DSP Group, Inc. Reports Financial Results for Third Quarter 1997
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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