quarter of 2006 reflected solid execution in a
challenging environment. As a result of reduced projections of revenues for
the fourth quarter of 2006, the Company now expects revenues for the year
to range from $213 million to $217 million, and annual growth of between
14% to 16% over 2005. We expect revenue will continue to grow during 2007."
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 ended September 30, 2006 to the same
period during 2005, because results for the third quarter of 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.
Earnings conference call
DSP Group has scheduled a conference call for 5:00 p.m. EDT today to
discuss the financial results for the third 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: 16662441)
--International Dial-In # 1-617-801-6888 (passcode: 16662441)
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
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
anticipated ranges of revenues for the full year 2006 and ranges of annual
growth for 2006 in comparison to 2005, as well as anticipated continued
growth in 2007. 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, especially DECT products; changes in demand of existing OEM
customers, 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.
Contact: Ofer Elyakim, Director of Investor Relations & Business
Development of DSP Group Inc., +1-408-986-4421, or ofere@dsp.co.il.
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
2006 2005 2006 2005
(Unaudited)
Product revenues and other
$63,875 $55,614 $176,565 $144,824
Cost of product revenues
and other 37,689 29,420 103,676 77,654
Gross profit
26,186 26,194 72,889 67,170
Operating expenses:
Research and development 12,242 10,487 35,553 30,428
Sales and marketing 4,357 3,706 12,233 9,882
General and administrative 2,771 1,904 8,466 5,552
Total operating expenses 19,370 16,097 56,252 45,862
Operating income 6,816 10,097 16,637 21,308
Other income:
Interest and other
income, net 3,372 2,565 9,832 7,336
Income before provision for
income taxes 10,188 12,662 26,469 28,644
Provision for income taxes 2,136 2,152 5,691 4,879
Net income $8,052 $10,510 $20,778 $23,765
Net earnings per share:
Basic $0.28 $0.37 $0.70 $0.84
Diluted $0.27 $0.35 $0.68 $0.80
Weighted average number of
shares of Common Stock used
in the computation of:
Basic 29,279 28,663 29,543 28,368
Diluted 29,748 30,079 30,388 29,801
DSP GROUP, INC.
CONSOLIDATED PRO FORMA STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Nine Months
Ended Ended
September 30, September 30,
2006 2005 2006 2005
(Unaudited)
Product revenues and other $63,875 $55,614 $176,565 $144,824
Cost of product revenues
and other 37,563 29,420 103,342 77,654
Gross profit 26,312 26,194 73,223 67,170
Operating expenses:
Research and development 10,589 10,487 30,975 30,428
Sales and marketing 4,013 3,706 11,267 9,882
General and administrative 1,917 1,904 5,516 5,552
Total operating expenses 16,519 16,097 47,758 45,862
Operating income 9,793 10,097 25,465 21,308
Other income:
Interest and other
income, net 3,372 2,565 9,832 7,336
Income before provision for
income taxes 13,165 12,662 35,297 28,644
Provision for income taxes 2,262 2,152 6,025 4,879
Net income $10,903 $10,510 $29,272 $23,765
Net earnings per share:
Basic $0.37 $0.37 $0.99 $0.84
Diluted $0.37 $0.35 $0.96 $0.80
Weighted average number of
shares of Common Stock used
in the computation of:
Basic 29,279 28,663 29,543 28,368
Diluted 29,748 30,079 30,388 29,801
The above pro forma consolidated statements of income have
been adjusted to exclude the following to US GAAP reported net
income:
Three Months Nine Months
Ended Ended
September 30, September 30,
2006 2005 2006 2005
(Unaudited)
Reported net income per US GAAP $8,052 $10,510 $20,778 $23,765
Adjustments:
Equity-based compensation
expense included in cost of
product revenues and other 126 -- 334 --
Equity-based compensation
expense included in
research and development 1,653 -- 4,578 --
Equity-based compensation
expense included in sales
and marketing 344 -- 966 --
Equity-based compensation
expense included in general
and administrative 854 -- 2,950 --
Tax benefit resulting from
equity-based compensation (126) -- (334) --
Pro forma net income $10,903 $10,510 $29,272 $23,765
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2006 2005
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $36,877 $50,460
Marketable securities and cash 129,082 108,928
deposits
Trade receivables, net 26,525 16,991
Inventories 15,404 12,686
Other accounts receivable 2,723 1,617
Deferred income taxes 1,560 1,227
Total current assets 212,171 191,909
Property and equipment, net 13,578 11,704
Long term marketable securities 197,887 185,828
Severance pay fund 5,290 4,419
Deferred income taxes 1,638 1,638
Other assets 3,690 4,507
Total assets $434,254 $400,005
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $18,863 $12,753
Other current liabilities 28,293 33,411
Total current liabilities 47,156 46,164
Accrued severance pay 5,713 4,707
Stockholders' equity:
Common Stock 29 29
Additional paid-in capital 212,070 188,539
Accumulated other
comprehensive income 252 45
Retained earnings 194,071 179,968
Less - Cost of treasury stock (25,037) (19,447)
Total stockholders' equity 381,385 349,134
Total liabilities and
stockholders' equity $434,254 $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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