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First Quarter Results:
Revenues for the first quarter of 2009 were $39,914,000, a decline of 45% from revenues of $72,729,000 for the first quarter of 2008. Net loss for the first quarter was $10,691,000, as compared to a net loss of $7,608,000 for the first quarter of 2008. Earnings per share (EPS) for the first quarter of 2009 were a loss of $0.41 per share vs. a loss of $0.25 per share for the first quarter of 2008.
Non-GAAP net loss and EPS for the first quarter of 2009 were $4,623,000 and a loss of $0.18 per share, respectively, as compared to the non-GAAP net income of $1,441,000 and the non-GAAP diluted EPS of $0.05 per share for the first quarter of 2008. Non-GAAP net loss and EPS for the first quarter of 2009 excluded the impact of amortization of acquired intangible assets of $3,047,000, associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V. and equity-based compensation expenses of $3,021,000. Non-GAAP net income and diluted EPS for the first quarter of 2008 excluded the impact of the amortization of acquired intangibles and other acquisition-related assets of $5,782,000, associated with the acquisition; equity-based compensation expenses of $3,961,000 and the aggregate tax benefits associated with such expenses of $694,000.
On March 12, 2009, the Company repurchased 4,186,603 shares of its common stock from NXP at a per share price of $4.78 for an aggregate consideration of $20,028,000 which was paid to NXP during the first quarter. This transaction was in accordance with the Stock Repurchase Agreement executed with NXP pursuant to which the Company agreed to repurchase all of its shares issued to NXP in connection with the acquisition of the Cordless and VoIP Terminals business.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "Although we were not completely satisfied with the company's financial results stemming from the severe economic downturn, our first quarter results came in at the higher end of our guidance. We believe that the depressed demand for our products may have reached a bottom during the first quarter of the year, which may indicate that the worst is behind us."
The Company believes that the non-GAAP presentation of net income and diluted EPS presented in this press release is useful to investors in comparing results for the quarter ended March 31, 2009 to the same period in 2008 because the exclusion of the above noted expenses may provide a more meaningful analysis of the Company's core operating results. Further, the Company believes it is useful to investors to understand how the expenses associated with equity-based compensations expenses are reflected on its statements of income.
About DSP Group
DSP Group, Inc. (NASDAQ: DSPG) is a leading global provider of wireless chipset solutions for converged communications at home. Delivering system solutions that combine semiconductors and software with reference designs, DSP Group enables world-leading consumer electronics (CE) manufacturers to cost-effectively develop innovative revenue-generating applications with fast time to market. At the forefront of wireless semiconductor development and operational excellence for over two decades, DSP Group provides a broad portfolio of chipsets integrating DECT, Wi-Fi, PSTN and VoIP/CoIP technologies with state-of-the-art application processors. Enabling converged voice, audio, video and data connectivity across diverse consumer products - from cordless and VoIP phones to home gateways and infotainment centers - DSP Group proactively partners with CE manufacturers to shape the future of residential converged communications. For more information, visit http://www.dspg.com.
Forward Looking Statements
This press release may contain statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including Mr. Ayalon's statement that the depressed demand for the Company's products may have reached a bottom during the first quarter of 2009, which may indicate that the worst is behind it. These forward-looking statements are based on current expectations and DSP Group assumes no obligation to update this information. In addition, the events described in these forward-looking statements may not actually arise. DSP Group's actual results could differ materially from those described in this press release as a result of various factors, including the timing and ability of the market to recover, especially the semiconductor and consumer electronics markets, and the corresponding recovery of DSP Group's customers; gross margin fluctuations; the success of implemented restructuring efforts; slower than expected change in the nature of residential communications domain; unexpected delays in the introduction of new products or failure of such products to achieve broad market acceptance; DSP Group's inability develop and produce new products at competitive costs; and general market demand for products that incorporate DSP Group's technology in the market. These factors and other factors which may affect future operating results or DSP Group's stock price are discussed under "RISK FACTORS" in the Form 10-K for fiscal 2008 as well as other reports DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group's Web site (http://www.dspg.com) under Investor Relations.
Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EST today to discuss the financial results for the first quarter of 2009 and invites you to listen to a live broadcast over the Internet. The broadcast can be accessed by all interested parties through the Investor Relations section (investor message board) of DSP Group's Web site at http://www.dspg.com or link to: http://ir.dspg.com./phoenix.zhtml?c=101665&p=irol-calendar.
