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DSP Group Inc. Reports Financial for Fourth Quarter 1999 and Announces a Two-for-One Stock Split
DSP

Information Contact:
Michael Cohen
Director for Investor Relations,
DSP Group, Inc.
+1 408 986 4424

DSP Group, Inc. Reports Financial Results
for Fourth Quarter 1999
and Announces a Two-For-One Stock Split

  • All-Time Record High Revenues - $25,973,000.
  • All-Time Record High EPS (excluding one-time gains) - $0.50

SANTA CLARA, CALIFORNIA – January 24, 2000 -- DSP Group, Inc. (NASDAQ: DSPG) today announced its financial results for the fourth quarter ended December 31, 1999.

Fourth quarter revenues were $25,973,000, an increase of 84%, compared to $14,117,000 in the same quarter of 1998. Total revenues for 1999 were $76,433,000, an increase of 20% compared to $63,850,000 during 1998.

Net income for the fourth quarter was $33,918,000, an increase of 878%, compared to $3,468,000 for the comparable quarter of 1998. Earnings per share were $2.46 (diluted), an increase of 583% compared to $0.36 in the fourth quarter of 1998. Net income for 1999 was $54,579,000, an increase of 279% over the net income of $14,415,000 in 1998. Earnings per share for 1999 were $4.29, an increase of 198% above earnings per share of $1.44 during the same period of 1998.

Results for the fourth quarter and annual 1999 include one-time capital gains of $47,151,000 and $58,931,000, respectively, resulting from the public offering and from the sale of shares of DSP Group's affiliate, AudioCodes Ltd, in the fourth quarter and annual 1999. These one-time gains are included under "Other income (expense)" in the Company's statements of income. DSP Group still holds approximately 2.9 Million of AudioCodes' shares which represent approximately 15% of the outstanding shares.

Excluding the effect of the one-time capital gains, pro-forma net income for the fourth quarter and annual 1999 were $6,867,000 or $0.50 (diluted) per share and $16,948,000 or $1.33 (diluted) per share, respectively, compared to $ 3,468,000 or $ 0.36 (diluted) per share and $ 13,600,000 or $ 1.36 (diluted) per share in the equivalent periods in 1998.

During 1999, the company significantly increased its research and development and sales and marketing expenses to support its new product introductions. These expense increases, which were undertaken to build future revenues resulted in a decreased operating income compared to 1998.

During the fourth quarter of 1999, a major international corporation signed a licensing agreement with DSP Group, for its PalmDSPCore®.

Eli Ayalon, President and CEO of DSP Group stated, "We are very pleased with the fourth quarter 1999 results. We managed to increase our EPS by 39% (excluding the one time gain) over the fourth quarter of 1998, despite an increase of 55% in R&D and 102% in sales & marketing expenses compared to the fourth quarter of 1998."

The Company Board has approved a two-for-one stock split in the form of a 100% stock dividend payable to stockholders of record as of February 16, 2000. The dividend will be payable on March 1, 2000 to shareholders of record as of February 16, 2000.

DSP Group, Inc. is a leader in the development and marketing of high-performance, cost-effective digital signal processing cores used in a wide range of applications for industries such as wireless communications, telephony and personal computing. By combining its DSP core technology with its advanced speech processing algorithms, DSP Group also delivers a wide range of enabling application-specific ICs, such as ICs for fully featured Integrated Digital Telephony, for 900 MHz Spread Spectrum wireless telephony products and for IP telephony applications

Statements contained in this release concerning the Companies ability to meet its goals for the year 2000 may constitute forward-looking statements. These statements involve certain risks and uncertainties such as acceptance of the company's new products by existing OEM customers and potential customers, the ability of the company to produce its new products at competitive costs, the volume and timing of product orders and the number and timing of new licensing agreements.

Additional information is available on the World Wide Web at www.dspg.com. This press release is also available through the company's News on Call fax service, which can be reached at (800) 758-5804, company code 112025.

