SAN JOSE, Calif., Oct. 31 /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, 2007.
Third Quarter Results:
Revenues for the third quarter of 2007 were $61,866,000, a decrease of
3% from revenues of $63,875,000 for the third quarter of 2006. Net loss for
the third quarter was $7,496,000 as compared to net income of $8,052,000
for the third quarter of 2006. Earnings per share (EPS) for the third
quarter of 2007 were a loss of $0.25 per share, as compared to earnings of
$0.28 per share for the third quarter of 2006.
Non-GAAP Results:
Non-GAAP net income and diluted EPS for the third quarter of 2007,
excluding the impact of an in-process R&D expense of $10,120,000 and the
amortization of acquired intangibles and other acquisition-related assets
of $3,704,000, both associated with the acquisition of the Cordless and
VoIP Terminals business of NXP B.V.; equity-based compensation expenses of
$2,880,000; and the tax benefits associated with such expenses, were
$7,615,000 and $0.26 per share on a diluted basis, representing a decrease
of 30% from the non-GAAP net income of $10,903,000 and non-GAAP diluted EPS
of $0.37 per share for the third quarter of 2006.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "During the third
quarter, we completed the acquisition of the Cordless and VoIP Terminals
business of NXP and operated as one company for the last three weeks of the
quarter. As anticipated, the acquired business had a positive impact on our
non-GAAP net income and EPS (excluding the in-process R&D expense and the
amortization of acquired intangibles and other acquisition-related assets)
for the third quarter of 2007. We believe the acquisition will have a
greater positive financial impact in the fourth quarter of 2007 and 2008.
In the fourth quarter of 2007, we believe our revenues will double as
compared to the fourth quarter of 2006, and we will significantly improve
our operating margins."
Mr. Ayalon added: "During the earnings conference call, we will
elaborate on the market conditions for traditional cordless telephony,
which remains challenging, our activities related to the introduction of
our next generation of products, the outlook for the fourth quarter of 2007
and 2008, and the contributions expected from the acquired business going
forward."
The Company believes that the non-GAAP 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, 2007 to the same
period during 2006, because results for the third quarter of 2006 did not
include the amortization of acquired intangibles and other
acquisition-related assets and the in-process R&D expense. Further, the
Company believes it is useful to investors to understand how the expenses
associated with equity-based compensations expenses 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 and 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,
video and data communication and deployment in residential, SOHO, SME,
enterprise and automotive applications. DSP Group's 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.
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 the statements made by Mr. Ayalon about DSP Group's
belief that (i) the acquisition of the Cordless and VoIP Terminals business
of NXP will have a greater positive financial impact in the fourth quarter
of 2007 and 2008; (ii) its revenues will double as compared to the fourth
quarter of 2006, (iii) the acquisition will significantly improve its
operating margins, and (iv) the acquisition will contribute to its business
going forward. 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 the risk that the acquired business will not be
integrated successfully; the risk that the revenue potentials, cost savings
and any other synergies from the acquisition may not be fully realized or
may take longer to realize than expected; disruption relating to the
acquisition that makes it more difficult for DSP Group to maintain
relationships with customers, employees or suppliers and other risks and
uncertainties associated with the acquisition; slower than expected change
in the nature of the residential communications domain, including the VoIP
and DECT markets, unexpected delays in the introduction of new products,
especially VoIP and DECT 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 2006 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 third quarter of 2007 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: 83156797)
-- International Dial-In # 1-617-801-6888 (passcode: 83156797)
For more information, please contact Ofer Elyakim, Vice President of
Business Development, DSP Group Inc. at (408) 240-6839; or e-mail:
ofere@dsp.co.il.
