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DSP Group, Inc. Reports Financial Results for First Quarter 2000
DSP

For more information contact:

Michael Cohen
Director, Investor Relations
Tel: 408-986-4424
email:
mcohen@dspg.com

 

DSP Group, Inc. Reports Financial Results
for First Quarter 2000

SANTA CLARA, CALIFORNIA – April 17, 2000 – DSP Group, Inc. (NASDAQ: DSPG) today announced its financial results for the first quarter ended March 31, 2000.

Revenues for the first quarter of 2000 were $23,386,000, an increase of 124%, compared to $10,462,000 in the same quarter of 1999. Net income for the first quarter was $15,409,000, an increase of 1,204%, compared to $1,182,000 for the same quarter of 1999. Earnings per share were $0.54 (diluted), an increase of 980% compared to $0.05 (diluted), in the same quarter of 1999.

Results for the first quarter of 2000 include two unusual expense items amounting to $14,154,000. A write off amount of $11,929,000, related to the acquired in-process research and development in connection with the acquisition of approximately 73% of the outstanding shares of VoicePump, Inc. In addition, an expense of $2,225,000, reflected the accelerated amortization of acquired assets and intangibles related to the 1999 acquisition of 900 MHz RF and baseband technology from Advanced Micro Devices, Inc. These unusual items are included under "Operating Expenses" in the Company's statements of income.

Results for the first quarter of 2000 also include a one-time capital gain of $40,009,000 resulting from the sale of shares of DSP Group's affiliate, Audiocodes Ltd. during this quarter. This one time capital gain is included under "Other Income (expense)" in the Company's statements of income. DSP Group still holds approximately 2.3 million of Audiocode's shares which represent approximately 12% of the outstanding shares.

Excluding the effects of the unusual items and the one-time capital gain, pro-forma net income for the first quarter 2000 was $5,854,000 or $0.21 (diluted) per share, compared to $ 1,182,000 or $ 0.05 (diluted) per share in the first quarter of 1999.

Eli Ayalon, Chairman and CEO of DSP Group stated, "We are very encouraged by the significant increase of revenues, in both our product and licensing lines compared to the first quarter of 1999. Our business visibility continues to be very good. We are very proud that during this quarter OKI Electric Industry Co., Ltd., a licensee of our OakDSPCore®, signed a new license agreement for the TeakLite® DSP core."

Ayalon went on saying, "We believe that the acquisition of VoicePump, Inc. in the last quarter is a major strategic move on the part of DSP Group, that offers the Company exciting business opportunities. The software gallery of VoicePump, for Voice Over DSL (VoDSL) and Voice Over Internet Protocol (VoIP), combined with our advanced DSP cores, places DSP Group in a position to offer in the future advantageous products to these emerging markets."

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 visibility and the merits of the acquisition of VoicePump, Inc. 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 company's ability to integrate the operations of VoicePump and to develop and produce its new products at competitive costs.

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 at (408) 986-4424

# # # #

OakDSPCore and TeakLite are registered trademarks of DSP Group, Inc.

 

DSP GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
   

Three Months Ended

   

March 31,

   

2000

1999

Revenues:

     

Product sales

 

$ 18,362

$ 6,522

Licensing, royalties and other

 

5,024

3,940

   

¾ ¾ ¾

¾ ¾ ¾

Total revenues

 

23,386

10,462

       

Cost of revenues:

     

Product sales

 

10,475

3,751

Licensing, royalties and other

 

323

75

   

¾ ¾ ¾

¾ ¾ ¾

Total cost of revenues

 

10,798

3,826

   

¾ ¾ ¾

¾ ¾ ¾

Gross profit

 

12,588

6,636

       

Operating expenses:

     

Research and development

 

4,676

3,361

Sales and marketing

 

2,853

1,916

General and administrative

 

1,292

1,252

Unusual items

 

14,154

---

   

¾ ¾ ¾

¾ ¾ ¾

Total operating expenses

 

22,975

6,529

   

¾ ¾ ¾

¾ ¾ ¾

Operating income (loss)

 

(10,387)

107

Other income (expense):

     

Interest and other income

 

2,795

1,130

Interest expense and other

 

(42)

(104)

Equity in income of affiliates

 

437

442

Capital gain from realization of

Investments

 

 

40,009

 

---

   

¾ ¾ ¾

¾ ¾ ¾

Income before provision for income taxes

 

32,812

1,575

Provision for income taxes

 

17,403

393

   

¾ ¾ ¾

¾ ¾ ¾

Net income

 

$ 15,409

$ 1,182

Net earnings per share:

     

Basic

 

$ 0.60

$ 0.05

Diluted

$ 0.54

$ 0.05

Shares used in per share computations:

     

Basic

 

25,790

21,538

Diluted

28,413

21,906

DSP GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

   

March 31,

December 31,

   

2000

1999

Assets

     

Current Assets:

     

Cash, cash equivalents, marketable securities and cash deposits

 

 

$ 201,690

 

$ 161,371

Trade receivable, net

 

9,303

10,435

Inventories

 

6,139

3,283

Deferred income taxes

 

1,802

1,707

Other accounts receivable and

prepaid expenses

 

 

3,665

 

1,362

   

¾ ¾ ¾

¾ ¾ ¾

Total current assets

 

222,599

178,158

       

Property and equipment, net

 

5,383

6,948

Other investments, net of accumulated amortization

 

 

15,081

 

18,433

Other assets, net of accumulated

amortization

 

 

4,429

 

1,250

Severance pay fund

 

1,484

1,390

   

¾ ¾ ¾

¾ ¾ ¾

Total Assets

 

$ 248,976

$ 206,179

Liabilities and Stockholders' Equity

 
   

Current liabilities:

     

Trade payable

 

$ 5,326

$ 6,079

Other current liabilities

 

12,363

8,332

   

¾ ¾ ¾

¾ ¾ ¾

Total current liabilities

17,689

14,411

Long term liabilities:

Accrued severance pay

1,553

1,431

Deferred income taxes

 

6,380

6,380

Minority interest

 

1,404

---

       

Stockholders' equity:

     

Common stock

 

26

12

Additional paid-in capital

 

141,733

119,163

Retained earnings

 

80,191

64,782

   

¾ ¾ ¾

¾ ¾ ¾

Total stockholders' equity

 

221,950

183,957

   

¾ ¾ ¾

¾ ¾ ¾

Total liabilities and

Stockholders' equity

 

 

$ 248,976

 

$ 206,179