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DSP Group Inc. Reports Financial Results for the Fourth Quarter 1997
DSP Group | Corporate Information





FOR IMMEDIATE RELEASE

For more information, contact:
Yizhar Ganor
Dir. Investor Relations
DSP Group, Inc.
(408) 986-4424
ir@dspg.com

DSP Group Inc. Reports Financial Results for the Fourth Quarter 1997

SANTA CLARA, Calif. Jan. 28 , 1997 -- DSP Group, Inc. (NASDAQ: DSPG) today announced its financial results for the fourth quarter ended December 31, 1997.

This was again a record breaking quarter in both revenues and operating income. Revenues for the fourth quarter of 1997 increased by 10% to $16,581,000 compared to $15,081,000 in the fourth quarter of 1996. Total revenues in 1997 increased by 17% to $61,959,000 compared to $52,910,000 in 1996.

Net income for the quarter increased by 55% to $3,475,000 or $0.33 per share (diluted), compared to net income of $2,244,000 or $0.23 per share (diluted), for the fourth quarter of 1996. Net income for 1997 increased by 170% to $11,063,000 or $1.08 per share (diluted) compared with net income of $4,092,000 or $0.43 per share (diluted) in 1996. The foregoing net income numbers for 1996 exclude the following non-recurring items: in the third quarter of 1996 the company incurred a one time charge of $1,529,000 for acquired in-process technology and in the fourth quarter of 1996 the company recorded a one time income of $3,750,000 as part of a litigation settlement.

Eli Ayalon, President and CEO of DSP Group stated, "We are pleased to present yet another record quarter and a record year for DSP Group since the inception of the Company. Sales of products in the fourth quarter of 1997 reached a record high of $13,612,000. Product sales in 1997 increased by 24% to $51,238,000 compared to $41,290,000 in 1996. Product gross margin for the fourth quarter reached 42%, a significant improvement, compared to 35% in the fourth quarter of 1996 and 39% in the third quarter of 1997."

Ayalon continued "in the fourth quarter of 1997 the Company introduced an array of leading edge products designed to answer market demand. These include the D6487 which is the first DSP solution to embrace Voice Recognition, Full Duplex SpeakerPhone and caller ID capabilities on the same chip. Also introduced was the D6571A Digital TAD solution with the new TrueSpeech® Triple Rate CoderTM, a breakthrough speech compression technology achieving unprecedented quality and flexibility. "

DSP Group Inc. is a leader in the development and marketing of high-performance, cost-effective, Digital Signal Processing (DSP) cores and integrated solutions for the consumer telephony and computer telephony market. By combining three key technologies -- digital signal processing, speech processing algorithms and telephony algorithms -- the Company is delivering a wide range of enabling application-specific DSPs to these markets.

Statements contained in this release concerning the Company's improved gross margins and the Company's leadership in developing and marketing products may constitute forward-looking statements. These statements involve certain risks and uncertainties such as the volume and timing of product orders, the impact of declining average selling prices for TAD speech processors on gross margins, the Company's reliance on independent foundries and dependence on a limited number of OEM customers and the turbulent economics in south east Asia. These and other risks are detailed in the Company's Form 10K report for 1996.

# # #

NOTE: TrueSpeech, True Full Duplex Speakerphone, FlexiSpeech and Triple Rate Coder are registered trademarks of DSP Group, Inc. All other products or service names mentioned herein are trademarks of their respective owners. TrueSpeech is a registered trademark of DSP Group, Inc.

 

DSP GROUP, INC.

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

   

Three Months Ended

year Ended

   

December 31,

December 31,

   

1997

1996

1997

1996

Revenues:          
Product sales  

13,612

12,154

51,238

41,290

Royalties, licensing and other  

2,969

2,927

10,721

11,620

- - - -

- - - -

- - - -

- - - -

Total revenues  

16,581

15,081

61,959

52,910

Cost of revenues:          
Cost of product sales  

7,837

7,921

31,143

29,432

Cost of royalties, licensing and other  

47

500

1,169

1,096

- - - -

- - - -

- - - -

- - - -

Total cost of revenues  

7,884

8,421

32,312

30,528

- - - - -

- - - - -

- - - - -

- - - - -

Gross profit  

8,697

6,660

29,647

22,382

Operating expenses          
Research and development  

2,377

1,897

8,420

8,481

Sales and marketing  

1,383

1,113

4,934

4,429

General and administrative  

1,133

1,299

4,505

5,669

Acquired in-process technology        

1,529

- - - -

- - - -

- - - -

- - - -

Total operating expenses  

4,893

4,309

17,859

20,108

- - - - -

- - - - -

- - - - -

- - - - -

Operating income  

3,804

2,351

11,788

2,274

Other income (expense):          
Interest and other income  

880

460

2,710

1,469

Interest expense and other          

Gain on settlement of lawsuit

   

3,750

 

3,750

Equity in income (loss) of unconsolidated subsidiaries, net

 

(147)

(171)

(706)

(458)

- - - - -

- - - - -

- - - - -

- - - - -

Income before income taxes  

4,537

6,390

13,792

7,035

Provision for income taxes  

1,092

989

2,758

1,057

- - - - -

- - - - -

- - - - -

- - - - -

Net income  

3,445

5,401

11,034

5,978

Net earning per share:           
Basic  

0.34

0.57

1.13

0.63

Diluted  

0.33

0.56

1.08

0.62

Shares used in per share computation:          
Basic  

10,016

9,540

9,736

9,510

Diluted  

10,578

9,609

10,244

9,581

 including one-time charge for acquired in-process technology in Q3/96 and one-time income as part of litigation settlement in Q4/96. Excluding these items, pro forma earning per common share (diluted) was $0.23 for Q4/96 and $0.43 for 1996.

DSP GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

 

   

December 31,

December 31,

   

1997

1996

ASSETS

     
CURRENT ASSETS      
Cash, cash equivalents and  

65,944

42,934

marketable securities      
Accounts receivable, net  

3,594

4,861

Inventories  

4,116

2,957

Deferred income taxes  

2850

500

Prepaid expenses and others  

1,441

1,047

   

- - - - -

- - - - -

Total current assets  

77,945

52,299

       
Property and equipment, net  

3,488

3,291

   

- - - - -

- - - - -

       

Investment in unconsolidated subsidiaries, net

 

2,935

2,415

Other assets, net  

150

388

Deferred income taxes  

650

504

   

- - - - -

- - - - -

TOTAL ASSETS  

85,168

58,897

       
       

LIABILITIES AND STOCKHOLDERS' EQUITY

 
   
CURRENT LIABILITIES      
Accounts payable  

3,319

1,428

Other current liabilities  

7,679

3,020

   

- - - - -

- - - - -

Total current liabilities

 

10,998

4,448

       
STOCKHOLDERS' EQUITY      
Common stock  

10

10

Additional paid-in capital  

74,418

66,781

Unrealized equity gain  

1,050

 
Accumulated deficit  

(1,308)

(12,342)

   

- - - - -

- - - - -

       
   

- - - - -

- - - - -

TOTAL LIABILITIES

AND STOCKHOLDERS' EQUITY

 

85,168

58,897