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
(Unaudited)(Unaudited) (Unaudited) (Unaudited)
Product revenues and other $61,866 $63,875 $163,590 $176,565
Cost of product
revenues and other 37,201 37,689 98,434 103,676
Gross profit 24,665 26,186 65,156 72,889
Operating expenses:
Research and development 13,874 12,242 39,095 35,553
Sales and marketing 4,680 4,357 12,987 12,233
General and administrative 3,271 2,771 10,196 8,466
In-process R&D 10,120 - 10,120 -
Amortization of
intangible assets 3,057 - 3,057 -
Total operating expenses 35,002 19,370 75,455 56,252
Operating income (loss) (10,337) 6,816 (10,299) 16,637
Other income :
Interest and
other income, net 2,569 3,372 9,148 9,832
Income (loss) before provision
for income taxes (7,768) 10,188 (1,151) 26,469
Provision for income taxes
(benefit) (272) 2,136 2,016 5,691
Net income (loss) $(7,496) $ 8,052 $ (3,167) $ 20,778
Net earnings (loss) per share:
Basic $ (0.25) $ 0.28 $ (0.11) $ 0.70
Diluted $ (0.25) $ 0.27 $ (0.11) $ 0.68
Weighted average number of
shares of Common stock used
in the computation of:
Basic 29,436 29,279 28,716 29,543
Diluted 29,549 29,748 28,903 30,388
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP)
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
(Unaudited)(Unaudited) (Unaudited)(Unaudited)
Product revenues and other $61,866 $63,875 $163,590 $176,565
Cost of product revenues
and other 36,411 37,563 97,312 103,342
Gross profit 25,455 26,312 66,278 73,223
Operating expenses:
Research and development 12,424 10,589 33,628 30,975
Sales and marketing 4,351 4,013 11,771 11,267
General and administrative 2,313 1,917 6,613 5,516
Total operating expenses 19,088 16,519 52,012 47,758
Operating income 6,367 9,793 14,266 25,465
Other income :
Interest and other
income, net 2,569 3,372 10,144 9,832
Income before provision
for income taxes 8,936 13,165 24,410 35,297
Provision for income taxes 1,321 2,262 4,291 6,025
Net income $ 7,615 $10,903 $ 20,119 $ 29,272
Net earnings per share:
Basic $ 0.26 $ 0.37 $ 0.70 $ 0.99
Diluted $ 0.26 $ 0.37 $ 0.70 $ 0.96
Weighted average number of
shares of Common stock
used in the computation of:
Basic 29,436 29,279 28,716 29,543
Diluted 29,549 29,748 28,903 30,388
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
GAAP net (loss) income $(7,496) $ 8,052 $(3,167) $20,778
Equity-based compensation
expense 143 126 475 334
Included in cost of
product revenues
Amortization of adjustment
of inventories to market
values 647 - 647 -
Included in cost of
product revenues
Equity-based compensation
expense 1,450 1,653 5,467 4,578
Included in R&D
Equity-based compensation
expense 1,287 1,198 4,799 3,916
Included in SG&A
Loss related to certain
marketable securities - - 996 -
In-process R&D 10,120 - 10,120 -
Amortization of
intangible assets related
to NXP transaction 3,057 - 3,057 -
Tax benefit resulting from
equity-based compensation,
loss related to
certain marketable
securities, in-process R&D
and amortization of
intangibles and other
acquisition-related assets (1,593) (126) (2,275) (334)
Non-GAAP net income $ 7,615 $10,903 $20,119 $29,272
Non-GAAP basic earnings
per share $ 0.26 $ 0.37 $ 0.70 $ 0.99
Non-GAAP diluted earnings
per share $ 0.26 $ 0.37 $ 0.70 $ 0.96
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
2007 2006
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 38,192 $ 37,344
Marketable securities and cash deposits 69,830 132,170
Trade receivables, net 42,833 21,489
Inventories 16,352 14,366
Other accounts receivable 22,564 4,049
Deferred income taxes 2,638 1,516
Total current assets 192,409 210,934
Property and equipment, net 14,926 12,644
Long term marketable securities 50,996 179,368
Severance pay fund 6,311 5,689
Deferred income taxes 4,916 1,987
Goodwill and other intangible assets 246,429 2,694
Other assets 699 672
Total assets $516,686 $413,988
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 20,329 $ 12,205
Other current liabilities 46,517 28,969
Total current liabilities 66,846 41,174
Accrued severance pay 6,650 6,065
Accrued pensions 1,663 -
Stockholders' equity:
Common stock 32 28
Additional paid-in capital 298,173 216,041
Accumulated other comprehensive income (loss) 569 28
Retained earnings 188,707 195,198
Less - Cost of treasury stock (45,954) (44,546)
Total stockholders' equity 441,527 366,749
Total liabilities and stockholders' equity $516,686 $413,988
SOURCE DSP Group, Inc.
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Related links:
http://www.dspg.com
Photo Notes:
NewsCom: http://www.newscom.com/cgi-bin/prnh/20020715/SFM118LOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com
CONTACT:
Ofer Elyakim, Vice President of Business
Development of DSP Group Inc., +1-408-240-6839, ofere@dsp.co.il
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