For more information, please contact Michael Cohen, DSP Group, Santa Clara, CA. (408) 986-4300.

# # #

PalmDSPCore is a registered trademark of DSP Group, Inc.

 

 

 

DSP GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(In thousands, except per share amounts)

   

Three Months Ended

Year Ended

   

December 31,

December 31,

   

1999

1998

1999

1998

Revenues:

         

Product sales

 

$ 19,923

$ 9,302

$ 57,397

$ 49,252

Licensing, royalties and other

 

6,050

4,815

19,036

14,598

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Total revenues

 

25,973

14,117

76,433

63,850

           

Cost of revenues:

         

Product sales

 

11,506

5,304

33,051

29,002

Licensing, royalties and

Other

 

 

49

 

71

 

155

 

426

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Total cost of revenues

 

11,555

5,375

33,206

29,428

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Gross profit

 

14,418

8,742

43,227

34,422

           

Operating expenses:

         

Research and development

 

4,402

2,847

15,404

10,181

Sales and marketing

 

2,801

1,388

9,309

5,222

General and administrative

 

1,698

1,103

5,511

4,632

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Total operating expenses

 

8,901

5,338

30,224

20,035

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Operating income

 

5,517

3,404

13,003

14,387

Other income (expense):

         

Interest and other income

 

2,254

1,026

6,048

3,810

Interest expense and other

 

(70)

(57)

(232)

(189)

Gain on sale of marketable

Equity security

 

 

---

 

---

 

---

 

1,086

Equity in income of equity method investees, net

 

 

789

 

248

 

2,475

 

125

Capital gain

 

47,151

---

58,931

---

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Income before provision for

Income taxes

 

 

55,641

 

4,621

 

80,225

 

19,219

Provision for income taxes

 

21,723

1,153

25,646

4,804

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Net income

 

$ 33,918

$ 3,468

$ 54,579

$ 14,415

Net income per share:

         

Basic

 

$ 2.70

$ 0.37

$ 4.65

$ 1.48

Diluted

$ 2.46

$ 0.36

$ 4.29

$ 1.44

Shares used in per

Share computations:

         

Basic

 

12,543

9,401

11,734

9,768

Diluted

13,803

9,587

12,721

10,016

 

DSP GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

   

December 31,

December 31,

   

1999

1998

Assets

     

Current Assets:

     

Cash, cash equivalents and marketable securities

 

 

$ 161,371

 

$ 66,989

Accounts receivable, net

 

10,435

5,721

Inventories

 

3,283

2,182

Deferred income taxes

 

1,707

1,374

Other accounts receivable

 

1,362

1,608

   

¾ ¾ ¾

¾ ¾ ¾

Total current assets

 

178,158

77,874

       

Property and equipment, net

 

6,948

4,236

Other investments, net of accumulated amortization

 

 

18,433

 

1,834

Other assets

 

1,250

135

Severance pay fund

 

1,390

864

Deferred income taxes

 

--

848

   

¾ ¾ ¾

¾ ¾ ¾

Total Assets

 

$ 206,179

$ 85,791

Liabilities and Stockholders' Equity

 
   

Current liabilities:

     

Accounts payable

 

$ 6,079

$ 2,360

Other current liabilities

 

8,332

6,841

   

¾ ¾ ¾

¾ ¾ ¾

Total current liabilities

14,411

9,201

Long term liabilities

Accrued severance pay

1,431

895

Deferred income taxes

 

6,380

--

       

Stockholders' equity:

     

Common stock

 

12

9

Additional paid-in capital

 

119,163

75,610

Retained earnings

 

64,782

12,129

Less cost of treasury stock

 

---

(12,053)

   

¾ ¾ ¾

¾ ¾ ¾

Total stockholders' equity

 

183,957

75,695

   

¾ ¾ ¾

¾ ¾ ¾

Total liabilities and

Stockholders' equity

 

 

$ 206,179

 

$ 85,791