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FOR IMMEDIATE RELEASE For more information, contact:
DSP Group, Inc. Reports Financial Results for Third Quarter 1997 SANTA CLARA, CALIFORNIA October 27, 1997 -- DSP Group, Inc. (NASDAQ: DSPG) today announced its financial results for the third quarter ended September 30, 1997.Revenues for the quarter increased by 22% to $16,558,000 compared to $13,611,000 in the third quarter of 1996. Revenues for the first three quarters of 1997 increased by 20% to $45,378,000 compared to $37,829,000 in the first three quarters of 1996. Net income for the quarter amounted to $3,348,000 compared to a loss of $263,000 in the third quarter of 1996. In the third quarter of 1996 the company recorded a charge of $1,529,000 for acquired in process technology. Excluding this one-time charge, net income for the third quarter 1997 increased by 201%. Primary and fully diluted net income per share increased by 167% to $0.32 per share, compared to $0.12 per share (excluding the one-time charge) for the third quarter of 1996. Net income for the first three quarters of 1997 increased by 289% to $7,589,000 compared to net income of $1,953,000 (excluding the one-time charge), in the first three quarters of 1996. Eli Ayalon, President and CEO of DSP Group stated, "We are very pleased to announce the earnings for our best quarter in the Company's history. Gross profit for the third quarter increased by 61% to $8,050,000 compared to $5,015,000 in the third quarter of 1996. This increase is a result of both higher revenues and improved margins. Gross margin on product sales continued to improve and reached a level of 39% compared to 27% in the third quarter of 1996". Igal Kohavi, Chairman of DSP Group stated, "During this quarter we signed a significant agreement with National Semiconductor Corporation under which DSP Group has the exclusive right to license National's CompactRISC™ core technology worldwide". Kohavi added, "We believe that providing product designers with a seamless integration of National's RISC technology and our proven DSP technology will significantly reduce time to market and prove to be a winning combination. This new agreement underscores the increasing importance of the core licensing business in our Company's strategy". DSP Group, Inc., is a leader in the development and marketing of high-performance, cost-effective digital signal processing solutions for the consumer telephone, computer telephony and personal computer industries. By combining three key technologies -- speech processing algorithms, telephony algorithms and digital signal processors (DSPs) -- the Company has delivered a wide range of enabling application-specific DSPs to these markets. Statements contained in this release concerning the Company's improved growth margins, the impact of the Company's agreement with National Semiconductors, 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, recognition of license fee and royalties, 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. These and other risks are detailed in the Company's Form 10K report for 1996. # # # TrueSpeech is a registered
trademark of DSP Group, Inc. |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Product sales $ 13,547 $ 11,403 $ 37,626 $ 29,136
Royalties, licensing
and other 3,011 2,208 7,752 8,693
Total revenues 16,558 13,611 45,378 37,829
Cost of revenues:
Cost of product sales 8,232 8,378 23,306 21,511
Cost of royalties,
licensing and other 276 218 1,122 596
Total cost of revenues 8,508 8,596 24,428 22,107
Gross profit 8,050 5,015 20,950 15,722
Operating expenses
Research and development 2,084 1,802 6,043 6,584
Sales and marketing 1,220 941 3,551 3,316
General and administrative 1,168 1,125 3,372 4,370
Acquired in-process
technology -- 1,529 -- 1,529
Total operating expenses 4,472 5,397 12,966 15,799
Operating income (loss) 3,578 (382) 7,984 (77)
Other income (expense):
Interest and other income 753 331 2,006 1,131
Interest expense and other (55) (48) (176) (121)
Equity in income (loss) of
unconsolidated
subsidiaries, net (42) (193) (559) (287)
Income (loss) before income
taxes 4,234 (292) 9,255 646
Provision (benefit)for
income taxes 886 (29) 1,666 68
Net income (loss) $ 3,348 $ (263) $ 7,589 $ 578
Net income (loss) per
share:(a)
Primary $ 0.32 $ (0.03) $ 0.76 $ 0.06
Fully diluted $ 0.32 $ (0.03) $ 0.73 $ 0.06
Shares used in per share
computation:
Primary 10,350 9,534 10,018 9,567
Fully diluted 10,531 9,534 10,441 9,567
(a) including one-time charge for acquired in-process technology in the
third quarter of 1996. pro forma earning per common share (primary and
fully diluted) was $0.12 for Q3/96 and $0.20 for the first nine months of
1996.
DSP GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
September 30, December 31,
1997 1996
ASSETS
CURRENT ASSETS
Cash, cash equivalents and
marketable securities $ 61,192 $ 42,934
Accounts receivable, net 2,582 4,861
Inventories 3,987 2,957
Deferred income taxes 500 500
Prepaid expenses and others 2,349 1,357
Total current assets 70,610 52,609
Property and equipment 8,745 7,324
Accumulated depreciation
and amortization (4,976) (4,033)
3,769 3,291
Investment in unconsolidated
subsidiaries, net 1,856 2,415
Other assets, net 150 388
Deferred income taxes 504 504
TOTAL ASSETS $ 76,889 $ 59,207
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,070 $ 1,428
Other current liabilities 6,637 3,330
Total current liabilities 10,707 4,758
STOCKHOLDERS' EQUITY
Common stock 10 10
Additional paid-in capital 70,925 66,781
Accumulated deficit (4,753) (12,342)
66,182 54,449
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY $ 76,889 $ 59,207