If you cannot join the call, please listen to the replay, which will be available for approximately two weeks after the call on DSP Group's Web site or by calling the following numbers:
US Dial-In # 1-888-286-8010 (passcode: 94529166) International Dial-In # 1-617-801-6888 (passcode: 94529166) DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Three Months Ended March 31, 2009 2008 Unaudited Unaudited Product revenues and other $ 39,914 $ 72,729 Cost of product revenues and other 26,504 45,776 ___ ___ Gross profit 13,410 26,953 Operating expenses: Research and development 13,738 20,028 Sales and marketing 4,516 6,021 General and administrative 3,814 4,250 Amortization of intangible assets 3,047 5,782 ___ ___ Total operating expenses 25,115 36,081 ___ ___ Operating loss (11,705) (9,128) Other income : Interest and other income, net 603 1,234 ___ ___ loss before provision for income taxes (11,102) (7,894) Income tax benefit (411) (286) ___ ___ Net loss $ (10,691) $ (7,608) Net loss per share: Basic $ (0.41) $ (0.25) Diluted $ (0.41) $ (0.25) Weighted average number of shares of common stock used in the computation of: Basic 26,083 30,574 Diluted 26,083 30,574 DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP) (In thousands, except per share amounts) Three Months Ended March 31, 2009 2008 Unaudited Unaudited Product revenues and other $ 39,914 $ 72,729 Cost of product revenues and other 26,296 45,519 ___ ___ Gross profit 13,618 27,210 Operating expenses: Research and development 12,163 17,937 Sales and marketing 4,058 5,514 General and administrative 3,034 3,144 ___ ___ Total operating expenses 19,255 26,595 ___ ___ Operating income (loss) (5,637) 615 Other income : Interest and other income, net 603 1,234 ___ ___ Income (loss) before provision for income taxes (5,034) 1,849 Provision for income taxes (income tax benefit) (411) 408 ___ ___ Net income (loss) $ (4,623) $ 1,441 Net earnings (loss) per share: Basic $ (0.18) $ 0.05 Diluted $ (0.18) $ 0.05 Weighted average number of shares of common stock used in the computation of: Basic 26,083 30,574 Diluted 26,083 30,757 Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts) Three Months Ended March 31, 2009 2008 (Unaudited) (Unaudited) GAAP net (loss) income $ (10,691) $ (7,608) Equity-based compensation expense 208 257 Included in cost of product revenues Equity-based compensation expense 1,575 2,091 Included in R&D Equity-based compensation expense 1,238 1,613 Included in SG&A Amortization of intangible assets 3,047 5,782 related to NXP transaction Tax benefit resulting from 0 (694) equity-based compensation and amortization of acquired intangible assets Non-GAAP net income $ (4,623) $ 1,441 Non-GAAP basic earnings per share $ (0.18) $ 0.05 Non-GAAP diluted earnings per $ (0.18) $ 0.05 share DSP GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) March 31, December 31, 2009 2008 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents $ 45,284 $ 68,886 Restricted deposits 115 115 Marketable securities and cash 24,979 12,449 deposits Trade receivables, net 23,826 39,603 Inventories 12,301 14,098 Other accounts receivable 17,187 17,367 Deferred income taxes 259 306 Total current assets 123,951 152,824 Property and equipment, net 13,208 14,822 Long term marketable securities 33,736 40,051 Severance pay fund 6,822 7,286 Deferred income taxes 200 212 Goodwill and other intangible assets 29,547 32,728 Other assets 1,183 1,331 Total assets $ 208,647 $249,254 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 13,923 $ 20,136 Other current liabilities 34,810 40,329 Total current liabilities 48,733 60,465 Accrued severance pay 8,028 8,008 Accrued pensions 1,526 1,675 Deferred tax liability 19 24 Other long term liabilities - 455 Total long term liabilities 9,573 10,162 Stockholders' equity: Common stock 23 27 Additional paid-in capital 317,509 314,484 Accumulated other comprehensive income (loss) (1,680) 51 Retained loss (40,369) (28,186) Less - Cost of treasury stock (125,142) (107,749) Total stockholders' equity 150,341 178,627 Total liabilities and $ 208,647 $ 249,254 stockholders' equity
For more information, please contact Ofer Elyakim, +852-9017-5426, or e-mail: firstname.lastname@example.org.
SOURCE DSP Group Ltd.